Johannesburg, 06 May 2008

• Operating profit excluding special items improved to US$97 million
• Special items US$124 million (pre-tax) – primarily plantation fair value
• Basic EPS 68 US cents (inclusive of special items)
• Prices up but only marginally so in Europe
• Continued input cost pressure
• Saiccor expansion on track

Summary

* Refer to Supplemental Information in the published results for the definition of the term and reconciliation of profit/ loss for the period to EBITDA
The results for the quarters presented above have not been audited or reviewed.

The quarter under review

Commenting on the results, Sappi chief executive Ralph Boëttger said:
“Our operating performance this quarter improved further, both compared to a year ago and compared to the prior quarter. The performance of our Southern African businesses was supported by good demand, higher prices and a weaker Rand against the Dollar. Our North American business continued its improving trend, benefiting from higher prices and improved operating efficiencies. However, margins remain under pressure from rising input costs. Our key challenge remains to restore our European business to acceptable profitability. The limited coated fine paper price increases we achieved in parts of Europe were insufficient to recover the increasing input costs. Globally our sales increased by 11.8% compared to a year ago to US$1.47 billion. Operating profit excluding special items increased 33% to US$97 million from US$73 million a year ago.

Looking forward, Boëttger commented:
“Global capacity utilisation remains reasonably high with limited new capacity coming on stream within the next year. Prices for coated fine paper continue to strengthen in most regions in US Dollar terms. Improved price realisation in Europe is, however, essential in order to achieve a much needed improvement in margin.

Pulp prices remain high supported by strong demand, particularly from Asia, and the weaker US Dollar.

While market conditions in terms of demand are generally favourable in our industry, we cannot ignore the potential impact of economic slow-downs in North America and Europe on our business.

Operating performance of our Southern African operations is expected to remain strong and in North America we expect the improving trend to continue on a year on year basis. Europe’s performance will remain under pressure as a result of the pricing situation and high input costs.  Manufacturing and logistics efficiencies and tight control over costs remain essential to manage the effect of high energy, pulp and wood costs and labour cost inflation.

Our net debt is expected to start declining towards the end of the financial year following the completion of the Saiccor expansion project. Improved cash generation, continued attention to working capital and capital expenditure management will remain priorities.

Operating profit excluding special items is expected to improve in the next quarter compared to a year ago.”

ENDS

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; 2Q08 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.  Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors, that could cause actual results and company plans and objectives to differ materially from those expressed or implied in the forward-looking statements (or from past results). Such risks, uncertainties and factors 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), adverse changes in the markets for the group’s products, consequences of substantial leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed, changing regulatory requirements, unanticipated production disruptions (including as a result of planned or unexpected power outages), economic and political conditions in international markets, the impact of investments, acquisitions and dispositions (including related financing), any delays, unexpected costs or other problems experienced with integrating acquisitions and achieving expected savings and synergies and currency fluctuations. The company undertakes 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.

Documentation

Financial results presentation
Financial results booklet



Issued by:

Brunswick South Africa on behalf of Sappi Limited
Tel + 27 (0)11 502 7300
Fax + 27 (0)11 268 5747