Drmicrocap
11 years ago
Sappi results for 2nd quarter and half-year ended March 2014 reflect significantly improved performance
PR Newswire By Sappi Limited
May 12, 2014 3:15 AM
>
JOHANNESBURG, May 12, 2014 /PRNewswire/ --
Financial summary for the quarter
Strong cash flow generation
Good performance from South African business
Profit for the period US$32 million (Q2 2013 US$2 million)
EPS 6 US cents (Q2 2013 0 US cents)
EBITDA excluding special items US$171 million (Q2 2013 US$126 million)
Net debt US$2,248 million (Q1 2014 US$2,380 million)
Commenting on the result, Sappi (SPPJY) Chief Executive Officer Ralph Boettger said:
"The past quarter saw an improvement in the operating performance of all three of our operating regions, despite tough market conditions overall. The improving trend in operating performance continued for the quarter, with EBITDA excluding special items of US$171 million, operating profit excluding special items of US$95 million and profit for the period of US$32 million. There were no major special items for the quarter.
"Continued emphasis on lowering cost and optimising sales in both the coated paper and dissolving wood pulp markets have enabled us to compete effectively. Looking forward, we will continue to take actions in North America, Europe and Southern Africa to improve our competitiveness and enable us to reduce debt.
"Our outlook for the year is one of significantly improved performance for the 2014 financial year when compared to 2013."
Quarter ended
Half-year ended
Restated*
Restated*
Restated*
Mar 2014
Mar 2013
Dec 2013
Mar 2014
Mar 2013
Key figures: (US$ million)
Sales
1,573
1,503
1,499
3,072
2,978
Operating profit excluding special items**
95
38
60
155
108
Special items – gains**
(4)
(38)
(10)
(14)
(35)
EBITDA excluding special items**
171
126
147
318
285
Profit for the period
32
2
18
50
14
Basic earnings per share (US cents)
6
-
3
10
3
Net debt **
2,248
2,189
2,380
2,248
2,189
Key ratios (%)
Operating profit excluding special items to sales
6.0
2.5
4.0
5.0
3.6
Operating profit excluding special items to capital employed (ROCE)**
11.0
4.2
7.0
9.1
6.0
EBITDA excluding special items to sales
10.9
8.4
9.8
10.4
9.6
Return on average equity (ROE)**
11.3
0.5
6.4
8.7
1.9
Net debt to total capitalisation**
66.2
60.3
68.0
66.2
60.3
Net asset value per share (US cents)
219
277
215
219
277
* Restated for the adoption of IAS 19 (Revised) Employee Benefits and IFRS 10 Consolidated Financial Statements. Refer to the published results for more details.
** Refer to the published results for details on special items, the definition of the terms and the reconciliation of EBITDA excluding special items to profit/loss for the period.
The table above has not been audited or reviewed.
The quarter under review
Against a backdrop of more challenging dissolving wood pulp markets, the Specialised Cellulose business had another good quarter with strong shipment volumes generating US$82 million in EBITDA excluding special items at an EBITDA margin of 33%. Due to the competitive nature of the market and weak viscose staple fibre pricing, we experienced increased pressure on our prices, leading to a lower average dollar price for our dissolving wood pulp than achieved in the prior quarter.
The graphic paper markets in Europe and North America continue to experience demand declines for most major grades, and sales prices remained under pressure in both markets. These market dynamics were anticipated and we responded by implementing a number of cost cutting initiatives across the group. This, combined with the seasonally stronger second quarter, delivered an improved operating performance in both businesses.
The Southern African paper business continued the trend of improving performance, with increased sales prices offsetting cost pressures.
As a result of the improved operational performance, lower capital expenditure post the completion of the three major conversion projects and stringent working capital management, net cash generated for the quarter was US$132 million compared to net cash utilisation of US$99 million in the equivalent quarter last year. Capital expenditure in the quarter declined to US$62 million compared to US$179 million a year ago, reflecting the completion of the expenditure on the dissolving wood pulp projects.
Net debt of US$2,248 million declined by US$132 million from the prior quarter, as a result of the cash generated from operations and the lower working capital.
Finance costs of US$48 million were in line with the restated equivalent quarter last year.
Earnings per share for the quarter was 6 US cents (including a gain of 1 US cent in respect of special items), compared to 0 US cents (including a gain of 2 US cents in respect of special items) in the restated equivalent quarter last year.
