Commenting on the group’s second quarter results, Sappi chief executive Ralph Boëttger said: “Our operating performance improved further, both compared with a year ago and 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 per cent compared with a year ago, to US$1.47B. Operating profit excluding special items increased 33 per cent to US$97M, from US$73M a year ago.
Looking forward, he 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.”
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