* Q2 adj EPS $2.67 vs est. $1.60
* Q2 rev up 17 pct to $1.55 bln, beats market
* Positive outlook for Q3 - CEO
* Shares rise 8 pct (Recasts; adds details, analyst comments, share movement)
July 30 (Reuters) - Domtar Corp (UFS.TO) (UFS.N) posted a second-quarter profit that blew past market estimates, helped partly by higher pulp shipments, and said third-quarter results would benefit from lower costs, sending it shares up 8 percent.
"Costs related to planned maintenance shutdowns will be materially reduced in the third quarter," Domtar said in a statement.
Many forestry firms have refrained from restarting mills due to the high costs involved in keeping them operative. Earlier in the year, Domtar had warned of higher-than-average maintenance costs taking a toll on second-quarter results.
"We have a positive outlook on the third quarter," Chief Executive John Williams added on a conference call with analysts.
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Dual-listed Domtar, however, said it expects third-quarter paper shipments to be flat sequentially. In the second quarter, pulp shipments rose 25 percent from last year to 486,000 air dry metric tons.
Shipments are expected to gradually decline towards the year-end due to seasonal factors, the company said.
BMO Capital Markets analyst Stephen Atkinson said the company's results also benefited from tax recovery and from lower pulp inventory levels.
Paper inventory fell 9,000 tons and pulp inventory 95,000 metric tons at the end of June, compared to end-March levels, the company said.
Cash received in the quarter regarding alternative fuel tax credits amounted to $368 million.
Higher average selling prices in pulp and paper also added to the strong second-quarter results.
Northern Bleached Softwood Pulp prices in North America climbed up 55 percent to a peak of $1,020 per ton in June.
However, selling prices for paper-grade pulp are expected to come under pressure going forward, Domtar said.
Net income for the quarter fell to $31 million, or 71 cents a share, from $48 million, or $1.12 a share, in the year-ago quarter.
Excluding items, the company earned $2.67 a share. The results included a loss of $50 million related to its wood business.
Consolidated sales for the quarter rose 17 percent to $1.55 billion.
Analysts on average had forecast earnings of $1.60 a share, excluding items, on revenue of $1.51 billion, according to Thomson Reuters I/B/E/S.
In March, Eacom Timber Corp ETR.V acquired the forest products business of Domtar for C$80 million, plus certain working capital adjustments. [ID:nN29244352]
Shares of the company were up 7 percent at C$59.66 in midday trade Friday on the Toronto Stock Exchange, after touching a high of C$59.89. (Reporting by Isheeta Sanghi in Bangalore; Editing by Gopakumar Warrier, Unnikrishnan Nair)