Domtar Corporation Company Analysis

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Table of Contents Introduction ............................................................................................................................................ 3

History, structure & size of company ...................................................................................................... 4

History ................................................................................................................................................. 4

Structure and Size ............................................................................................................................... 4

Services provided ................................................................................................................................ 4

Revenues from each (proportion, trends) .......................................................................................... 5

Market share, level of recognition, success measures ....................................................................... 7

Competitors ........................................................................................................................................ 7

Industry sector comparison .................................................................................................................... 8

Labour issues related to convergence .................................................................................................... 8

Neo-liberalization of media industries ................................................................................................ 8

Globalization ....................................................................................................................................... 8

Nationalism ......................................................................................................................................... 8

Technology .......................................................................................................................................... 9

Conclusion: .............................................................................................................................................. 9

References .............................................................................................................................................. 9

Introduction

Domtar Corporation is a sustainable paper company of uncoated free sheet paper in North

America and is considered as the second largest in the world based on the paper production

capacity. It is also a manufacturer of paper grade pulp which has quite good demand in the

world. Domtar Corporation is a profitable public company, owned independent and based in

Canada. The pulp and paper industry is growing at a quite good rate in the world and out of

them Canada is considered as at top 5th

position and produces of 12787,000 ton paper

(excluding pulp) yearly based on the RISI statistics data. Wood is used as raw material to

produce the pulp, paper, board and cellulose based products as because these are in high

demand. The paper industry is mostly dominated in the United States, Canada, Finland,

Sweden, North West Russia, Japan, China, Korea, Australia, and Brazil.

In these countries there is significant amount of pulp and paper produced but in Canada this

Industry is quite good and contributing in the GDP of the country. This industry is always

criticized by the environmental groups in the world like Natural Resource Defense Council

because of the deforestation and also cutting of the natural old forest. Due to these the

environmental issues has been created such as increase in pollution, not raining on time,

global warming and animal deaths etc. Domtar Corporation has taken some important step in

order to qualify the paper industry and minimum loss to the human, animal and other natural

resources because of the environmental issues. This report analyse the paper industry of

Domtar Corporation with labour issue and industry related comparison.

History, structure & size of company

History

In year 1848, Henry Potter Burt founded a timber against rot from moisture firm in England

named as Boulton Holdings Ltd. This company used the wood products or creosote produced

from coal tar to increase the timber’s life but after some time the firm acquired the Quebec’s

mill of paper and started the production of the paper in North America. Increasing demand of

treated wood because of increase source of coal tar, in year 1903 there was formed a firm

named as Domtar Corporation. Soon after in the early 21st century this company became the

largest industry in the North America and second largest industry in the world for the paper

and pulp related products and services.

Structure and Size In the recent years, the firm has now became globally and now established its business to the

50+ countries worldwide and have 9100+ employee in the firm, the approximate revenue of

the firm is USD $ 5.6 billion. Currently there are five executives of the firm named as Mr.

John D. Williams BA, Mr. Daniel Buron, Mr. Michael Edwards, Mr. Patrick Loulou and Mr.

Richard L. Thomas, who have the immense experience in the paper and pulp industry and

related activities.

Services provided Domtar Corporation offers different pulp and paper related services and produces related

products. The firm designs, manufactures, markets and distributes a large number of range of

the fibre based and related products. It manufactures the uncoated free sheet paper in USA

and Canada, also market the paper to these countries primarily. The paper is distributed to the

individual customers through the different merchants and retail outlets of the pulp and paper

industry. There are three main segments in the sustainable paper industry, such as pulp, paper

and sheet which has three business units in the industry as manufacturing, sale and

distribution for the packaging of papers, distribution of papers, and recycling of papers.

More than these, it produces softwood, fluff, and hardwood market pulp. The other service

for the firm include the distribution of other firm’s paper products through the retail services

and provides the customer care support to all the paper products with the distribution of the

adult incontinence products. Commercial, communication and technical papers are also

produced in the firm premium brands such as Cougar, Lynx Opaque Ultra, Husky Opaque

Offset, First Choice, and Sandpiper. This company acquired other business such as health

care and personal care in year 2011 and year 2012 so it also has health and personal care

products and services.

Revenues from each (proportion, trends) The consolidated revenue of the firm for year 2011, according to the financial statement

reported by the firm is USD $ 5612 million which is less than the previous year of revenue.

As seen from the below chart that the market revenue of the firm for the year 2011 got

decrease in comparison to the year 2010 but in year 2010 the revenue of the firm got increase

in comparison to the year 2009.

Fig: Financial trend for the firm for the last 3 years

Revenue is also different for the different business sector but the more revenue is collected

through the pulp and paper business which comprises of 85 % of the total revenue, 14 percent

is collected from the distribution business and from other services it gets almost 1 % of the

total revenue. The below chart describes about the revenue that it generates from the three

type of business mainly of Domtar Corporation.

