February 4, 2010 / 1:00 PM / in 8 years

UPDATE 2-Domtar posts Q4 profit, sees strength in pulp demand

* Q4 EPS $1.39 vs est $0.91

* Revenue down 4 pct (Adds details)

Feb 4 (Reuters) - Forestry firm Domtar Corp (UFS.TO) (UFS.N) posted a fourth-quarter profit that beat Wall Street estimates, aided by strength in pulp markets, and said it expects pulp demand to remain strong in the short term.

Domtar also said it will benefit from the recently announced price increases in the upcoming quarters.

“Due to the seasonality of the business and the impact of the price increases being implemented, we expect to make working capital investments in the first quarter of 2010,” Chief Executive John Williams said in a statement.

“We expect that the increased economic activity will partially offset the secular decline in paper demand in 2010,” the CEO said.

Domtar, which operates across papers, paper merchants and wood segments, posted a quarterly profit of $124 million, or $2.86 a share, compared with a loss of $676 million, or $15.72 a share, a year ago.

Excluding items, dual-listed Domtar earned $1.39 a share. Analysts on average had expected the manufacturer and marketer of uncoated freesheet paper to earn 91 cents a share, according to Thomson Reuters I/B/E/S.

Consolidated sales fell 4 percent to $1.40 billion.

The year-ago quarter included impairment charges of $591 million.

CEO Williams said Domtar’s paper inventories were reduced for a fifth consecutive quarter, which contributed to its cash flow.

The Montreal-based company’s shares closed at C$56.65 Wednesday on the Toronto Stock Exchange.

For related alerts, please double click on [ID:nWNAB3047] (Reporting by Isheeta Sanghi in Bangalore; Editing by Vinu Pilakkott)

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