Outlook
Demand in the Specialised Cellulose business remains firm, though pricing pressure continues to be evident. The Rand/Dollar exchange rate will continue to play a major role in the operating performance of the South African Specialised Cellulose business as well as the Southern African paper business.
Capital expenditure for the full year is expected to be below US$300 million, with positive cash generation for the remainder of the year. We anticipate net debt levels to end the year close to US$2 billion.
The third quarter is seasonally weaker in both North America and Europe, and scheduled annual maintenance shuts during the quarter in all three regions will also impact the results in the third quarter, leading to a weaker operating performance than the past quarter, though we expect the result to be substantially better than the equivalent quarter in the prior year. Our outlook for the year is one of significantly improved performance for the 2014 financial year when compared to 2013.
The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investor Info; Investor Calendar; 2Q14 Financial Results
Forward-looking statements
Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters, and may be used to identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:
the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing);
the impact on our business of the global economic downturn;
unanticipated production disruptions (including as a result of planned or unexpected power outages);
changes in environmental, tax and other laws and regulations;
adverse changes in the markets for our products;
the emergence of new technologies and changes in consumer trends including increased preferences for digital media;
consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructuring or strategic initiatives (including our announced dissolving wood pulp conversion projects), and achieving expected savings and synergies; and
currency fluctuations.
We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
For further information
Andre F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0)11 407 8044
Mobile +27 (0)83 235 2973
Andre.oberholzer@sappi.com
Graeme Wild
Group Head Investor Relations and Sustainability
Sappi Limited
Tel +27 (0)11 407 8391
Mobile +27 (0)83 320 8624
Graeme.wild@sappi.com
Sappi Limited
PO Box 31560
Braamfontein
2017
South Africa
Tel +28 (0)11 407 8111
www.sappi.com
Drmicrocap
11 years ago
Sappi results for 1st quarter in line with expectations.
PR Newswire Sappi Limited
February 5, 2014 1:18 AM
JOHANNESBURG, Feb. 5, 2014 /PRNewswire/ --
Financial summary for the quarter
Profit for the period US$18 million (Q1 2013 US$12 million)
EPS excluding special items 2 US cents (Q1 2013 3 US cents)
EBITDA excluding special items US$147 million (Q1 2013 US$159 million)
Net debt US$2,348 million (Q1 2013 US$2,095 million)
Commenting on the result, Sappi (JSE:SAP) Chief Executive Officer Ralph Boettger said:
"The group returned to positive earnings in the quarter with an EBITDA excluding special items of US$147 million, an operating profit excluding special items of US$60 million and a profit for the period of US$18 million.
(Logo: http://photos.prnewswire.com/prnh/20110728/MM43821LOGO)
"We continue to generate good returns in the Specialised Cellulose business and the dissolving wood pulp market experienced strong demand in an increasingly competitive market. Conditions are generally difficult in the global graphic paper markets, in line with our expectations in Europe and more challenging than anticipated in North America.
"The past year has reinforced the importance of our strategy to reposition Sappi for growth, higher margins, improved profitability, and with less reliance on graphic paper. The two major dissolving wood pulp conversion projects are both now contributing to earnings and profitability, whilst the paper businesses, although dealing with difficult market conditions, continue to generate cash that will enable us to reduce debt.
"Capital expenditure for the full year is expected to be less than US$300 million and, along with the expected improvement in profitability when compared to the prior year, should allow the group to reduce debt levels to approximately US$2 billion by the end of the fiscal year.
"Our outlook for the year continues to be one of improved profitability for the 2014 financial year when compared to 2013."
Quarter ended
Dec 2013
Restated*
Dec 2012
Restated*
Sept 2013
Key figures: (US$ million)
Sales
Operating profit (loss)
Special items – (gains) losses **
Operating profit excluding special items**
EBITDA excluding special items **
Profit (loss) for the period
Basic earnings (loss) per share (US cents)
Net debt**
Key ratios: (%)
Operating profit (loss) to sales
Operating profit excluding special items to sales
Operating profit excluding special items to capital employed (ROCE)
EBITDA excluding special items to sales
Return on average equity (ROE)**
Net debt to total capitalisation**
Net asset value per share (US cents)
1,499
70
(10)
60
147
18
3
2,348
4.7
4.0
7.0
9.8
6.4
67.7
215
1,475
67
3
70
159
12
2
2,095
4.5
4.8
7.9
10.8
3.2
58.1
290
1,530
(110)
177
67
155
(149)
(29)
2,214
(7.2)
4.4
7.7
10.1
(48.0)
65.9
219
* During the year, the group adopted IAS 19 (Revised) Employee Benefits. Refer to the group results for the accounting policy change.