5200

5400

5600

5800

6000

2009 2010 2011

Re

ven

ue

s in

mill

ion

d

olla

rs (

USD

)

Financial Trend

Financial Trend

85%

14%

1%

Revenue per business segment

Pulp and Paper Distribution Other

Fig: Revenue per business segment for the Domtar Corporation

It is also important for the firm to analyse about the sales from the different region so that it

can be identified that which region is most suitable for the business and where it need to

improve that. The below chart indicates about the sales per region for the products and

services offered by the firm. In USA region the products and services are accepted more than

Canada where it is only 13 percent sales and other region of the world has sales of 12 percent

of the products and services. Based on this it can be said that the sales per region indicate

about the brand recognition of the firm in USA mostly.

Fig: Sales based on the given region for the firm

In which country, how many people are accepting or using the products and services has been

indicated in the below figure. It is generally estimated that in USA there are 63 percent

people who adopt the products and services but in Canada it is 32 percent in other region of

the world there are 5 % people who uses the products and services of the Domtar

Corporation.

75%

13%

12%

Sales Per Region

USA Canada Other

63%

32%

5%

Head Count Per Region

USA Canada Other

Fig: Head Count per region for the products and services of Domtar Corporation

Market share, level of recognition, success measures The firm has demand and supply for its products and services to the almost every area of the

North America as it is largest industry in North America for paper and pulp products and

services. It is estimated that it almost cover the 80 percent market for the paper and personal

care need. In the other region of the world the firm has acquired the business of around 30-40

percent in the pulp and paper industry. The firm has been recognized as one of the best paper

and pulp production industry in the world. There are total 13 wood fiber mills across North

America and more than 15 manufacturing operations firms across the world. As of 31

December 2011, the Domtar Corporation sold a total of 36131200 shares of the common

stock that are issued by the NASDAQ stock exchange and also the other shares of Domtar

Canada Paper Inc. Which is 100 percent owned subsidiary that is also have a total of 619108

shares as exchangeable shares issued and outstanding.

The exchangeable shares of the other subsidiary organization are considered as the intended

shared to be substantially economically equivalent to the common stocks and these shares are

presently exchangeable at the option of the holder on a one-for-one basis for shares of our

common stock. Therefore, the total number of common and exchangeable shares issued and

outstanding was 36750308 as on 31 December 2011. The common shares of the firm are

traded on the New York Stock Exchange and the Toronto Stock Exchange. The success of the

firm can be measured on basis of the financial strength, employee strength, business

expansion in the overseas countries, customer satisfaction, increase in customer database and

less repay of the debt.

Competitors There are many competitors of the Domtar Corporation in North America and also across the

world but not on a big scale. Few of them include Boise Cascade Holdings, L.L.C. (privately

held), Georgia-Pacific LLC (privately held) and International Paper Company. The analysis

for the competitors shows that Domtar Corporation’s market capital is more than the other

paper and pulp related businesses. The debt payment has been reduced to a very low so the

earning per share got increase is highest among the same industries in the world in the paper

and pulp. The competitive advantages of the firm are because of the quality, brand

recognition and cheap prices. The competitors are also not able to compete with it because of

the large segment of paper, pulp and personal care related production and services because

that has acquired the more than 80 % business in the market.

Industry sector comparison The paper and pulp industry is very big and most of the businesses are established in the USA

and Europe region. The comparison of the industry can be done as on basis of the price of the

shares because it signifies the importance and the brand of the firm. There are most valuable

79 top global industries in the world, out of them few are such as Mondi plc, Ballarpur

Industries Ltd., International Paper Company, and Orient Paper & Industries Ltd. The paper

and pulp industry share in the global business market is about 5-8 percent and it contributes a

major profit to the GDP of the any country where there is leading paper and pulp industry.

Labour issues related to convergence Labour issue is one of the biggest issues in the paper and pulp industry because most of the

work is done by the labour as it needs the raw material of wood that is taken from the forest

to the mill and then it converted in to the paper. In case of Domtar Corporation, the issue are

not much because of the good and right policies of the corporate governance of the firm.

Neo-liberalization of media industries It basically supports the privatization of the state owned enterprises. In this situation it is

important to take care of the labour to work in the private firms erectly. Domtar Corporation

also acquired some state owned business so the labour issues were resolved through giving

them care and welfare policies.

Globalization In globalization, the main issue is for the labour to involve in the other country or state

culture, language and their business or ethical standards. In these cases the labours feel very

uncomfortable to live the different environment. The proper training and communication

skills make them goo to handle all the situations in the overseas places.

Nationalism Nationalism culture surely have some labour issue as some of the people don’t want to work

for other state and some of them are not suitable for the work because eof lack of language,

behaviour etc.

Technology Most of the older labors are not aware of the recent technologies so it is very difficult to work

in the new environment. This is the biggest issue among the labour to understand the

technology easily and feel inferiority complex.

Conclusion: Domtar Corporation is one of the biggest paper and pulp industry, in North America and

second largest in the world. The financial reports states about its growth and brand

recognition among the customers.

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