Click here to close now.


Microsoft Cloud Authors: Jayaram Krishnaswamy, Elizabeth White, Andreas Grabner, Jim Kaskade, 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/ --


  • 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


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






Key figures: (US$ million)







Operating profit (loss)






    Special items – (gains) losses*






    Operating profit excluding special items*






    EBITDA excluding special items*






    Profit (loss) for the period






Basic earnings (loss) per share (US cents)






    Net debt*






Key ratios: (%)

Operating profit (loss) to sales






    Operating profit excluding special items to sales






    Operating profit excluding special items to capital
    employed (ROCE)






    EBITDA excluding special items to sales






    Return on average equity (ROE)*






    Net debt to total capitalisation*






    Net asset value per share (US cents)






* 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.


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

There will be a conference call to which investors are invited. Full details are available at 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



South Africa


Tel +28 (0)11 407 8111



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
The broad selection of hardware, the rapid evolution of operating systems and the time-to-market for mobile apps has been so rapid that new challenges for developers and engineers arise every day. Security, testing, hosting, and other metrics have to be considered through the process. In his session at Big Data Expo, Walter Maguire, Chief Field Technologist, HP Big Data Group, at Hewlett-Packard, will discuss the challenges faced by developers and a composite Big Data applications builder, focusing on how to help solve the problems that developers are continuously battling.
Nowadays, a large number of sensors and devices are connected to the network. Leading-edge IoT technologies integrate various types of sensor data to create a new value for several business decision scenarios. The transparent cloud is a model of a new IoT emergence service platform. Many service providers store and access various types of sensor data in order to create and find out new business values by integrating such data.
NHK, Japan Broadcasting will feature upcoming @ThingsExpo Silicon Valley in a special IoT documentary which will be filmed on the expo floor November 3 to 5, 2015 in Santa Clara. NHK is the sole public TV network in Japan equivalent to BBC in UK and the largest in Asia with many award winning science and technology programs. Japanese TV is producing a documentary about IoT and Smart technology covering @ThingsExpo Silicon Valley. The program will be aired during the highest viewership season of the year that it will have a high impact in the industry through this documentary in Japan. The film...
SYS-CON Events announced today that Luxoft Holding, Inc., a leading provider of software development services and innovative IT solutions, has been named “Bronze Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Luxoft’s software development services consist of core and mission-critical custom software development and support, product engineering and testing, and technology consulting.
Developing software for the Internet of Things (IoT) comes with its own set of challenges. Security, privacy, and unified standards are a few key issues. In addition, each IoT product is comprised of at least three separate application components: the software embedded in the device, the backend big-data service, and the mobile application for the end user's controls. Each component is developed by a different team, using different technologies and practices, and deployed to a different stack/target - this makes the integration of these separate pipelines and the coordination of software upd...
SYS-CON Events announced today that IBM Cloud Data Services has been named “Bronze Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. IBM Cloud Data Services offers a portfolio of integrated, best-of-breed cloud data services for developers focused on mobile computing and analytics use cases.
In his session at @ThingsExpo, Tony Shan, Chief Architect at CTS, will explore the synergy of Big Data and IoT. First he will take a closer look at the Internet of Things and Big Data individually, in terms of what, which, why, where, when, who, how and how much. Then he will explore the relationship between IoT and Big Data. Specifically, he will drill down to how the 4Vs aspects intersect with IoT: Volume, Variety, Velocity and Value. In turn, Tony will analyze how the key components of IoT influence Big Data: Device, Connectivity, Context, and Intelligence. He will dive deep to the matrix...
When it comes to IoT in the enterprise, namely the commercial building and hospitality markets, a benefit not getting the attention it deserves is energy efficiency, and IoT’s direct impact on a cleaner, greener environment when installed in smart buildings. Until now clean technology was offered piecemeal and led with point solutions that require significant systems integration to orchestrate and deploy. There didn't exist a 'top down' approach that can manage and monitor the way a Smart Building actually breathes - immediately flagging overheating in a closet or over cooling in unoccupied ho...
SYS-CON Events announced today that Cloud Raxak has been named “Media & Session Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Raxak Protect automates security compliance across private and public clouds. Using the SaaS tool or managed service, developers can deploy cloud apps quickly, cost-effectively, and without error.