** Refer to the published results for details on special items, the definition of the terms and the reconciliation of EBITDA excluding special items to profit/loss for the period.
The table above has not been audited or reviewed.
The quarter under review
The group has benefited from the strategic decision to invest in and grow the Specialised Cellulose business, with 286kt of dissolving wood pulp sold during the quarter (an increase of 63% over the equivalent quarter last year), generating US$74 million in EBITDA excluding special items at an EBITDA margin of 30%. We continue to benefit from our low cost position at each of our dissolving wood pulp mills and the weaker Rand/Dollar exchange rate during the quarter.
The South African business had another good quarter, benefiting from additional sales volumes in the Specialised Cellulose business from the Ngodwana Mill, the weaker Rand/Dollar exchange rate and a gradual improvement in the paper business. The European business returned to a small operating profit after three quarters of losses, with a reduction in fixed cost offsetting lower selling prices. The North American business experienced a difficult quarter, with volume and price declines in the paper segment as well as increased variable costs leading to a small operating loss.
NBSK paper pulp list prices, to which most of our dissolving wood pulp sales are linked, increased during the quarter, reaching its highest levels in two years. Due to the competitive nature of the market and weak viscose pricing, we expect increased pressure on our NBSK linked prices going forward.
Net debt of US$2,348 million is up, compared both to the prior quarter, US$2,214 million, and the equivalent quarter last year, US$2,095 million, as a result of the seasonal increase in cash utilisation, and the past year's capital expenditure respectively.
The strategic actions to reduce costs and improve our profitability enabled the European business to return to an operating profit this quarter. The paper market remains tough, with demand continuing to decline and pricing under pressure, particularly in a strong Euro/Dollar exchange rate environment. The Alfeld PM2 conversion to speciality paper has been completed with successful trial runs and customer quality acceptance.
The North American business experienced a challenging quarter, and the graphic paper business was particularly difficult with lower sales volumes and prices in very competitive markets. Domestic coated freesheet paper demand in North America declined some 5% compared to the prior year, and whilst our sales declined by less than this, the loss of volume and a decline in coated web pricing over the past year had a significant impact. Higher cost purchased fibre also impacted paper costs compared to the prior year.
Dissolving wood pulp production and sales volumes were close to full capacity with excellent quality. In optimising the global Specialised Cellulose business we have seen lower average pricing and higher logistics costs in our North American operation, resulting in lower average returns for the business in North America.
The Southern African Specialised Cellulose business continues to perform well, and this quarter included sales from the recently converted Ngodwana Mill for the first time. Average net selling prices for dissolving wood pulp were flat compared to the prior quarter, but significantly higher than for the equivalent quarter in the prior year due to higher NBSK reference prices as well as a weaker Rand/Dollar exchange rate. The South African paper business returned to profitability, aided by the weaker Rand/Dollar exchange rate. However, the local graphic paper market remains weak, with continued cost pressure and a competitive import market. The domestic packaging market, though seasonally weaker in this quarter, continues to see good demand levels and improved pricing.
There were no major special items for the quarter. The gain of US$10 million included a positive plantation fair value price adjustment of US$8 million and an asset impairment reversal of US$2 million. Finance costs of US$48 million were in line with the restated equivalent quarter last year. Earnings per share for the quarter was 3 US cents (including a gain of 1 US cent in respect of special items), compared to 2 US cents (including a charge of 1 US cent in respect of special items) in the equivalent quarter last year.
Outlook
Both the European and South African paper businesses returned to profitability during the quarter and we expect to see further improvement in the performance of these paper businesses. Plans are in place to return the North American paper business to previous profitability levels.
Paper markets are expected to remain challenging for the remainder of the year and we continue to focus on costs across all our regions, with each of them striving to ensure they are amongst the lowest cost producers in their respective markets.
Demand in the Specialised Cellulose business is expected to remain firm, but with continued pressure on pricing. Currency, particularly the Rand/Dollar exchange rate will continue to remain a factor in the overall profitability of this business.
