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Sappi reports fourth quarter results in continuing weak markets
Sappi Limited
Press Release
Johannesburg, 10 November 2003
Sappi reports fourth quarter results in continuing weak markets
Sappi, the world"s leading producer of coated fine paper, today announced
results for the fourth quarter to September 2003.
Highlights
Markets remained weak
Significant reduction in prices in all major markets
Fourth quarter sales up 6.7% from prior year
Operating costs well controlled
Cash generated by operations up 28% from prior quarter to US$159 million
Headline EPS of 11 US cents for quarter; 71 US cents for year
EPS of 4 US cents for quarter; 65 US cents for year
After tax charge in quarter of 8 US cents in relation to US machine closure
Dividend of 29 US cents
Commenting on the results, Sappi CEO Jonathan Leslie, said:
"Our results were achieved in an environment of continued weak demand for coated
fine paper, contrary to the customary seasonal pick up in this quarter, and
lower prices in all regions. Our fine paper businesses were unfavourably
affected by weak pricing in Europe and North America and in South Africa by more
competitive imports and reduced export margins due to the weaker US Dollar.
"Forest Products experienced firm demand in the South African markets for
packaging paper and internationally for dissolving pulp. The weaker US Dollar
continued to impact prices realised in local currency.
"We have embarked on a number of actions to improve the supply demand balance
and to offset rising costs in these tough markets.
"At Westbrook in the US we will close our highest cost paper machine and
transfer the production of coated fine paper to other mills. The mill will in
future focus on our Ultracast and casting release paper business.
"We have stopped operations at our Clan sawmill in South Africa. The sawmill
was non-core, relied on old technology and had an uncompetitive log supply.
"I have also decided to restructure the Fine Paper division. Wolfgang Pfarl and
Kathy Walters, CEOs of Sappi Fine Paper Europe and North America respectively,
will report directly to me and as a consequence the Fine Paper office in London
will be closed.
"As the position of CEO of Sappi Fine Paper will no longer exist, we have agreed
that Bill Sheffield will leave the group on 14 November 2003.
"In addition we plan to reduce our staffing levels by a further 100 people in
North America and by 150 people in Europe in 2004."
Looking forward, Leslie continued:
"We will continue to curtail fine paper production in Europe and North America
during the current quarter including scheduling major maintenance shuts at all
the North American mills.
"It appears as if any pick up in markets will be delayed beyond our first
quarter. As a result of poor market conditions and low prices we expect
earnings to be weaker than the prior quarter, before the charges related to
closures and staff reductions and the impact of the maintenance shuts, in the
first quarter.
In conclusion, he said:
"We are, however, seeing early signs of improvement in Europe. The order intake
of coated fine paper has improved and announcements of price increases for
coated groundwood paper, in Europe and the United States, and coated fine paper
reels, in Europe, have been made.
"With this background we expect earnings to improve for the balance of the year,
resulting in an overall improvement, before the closure and staff reduction
charges, compared to 2003."
ENDS
The full results announcement is available at www.sappi.com
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. Undue reliance should
not be placed on such statements because, by their nature, they are subject to
known and unknown risks and uncertainties and can be affected by other factors,
that could cause actual results and company plans and objectives to differ
materially from those expressed or implied in the forward-looking statements (or
from past results). Such risks, uncertainties and factors 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 and pricing), adverse changes in the markets for
the group"s products, consequences of substantial leverage, changing regulatory
requirements, unanticipated production disruptions, economic and political
conditions in international markets, the impact of investments, acquisitions and
dispositions (including related financing), any delays, unexpected costs or
other problems experienced with integrating acquisitions and achieving expected
savings and synergies and currency fluctuations. The company undertakes 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.
Issued by:
Brunswick South Africa on behalf of Sappi Limited
Tel + 27 (0)11 268 5750
Fax + 27 (0)11 268 5747
For further information contact:
Robert Hope
Director Strategic Development
Sappi Limited
Tel +27 (0)11 407 8492
Robert.Hope@sappi.com
Andre F Oberholzer
Corporate Affairs and Communication Manager
Sappi Limited
Tel +27 (0)11 407 8044
Mobile +27 (0)82 906 0638
Andre.Oberholzer@sappi.com
Date: 10/11/2003 02:01:04 PM Supplied by www.sharenet.co.za
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