Welcome!

SAP Authors: Cynthia Dunlop, Dana Gardner, Carmen Gonzalez, Madhukar Govindaraju, Pat Romanski

News Feed Item

Sappi Limited results for the fourth quarter and year ended September 2012. Strategic initiatives yield solid results; good progress on debt reduction

JOHANNESBURG, Nov. 8, 2012 /PRNewswire/ --

Summary

  • Net profit US$107 million (Q4 2011 net loss US$127 million)
  • Earnings per share of 21 US cents (Q4 2011 loss per share 24 US cents)
  • Operating profit excluding special items US$118 million (Q4 2011 US$80 million)
  • Net cash generated US$203 million (Q4 2011 US$279 million)
  • Targeted net debt level reached a year early - US$1,979 million

(Logo: http://photos.prnewswire.com/prnh/20110728/MM43821LOGO

Commenting on the key financial highlights of the quarterly and year-end results, Sappi (NYSE: SPP, JSE: SAP) Chief Executive Officer Ralph Boettger said:

"Sappi posted a solid set of fourth quarter and financial year-end results. Operating profit excluding special items for the quarter was ahead of market expectations and for the full year remained at similar levels as last year. This good performance was in spite of challenging market conditions and pulp prices that were substantially lower in Dollar terms which negatively impacted on the Southern African and North American businesses.

"The European and North American paper businesses performed well during the quarter, despite tough market conditions, benefiting from our ongoing actions over the past two years to further improve customer service, reduce costs and increase efficiencies.

"Overall, the performance of the Southern African business was negatively impacted by the rescheduling of the planned maintenance shut at Saiccor Mill from the third quarter to the fourth quarter and continued weakness in the South African paper market. However, the South African paper business reduced fixed costs by 20% as a result of the restructuring initiative completed earlier in the year and improved performance compared to the same quarter last year. The business has continued to take action to position itself for improved profitability. The Chemical Cellulose (Specialised Cellulose) business performed well, generating an EBITDA excluding special items margin of 30%. Saiccor Mill also achieved record production volumes in the past year.

"I am pleased that we have achieved, a year earlier than initially indicated, our goal of reducing our net debt to below our target of US$2 billion.

"Given continued uncertainty in global financial markets, and questions around the timing of any meaningful economic recovery in our major markets, we expect trading conditions to remain challenging for the next twelve months. However, we believe that the actions we have taken in all of our paper businesses over the past two years, and the strategy of investing in higher margin, higher growth businesses such as Specialised Cellulose will enable us to continue to improve our ability to generate shareholder value in the coming year, but importantly, also position us for an acceleration of that growth in the years ahead."



Quarter ended

Year ended


Sept
2012

Sept
2011

June
2012

Sept
2012

Sept
2011

Key figures: (US$ million)






Sales

1,585

1,787

1,544

6,347

7,286

Operating profit (loss)

160

(88)

34

421

86

    Special items – (gains) losses*

(42)

168

26

(18)

318

    Operating profit excluding special items*

118

80

60

403

404

    EBITDA excluding special items*

211

183

150

772

821

    Profit (loss) for the period

107

(127)

(106)

104

(232)

Basic earnings (loss) per share (US cents)

21

(24)

(20)

20

(45)

    Net debt*

1,979

2,100

2,213

1,979

2,100







Key ratios: (%)






Operating profit (loss) to sales

10.1

(4.9)

2.2

6.6

1.2

    Operating profit excluding special items to sales

7.4

4.5

3.9

6.3

5.5

    Operating profit excluding special items to capital
    employed (ROCE)

13.0

8.1

6.4

11.4

10.5

    EBITDA excluding special items to sales

13.3

10.2

9.7

12.2

11.3

    Return on average equity (ROE)*

27.8

(30.2)

(26.5)

6.9

(13.8)

    Net debt to total capitalisation*

56.5

58.7

58.7

56.5

58.7

    Net asset value per share (US cents)

293

284

299

293

284







* 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 year and quarter under review

Net profit for the year amounted to US$104 million compared to a net loss of US$232 million in the prior year. The prior net loss included special item losses of US$318 million, principally related to the restructuring of the European and Southern African operations. Earnings per share were significantly better, with earnings per share of 20 US cents (including a charge of 10 US cents in respect of special items and once-off refinancing costs) compared to a loss per share of 45 US cents (including a charge of 65 US cents in respect of special items and once-off refinancing costs) in the prior year.