The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investor Info; Investor Calendar; 1Q14 Financial Results
Forward-looking statements
Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters, and may be used to identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:
the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing);
the impact on our business of the global economic downturn;
unanticipated production disruptions (including as a result of planned or unexpected power outages);
changes in environmental, tax and other laws and regulations;
adverse changes in the markets for our products;
the emergence of new technologies and changes in consumer trends including increased preferences for digital media;
consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructuring or strategic initiatives (including our announced dissolving wood pulp conversion projects), and achieving expected savings and synergies; and
currency fluctuations.
We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
For further information
Andre F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0)11 407 8044
Mobile +27 (0)83 235 2973
Andre.oberholzer@sappi.com
Graeme Wild
Group Head Investor Relations and Sustainability
Sappi Limited
Tel +27 (0)11 407 8391
Mobile +27 (0)83 320 8624
Graeme.wild@sappi.com
Sappi Limited
PO Box 31560
Braamfontein
2017
South Africa
Tel +28 (0)11 407 8111
www.sappi.com
Drmicrocap
12 years ago
Sappi results for 2nd quarter ended March 2013 reflect mixed markets
PR NewswirePress Release: Sappi Limited – Thu, May 9, 2013 2:34 AM EDTEmail0Share0PrintRELATED QUOTESSymbol Price Change
SPP 2.69 0.04
JOHANNESBURG, May 9, 2013 /PRNewswire/ --
Summary for the quarter
European business impacted by lower prices and higher pulp costs
Specialised Cellulose projects on track, major shuts completed
Profit for the period US$7 million (Q2 2012 US$58 million)
EPS 1 US cent (Q2 2012 11 US cents)
Operating profit excluding special items US$40 million (Q2 2012 US$125 million)
Net finance costs US$40 million (Q2 2012 US$51 million)
Net debt US$2,152 million (Q2 2012 US$2,133 million)
(Logo: http://photos.prnewswire.com/prnh/20110728/MM43821LOGO )
Commenting on the result, Sappi (NYSE: SPP, JSE: SAP) Chief Executive Officer Ralph Boettger said:
"The Specialised Cellulose and North American businesses continue to perform well and the investments in the conversions at the Ngodwana and Cloquet Mills have progressed according to plan. Dissolving wood pulp production is scheduled to start at these two mills during the 3rd quarter. As indicated in the previous quarter, we expected operating profit for the second quarter to be lower than that of the first quarter. The actual performance was weaker than expected however, due to weaker European market conditions and an inability to implement any meaningful coated graphic paper price increases in Europe during the past quarter. This led to a weak overall group performance.
"Looking forward, market conditions for our paper businesses, particularly in Europe are expected to continue to be weaker than previously envisaged. The price increases in Europe, to date, have not been sufficient to restore margins given rising input costs. Despite the interventions and major cost reductions that have taken place, we expect the European business to only achieve a breakeven operating profit excluding special items for the full year. This performance necessitates further action and we are evaluating a number of options that could result in capacity and cost reductions in our European business. Further measures are also being implemented in the Southern African business. The Specialised Cellulose and North American businesses are expected to continue to perform according to plan.
"Notwithstanding the weak European performance, and the impact of the commissioning and start-up of the two major dissolving wood pulp projects, we believe that the group will at worst breakeven at the net profit excluding special items level for the full year. We expect net debt to peak at approximately US$2.4 billion in the third quarter and thereafter to decrease to approximately US$2.2 billion by the end of the financial year.
"Despite the generally tough market conditions and the once-off impact of our major transitionary projects on the current year's performance, our actions and investments will position the group well for improved performance from 2014 onwards."
Quarter ended
Half-year ended
Mar
2013
Mar
2012
Dec
2012
Mar
2013
Mar
2012
Key figures: (US$ million)
Sales
1,503
1,633
1,475
2,978
3,218
Operating profit
78
120
70
148
227
Special items – (gains) losses*
(38)
5
3
(35)
(2)
Operating profit excluding special items*
40
125
73
113
225
EBITDA excluding special items*
128
217
162
290
411
Profit for the period
7
58
17
24
103
Basic earnings per share (US cents)
1
11
3
5
20
Net debt *
2,152
2,133
2,095
2,152
2,133
Key ratios (%)
Operating profit to sales
5.2
7.4
4.8
5.0
7.1
Operating profit excluding special items to
sales
2.7
7.7
5.0
3.8
7.0
Operating profit excluding special items to
capital employed (ROCE)
4.4
13.4
8.2
6.4
12.2
EBITDA excluding special items to sales
8.5
13.3
11.0
9.7
12.8
Return on average equity (ROE)*
1.9
14.7
4.5
3.2
13.2
Net debt to total capitalisation*
59.9
56.5
58.1
59.9
56.5
Net asset value per share (US cents)
277
315
290
277
315
*
Refer to the published results for details on special items, the definition of the terms and the reconciliation of EBITDA
excluding special items to profit/loss for the period.
