Johannesburg - South African paper maker Sappi [JSE:SAP] posted
a return to second-quarter profit on Thursday, helped by cost savings and the
solid performance of its chemical cellulose business, sending its share price
sharply higher.
Sappi shares were up 4% to R26.77 as of 07:31 GMT, compared
with a 0.52% rise in the broader All Share [JSE:J203] index.
Sappi, the world’s largest maker of fine paper used in
glossy magazines, reported headline earnings per share of 10 US cents for second
quarter ended March, against a loss of 2 US cents a year earlier.
“The performance of the European business was particularly
pleasing, following the relentless focus on cost reduction in that region,”
chief executive Ralph Boettger said in a statement.
Boettger said the Southern African chemical cellulose
business continued with a strong performance, driven by solid sales volume.
Sappi said it expects the third financial quarter, which is
seasonally weaker, to be further impacted by planned annual maintenance shuts
at a number of its major pulp mills.
“For the full year we expect operating profit excluding
special items to be in line with the previous financial year,” it said.
Sappi also said it would consider refinancing its higher
cost debt, including the bonds which are due in 2014, when market conditions
are favourable and it made economic sense to do so.