Sappi Reports Quarterly Profit as Cost Cuts Offset Weak Prices

Editorial Team
By Editorial Team
Sappi Reports Quarterly Profit as Cost Cuts Offset Weak Prices

Sappi Ltd., the world’s biggest producer of dissolving wood pulp, reported a third quarter profit as cost cutting helped offset weaker prices in Europe and North America.

Net income advanced to $17 million in the three months through June, compared with a loss of $47 million a year ago, the Johannesburg-based company said in a statement today. Sales rose to $1.48 billion from $1.42 billion.

Sappi is increasing its focus on dissolving pulp, used to make luxury clothing, sportswear and pharmaceuticals, as the product carries a higher profit margin than paper. The company is also aiming to reduce debt by about a third to $1.6 billion within two years as it cuts costs, according to Chief Executive Officer Steve Binnie. Net debt was $2.29 billion at the end of June, down from $2.33 billion a year ago.

The return to profit was “particularly encouraging” as the third quarter is the company’s weakest, Binnie told reporters on a conference call. “Demand is typically lower in Europe and North Americadue to the summer holidays” and planned maintenance. Profit will increase in the “seasonally stronger” fourth quarter, the company said.

Sappi shares declined 2.2 percent to 42.05 rand by 10:10 a.m. in Johannesburg. The stock has advanced about 28 percent in 2014, on track for its biggest yearly gain since 2006, according to data compiled by Bloomberg.


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The Editorial Team at EME Outlook Magazine is a team of professional in-house editors led by Phoebe Harper, Editorial Director at Outlook Publishing.