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Johannesburg - Sappi [JSE:SAP] shares extended gains, rising more than 5% on Friday after the paper maker said it plans to slash jobs and restructure its operations to rein in costs and focus on higher-margin businesses.
Shares of Sappi were up 5.2% at R24.25 in morning trade, making the company the top percentage gainer on Johannesburg’s broad All Share [JSE:J203] index.
Shares of Sappi were up 5.2% at R24.25 in morning trade, making the company the top percentage gainer on Johannesburg’s broad All Share [JSE:J203] index.
Sappi is the world’s largest maker of fine paper used in glossy magazines such
as Vogue and has operations in Europe, North America and southern Africa.
The company said market conditions remained uncertain with demand
in most of its markets showing less resilience than anticipated.
It wants to focus more on higher margin businesses such as chemical
cellulose, a product made from wood and used in plastics and consumer goods.
“We aim to generate at least 60% of operating profit from
these higher margin growth businesses within three to five years,” it said.
Sappi, which has already announced the closure of mills in
Switzerland and South Africa, said it expected significant additional job cuts
in South Africa in the first half of 2012. It said it expects to save as much as R350m a year at its South African business.
The paper industry had struggled to emerge from a decade-long slump
caused by soft demand and overcapacity exacerbated by the 2009
recession.
