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For such a small group of listed companies – York by itself in the forestry sector, and Sappi, Mondi Ltd and Mondi plc in the paper sector – a surprisingly large amount is written about them.
Perhaps it’s because they’re in one of the sectors drastically affected by the changing world of technology: we read almost daily about the growing struggle for survival by conventional newspaper and magazines, while the (fairly) paperless environment of the electronic media grows in stature each year.
Not one of those four groups was unaffected over the past five years by the huge moves in the media industry worldwide.
Even when Sappi decided in 2008 to buy four paper mills in Finland for €750m it was still unclear to what extent the demand for paper worldwide would fall.
Failing fast
Now one of them – the Kangas mill – is already permanently closed and much money lost.
That and other misjudgements resulted in Sappi until recently having to borrow expensive money (€650m, at an average of more than 13%) on international capital markets to ease its short-term debt burden and try to improve its chances of survival.
However, there’s still concern about redeeming those corporate bonds, because its return on capital over recent years has bogged down at around 6%/year.
Investors still hanging on are putting their faith in the fact a slimmer Sappi – by dumping loss-making mills (combined with a lower supply of paper and higher prices) and a smaller, more productive staff – could perhaps regain its former glory.
The much younger Mondi didn’t escape the consequences of a sated paper market but wasn’t so much in the spotlight for controversial decisions.
That makes investors feel more comfortable than is the case of Sappi and it can be seen, for example, in the share prices: though both share prices were better in February than in February 2009, Mondi’s fared much better in terms of percentage.
Great opportunity?
As for York, its share price has suffered badly since February 2009 and you can’t help wondering whether it will regain investors’ confidence.
With a price that’s mainly fluctuated between 300c and 400c/share over the past months there are great possibilities here.
In February 2009 it was four times as high.
Just think of the opportunities, especially if the new management comes fully into operation after its restructuring.
- Finweek
Perhaps it’s because they’re in one of the sectors drastically affected by the changing world of technology: we read almost daily about the growing struggle for survival by conventional newspaper and magazines, while the (fairly) paperless environment of the electronic media grows in stature each year.
Not one of those four groups was unaffected over the past five years by the huge moves in the media industry worldwide.
Even when Sappi decided in 2008 to buy four paper mills in Finland for €750m it was still unclear to what extent the demand for paper worldwide would fall.
Failing fast
Now one of them – the Kangas mill – is already permanently closed and much money lost.
That and other misjudgements resulted in Sappi until recently having to borrow expensive money (€650m, at an average of more than 13%) on international capital markets to ease its short-term debt burden and try to improve its chances of survival.
However, there’s still concern about redeeming those corporate bonds, because its return on capital over recent years has bogged down at around 6%/year.
Investors still hanging on are putting their faith in the fact a slimmer Sappi – by dumping loss-making mills (combined with a lower supply of paper and higher prices) and a smaller, more productive staff – could perhaps regain its former glory.
The much younger Mondi didn’t escape the consequences of a sated paper market but wasn’t so much in the spotlight for controversial decisions.
That makes investors feel more comfortable than is the case of Sappi and it can be seen, for example, in the share prices: though both share prices were better in February than in February 2009, Mondi’s fared much better in terms of percentage.
Great opportunity?
As for York, its share price has suffered badly since February 2009 and you can’t help wondering whether it will regain investors’ confidence.
With a price that’s mainly fluctuated between 300c and 400c/share over the past months there are great possibilities here.
In February 2009 it was four times as high.
Just think of the opportunities, especially if the new management comes fully into operation after its restructuring.
- Finweek
