Johannesburg - Sappi [JSE:SAP] posted a fall in
first-quarter profit on Wednesday, hit by lower paper and pulp selling prices,
and said it expected market conditions to remain tough.
Sappi, the world's largest maker of fine paper used in
glossy magazines, reported diluted headline earnings per share of 3 US cents
for the three months to the end of December from 8 US cents a year earlier.
The company said operating profit, excluding special items,
fell to $73m from $100m last year.
Sappi said market conditions for its paper business were
expected to remain tough, particularly in Europe, and that its second quarter
operating profit excluding special items was likely to be below the first
The global paper industry is struggling to recover from a
slump caused by sluggish demand and over capacity and Sappi has turned its
focus into higher margin businesses such as specialised cellulose to boost its
The company, which is also the world's top producer of
chemical cellulose, is currently investing $500m in boosting its chemical
cellulose capacity to more than 1.3 million tonnes a year.
Sappi produces chemical cellulose from its own woods for
conversion into raw materials for clothing, plastics, food and pharmaceutical
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