News Feed Item

Sappi results for 1st quarter in line with expectations.

JOHANNESBURG, Feb. 5, 2014 /PRNewswire/ --

Financial summary for the quarter

  • Profit for the period US$18 million (Q1 2013 US$12 million)
  • EPS excluding special items 2 US cents (Q1 2013 3 US cents)
  • EBITDA excluding special items US$147 million (Q1 2013 US$159 million)
  • Net debt US$2,348 million (Q1 2013 US$2,095 million)

Commenting on the result, Sappi (JSE: SAP) Chief Executive Officer Ralph Boettger said:
"The group returned to positive earnings in the quarter with an EBITDA excluding special items of US$147 million, an operating profit excluding special items of US$60 million and a profit for the period of US$18 million.

(Logo: http://photos.prnewswire.com/prnh/20110728/MM43821LOGO)

"We continue to generate good returns in the Specialised Cellulose business and the dissolving wood pulp market experienced strong demand in an increasingly competitive market. Conditions are generally difficult in the global graphic paper markets, in line with our expectations in Europe and more challenging than anticipated in North America.

"The past year has reinforced the importance of our strategy to reposition Sappi for growth, higher margins, improved profitability, and with less reliance on graphic paper. The two major dissolving wood pulp conversion projects are both now contributing to earnings and profitability, whilst the paper businesses, although dealing with difficult market conditions, continue to generate cash that will enable us to reduce debt. 

"Capital expenditure for the full year is expected to be less than US$300 million and, along with the expected improvement in profitability when compared to the prior year, should allow the group to reduce debt levels to approximately US$2 billion by the end of the fiscal year.

"Our outlook for the year continues to be one of improved profitability for the 2014 financial year when compared to 2013."

Quarter ended


Dec 2013


Dec   2012


Sept  2013

Key figures: (US$ million)


Operating profit (loss)

Special items – (gains) losses **

Operating profit excluding special items**

EBITDA excluding special items **

Profit (loss) for the period

Basic earnings (loss) per share (US cents)

Net debt**


Key ratios: (%)

Operating profit (loss) to sales

Operating profit excluding special items to sales

Operating profit excluding special items to capital employed (ROCE)

EBITDA excluding special items to sales

Return on average equity (ROE)**

Net debt to total capitalisation**

Net asset value per share (US cents)























































* During the year, the group adopted IAS 19 (Revised) Employee Benefits. Refer to the group results for the accounting policy change.

** Refer to the published results for details on special items, the definition of the terms and the reconciliation of EBITDA excluding special items to profit/loss for the period.

The table above has not been audited or reviewed.

The quarter under review

The group has benefited from the strategic decision to invest in and grow the Specialised Cellulose business, with 286kt of dissolving wood pulp sold during the quarter (an increase of 63% over the equivalent quarter last year), generating US$74 million in EBITDA excluding special items at an EBITDA margin of 30%. We continue to benefit from our low cost position at each of our dissolving wood pulp mills and the weaker Rand/Dollar exchange rate during the quarter.

The South African business had another good quarter, benefiting from additional sales volumes in the Specialised Cellulose business from the Ngodwana Mill, the weaker Rand/Dollar exchange rate and a gradual improvement in the paper business. The European business returned to a small operating profit after three quarters of losses, with a reduction in fixed cost offsetting lower selling prices. The North American business experienced a difficult quarter, with volume and price declines in the paper segment as well as increased variable costs leading to a small operating loss.

NBSK paper pulp list prices, to which most of our dissolving wood pulp sales are linked, increased during the quarter, reaching its highest levels in two years. Due to the competitive nature of the market and weak viscose pricing, we expect increased pressure on our NBSK linked prices going forward. 

Net debt of US$2,348 million is up, compared both to the prior quarter, US$2,214 million, and the equivalent quarter last year, US$2,095 million, as a result of the seasonal increase in cash utilisation, and the past year's capital expenditure respectively.

The strategic actions to reduce costs and improve our profitability enabled the European business to return to an operating profit this quarter. The paper market remains tough, with demand continuing to decline and pricing under pressure, particularly in a strong Euro/Dollar exchange rate environment. The Alfeld PM2 conversion to speciality paper has been completed with successful trial runs and customer quality acceptance.

The North American business experienced a challenging quarter, and the graphic paper business was particularly difficult with lower sales volumes and prices in very competitive markets. Domestic coated freesheet paper demand in North America declined some 5% compared to the prior year, and whilst our sales declined by less than this, the loss of volume and a decline in coated web pricing over the past year had a significant impact. Higher cost purchased fibre also impacted paper costs compared to the prior year.

Dissolving wood pulp production and sales volumes were close to full capacity with excellent quality. In optimising the global Specialised Cellulose business we have seen lower average pricing and higher logistics costs in our North American operation, resulting in lower average returns for the business in North America. 

The Southern African Specialised Cellulose business continues to perform well, and this quarter included sales from the recently converted Ngodwana Mill for the first time. Average net selling prices for dissolving wood pulp were flat compared to the prior quarter, but significantly higher than for the equivalent quarter in the prior year due to higher NBSK reference prices as well as a weaker Rand/Dollar exchange rate. The South African paper business returned to profitability, aided by the weaker Rand/Dollar exchange rate. However, the local graphic paper market remains weak, with continued cost pressure and a competitive import market. The domestic packaging market, though seasonally weaker in this quarter, continues to see good demand levels and improved pricing. 

