Sappi delivers solid profit during third quarter while concluding key expansion projects

Sappi has published a financial summary for the quarter to end June 2018. Profit for the period was US$51 million (Q3 2017 US$58 million). Net debt amounted to US$1,603 million, down US$29 million on the prior quarter.

Sappi Chief Executive Officer Steve Binnie, commenting on the group’s performance, said:

“Our third quarter operating performance was in line with previous guidance with earnings (EBITDA ex special items) flat at US$155 million compared to a year ago.  The third quarter is seasonally and historically our weakest quarter due to the slow-down in business activity during the Northern Hemisphere summer holiday period and Sappi’s choice to use this quarter to undertake major annual maintenance shuts. A strong performance by our European operations was offset by a number of once-off operational and production issues in our South African and North American businesses.

“Capital expenditure increased due to the now completed paper machine conversion at Somerset Mill and the debottlenecking of dissolving wood pulp (DWP) production at our Ngodwana and Saiccor mills.   I am pleased that we have completed the conversion projects at Somerset and Maastricht mills and that we can look forward to significantly improved packaging sales volumes in the coming financial year.

“Based on current market conditions, including the current Rand/Dollar exchange rate, we expect the group’s fourth quarter operating performance to be similar to that of last year, despite the lost production volumes in the third quarter impacting fourth quarter sales volumes due to the resultant low inventory levels. We expect to reduce net debt further in the coming quarter through positive cash generation.”

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