Operating profit excluding special items for the quarter was US$118 million, a significant improvement when compared to US$80 million in the equivalent quarter last year and US$60 million in the quarter ended June 2012. Sappi posted a net profit for the quarter of US$107 million off the back of an improved operating performance and lower interest costs as result of the refinancing undertaken in the prior quarter. Earnings per share for the quarter were 21 US cents (including a gain of 10 US cents in respect of special items) compared with a loss per share of 24 US cents (including a charge of 26 US cents in respect of special items) in the equivalent quarter last year.

During the quarter we announced the planned conversion of PM2 at the Alfeld Mill from 150,000 tons of coated fine paper to 135,000 tons of speciality paper per annum. This conversion will not only increase our capacity in a growing and higher margin specialised business, but will also improve our cost position in coated woodfree graphic paper and further reduce our graphic paper capacity in line with our strategy.

In South Africa, substantial electricity price increases from Eskom, the national electricity supplier, continued to put pressure on costs, and lower average pulp prices impacted negatively on operating performance. Post the quarter-end, we announced the decision to mothball PM4, a sackkraft and containerboard machine, at the Tugela Mill from 01 January 2013.  We are currently in a consultation process with employees at the mill regarding potential retrenchments. The asset impairment charge related to the mothballing of the machine of R76 million was taken in this quarter and is included in special items.

Net cash generated for the quarter and for the full year was lower at US$203 million (2011 US$279 million) and US$127 million (2011 US$163 million) respectively. Increased spending on the dissolving wood pulp (chemical cellulose) investments at the Ngodwana and Cloquet Mills resulted in higher capital expenditure for the quarter of US$112 million from US$103 million in equivalent quarter last year. 

Our net debt now stands at US$1,979 million compared to US$2,100 million in the equivalent quarter last year. Additionally, during the year we successfully refinanced US$700 million of debt resulting in the extension of our maturities and reduction in our finance costs. The refinancing will reduce our annual interest charge by US$45 million and our cash interest charge by US$30 million per annum. 

We have renamed the Chemical Cellulose division Sappi Specialised Cellulose to better reflect our product range and the increased importance to the group of our dissolving wood pulp business. We expect that demand will continue to grow in the coming year and beyond. The conversion of the Ngodwana and Cloquet pulp mills from hardwood kraft pulp to dissolving wood pulp continues on schedule.

Sir Nigel Rudd, who has served as a non-executive director for six years, will succeed Professor Meyer Feldberg as lead independent director on 01 January 2013, given that Professor Feldberg retires from the board at the end of December 2012, having reached the board's mandatory retirement age.

Outlook

Pulp prices, despite having recovered from their recent lows, are expected to remain lower on average in 2013 than they were in 2012. This will negatively impact our North American and Southern African businesses, which are net sellers of pulp, but will have a favourable impact on our European business which is a net buyer of pulp. 

We expect that demand for dissolving wood pulp in our Specialised Cellulose operations will continue to grow in the coming year and beyond. We believe that particularly with our additional low cost capacity, we are well positioned to take advantage of this growth. We have made further good progress in signing long-term contracts for a significant portion of our new dissolving wood pulp capacity.

We expect the first quarter results for the Southern African operations to be in line with those achieved in the fourth quarter of 2012. Operating profit in the first financial quarter of 2013 is expected to be weaker than the equivalent quarter last year as a result of lower pulp prices, slightly lower paper prices in Europe, as well as the impact of the road transport strike in South Africa. 

We expect a modest cash outflow in the important transitional year ahead due to the increase in capital expenditure on the Specialised Cellulose investments. Our finance costs will be substantially lower following the refinancing in 2012 and we expect that the net debt will end the coming year essentially flat year-on-year, barring the impact of any adverse foreign currency translations.

