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Johannesburg - Sappi [JSE:SAP] has been able to turn the losses of 2013 around in its current financial year by taking significant costs out across the business in all its respective regions, CEO Steve Binnie told Fin24 in a post-results video interview.
"Perhaps the most important target we've set ourselves in recent times relates to reducing our net debt, but more importantly is that we were able to grow Ebitda (earnings before interest, taxes, depreciation, and amortisation) by 25% during the year," he said.
Binnie said Sappi has managed to bring down its net debt by over $300m and below the important milestone of $2bn - it's now $1.946bn.
"Before we've set ourselves further targets and we believe we can reduce that debt by approximately $150m per annum.
"Other significant milestones during the year include the full-year ramp up of our dissolving wood pulp conversions that we made back in 2013. Those ramped up nicely, quality was good and production efficiency was strong.
"Also, we sold some non-core assets - we disposed of a mill in Europe which was not generating cash for us and we also sold some excess forests that we have here in Swaziland," he said.
Going forward, Binnie said he believed the prospects are in line with what Sappi achieved in 2014.
"It's important to take into account that we have two large projects underway at the moment. One is Gratkorn Mill in Austria and the other at our Kirkniemi Mill in Finland. Both of these are related to improving production efficiency and ultimately reducing our costs.
"As a result of these projects it does mean we'll have to take some extended production downtime during the first quarter, never-the-less we remain confident that our profits for the year will be broadly in line with 2014," Binnie said.
Sappi's share price reacted positively to the results, adding almost 3% to R47.25 on Tuesday, outpacing the Industrial index which added 0.1% to 61 208.78 points.
