Sappi says business shows resilience in difficult climate

Image: iStock

Image: iStock

‘Profitability was in line with our guidance at the end of the 2018 financial year,’ says COO.

Pulp and paper company Sappi on Wednesday reported earnings before interest, tax, depreciation, and amortisation of US$197 million, excluding special items for the quarter ended December, compared with $172 million during the same period in 2017.

Earnings per share were slightly up at 16 US cents from 14 cents, while profit rose to $81 million compared with $63 million during the same quarter the previous year.

“In a difficult operating climate, the resilience of the business and the benefits from the diversification of the product portfolio in recent years were emphasised during the quarter,” Sappi chief executive officer Steve Binnie said.

“Profitability was in line with our guidance at the end of the 2018 financial year. We continue to work hard to mitigate increased input costs and weaker global graphic paper markets.”

He said Sappi’s strategy to invest in higher margin growth segments continued to bear fruit, with overall sales volumes for packaging and specialities increasing by 27% year-on-year.

In Europe, the volumes increased by 50% year-on-year following the completion of the Maastricht Mill conversion and the inclusion of the Cham Paper volumes. In North America, sales volumes of existing packaging grades and new paperboard grades helped drive packaging and specialities volumes 68% higher than those of last year.

In South Africa, packaging volumes also increased year-on-year, supporting a strong improvement in operating performance.

Input cost pressures on non- or partially integrated mills persisted due to elevated paper pulp prices, which impacted margins. These cost pressures and sluggish demand in some market segments were offset by higher sales, higher selling prices and market share gains in other segments along with good fixed cost control.

Sappi said following the completion of the de-bottlenecking of Saiccor and Ngodwana Mills in 2018, it planned to grow dissolving wood pulp volumes through the remainder of 2019 to meet increased customer demand.

Market conditions for the various grades of packaging and speciality papers produced by the company had diverged in the past month or so, it said, with strong containerboard markets in South Africa and solid paperboard demand in Europe contrasting with some weakness in the release paper and various European speciality grades.

– African News Agency

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