Sappi results for 2nd quarter ended March 2013 reflect mixed markets
QUOTES Symbol Price Change
SPP 2.69 0.04
JOHANNESBURG, May 9, 2013 Summary for the quarter
European business impacted by lower prices and higher pulp costs
Specialised Cellulose projects on track, major shuts completed
Profit for the period US$7 million (Q2 2012 US$58 million)
EPS 1 US cent (Q2 2012 11 US cents)
Operating profit excluding special items US$40 million (Q2 2012 US$125 million)
Net finance costs US$40 million (Q2 2012 US$51 million)
Net debt US$2,152 million (Q2 2012 US$2,133 million)
Commenting on the result, Sappi (NYSE: SPP, JSE: SAP) Chief Executive Officer Ralph Boettger said:
"The Specialised Cellulose and North American businesses continue to perform well and the investments in the conversions at the Ngodwana and Cloquet Mills have progressed according to plan. Dissolving wood pulp production is scheduled to start at these two mills during the 3rd quarter. As indicated in the previous quarter, we expected operating profit for the second quarter to be lower than that of the first quarter. The actual performance was weaker than expected however, due to weaker European market conditions and an inability to implement any meaningful coated graphic paper price increases in Europe during the past quarter. This led to a weak overall group performance.
"Looking forward, market conditions for our paper businesses, particularly in Europe are expected to continue to be weaker than previously envisaged. The price increases in Europe, to date, have not been sufficient to restore margins given rising input costs. Despite the interventions and major cost reductions that have taken place, we expect the European business to only achieve a breakeven operating profit excluding special items for the full year.