Sappi recently posted its fiscal first quarter financial results. Commenting on the results, Sappi Chief Executive Officer Steve Binnie said, "Operating performance in the quarter was in line with expectations and the equivalent quarter last year. The group generated an EBITDA excluding special items of US$145 million, operating profit excluding special items of US$74 million and profit for the period of US$24 million.
"The Specialised Cellulose business continued to generate good returns during the quarter, with EBITDA excluding special items of US$70 million. US Dollar prices for dissolving wood pulp remain under pressure in all market segments due to excess market supply as well as the weak margins in the viscose staple fibre sector. The decline in cotton and polyester prices and large cotton reserves are compounding the pricing pressures. The weaker Rand/Dollar exchange rate has enabled the South African mills to maintain Rand pricing, while good variable and fixed cost control across the business is helping to maintain margins.
"In this seasonally slower quarter, the performance of the European business improved compared to that of the equivalent quarter last year. This was despite the EUR 12 million cost and lost margin impact of the paper machine upgrade at the Gratkorn Mill. The European business benefited from lower fixed costs after the disposal of the Nijmegen Mill, higher average sales prices for coated woodfree paper as well as an improved performance from the specialities business at Alfeld.
