Domtar Corporation Reports 10% Sales Decline and $168 Million Net Loss in Q1 2026

Domtar Corporation reported a significant decline in financial performance for the first quarter of 2026, with total sales of $1.678 billion, down 10% from $1.860 billion in the same period of 2025. The company experienced an operating loss of $118 million, a stark contrast to the operating income of $66 million reported in the prior year. The net loss for the quarter was $168 million, compared to a net earnings of $6 million in the first quarter of 2025. This downturn was primarily attributed to increased closure and restructuring costs, higher impairment charges, and rising energy and freight costs, alongside lower average selling prices for pulp products.

In terms of operational changes, Domtar announced the indefinite idling of its Coosa Pines, Alabama mill, which is expected to reduce annual market pulp production capacity by approximately 270,000 air-dried metric tons and result in a workforce reduction of about 285 employees. The company also recorded impairment charges totaling $25 million related to long-lived assets and inventory write-offs during the quarter. Additionally, the company has been adjusting its production capacity in response to lower customer demand, including the indefinite idling of the Grenada, Mississippi newsprint mill and the closure of the Nogales, Mexico converting facility.

Domtar's sales by segment reflected the overall decline, with the Paper and Packaging segment generating $907 million in sales, down from $1.003 billion, and the Pulp and Tissue segment reporting $570 million, down from $645 million. The Wood Products segment also saw a decrease, with sales of $226 million compared to $237 million in the previous year. The company noted that the decline in sales was largely due to lower volumes and average selling prices across most product lines, driven by ongoing macroeconomic challenges and reduced consumer demand.

Looking ahead, Domtar anticipates a modest recovery in demand for paper products and an increase in prices for fluff pulp and paper products. However, the company remains cautious about the impact of tariffs and market conditions on its operations. The outlook for the remainder of 2026 includes expectations of rising costs for freight, labor, and raw materials, alongside a focus on managing inventory levels and aligning production with customer demand. Domtar's management emphasized the importance of controlling costs and generating cash flow in the current economic environment.