Sappi profits fall on maintenance shutdowns

Johannesburg - Sappi [JSE:SAP], the world’s largest producer of dissolving wood pulp, said third-quarter profit declined 76% after planned maintenance shutdowns in all three of its operating regions.

Profit was $4m in the three months through June, compared with $17m a year earlier, the Johannesburg-based company said in a statement on Friday. Revenue fell 14% to $1.27bn. Excluding special items, earnings per share were unchanged at 2 cents.

A mill upgrade in Austria and planned annual maintenance shutdowns in North America, Europe and South Africa reduced profit by about $27m compared with a year earlier, Sappi said. A stronger US dollar also hurt profit margins in the Europe and North American business.

Sappi is seeking to lower costs and cut debt as it focuses on pulp and packaging products for growth amid softening demand for graphic paper. Net debt stood at $1.92bn at the end of June, down from $2.29bn the previous year.

Sappi’s shares declined 0.6% to R43.88 as of 09:16 in Johannesburg. The stock has gained 4% this year, compared with a 5.3% increase in the FTSE/JSE Africa All-Share Index.