Specialist
Former VP at Domtar Corp
Agenda
- Competitive dynamics throughout the paper and pulp markets, noting opportunities and challenges
- Innovation, sustainability trends and growth opportunities
- Regulatory and legislative environment
- 2023 outlook for Domtar (NYSE: UFS) and the paper and pulp industry
Questions
1.
How would you describe the current operating environment for Domtar? What 2-3 trends would you highlight, either headwinds or tailwinds?
2.
Now that Domtar can’t produce and fill orders, as you mentioned, isn’t that a good problem to have, given the secular shifts away from paper for many years? How do you now gauge the risks imports present to the US market? Where else are you watching, other than Portugal?
3.
On the potential risk that exports or imports present, how should we gauge the impact? Is there an X% increase in imports in the US that would be alarming to Domtar?
4.
You talked about the potential risk of imports. We’ve seen what’s happened with that on the supply and demand side over a number of years, but what would you categorise as the core business risk today for Domtar outside of imports?
5.
Who would you segment as Domtar’s core competitors? Where do the company’s competitive advantages lie vs peers and where does it lag peers?
6.
Where would you say Domtar is often advantaged or lagging across the segments you mentioned vs peers? What are the sources and drivers of advantages and weaknesses across the marketplace for the company and its peers?
7.
What are your 2023 pricing and volume expectations for paper and pulp? Are there any potential threats to volumes you would highlight?
8.
On digitisation, you mentioned secular CAGR declines of 1-1.5% in the US. What could meaningfully accelerate or elongate these shifts? Is there anything that might accelerate or deter digitisation efforts, or cause them to flatline?
9.
Paper Excellence acquired Domtar in 2021. What can Domtar now do under Paper Excellence’s umbrella that it couldn’t do previously? Are there any scale or supply unlocks, or anything on the demand side the company can now grow more meaningfully?
10.
Where are Domtar’s opportunities greatest under Paper Excellence? You talked about bringing coating to Bennettsville and cost savings there, but given a looming recession or cost pressure fears, can you also discuss cost management and what the company can now do under Paper Excellence, or more generally as a private company?
11.
How will Domtar’s divestiture of its personal care business in 2021 impact the company and its operations? Was the personal care business deeply integrated within Domtar or was it siloed? In what ways did carving the business out help or hurt other segments?
12.
How should we think about fluff pulp supply’s relationship with the personal care segment post-divestment? What’s the typical discount for fluff pulp supply and how might this be impacted? Now that the personal care business isn’t under the Domtar umbrella, would it receive less favourable pricing?
13.
Domtar is still working on converting its Kingsport plant from uncoated freesheet to containerboard. What were your thoughts on the timing of this decision during the pandemic, and what risks or opportunities would you highlight with the conversion?
14.
You said linerboard was thought about at Domtar for as long as you were at the company. Why was during the pandemic the right time? We obviously saw many pandemic trends pulling e-commerce and corrugated demand up, so was it related to that? Would you have any cautions here?
15.
How do you think about oversupply in the paper and pulp industry generally? How do you gauge the risk of oversupply, given we’ve seen a number of conversions from Domtar and other players? We’ve seen a lot of capacity being added on the corrugated side, but where is oversupply most likely across paper and pulp segments?
16.
What did you most often hear from customers regarding sustainability? What do CPGs and state and local governments want from paper and pulp players? What are their priorities today and how have these evolved in the last few years?
17.
Where might substrate shifts be impactful for Domtar in 12-24 months or beyond? Where might we start to see substrate shifts and meaningful growth for the company away from plastic or elsewhere?
18.
From the outside, how would you be trying to extrapolate how fast or slow the conversions away from plastic might be? You gave the example of sealed air bubble wrap vs crumpled paper. How should we assess these conversions? Is there any plastic replacement rate or percentage that you would point to?
19.
What do you view as the core disruptors to Domtar’s potential? We discussed digitisation and the risk that exports or imports present, but is anything else a looming threat to the company’s long-term story?
20.
What are you watching closely in terms of inflationary drags on margins over the next 12-24 months or beyond? Conversely, what levers or initiatives could be put in place to expand margins for Domtar over that horizon?
21.
What questions would you have for Domtar’s new management team about the company’s outlook?
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