The table above has not been audited or reviewed.
The quarter under review
Operating profit excluding special items of US$40 million was adversely impacted by the weak performance of the European business. This compares to an operating profit excluding special items of US$125 million in the equivalent quarter last year and US$73 million in the quarter ended December 2012.
In the North American business strong paper sales volumes offset weaker paper sales prices as well as the decline in paper pulp sales due to preparations at the Cloquet Mill for the pulp mill conversion from paper pulp to dissolving wood pulp. Coated paper sales volumes increased 6% over the equivalent quarter last year and were 2% higher than the prior quarter; prices were however, lower in a competitive market.
While the Southern African business performed reasonably well, it was as expected, negatively impacted by the planned extended shut at the Ngodwana Mill as a result of the conversion of the pulp mill to dissolving wood pulp as well as the relatively weak local demand for paper products. Special items for the quarter included a plantation price fair value adjustment of US$96 million (R863 million) largely as a result of the revaluation of the softwood plantation assets that previously supplied the Ngodwana softwood pulp line. As a result of the conversion of the pulp mill to hardwood dissolving wood pulp, this softwood resource is now available to sell as saw logs which earn a price premium to pulp logs. Various assets at the Tugela and Stanger Mills were impaired and a charge of US$52 million (R454 million) was booked in the quarter. These charges relate to the ongoing optimisation process in the Southern African paper and paper packaging business.
Dissolving wood pulp sales volumes from the Saiccor Mill remain limited only by our production capacity. Rising NBSK pulp prices, to which our dissolving wood pulp sales are linked, and a weaker Rand exchange rate contributed to the strong performance of Saiccor, which generated R472 million in EBITDA excluding special items and an EBITDA excluding special items margin of 34%.
Market conditions for our graphic paper products remained challenging, particularly in Europe where we experienced further deterioration across all graphic paper grades. Paper volumes and prices in this business were lower, whilst input costs were higher compared to the corresponding quarter last year. We were unable to fully implement the January price increases during the quarter.
Net finance costs for the quarter of US$40 million are US$11 million below that of the equivalent quarter last year as a result of the refinancing of higher cost debt in the past year.
Net cash utilised for the quarter was US$99 million, compared to net cash generation of US$91 million in the equivalent quarter last year. This cash utilisation was mainly as a result of lower profits from operations and capital expenditure which increased to US$179 million during the quarter from the US$59 million in the equivalent quarter last year. This increased capital expenditure relates primarily to the strategic investments in expanding our dissolving wood pulp capacity.
Liquidity remains strong with cash on hand of US$398 million and US$509 million available from the undrawn committed revolving credit facilities in Europe and South Africa.
Outlook
Market conditions for our paper businesses, particularly in Europe are expected to be weaker than previously envisaged. Demand and pricing remain under pressure and input costs, particularly pulp, are likely to remain high. The announced January price increases for coated woodfree paper were only marginally successful, and further price increases were announced during the quarter for implementation in April. These increases, to date, have not been sufficient to restore margins given rising input costs. Despite the interventions and major cost reductions that have taken place, we expect the European business to only achieve a breakeven operating profit excluding special items for the full year.
The Ngodwana and Cloquet Mills both successfully completed their major shuts relating to the Specialised Cellulose expansion projects during March and April. Dissolving wood pulp production is expected to commence at both plants before the end of June, with paper pulp being produced for internal use in the interim.
The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investor Info; Investor Calendar; 2Q13 Financial Results
Forward-looking statements
Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends, which do not relate to historical matters, identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:
the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing);
the impact on our business of the global economic downturn;
unanticipated production disruptions (including as a result of planned or unexpected power outages);
changes in environmental, tax and other laws and regulations;
adverse changes in the markets for our products;
the emergence of new technologies and changes in consumer trends including increased preferences for digital media;
consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructuring or strategic initiatives (including our announced dissolving wood pulp conversion projects), and achieving expected savings and synergies; and
currency fluctuations.