Scott Guthrie's keynote presentation "Journey to the intelligent cloud" is a must view video. This is from AzureCon 2015, September 29, 2015 I have reproduced some screen shots in case you are unable to view this long video for one reason or another. One of the highlights is 3 datacenters coming on line in India.
“The Internet of Things transforms the way organizations leverage machine data and gain insights from it,” noted Splunk’s CTO Snehal Antani, as Splunk announced accelerated momentum in Industrial Data and the IoT. The trend is driven by Splunk’s continued investment in its products and partner ecosystem as well as the creativity of customers and the flexibility to deploy Splunk IoT solutions as software, cloud services or in a hybrid environment. Customers are using Splunk® solutions to collect and correlate data from control systems, sensors, mobile devices and IT systems for a variety of Ind...
SYS-CON Events announced today that ProfitBricks, the provider of painless cloud infrastructure, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. ProfitBricks is the IaaS provider that offers a painless cloud experience for all IT users, with no learning curve. ProfitBricks boasts flexible cloud servers and networking, an integrated Data Center Designer tool for visual control over the cloud and the best price/performance value available. ProfitBricks was named one of the coolest Clo...
You have your devices and your data, but what about the rest of your Internet of Things story? Two popular classes of technologies that nicely handle the Big Data analytics for Internet of Things are Apache Hadoop and NoSQL. Hadoop is designed for parallelizing analytical work across many servers and is ideal for the massive data volumes you create with IoT devices. NoSQL databases such as Apache HBase are ideal for storing and retrieving IoT data as “time series data.”
Clearly the way forward is to move to cloud be it bare metal, VMs or containers. One aspect of the current public clouds that is slowing this cloud migration is cloud lock-in. Every cloud vendor is trying to make it very difficult to move out once a customer has chosen their cloud. In his session at 17th Cloud Expo, Naveen Nimmu, CEO of Clouber, Inc., will advocate that making the inter-cloud migration as simple as changing airlines would help the entire industry to quickly adopt the cloud without worrying about any lock-in fears. In fact by having standard APIs for IaaS would help PaaS expl...
Organizations already struggle with the simple collection of data resulting from the proliferation of IoT, lacking the right infrastructure to manage it. They can't only rely on the cloud to collect and utilize this data because many applications still require dedicated infrastructure for security, redundancy, performance, etc. In his session at 17th Cloud Expo, Emil Sayegh, CEO of Codero Hosting, will discuss how in order to resolve the inherent issues, companies need to combine dedicated and cloud solutions through hybrid hosting – a sustainable solution for the data required to manage I...
Apps and devices shouldn't stop working when there's limited or no network connectivity. Learn how to bring data stored in a cloud database to the edge of the network (and back again) whenever an Internet connection is available. In his session at 17th Cloud Expo, Bradley Holt, Developer Advocate at IBM Cloud Data Services, will demonstrate techniques for replicating cloud databases with devices in order to build offline-first mobile or Internet of Things (IoT) apps that can provide a better, faster user experience, both offline and online. The focus of this talk will be on IBM Cloudant, Apa...
Mobile messaging has been a popular communication channel for more than 20 years. Finnish engineer Matti Makkonen invented the idea for SMS (Short Message Service) in 1984, making his vision a reality on December 3, 1992 by sending the first message ("Happy Christmas") from a PC to a cell phone. Since then, the technology has evolved immensely, from both a technology standpoint, and in our everyday uses for it. Originally used for person-to-person (P2P) communication, i.e., Sally sends a text message to Betty – mobile messaging now offers tremendous value to businesses for customer and empl...
As more and more data is generated from a variety of connected devices, the need to get insights from this data and predict future behavior and trends is increasingly essential for businesses. Real-time stream processing is needed in a variety of different industries such as Manufacturing, Oil and Gas, Automobile, Finance, Online Retail, Smart Grids, and Healthcare. Azure Stream Analytics is a fully managed distributed stream computation service that provides low latency, scalable processing of streaming data in the cloud with an enterprise grade SLA. It features built-in integration with Azur...
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
The enterprise is being consumerized, and the consumer is being enterprised. Moore's Law does not matter anymore, the future belongs to business virtualization powered by invisible service architecture, powered by hyperscale and hyperconvergence, and facilitated by vertical streaming and horizontal scaling and consolidation. Both buyers and sellers want instant results, and from paperwork to paperless to mindless is the ultimate goal for any seamless transaction. The sweetest sweet spot in innovation is automation. The most painful pain point for any business is the mismatch between supplies a...