Results for the second quarter ended March 2012

Supporting documentation:

  • Profit for the period US$58 million (Q2 2011 loss US$74 million)
  • EPS 11 US cents (Q2 2011 loss per share 14 US cents)
  • Net cash generated US$91 million (Q2 2011 US$100 million)
  • Net debt US$2,133 million, down US$42 million from Q1 2012
  • Cost savings led to improved performance in European business
  • Southern African chemical cellulose business continues strong performance


*  Refer to the published results for details on special items, the definition of the terms, the reconciliation of profit/loss for the period to EBITDA excluding special items, the reconciliation of operating profit/loss excluding special items to segment operating profit/loss and the reconciliation of net debt to interest-bearing borrowings.

** The half-year ended March 2011 consisted of 27 weeks whereas the half-year ended March 2012 consisted of 26 weeks.


The table presented above has not been audited or reviewed.


The quarter under review

Commenting on the results, Sappi Chief Executive Officer Ralph Boëttger said:
“The improving trend in operating performance continued in the quarter, with the European and North American businesses in particular showing good improvement. The group achieved a net profit for the period of US$58 million (Q2 2011 US$74 million loss) and EPS of 11 US cents (Q2 2011 loss of 14 US cents) in the second quarter of the 2012 financial year.

“The performance of the European business was particularly pleasing, following the relentless focus on cost reduction in that region.  Market conditions for coated paper have been weaker than in the equivalent period last year, but despite this, our operating rates remained good in both Europe and North America as a result of management action. Variable costs and fixed costs are generally lower, particularly in Europe, enabling margins to be maintained or widened.


“The Southern African chemical cellulose business continues to perform strongly, driven by strong sales volumes. Despite pricing being lower than in the prior quarter and in the equivalent quarter last year, the business generated an EBITDA margin of approximately 30%.”

“Pulp prices, which had been weakening since July 2011, stopped declining midway through the quarter, and have since been gradually increasing. This increase in pulp prices benefits our Southern African and North American businesses as they are net sellers of pulp, but it has a negative effect on the input costs of our European business.


Cash generated from operations was US$214 million for the quarter, and net cash generated was US$91 million. Net debt reduced to US$2,133 million. Net finance costs of US$51 million were significantly lower than the US$68 million of the equivalent quarter last year.”



We expect demand for our coated paper to remain challenging compared to last year, but for most major input costs to remain below the levels seen a year ago.  The European and South African businesses will benefit from the restructuring actions taken in these regions.


“The Southern African chemical cellulose business is expected to continue to perform well. The conversion projects at Ngodwana and Cloquet mills are on track for start-up in our third financial quarter of 2013.  We have received good support from a range of customers for the future increase in production volumes.


“Our third financial quarter is historically and seasonally the weakest quarter, and will be further impacted, as it was last year, by planned annual maintenance shuts at a number of our major pulp mills.  These shuts will result in an increase in maintenance costs and lost contribution from reduced output and sales.  We expect our operating profit excluding special items for the third financial quarter to be in line with the equivalent quarter last year.


“For the full year we expect operating profit excluding special items to be in line with the previous financial year, and for the group to generate positive earnings per share.


“We expect positive cash generation for the balance of the year, leading to a further reduction in net debt.  We will consider refinancing our higher cost debt, including the bonds due in 2014, when market conditions are favourable and it makes economic sense to do so.


Looking forward, Boëttger commented:
“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.”




The full results announcement is available at 
There will be a conference call to which investors are invited. Full details are available using the links Investor Info; Investor Calendar; 2Q12 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;
  • 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, cost-reduction programmes, investments, acquisitions and dispositions (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions 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 South Africa on behalf of Sappi Limited
Tel + 27 (0) 11 502 7300


For further information contact:

Robert Hope
Group Head Strategic Development
Sappi Limited
Tel +27 (0) 11 407 8492


André F Oberholzer 
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0) 11 407 8044
Mobile +27 (0) 83 235 2973