SAP - Sappi Limited - Sappi Trading Update as at the Annual General Meeting of

SAP - Sappi Limited - Sappi Trading Update as at the Annual General Meeting of  
02 March 2009                                                                   
Sappi Limited                                                                   
(Registration number 1936/008963/06)                                            
(Incorporated in the Republic of South Africa)                                  
Share code: SAP & ISIN: ZAE000006284                                            
("Sappi" or the "Company")                                                      
Sappi Trading Update as at the Annual General Meeting of 02 March 2009          
Speaking today at the Annual General Meeting, Sappi non-executive chairman Dr   
Danie Cronje provided the following update on trading conditions for the group: 
We reported our results for our first quarter on 2 February 2009 which reflected
a weak operating profit as a result of deteriorating global market conditions.  
At the same time we said that our short term outlook was for difficult global   
economic conditions to continue and for these to be reflected in demand for our 
products and our operating results. We also said at that time we expected some  
improvement in demand from the very low levels experienced in December and in   
the first part of January. We expected the operating profit for the quarter     
ending March to remain weak.                                                    
Since then we have seen no improvement in market conditions and have in fact    
experienced lower demand than expected as well as weaker pricing in some markets
as global market conditions continued to deteriorate.                           
In Europe, demand for coated paper deteriorated further particularly for coated 
fine paper sheets. Prices have held up and we are implementing a further        
increase in the February/March timeframe for coated fine paper.                 
The integration of the recently acquired mills is proceeding well and we will   
start integrating the acquired order books and brands of the Gohrsmuhle and     
Hallein mills when M-real ceases coated fine paper production at these two      
mills, which have a capacity of 640,000 tons, in April. We have generally had   
good support from our existing and new customers following the acquisition.     
Demand levels in Europe are expected to remain substantially below last year for
the remainder of this year and we expect to continue to curtail production for  
the rest of this year. The second largest European coated fine paper producer   
announced in February that it expected to curtail its coated fine paper         
production more than 20% in the first 4 months of 2009 and that it had completed
its previously announced permanent closure of 160,000 tons of coated fine paper 
capacity.                                                                       
In North America, demand levels for coated fine paper are even weaker than in   
Europe and prices have also weakened further. Our North American business is    
further impacted by low demand for market pulp with prices which have continued 
to decline. We will continue to curtail production, and we have decided to      
suspend operations at our Muskegon Mill, which has a capacity of 170,000 tons of
coated fine paper, pending developments in market conditions over the course of 
the year.                                                                       
The Southern African business, which had previously experienced less            
deterioration in its domestic markets, is now also facing lower demand for      
newsprint and packaging paper. Demand for chemical cellulose pulp remains weak  
and prices have declined further in line with NBSK pulp prices.                 
Input costs continue to decrease gradually but the positive impact is partly    
offset by the relative weakness of the Rand and Euro against the Dollar, each a 
major operating currency for us. The disruption caused by stopping and starting 
production also has an unfavourable impact on usage of raw materials.           
Visibility of future market demand remains poor but we now expect an operating  
loss before special items for the quarter to March 2009.                        
In light of current challenging market conditions and lack of visibility about  
future market developments we are prioritising cash generation and liquidity.   
Each of our operating businesses is implementing production curtailment and     
variable and fixed cost reduction plans to minimise the cash impact of the      
current weak market conditions, including the suspension of operations at       
Muskegon Mill. We are also tightly managing working capital down to minimum     
levels without compromising on service excellence. At current levels of business
we are targeting a US$100 million reduction in working capital from December    
2008 to our financial year end.  In addition, we are reducing capital           
expenditure to a minimum.  In the current financial year we expect capital      
expenditure in our operations to be below US$200 million compared to US$505     
million last year.                                                              
We do not have any major borrowings maturing in the next 15 months and the group
has sufficient cash and committed facilities to cover short term obligations.   
Given the weak global market conditions, we are expecting the rest of 2009 to   
remain challenging. Our actions and plans are focused on dealing with these     
tough market conditions and importantly, to ensure that Sappi remains well      
positioned to take full advantage of our leading positions in coated graphic    
paper and chemical cellulose when markets start to recover.                     
02 March 2009                                                                   
ENDS                                                                            
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 impact of the global economic downturn, the risk that the       
European Acquisition will not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected, expected revenue     
synergies and cost savings from the acquisition may not be fully realized or    
realized within the expected time frame, revenues following the acquisition may 
be lower than expected, any anticipated benefits from the consolidation of the  
European paper business may not be achieved,  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), adverse changes in the   
markets for the group`s products, consequences of substantial leverage,         
including as a result of adverse changes in credit markets that affect our      
ability to raise capital when needed, changing regulatory requirements,         
unanticipated production disruptions (including as a result of planned or       
unexpected power outages), 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.                     
For further information contact:                                                
Robert Hope                                                                     
Group Head Strategic Development                                                
Sappi Limited                                                                   
Tel +27 (0) 11 407 8492                                                         
Robert.Hope@sappi.com                                                           
Andre F Oberholzer                                                              
Group Head Corporate Affairs                                                    
Sappi Limited                                                                   
Tel +27 (0) 11 407 8044                                                         
Mobile +27 (0) 83 235 2973                                                      
Andre.Oberholzer@sappi.com                                                      
Sponsor                                                                         
UBS South Africa (Pty) Ltd                                                      
Date: 02/03/2009 15:45:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department.                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.