We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
Issued by
Brunswick
on behalf of Sappi Limited
Tel + 27 (0) 11 502 7300
For further information
Andre F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0)11 407 8044
Mobile +27 (0)83 235 2973
Andre.oberholzer@sappi.com
Graeme Wild
Group Head Investor Relations and Sustainability
Sappi Limited
Tel +27 (0)11 407 8391
Mobile +27 (0)83 320 8624
Graeme.wild@sappi.com
Drmicrocap
12 years ago
Sappi results for 2nd quarter ended March 2013 reflect mixed markets
PR NewswirePress Release: Sappi Limited – Thu, May 9, 2013 2:34 AM EDTEmail0Share0PrintRELATED QUOTESSymbol Price Change
SPP 2.69 0.04
JOHANNESBURG, May 9, 2013 /PRNewswire/ --
Summary for the quarter
European business impacted by lower prices and higher pulp costs
Specialised Cellulose projects on track, major shuts completed
Profit for the period US$7 million (Q2 2012 US$58 million)
EPS 1 US cent (Q2 2012 11 US cents)
Operating profit excluding special items US$40 million (Q2 2012 US$125 million)
Net finance costs US$40 million (Q2 2012 US$51 million)
Net debt US$2,152 million (Q2 2012 US$2,133 million)
(Logo: http://photos.prnewswire.com/prnh/20110728/MM43821LOGO )
Commenting on the result, Sappi (NYSE: SPP, JSE: SAP) Chief Executive Officer Ralph Boettger said:
"The Specialised Cellulose and North American businesses continue to perform well and the investments in the conversions at the Ngodwana and Cloquet Mills have progressed according to plan. Dissolving wood pulp production is scheduled to start at these two mills during the 3rd quarter. As indicated in the previous quarter, we expected operating profit for the second quarter to be lower than that of the first quarter. The actual performance was weaker than expected however, due to weaker European market conditions and an inability to implement any meaningful coated graphic paper price increases in Europe during the past quarter. This led to a weak overall group performance.
"Looking forward, market conditions for our paper businesses, particularly in Europe are expected to continue to be weaker than previously envisaged. The price increases in Europe, to date, have not been sufficient to restore margins given rising input costs. Despite the interventions and major cost reductions that have taken place, we expect the European business to only achieve a breakeven operating profit excluding special items for the full year. This performance necessitates further action and we are evaluating a number of options that could result in capacity and cost reductions in our European business. Further measures are also being implemented in the Southern African business. The Specialised Cellulose and North American businesses are expected to continue to perform according to plan.
"Notwithstanding the weak European performance, and the impact of the commissioning and start-up of the two major dissolving wood pulp projects, we believe that the group will at worst breakeven at the net profit excluding special items level for the full year. We expect net debt to peak at approximately US$2.4 billion in the third quarter and thereafter to decrease to approximately US$2.2 billion by the end of the financial year.
"Despite the generally tough market conditions and the once-off impact of our major transitionary projects on the current year's performance, our actions and investments will position the group well for improved performance from 2014 onwards."
Quarter ended
Half-year ended
Mar
2013
Mar
2012
Dec
2012
Mar
2013
Mar
2012
Key figures: (US$ million)
Sales
1,503
1,633
1,475
2,978
3,218
Operating profit
78
120
70
148
227
Special items – (gains) losses*
(38)
5
3
(35)
(2)
Operating profit excluding special items*
40
125
73
113
225
EBITDA excluding special items*
128
217
162
290
411
Profit for the period
7
58
17
24
103
Basic earnings per share (US cents)
1
11
3
5
20
Net debt *
2,152
2,133
2,095
2,152
2,133
Key ratios (%)
Operating profit to sales
5.2
7.4
4.8
5.0
7.1
Operating profit excluding special items to
sales
2.7
7.7
5.0
3.8
7.0
Operating profit excluding special items to
capital employed (ROCE)
4.4
13.4
8.2
6.4
12.2
EBITDA excluding special items to sales
8.5
13.3
11.0
9.7
12.8
Return on average equity (ROE)*
1.9
14.7
4.5
3.2
13.2
Net debt to total capitalisation*
59.9
56.5
58.1
59.9
56.5
Net asset value per share (US cents)
277
315
290
277
315
*
Refer to the published results for details on special items, the definition of the terms and the reconciliation of EBITDA
excluding special items to profit/loss for the period.
