Sappi Group reported a first-quarter sales increase of 8,7% compared to 2007. Sales amounted to US$1,377 billion (R14,667 billion), while operating profit, excluding special items, peaked at 92 million – a 46% increase over the year before.
The increase in sales and good profits comes despite runaway fires laying waste to thousands of hectares of timber last year. R obert Hope, Sappi group head of strategic development said, “The fires won’t hurt us in the short term, but we will feel it in time”. Sappi chief executive Ralph Boëttger said the favourable performance was attributed to good demand and increasing prices for forest products, as well as improved margins for coated fine paper in the US due to locally reduced costs. “We started a programme in 2005 to streamline the business and improve our efficiencies by removing unnecessary costs,” said Hope. E urope, which accounts for 41% of Sappi’s export market, is plagued with cost pressures and difficult market conditions, partly due to market saturation and the strong euro dampening European demand. he pulp industry, however, continues to experience high demand and increased prices. “Sappi is a big exporter, so the current weakening of the rand is highly favourable for our export division,” added Hope. xpansion plans at the Saiccor plant would continue to increase the group’s net debt, before levelling in the third quarter. Outlook for forest products is positive as is operating profit, excluding special items. – David Steynberg
