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Domtar Corporation's president and CEO John Williams speaks to the media following the pulp and paper company's annual shareholders meeting on May 4, 2011.

SHAUN BEST/REUTERS

Domtar Corp. widely missed expectations even though the pulp and paper producer swung to a profit in the second quarter, earning $40-million (U.S.) despite higher costs.

The Montreal-based company, which reports in U.S. dollars, earned 61 cents per share for the period ended June 30, compared with a loss of 69 cents per share or $46-million in the second quarter of 2013.

Excluding one-time litigation, closure and impairment charges, Domtar's adjusted earnings in the same quarter last year were $16-million or 24 cents per share.

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Sales increased 5.3 per cent to $1.38-billion, compared with $1.31-billion as personal care revenues more than doubled to $234-million. Pulp and paper sales were down four per cent to $1.16-billion.

Domtar was expected to post 82 cents per share in adjusted earnings and 86 cents per share in net earnings on $1.43-billion of revenues in the quarter, according to analysts polled by Thomson Reuters.

Chief executive John Williams said its paper segment was negatively affected by 51,000 tonnes of lack-of-order down time, which resulted in higher costs, and higher raw material costs at its personal care segment, which includes adult diapers.

Improved pulp pricing was more than offset by seasonally higher maintenance at its pulp mills.

The pulp and paper segment's operating income increased to $69-million from $16-million a year ago, while personal care profit was $14-million, up from $10-million in the prior year.

Williams said the integration of Spain's adult diaper maker Indas, acquired last year for about $565-million including debt is progressing well and in line with expectations.

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