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Cape Town - Sappi [JSE:SAP] said on Wednesday its profits for the quarter to December 31 stood at $18m compared with $12m in the previous comparable period.
The group said it returned to positive earnings in the quarter with an Ebitda excluding special items of $147m, an operating profit excluding special items of $60m and a profit for the period of $18m.
Earnings per share excluding special items were 2 US cents (Q1 2013 3 US cents).
It said its South African business had another good quarter, benefiting from additional sales volumes in the specialised cellulose business from the Ngodwana Mill, the weaker rand/dollar exchange rate and a gradual improvement in the paper business.
"The South African paper business returned to profitability, aided by the weaker rand/dollar exchange rate.
"However, the local graphic paper market remains weak, with continued cost pressure and a competitive import market.
"The domestic packaging market, though seasonally weaker in this quarter, continues to see good demand levels and improved pricing. Variable costs continue to increase, particularly for energy and chemicals and other dollar denominated costs.
"Fixed costs were well managed, and were 3% below those of the prior quarter despite additional maintenance costs due to a planned annual maintenance shut at Saiccor," Sappi said.
The European business returned to a small operating profit after three quarters of losses, with a reduction in fixed cost offsetting lower selling prices.
The North American business experienced a difficult quarter, with volume and price declines in the paper segment as well as increased variable costs leading to a small operating loss.
Commenting on the year ahead Sappi said the past year has reinforced the importance of its strategy to reposition the company for growth, higher margins, improved profitability, and with less reliance on graphic paper.
It expected to see further improvement in the performance of both the European and South African paper businesses, while putting plans in place to return the North American paper business to previous profitability levels.
"Paper markets are expected to remain challenging for the remainder of the year and we continue to focus on costs across all our regions, with each of them striving to ensure that they are amongst the lowest cost producers in their respective markets."
Capital expenditure for the full year is expected to be less than US$300m.
Full SENS report.
The group said it returned to positive earnings in the quarter with an Ebitda excluding special items of $147m, an operating profit excluding special items of $60m and a profit for the period of $18m.
Earnings per share excluding special items were 2 US cents (Q1 2013 3 US cents).
It said its South African business had another good quarter, benefiting from additional sales volumes in the specialised cellulose business from the Ngodwana Mill, the weaker rand/dollar exchange rate and a gradual improvement in the paper business.
"The South African paper business returned to profitability, aided by the weaker rand/dollar exchange rate.
"However, the local graphic paper market remains weak, with continued cost pressure and a competitive import market.
"The domestic packaging market, though seasonally weaker in this quarter, continues to see good demand levels and improved pricing. Variable costs continue to increase, particularly for energy and chemicals and other dollar denominated costs.
"Fixed costs were well managed, and were 3% below those of the prior quarter despite additional maintenance costs due to a planned annual maintenance shut at Saiccor," Sappi said.
The European business returned to a small operating profit after three quarters of losses, with a reduction in fixed cost offsetting lower selling prices.
The North American business experienced a difficult quarter, with volume and price declines in the paper segment as well as increased variable costs leading to a small operating loss.
Commenting on the year ahead Sappi said the past year has reinforced the importance of its strategy to reposition the company for growth, higher margins, improved profitability, and with less reliance on graphic paper.
It expected to see further improvement in the performance of both the European and South African paper businesses, while putting plans in place to return the North American paper business to previous profitability levels.
"Paper markets are expected to remain challenging for the remainder of the year and we continue to focus on costs across all our regions, with each of them striving to ensure that they are amongst the lowest cost producers in their respective markets."
Capital expenditure for the full year is expected to be less than US$300m.
Full SENS report.
