R/€ = 15.44Change: -0.12
R/$ = 13.56Change: -0.10
Au 1168.87 $/ozChange: 3.52
Pt 990.00 $/ozChange: 0.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
May 10, 2012

Sappi’s SA paper division still underperforming

Africa|Environment|Packaging|Sappi|Sustainable|Africa|Europe|North America|United States|USD|Cloquet Mill|Enstra Mill|KwaZulu-Natal Saiccor Plant|Ngodwana Mill|Tugela Mill|Chemical Cellulose|Chemical Cellulose Division|Maintenance|Packaging|Paper And Packaging|Ralph Bo|Operations|Minnesota
© Reuse this

Paper and packaging group Sappi said on Thursday that, while its chemical cellulose business continued to perform strongly during the second quarter of 2012, its paper division underperformed on the back of a competitive environment in terms of price, costs and volumes.

However, Sappi CEO Ralph Boëttger said the current restructuring of the paper and packaging operations were on track, the benefits of which would show during the third quarter of 2012.

The restructuring, which aimed to improve profitability, streamline sales and marketing and deal with the tough market conditions that resulted in poor performance over the past three years, included the closure of the pulp mill at Enstra mill, the kraft pulp mill at Tugela mill and a 10 000 t kraft paper machine at Tugela mill.

It would also result in the loss of about 800 jobs, some of which would be through voluntary retrenchments or retirements.

However, Boëttger was optimistic about the improving chemical cellulose division, which he hoped could potentially create more jobs.

The cellulose division, which accounted for most of the operating profit in Southern Africa, generated R385-million in earnings before interest, taxes, depreciation and amortisation – a margin of about 30%.

Sappi currently supplied between 15% and 20% of the market demand from its KwaZulu-Natal Saiccor plant. It reported that the $240-million expansion of its Ngodwana mill, in Mpumalanga, and the $170-million conversion of the Cloquet mill, in Minnesota, US, were on track to start during the third quarter of 2013. The two mills would increase the group’s cellulose capacity to over 1.3-million tons a year.

Meanwhile, Sappi reported that the group operating profit for the second quarter increased quarter-on-quarter to $125-million, from $100-million in the first quarter.

The company’s Southern African operations held a steady operating profit of $53-million, while Europe generated $49-million and North America reached $24-million, compared with the first-quarter performance of $29-million and $10-million respectively.

“The improving trend in operating performance continued in the quarter, with the European and North American businesses in particular showing good improvement,” he said.

This followed a “relentless” focus on cost reduction, as market conditions for coated paper have been weaker than the in corresponding quarter of the prior year, enabling margins to be maintained or widened, particularly in Europe.

The group achieved a profit of $58-million, up year-on-year from a loss of $74-million in the second quarter of 2011. Earnings a share increased to 11c for the March quarter, compared with 7c earned during the first quarter, and the loss of 14c recorded during the corresponding quarter the year before.

“We are confident that the actions we have taken and that we continue to take will lead to a sustainable and continuous improvement in performance going forward,” said Boëttger.

However, he warned that the third quarter was “historically and seasonally the weakest” quarter, and would be further impacted by planned yearly maintenance closures at its mills.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
Other Agriculture News
Bruno Witvoet, Dr Rob Davies, Judith Macgregor, Himesh Singh and Sandeep Desai
The launch of Unilever’s Lords View ice-cream factory, in Midrand, complemented South Africa’s goal of moving up the value chain and was a vote of confidence in the country’s economy on a continent that was going to be industrialised, Trade and Industry Minister Dr...
JSE-listed SABMiller's share price rose 11% on the JSE on Tuesday morning, after it and Anheuser-Busch (AB) InBev announced they had reached an in-principle agreement that would see AB InBev acquiring SABMiller's shares for £44 a share in cash, with a partial share...
Anheuser-Busch InBev take-over target SABMiller has increased its annual run rate cost savings from its initial goal of $500-million by March 31, 2018, by a further $550-million by March 31, 2020, across an addressable cost base of about $10-billion. The JSE-listed...
Article contains comments
Latest News
Rural Development and Land Reform Minister Gugile Nkwinti
Agri SA is calling for urgent clarification of the correct wording and interpretation of the governing party’s decision, whereby the 50/50 proposal, which requires farmers to hand over half their land to their workers, has been accepted as African National Congress...
South Africa should not be allowed to create new coal-fired power stations if it is to tackle its carbon emissions and meet the global goal of keeping temperature increases below 2 °C, says South African environmental and antinuclear organisation Earthlife Africa...
Integrated information and communications technology (ICT) systems provider Datacentrix has lifted earnings attributable to shareholders for the six months ended August 31, by 15.4% to R54.5-million and headline earnings per share (HEPS) by 14% to 27.7c, benefitting...
Recent Research Reports
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
This Week's Magazine
Engen Driver Wellness, the mobile health awareness initiative, continues to make a tangible difference to the lives of the country’s bulk truck operators with increased driver participation in voluntary screenings and improved health scores. Now in its fifth year,...
BUSINESS LEADERS PANEL Adam Craker, Ivor Chipkin, Alan Hosking and Allon Raiz at the 6th IQ Business Active Growth conference
At the sixth IQ Business conference held in Sandton last month, a panel of business leaders and academics advocated that business reclaims the initiative to spur growth in South Africa amid fragmented and haphazard political direction. Management consulting firm IQ...
The building industry is an essential component of the South African economy as it contributes about 15% to the gross fixed investment that drives the economy. However, with the country’s economy going through a tough time currently, this, in turn, reflects on the...
The recipients of the 2015 South African National Energy Association (Sanea)/South African National Energy Development Institute Energy (Sanedi) Awards were announced at a ceremony and banquet in Sandton last month. Sanea chairperson Brian Statham named Exxaro CEO...
ASHER BOHBOT EOH’s corporate goals were originally aspirations, but the company is relevant and is making a difference in the territories it operates in
As South African information technology (IT) firm EOH posted another full year of strong growth, CEO Asher Bohbot, known for his frank words, people-centric management style and stoic humanism, attributed the company’s continued South African and African growth to...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96