The table above has not been audited or reviewed.
The quarter under review
Operating profit excluding special items of US$40 million was adversely impacted by the weak performance of the European business. This compares to an operating profit excluding special items of US$125 million in the equivalent quarter last year and US$73 million in the quarter ended December 2012.
In the North American business strong paper sales volumes offset weaker paper sales prices as well as the decline in paper pulp sales due to preparations at the Cloquet Mill for the pulp mill conversion from paper pulp to dissolving wood pulp. Coated paper sales volumes increased 6% over the equivalent quarter last year and were 2% higher than the prior quarter; prices were however, lower in a competitive market.
While the Southern African business performed reasonably well, it was as expected, negatively impacted by the planned extended shut at the Ngodwana Mill as a result of the conversion of the pulp mill to dissolving wood pulp as well as the relatively weak local demand for paper products. Special items for the quarter included a plantation price fair value adjustment of US$96 million (R863 million) largely as a result of the revaluation of the softwood plantation assets that previously supplied the Ngodwana softwood pulp line. As a result of the conversion of the pulp mill to hardwood dissolving wood pulp, this softwood resource is now available to sell as saw logs which earn a price premium to pulp logs. Various assets at the Tugela and Stanger Mills were impaired and a charge of US$52 million (R454 million) was booked in the quarter. These charges relate to the ongoing optimisation process in the Southern African paper and paper packaging business.
Dissolving wood pulp sales volumes from the Saiccor Mill remain limited only by our production capacity. Rising NBSK pulp prices, to which our dissolving wood pulp sales are linked, and a weaker Rand exchange rate contributed to the strong performance of Saiccor, which generated R472 million in EBITDA excluding special items and an EBITDA excluding special items margin of 34%.
Market conditions for our graphic paper products remained challenging, particularly in Europe where we experienced further deterioration across all graphic paper grades. Paper volumes and prices in this business were lower, whilst input costs were higher compared to the corresponding quarter last year. We were unable to fully implement the January price increases during the quarter.
Net finance costs for the quarter of US$40 million are US$11 million below that of the equivalent quarter last year as a result of the refinancing of higher cost debt in the past year.
Net cash utilised for the quarter was US$99 million, compared to net cash generation of US$91 million in the equivalent quarter last year. This cash utilisation was mainly as a result of lower profits from operations and capital expenditure which increased to US$179 million during the quarter from the US$59 million in the equivalent quarter last year. This increased capital expenditure relates primarily to the strategic investments in expanding our dissolving wood pulp capacity.
Liquidity remains strong with cash on hand of US$398 million and US$509 million available from the undrawn committed revolving credit facilities in Europe and South Africa.
Outlook
Market conditions for our paper businesses, particularly in Europe are expected to be weaker than previously envisaged. Demand and pricing remain under pressure and input costs, particularly pulp, are likely to remain high. The announced January price increases for coated woodfree paper were only marginally successful, and further price increases were announced during the quarter for implementation in April. These increases, to date, have not been sufficient to restore margins given rising input costs. Despite the interventions and major cost reductions that have taken place, we expect the European business to only achieve a breakeven operating profit excluding special items for the full year.
The Ngodwana and Cloquet Mills both successfully completed their major shuts relating to the Specialised Cellulose expansion projects during March and April. Dissolving wood pulp production is expected to commence at both plants before the end of June, with paper pulp being produced for internal use in the interim.
The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investor Info; Investor Calendar; 2Q13 Financial Results
Forward-looking statements
Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends, which do not relate to historical matters, identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:
the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing);
the impact on our business of the global economic downturn;
unanticipated production disruptions (including as a result of planned or unexpected power outages);
changes in environmental, tax and other laws and regulations;
adverse changes in the markets for our products;
the emergence of new technologies and changes in consumer trends including increased preferences for digital media;
consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructuring or strategic initiatives (including our announced dissolving wood pulp conversion projects), and achieving expected savings and synergies; and
currency fluctuations.
We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
Issued by
Brunswick
on behalf of Sappi Limited
Tel + 27 (0) 11 502 7300
For further information
Andre F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0)11 407 8044
Mobile +27 (0)83 235 2973
Andre.oberholzer@sappi.com
Graeme Wild
Group Head Investor Relations and Sustainability
Sappi Limited
Tel +27 (0)11 407 8391
Mobile +27 (0)83 320 8624
Graeme.wild@sappi.com
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