Sappi earnings swing into profit

Johannesburg - South African paper maker Sappi [JSE:SAP] on Monday said fourth quarter earnings for the year ended September 2014 swung into profit, after a loss during the same period last year, due to cost reductions and higher selling prices for its products in some markets.

Sappi, the world's largest maker of the fine paper used in glossy magazines, said diluted earnings per share were at 13 cents from a loss of 29c a year ago.

Strategy has delivered strong earnings growth, according to Sappi, with earnings before interest, taxes, depreciation and amortisation (Ebitda), excluding special items, of $658m - up 25% year-on-year, according to Sappi.

In the fourth quarter earnings before interest, taxes, depreciation and amortisation (Ebitda), excluding special items, were $200m - up 29% year-on-year and there was cash generation of $288m.

"Sappi works closely with customers, both direct and indirect, in over 100 countries to provide them with relevant and sustainable paper, paper-pulp and dissolving wood pulp products and related services and innovations," the company said in a Sens release.

"Our market-leading range of paper products includes coated fine papers used by printers, publishers and corporate end-users in the production of books, brochures, magazines, catalogues, direct mail and many other print applications, casting release papers used by suppliers to the fashion, textiles, automobile and household industries, and in our Southern African region, newsprint, uncoated graphic and business papers, premium-quality packaging papers, paper-grade pulp and dissolving wood pulp."

Its dissolving wood pulp products are used worldwide by converters to create viscose fibre, acetate tow, pharmaceutical products as well as a wide range of consumer products.

The pulp needed for its products is either produced within Sappi or bought from accredited suppliers.

"Across the group, Sappi is close to 'pulp neutral', meaning that we sell almost as much pulp as we buy," the company said.

"We are the market leader in specialised cellulose used widely in the viscose staple fibre (VSF) segment. We are ideally positioned to take advantage of increased demand."