Sappi recently presented its financial results for the year and Q4 ended September 2014. Statement on key financial highlights of the quarterly and year-end results from Sappi Chief Executive Officer, Steve Binnie:
"We made significant strides in the execution of our strategy this past year. Notable achievements were reduction of net debt, improved performance of our European and Southern African paper businesses and delivery of substantially increased dissolving wood pulp volumes into a growing and high margin market. Additionally, we disposed of Nijmegen Mill in order to reduce costs, and sold our Usutu forests which were surplus to requirements, to assist with reducing net debt. The North American business had a challenging year; however, we can already see advancement in that business and expect further improvement in the year ahead.
The first full year of operation for our expanded Specialised Cellulose operations as well as reduced capex expenditure following the completion of the dissolving wood pulp projects, allowed for a focus on cash generation and debt reduction. The group's EBITDA excluding special items for the full year increased by 25% over the prior year.
The group continued the strong progress made throughout 2014 and delivered a 29% rise in EBITDA excluding special items compared with the equivalent quarter last year. It is pleasing to note that all three regions improved from the prior quarter. Cost reductions across the group and higher selling prices in some markets contributed to the growth. Volumes continued to decline in the graphic paper markets, but at a slower rate than experienced in recent years.
The European business saw an encouraging improvement in margin in this seasonally better quarter, achieving an EBITDA excluding special items margin of more than 10% for the first time since 2012.
In North America, market conditions were extremely competitive throughout the year and we experienced significant downward pressure on pricing. During this seasonally stronger quarter, operating profit excluding special items recovered compared with the prior quarter, which included the impact of outages. The result was slightly below that of the equivalent quarter last year due to lower paper prices and higher input costs, particularly for wood. Prices for coated woodfree web increased during the quarter, but have yet to match prior year price levels. The release paper business was once again impacted by weak Chinese demand, only partially offset by stronger sales to the rest of the world.
Overall, this has been a good year for the Southern African business, with an expanded Specialised Cellulose business and the restructured paper business consistently delivering enhanced margins. The performance of the Southern African business improved compared to the equivalent quarter last year due to increased sales volumes for dissolving wood pulp, as well as higher average prices for paper and paper packaging.
