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Johannesburg - South African paper maker Sappi [JSE:SAP] posted
a slight rise in first-quarter earnings on Wednesday, lifted by lower input
prices and cost cuts, and said it expects earnings to rise in the current three
months.
Sappi, the world’s largest maker of fine paper used in
glossy magazines such as Vogue, said headline earnings per share totalled 8 US
cents for the three months to end-December, compared with 7 US cents a year
earlier.
As the paper industry struggles to recover from a slump
caused by anaemic demand and overcapacity, Sappi has closed mills and is
targeting higher-margin businesses such as chemical cellulose.
Headline earnings are the main profit gauge in South Africa
and exclude certain one-off and non trading items.
Sales for the quarter fell to $1.59bn from $1.87bn the
previous year.
The company said operating profit, excluding special items,
fell to $100m from $137m a year earlier.
Should market conditions remain stable, Sappi said it
expects underlying operating profit for the second quarter to improve from the
first quarter.
Sappi expects the performance of its European and North
American businesses to improve in the course of the year.
"There are signs that pulp prices may have reached a turning
point and we could see an increasing trend over the next few months," the
company said in a statement.
It also said demand for its chemical cellulose, made from
wood and used in clothing, plastics, food and pharmaceutical products, remained
relatively strong.
Sappi shares have gained nearly 12% so far this year, compared with a 6.2% gain in Johannesburg's All Share [JSE:J203] Index.
