Sappi weakens 10% on gloomy third-quarter results
The paper and pulp group reported a fall in profit in the quarter to end-June largely due to increased depreciation after recent capital expenditure
Paper and pulp producer Sappi’s share price fell almost 10% on Monday morning, after the group reported a drop in profit for its third quarter to end-June.Profit declined 12% to $51m due to increased depreciation, following capital expenditure activity, while results in SA were hit by a stronger rand exchange rate and lower sales volumes.Headline earnings per share in the quarter fell to 9c from the prior period’s 11c, with the group’s European segment performing best — sales by volume were up 4.7%.Dissolving wood pulp sales volume in SA was 3% lower than in the prior comparative quarter, while fixed costs rose due to longer than expected annual maintenance at its Saiccor and Ngodwana mills.Capital expenditure at the group’s Somerset mill in the US, at which Sappi intends to produce speciality paper, was also now expected to cost between $35m and $50m more than expected, Sappi’s statement read.The company said it expected its performance in the fourth quarter to be in line with the ...
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