There were no major special items for the quarter. The gain of US$10 million included a positive plantation fair value price adjustment of US$8 million and an asset impairment reversal of US$2 million. Finance costs of US$48 million were in line with the restated equivalent quarter last year. Earnings per share for the quarter was 3 US cents (including a gain of 1 US cent in respect of special items), compared to 2 US cents (including a charge of 1 US cent in respect of special items) in the equivalent quarter last year.

Both the European and South African paper businesses returned to profitability during the quarter and we expect to see further improvement in the performance of these paper businesses. Plans are in place to return the North American paper business to previous profitability levels.

Paper markets are expected to remain challenging for the remainder of the year and we continue to focus on costs across all our regions, with each of them striving to ensure they are amongst the lowest cost producers in their respective markets.

Demand in the Specialised Cellulose business is expected to remain firm, but with continued pressure on pricing. Currency, particularly the Rand/Dollar exchange rate will continue to remain a factor in the overall profitability of this business.

The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investor Info; Investor Calendar; 1Q14 Financial Results

Forward-looking statements

Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters, and may be used to identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:

the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing);

  • the impact on our business of the global economic downturn;
  • unanticipated production disruptions (including as a result of planned or unexpected power outages);
  • changes in environmental, tax and other laws and regulations;
  • adverse changes in the markets for our products;
  • the emergence of new technologies and changes in consumer trends including increased preferences for digital media;
  • consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
  • adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
  • the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructuring or strategic initiatives (including our announced dissolving wood pulp conversion projects), and achieving expected savings and synergies; and
  • currency fluctuations.

We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.

For further information
Andre F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0)11 407 8044
Mobile +27 (0)83 235 2973 
[email protected]

Graeme Wild
Group Head Investor Relations and Sustainability
Sappi Limited
Tel +27 (0)11 407 8391
Mobile +27 (0)83 320 8624 
[email protected] 

Sappi Limited
PO Box 31560
South Africa

Tel +28 (0)11 407 8111

SOURCE Sappi Limited

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
@ThingsExpo has been named the Top 5 Most Influential M2M Brand by Onalytica in the ‘Machine to Machine: Top 100 Influencers and Brands.' Onalytica analyzed the online debate on M2M by looking at over 85,000 tweets to provide the most influential individuals and brands that drive the discussion. According to Onalytica the "analysis showed a very engaged community with a lot of interactive tweets. The M2M discussion seems to be more fragmented and driven by some of the major brands present in the...
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
The Quantified Economy represents the total global addressable market (TAM) for IoT that, according to a recent IDC report, will grow to an unprecedented $1.3 trillion by 2019. With this the third wave of the Internet-global proliferation of connected devices, appliances and sensors is poised to take off in 2016. In his session at @ThingsExpo, David McLauchlan, CEO and co-founder of Buddy Platform, discussed how the ability to access and analyze the massive volume of streaming data from millio...
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
SYS-CON Events announced today that Pulzze Systems will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems, Inc. provides infrastructure products for the Internet of Things to enable any connected device and system to carry out matched operations without programming. For more information, visit http://www.pulzzesystems.com.
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his general session at @DevOpsSummit at 19th Cloud Expo, Eric Robertson, General Manager at CollabNet, will discuss how customers are able to achieve a level of transparency that e...
SYS-CON Events announced today that Interface Masters Technologies, a leader in Network Visibility and Uptime Solutions, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Interface Masters Technologies is a leading vendor in the network monitoring and high speed networking markets. Based in the heart of Silicon Valley, Interface Masters' expertise lies in Gigabit, 10 Gigabit and 40 Gigabit Eth...
Successful digital transformation requires new organizational competencies and capabilities. Research tells us that the biggest impediment to successful transformation is human; consequently, the biggest enabler is a properly skilled and empowered workforce. In the digital age, new individual and collective competencies are required. In his session at 19th Cloud Expo, Bob Newhouse, CEO and founder of Agilitiv, will draw together recent research and lessons learned from emerging and established ...
Enterprise IT has been in the era of Hybrid Cloud for some time now. But it seems most conversations about Hybrid are focused on integrating AWS, Microsoft Azure, or Google ECM into existing on-premises systems. Where is all the Private Cloud? What do technology providers need to do to make their offerings more compelling? How should enterprise IT executives and buyers define their focus, needs, and roadmap, and communicate that clearly to the providers?
As software becomes more and more complex, we, as software developers, have been splitting up our code into smaller and smaller components. This is also true for the environment in which we run our code: going from bare metal, to VMs to the modern-day Cloud Native world of containers, schedulers and microservices. While we have figured out how to run containerized applications in the cloud using schedulers, we've yet to come up with a good solution to bridge the gap between getting your conta...
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
SYS-CON Events announced today that Streamlyzer will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Streamlyzer is a powerful analytics for video streaming service that enables video streaming providers to monitor and analyze QoE (Quality-of-Experience) from end-user devices in real time.
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
DevOps theory promotes a culture of continuous improvement built on collaboration, empowerment, systems thinking, and feedback loops. But how do you collaborate effectively across the traditional silos? How can you make decisions without system-wide visibility? How can you see the whole system when it is spread across teams and locations? How do you close feedback loops across teams and activities delivering complex multi-tier, cloud, container, serverless, and/or API-based services?