Sylvamo 1Q Earnings Hit by Russia Ops Impairment Charge — Commodity Comment

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By Chris Wack

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Sylvamo Corp. said Wednesday it had first-quarter earnings of 59 cents a share on sales of $977 million. The paper company said earnings were affected by an impairment charge for its Russian operations, but offset by improved price and mix of products.

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On first-quarter highlights

“Price and mix improved by $53 million versus the prior quarter and volume decreased by $17 million due to slower seasonal demand in Eastern Europe and Latin America, while order backlogs remain strong.”

“Input and transportation costs increased by $24 million versus the prior quarter, reflecting higher costs for wood, energy, chemicals and distribution.”

On second-quarter expectations

“Price and mix are expected to improve by $60 million to $65 million ($50 million to $55 million, excluding Russia), compared to the first quarter, reflecting continued realization of prior price increases in all regions”

“Volume is expected to decrease $10 million to $15 million (remain stable, excluding Russia), with seasonally stronger Latin American volume offsetting more maintenance outages in North America”

“Operations and costs are expected to increase by $10 million to $15 million ($5 million to $10 million, excluding Russia), due to other costs.”

“Input and transportation costs are projected to increase by $15 million to $20 million ($10 million to $15 million, excluding Russia), mainly due to higher prices of natural gas in North America and rising diesel costs affecting fiber delivery in Latin America.”

“Total maintenance outage expenses are projected to increase by $25 million ($15 million, excluding Russia), as we conduct more planned maintenance outages.”

“We also project $8 million in costs related to transition service agreements in the quarter and $15 million of one-time costs (transition service agreements costs are not included in adjusted EBITDA, and one-time costs are not included in adjusted EBITDA and adjusted operating) earnings).”

By Chris Wack, [email protected]

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Credit: www.marketwatch.com /

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