Sappi up on profit hope

Johannesburg - Shares in Sappi were trading higher on the JSE on Monday, following comments from management that it was optimistic demand had improved for its major products.

The share was nearly 3% higher in early morning trade before retracing some of its gains. Sappi was last trading at R29.03 per share, a 1.8% gain.

"Although global economic conditions remain unpredictable and growth expectations vary considerably among commentators, we expect demand to continue to grow for our major products in most markets compared to our financial 2009," said CEO Ralph Boëttger.

He was commenting in notes to publication of the company's full-year results, in which the firm reported a 91% decline in operating profit - excluding special items - to $33m.

Boëttger said the company had taken "decisive action" in all of its businesses, which had resulted in an operating profit in the final quarter of the financial year for its North American and European businesses.

There had "been progress" in the southern Africa businesses which were also clawing their way towards profitability, said Boëttger.

The R15bn paper business reported a full-year share earnings loss of $0.37, compared to share earnings of $0.28 the previous year, news agency I-Net Bridge reported earlier on Monday morning.

Full-year sales dropped 8% to $5.37bn in the year to end-September 2009 from $5.86bn a year ago.

A full year operating loss of $73m was reported against last year's operating profit of $314m.

On a quarter-by-quarter basis, Sappi reported the widening of its per share loss to $0.20 for the three months to end-September 2009, from $0.12c in the June quarter and $0.09 in the same quarter last year.

A fourth-quarter operating loss of $129m was reported against the $7m loss reported in the third quarter, and $25m in the September quarter 2008. Net cash generated during the quarter was $225m.

- Fin24.com