Packaging and pulp push up Sappi earnings
Rising raw material costs put Sappi’s European profits under pressure
Sappi’s European profits were under pressure in the second quarter ended-March 2017 from rising raw material costs, especially pulp and latex, and a soft graphic paper market. Europe is the international pulp, paper and packaging group’s biggest market by sales. But its speciality packaging business in Europe — including for soup sachets, carry bags and cosmetics — experienced strong sales growth and profit margins, helped by a weaker euro. Meanwhile, buoyant dissolving wood pulp markets, mainly for clothing and textiles, generated 50% of profit. "SA surprised positively with a robust dissolving wood pulp and packaging performance," Wade Napier, a diversified resources analyst at Avior Capital Markets, said on Monday. The upward trajectory of dissolving wood pulp — also known as chemical or specialised cellulose — followed trends for viscose staple fibre, cotton and polyester. The average dollar prices in the quarter were above those of the prior quarter and the equivalent quarter i...