Sappi returns to profit on better sales and volumes

JOHANNESBURG (Reuters) – South Africa’s Sappi Ltd said on Monday it swung back to profit in its second quarter on higher sales volumes and prices and increased productivity in its operations, pushing its shares up.

Sappi (SAP) 1 year view
Sappi (SAP) 1 year view

Sappi, the world’s largest maker of fine paper used in glossy magazines, reported that diluted headline earnings per share totalled 6 U.S cents in the quarter to end-March, after being stagnant in the same period last year.

Headline EPS, which excludes certain one-off and non-trading items, is the main profit gauge in South Africa.

Sappi’s shares jumped 4.08 percent to 36.95 rand by 0810 GMT.

Profit in the period, excluding once-off items, rocketed to US$32 million rand from US$2 million, mainly due to gains in sales on specialised cellulose which offset the declining wood pulp market.

The company has been struggling to find its feet following a global decline in demand for its paper products as the market moves in favour of smartphones, tablet computers and online text.

In response, Sappi has turned its focus to higher margin businesses such as specialised cellulose.

Sappi produces chemical cellulose from its own woods for conversion into raw materials for clothing, plastics, food and pharmaceutical products.

 

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