Welcome!

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

Restated*

Dec   2012

Restated*

Sept  2013

Key figures: (US$ million)

Sales

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)

 

1,499

70

(10)

60

147

18

3

2,348

 

 

4.7

4.0

7.0

9.8

6.4

67.7

215

 

1,475

67

3

70

159

12

2

2,095

 

 

4.5

4.8

7.9

10.8

3.2

58.1

290

 

1,530

(110)

177

67

155

(149)

(29)

2,214

 

 

(7.2)

4.4

7.7

10.1

(48.0)

65.9

219





* 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.

Outlook
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 
Andre.oberholzer@sappi.com

Graeme Wild
Group Head Investor Relations and Sustainability
Sappi Limited
Tel +27 (0)11 407 8391
Mobile +27 (0)83 320 8624 
Graeme.wild@sappi.com 

Sappi Limited
PO Box 31560
Braamfontein
2017
South Africa

Tel +28 (0)11 407 8111
www.sappi.com

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
"When you think about the data center today, there's constant evolution, The evolution of the data center and the needs of the consumer of technology change, and they change constantly," stated Matt Kalmenson, VP of Sales, Service and Cloud Providers at Veeam Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Zerto exhibited at SYS-CON's 18th International Cloud Expo®, which took place at the Javits Center in New York City, NY, in June 2016. Zerto is committed to keeping enterprise and cloud IT running 24/7 by providing innovative, simple, reliable and scalable business continuity software solutions. Through the Zerto Cloud Continuity Platform™, organizations can seamlessly move and protect virtualized workloads between public, private and hybrid clouds. The company’s flagship product, Zerto Virtual...
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
We all know that data growth is exploding and storage budgets are shrinking. Instead of showing you charts on about how much data there is, in his General Session at 17th Cloud Expo, Scott Cleland, Senior Director of Product Marketing at HGST, showed how to capture all of your data in one place. After you have your data under control, you can then analyze it in one place, saving time and resources.
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
910Telecom exhibited at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and exchanges.
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
The IoT industry is now at a crossroads, between the fast-paced innovation of technologies and the pending mass adoption by global enterprises. The complexity of combining rapidly evolving technologies and the need to establish practices for market acceleration pose a strong challenge to global enterprises as well as IoT vendors. In his session at @ThingsExpo, Clark Smith, senior product manager for Numerex, discussed how Numerex, as an experienced, established IoT provider, has embraced a new m...
Niagara Networks exhibited at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
A look across the tech landscape at the disruptive technologies that are increasing in prominence and speculate as to which will be most impactful for communications – namely, AI and Cloud Computing. In his session at 20th Cloud Expo, Curtis Peterson, VP of Operations at RingCentral, will highlight the current challenges of these transformative technologies and share strategies for preparing your organization for these changes. This “view from the top” will outline the latest trends and developm...
Due of the rise of Hadoop, many enterprises are now deploying their first small clusters of 10 to 20 servers. At this small scale, the complexity of operating the cluster looks and feels like general data center servers. It is not until the clusters scale, as they inevitably do, when the pain caused by the exponential complexity becomes apparent. We've seen this problem occur time and time again. In his session at Big Data Expo, Greg Bruno, Vice President of Engineering and co-founder of StackIQ...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...