SA helps Sappi offset tough European market

By Robert Laing for Business Live

Sappi’s SA business contributed “excellent results” during its December quarter, the paper maker said on Wednesday morning in the results statement for the first quarter of its financial year.

The group’s net profit grew 29% to $81m in the three months to end-December from $63m in the matching period in 2017, boosted by healthy demand for its dissolving wood pulp from Chinese clothes makers.
It achieved this jump in profit on 6.6% revenue growth to $1.4bn from $1.3bn.
Europe contributed 51% of the group’s sales, North America 25%, and Southern Africa 24%.
Split by product categories, coated paper contributed 54% of Sappi’s sales, dissolving wood pulp 19%, speciality paper 15%, and uncoated paper and commodity paper 6% each.

Regarding its historical home market, Sappi said increased pulp and packaging sales volumes combined with higher rand selling prices across the board more than offset higher energy and wood fibre costs.

Its North American business benefited from higher dissolving wood pulp prices.

“Our dissolving wood pulp products are used worldwide mainly by converters to create viscose fibre for fashionable clothing and textiles, as well as other consumer products,” the results statement said.

Dissolving wood pulp sales prices remained stable throughout most of the quarter, and declined slightly in December
due to pressure from lower Chinese viscose staple fibre prices and a weak Chinese paper pulp market, Sappi said.
Its European business suffered from “sluggish demand for coated graphic and packaging papers along with ongoing high paper pulp input costs”.

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