Additional downtime, variable costs and paper pulp purchases during the start-up phase of the Ngodwana and Cloquet projects are expected to have a negative impact of approximately US$40 million in the 2013 financial year.

Provided that there is no further deterioration in global market conditions, we expect continued profit growth, with the once-off negative operational impact of the conversion projects and the expected lower pulp prices being offset by the lower finance costs.

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; 4Q12 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, 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

Issued by

Andre F Oberholzer

Group Head Corporate Affairs

Sappi Limited

Tel +27 (0)11 407 8044

Mobile +27 (0)83 235 2973

[email protected]

 

Graeme Wild

Group Head Investor Relations and Sustainability

Sappi Limited

Tel +27 (0)11 407 8391

Mobile +27 (0)83 320 8624

[email protected]

 

PO Box 31560

Braamfontein

2017

South Africa

 

Tel +28 (0)11 407 8111

www.sappi.com

 

Brunswick

on behalf of Sappi Limited

Tel + 27 (0) 11 502 7300

SOURCE Sappi Limited

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Bit6 today issued a challenge to the technology community implementing Web Real Time Communication (WebRTC). To leap beyond WebRTC’s significant limitations and fully leverage its underlying value to accelerate innovation, application developers need to consider the entire communications ecosystem.
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, phone and digital TV services to consumers primarily in rural areas.
"There is a natural synchronization between the business models, the IoT is there to support ,” explained Brendan O'Brien, Co-founder and Chief Architect of Aria Systems, in this SYS-CON.tv interview at the 15th International Cloud Expo®, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com), moderated by Ashar Baig, Research Director, Cloud, at Gigaom Research, Nate Gordon, Director of T...
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from hardware to software, or as we like to say, it’s an Internet of many different things. The difference ...

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's platform-as-a-service. The new platform enables developers to build ap...

An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and assessments, including a decade of leading incident response and digital forensics. He is co-author of t...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
Technology is enabling a new approach to collecting and using data. This approach, commonly referred to as the "Internet of Things" (IoT), enables businesses to use real-time data from all sorts of things including machines, devices and sensors to make better decisions, improve customer service, and lower the risk in the creation of new revenue opportunities. In his General Session at Internet of @ThingsExpo, Dave Wagstaff, Vice President and Chief Architect at BSQUARE Corporation, discuss the real benefits to focus on, how to understand the requirements of a successful solution, the flow of ...
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Focused on this fast-growing market’s needs, Vitesse Semiconductor Corporation (Nasdaq: VTSS), a leading provider of IC solutions to advance "Ethernet Everywhere" in Carrier, Enterprise and Internet of Things (IoT) networks, introduced its IStaX™ software (VSC6815SDK), a robust protocol stack to simplify deployment and management of Industrial-IoT network applications such as Industrial Ethernet switching, surveillance, video distribution, LCD signage, intelligent sensors, and metering equipment. Leveraging technologies proven in the Carrier and Enterprise markets, IStaX is designed to work ac...
C-Labs LLC, a leading provider of remote and mobile access for the Internet of Things (IoT), announced the appointment of John Traynor to the position of chief operating officer. Previously a strategic advisor to the firm, Mr. Traynor will now oversee sales, marketing, finance, and operations. Mr. Traynor is based out of the C-Labs office in Redmond, Washington. He reports to Chris Muench, Chief Executive Officer. Mr. Traynor brings valuable business leadership and technology industry expertise to C-Labs. With over 30 years' experience in the high-tech sector, John Traynor has held numerous...
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
SYS-CON Events announced today that IDenticard will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. IDenticard™ is the security division of Brady Corp (NYSE: BRC), a $1.5 billion manufacturer of identification products. We have small-company values with the strength and stability of a major corporation. IDenticard offers local sales, support and service to our customers across the United States and Canada. Our partner network encompasses some 300 of the world's leading systems integrators and security s...
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world. The next @ThingsExpo will take place November 4-6, 2014, at the Santa Clara Convention Center, in Santa Clara, California. Since its launch in 2008, Cloud Expo TV commercials have been aired and CNBC, Fox News Network, and Bloomberg TV. Please enjoy our 2014 commercial.