Sappi eyes pick-up in demand

Johannesburg - Listed paper manufacturer Sappi on Thursday reported a loss for its first quarter.

Releasing results for its first quarter ended December 27, 2009, it reported a basic loss per share of US10c, including a loss of US11c in respect of special items.

Sappi, however, said there had been a general improvement in demand for fine paper and pulp.

Operating profit - excluding special items - increased to $81m for the period under review.

Increased pulp prices were favourable for its southern African and North American businesses, but unfavourable for European business.

Sappi chief executive Ralph Boëttger said the operating results excluding special items for the group had improved substantially compared both to the equivalent quarter last year and to the prior quarter.

"Demand continued to improve for our major products with a steady improvement in demand for coated woodfree paper," he said.

Paper pulp prices and prices for chemical cellulose had continued to rise, driven by improved demand in general and good demand from China.

Demand for coated mechanical paper had, however, not recovered and demand conditions in the South African domestic market remained difficult.

Boëttger said conditions in Sappi's major markets were expected to improve gradually in 2010, resulting in rising demand for its products.

"Although we expect demand and our capacity utilisation rates to improve compared to financial 2009, we do not expect demand to return to 2008 levels."

Sappi would therefore continue to manage its output to meet customer demand, he said.

- Sapa