PR Newswire
JOHANNESBURG, Aug. 2, 2013
JOHANNESBURG, Aug. 2, 2013 /PRNewswire/ --
Summary for the quarter
Commenting on the result, Sappi (NYSE: SPP, JSE: SAP) Chief Executive Officer Ralph Boettger said:
The third financial quarter is seasonally our weakest, due to typically lower demand in Europe and North America and the scheduling of planned annual maintenance shuts at most of our major pulp mills. In this transitional year, the quarter was also impacted by the extended shuts at both the Cloquet and Ngodwana Mills as they completed the capital projects to convert existing paper pulp lines to dissolving wood pulp. In addition, market conditions, particularly in our European paper business, deteriorated further during the quarter. These factors combined to reduce group operating profit excluding special items for the period to US$8 million from US$40 million in the prior quarter and US$60 million for the equivalent quarter last year. The third-quarter results were also impacted by special items including a charge of US$11 million related to plantation price fair value adjustment and a charge of US$4 million due to plantation fire damage in South Africa.
Both the dissolving wood pulp projects at the Ngodwana and Cloquet pulp mills have now started production. The Cloquet Mill produced the first bales of dissolving wood pulp in early June, and the ramp-up has progressed according to schedule with production and quality targets having been met. The Ngodwana Mill started up in late July, a few weeks later than scheduled, and we expect this mill to ramp-up to full production over the coming months.
The past quarter saw a further deterioration in European paper industry conditions, exacerbating an already weak market, and demand is expected to remain subdued. Input costs, particularly pulp, remain high and we do not expect to see any price increases in our major paper grades in the coming quarter. Plans are being finalised that will result in significant capacity closure, lower costs and improved operating margins in Europe. We envisage these actions will occur over a three-year period and that any cash costs will be self-funded. The benefits of these actions will begin to flow in the 2014 financial year.
We expect our European business to make an operating loss in the fourth financial quarter which will result in the group making a small net loss for the financial year. Our full year results may be impacted by the aforementioned strategic initiatives and, any asset impairments and restructuring costs that may arise.
Debt remains within the levels previously indicated despite the weaker operating performance. We expect debt levels to peak during the fourth quarter as the final outlays for the dissolving wood pulp projects occur and to end the quarter slightly lower than that reported for the third quarter. Our medium-term leverage target remains between 1.5 and 2 times net debt to EBITDA.
| Quarter ended | Nine months ended | |||
| Jun 2013 | Jun 2012 | Mar 2013 | Jun 2013 | Jun 2012 |
Key figures: (US$ million) | | | | | |
Sales | 1,417 | 1,544 | 1,503 | 4,395 | 4,762 |
Operating (loss) profit | (11) | 34 | 78 | 137 | 261 |
Special items – losses (gains) * | 19 | 26 | (38) | (16) | 24 |
Operating profit excluding special items* | 8 | 60 | 40 | 121 | 285 |
EBITDA excluding special items* | 91 | 150 | 128 | 381 | 561 |
(Loss) Profit for the period | (42) | (106) | 7 | (18) | (3) |
Basic (loss) earnings per share (US cents) | (8) | (20) | 1 | (3) | (1) |
Net debt * | 2,297 | 2,213 | 2,152 | 2,297 | 2,213 |
Key ratios (%) | | | | | |
Operating (loss) profit to sales | (0.8) | 2.2 | 5.2 | 3.1 | 5.5 |
Operating profit excluding special items to sales | 0.6 | 3.9 | 2.7 | 2.8 | 6.0 |
Operating profit excluding special items to capital employed (ROCE) | 0.9 | 6.4 | 4.4 | 4.5 | 10.3 |
EBITDA excluding special items to sales | 6.4 | 9.7 | 8.5 | 8.7 | 11.8 |
Return on average equity (ROE)* | (12.1) | (26.5) | 1.9 | (1.7) | (0.3) |
Net debt to total capitalisation* | 63.2 Werbung Mehr Nachrichten zur Sappi ADR Aktie kostenlos abonnieren
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