Sappi shares slump on profit warning
The weak graphic-paper market adds credence to the company’s strategy to shift its focus to high-margin dissolving pulp, packaging and biotech
Sappi’s shares closed down more than 5% on Wednesday, its biggest one-day drop in six months, after the pulp and paper group warned of lower profits in Europe and North America due to subdued demand. The weak graphic-paper market added credence to the company’s strategy to shift focus from this segment in favour of the high-margin dissolving pulp, packaging and biotech segments. Sappi produces dissolving wood pulp, packaging and speciality papers, printing and writing papers, as well as biomaterials and biochemicals. Speaking at the release of the company’s results for the quarter ended December, Sappi CEO Steve Binnie said the graphic-paper markets in Europe and North America have slowed down in recent months. Binnie said, if it persists, the soft demand would negatively affect short-term profitability. He said that Sappi expected earnings before interest, tax, depreciation and amortisation (ebitda) in the second quarter of financial year 2019 to be slightly lower than the same per...
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