Click here to close now.

SYS-CON MEDIA Authors: Leon Fayer, Ruxit Blog, Carmen Gonzalez, Kevin Jackson, Peter Silva

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 
[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
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
SYS-CON Events announced today that Creative Business Solutions will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Creative Business Solutions is the top stocking authorized HP Renew Distributor in the U.S. Based out of Long Island, NY, Creative Business Solutions offers a one-stop shop for a diverse range of products including Proliant, Blade and Industry Standard Servers, Networking, Server Options and...
SYS-CON Events announced today that FierceDevOps will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. FierceDevOps keeps software developers and IT operations personnel updated on the latest news and trends around the rapidly evolving role of the traditional IT worker.
GENBAND has announced that SageNet is leveraging the Nuvia platform to deliver Unified Communications as a Service (UCaaS) to its large base of retail and enterprise customers. Nuvia’s cloud-based solution provides SageNet’s customers with a full suite of business communications and collaboration tools. Two large national SageNet retail customers have recently signed up to deploy the Nuvia platform and the company will continue to sell the service to new and existing customers. Nuvia’s capabili...
WHOA.com has announced the newest addition to its data center footprint with the expansion into Equinix's newest state-of-the-art facility: DC-11 Washington, DC IBX+. Located in Ashburn, VA, this data center expands Whoa.com's presence to meet rapidly expanding customer demand for secure cloud solutions. Equinix, Inc. operates International Business Exchange™ (IBX®) data centers in 32 markets across 15 countries in the Americas, EMEA, and Asia-Pacific. Equinix is committed to operating faciliti...
SYS-CON Events announced today that the DevOps Institute has been named “Association Sponsor” of SYS-CON's DevOps Summit, which will take place on June 9–11, 2015, at the Javits Center in New York City, NY. The DevOps Institute provides enterprise level training and certification. Working with thought leaders from the DevOps community, the IT Service Management field and the IT training market, the DevOps Institute is setting the standard in quality for DevOps education and training.
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
SYS-CON Events announced today that Cisco, the worldwide leader in IT that transforms how people connect, communicate and collaborate, has been named “Gold Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Cisco makes amazing things happen by connecting the unconnected. Cisco has shaped the future of the Internet by becoming the worldwide leader in transforming how people connect, communicate and collaborat...
WSM International is launching a DevOps services division that offers assessment, consulting and implementation to large enterprises and organizations with complex infrastructures. This is the first independent services company to create a dedicated practice to help organizations looking to transition to the DevOps model. The concept of DevOps is to blend information technology (IT) software development with operations to optimize the computing infrastructure according to the specific needs of ...
SYS-CON Events announced today that robomq.io will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. robomq.io is an interoperable and composable platform that connects any device to any application. It helps systems integrators and the solution providers build new and innovative products and service for industries requiring monitoring or intelligence from devices and sensors.
The WebRTC Summit 2014 New York, to be held June 9-11, 2015, at the Javits Center in New York, NY, announces that its Call for Papers is open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 16th International Cloud Expo, @ThingsExpo, Big Data Expo, and DevOps Summit.
Temasys has announced senior management additions to its team. Joining are David Holloway as Vice President of Commercial and Nadine Yap as Vice President of Product. Over the past 12 months Temasys has doubled in size as it adds new customers and expands the development of its Skylink platform. Skylink leads the charge to move WebRTC, traditionally seen as a desktop, browser based technology, to become a ubiquitous web communications technology on web and mobile, as well as Internet of Things...
Hosted PaaS providers have given independent developers and startups huge advantages in efficiency and reduced time-to-market over their more process-bound counterparts in enterprises. Software frameworks are now available that allow enterprise IT departments to provide these same advantages for developers in their own organization. In his workshop session at DevOps Summit, Troy Topnik, ActiveState’s Technical Product Manager, will show how on-prem or cloud-hosted Private PaaS can enable organ...
DevOps tasked with driving success in the cloud need a solution to efficiently leverage multiple clouds while avoiding cloud lock-in. Flexiant today announces the commercial availability of Flexiant Concerto. With Flexiant Concerto, DevOps have cloud freedom to automate the build, deployment and operations of applications consistently across multiple clouds. Concerto is available through four disruptive pricing models aimed to deliver multi-cloud at a price point everyone can afford.
Today, IT is not just a cost center. IT is an enabler and driver of business. With the emergence of the hybrid cloud paradigm, IT now has increasingly more capabilities to create new strategic opportunities for a business. Hybrid cloud allows an organization to utilize multi-tenant public clouds, dedicated private clouds, bare metal hosting, and the associated support and services for the right use cases through an on-demand, XaaS model. This model of IT creates tremendous opportunities for busi...
Docker is an excellent platform for organizations interested in running microservices. It offers portability and consistency between development and production environments, quick provisioning times, and a simple way to isolate services. In his session at DevOps Summit at 16th Cloud Expo, Shannon Williams, co-founder of Rancher Labs, will walk through these and other benefits of using Docker to run microservices, and provide an overview of RancherOS, a minimalist distribution of Linux designed...