South African market helps Sappi survive tough European market

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Sappi, a South African pulp and paper company with global operations, said its business operations in its home country contributed “excellent results” during its December quarter.

The company’s net profit increased by 29 percent to $81 million in the three months to end-December from $63 million in the matching period in 2017. The growth was as a result of the demand for its dissolving wood pulp from Chinese clothes makers.

Sappi achieved this jump in profit on 6.6 percent revenue growth to $1.4 billion from $1.3 billion. Europe contributed 51 percent of the group’s sales, North America 25 percent, and Southern Africa 24 percent.

A breakdown of the sales when split into categories shows that coated paper contributed 54 percent of Sappi’s sales, dissolving wood pulp 19 percent, speciality paper 15 percent, and uncoated paper and commodity paper 6 percent each.

Regarding its historical home market, Sappi said increased pulp and packaging sales volumes combined with higher rand selling prices across the board, more than offset higher energy and wood fibre costs. Its North American business benefited from higher dissolving wood pulp prices.

A statement released by Sappi said “our dissolving wood pulp products are used worldwide mainly by converters to create viscose fibre for fashionable clothing and textiles, as well as other consumer products”.

Sappi revealed that dissolving wood pulp sales prices remained stable throughout most of the quarter, and declined slightly in December due to pressure from lower Chinese viscose staple fibre prices and a weak Chinese paper pulp market

The company said its European business suffered from “sluggish demand for coated graphic and packaging papers along with ongoing high paper pulp input costs”.


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