Ailing graphic paper markets hurt Sappi
The largest maker of dissolving wood pulp wants to reduce exposure to the declining graphic paper market
Weak demand in graphic paper product categories in Europe and North America prompted Sappi to significantly cut back on production in those regions in the second quarter to March. The world’s largest maker of dissolving wood pulp intends reducing the profit contribution from its graphic paper business to about 25% from 40% to focus on high margin businesses “in the next few years”, CEO Steve Binnie said on Thursday. The “much weaker” conditions in the sector validate Sappi’s strategy to refocus operations away from the dwindling graphic paper best known for use in glossy magazines to the higher-margin dissolving wood pulp, which is used in making clothing and textiles, and specialised packaging products. Sappi reported relatively weak results which saw shares fall 8.53%, the largest one-day drop since August 13, 2018. Binnie said as a result of the unfavourable market conditions the company took a production downtime of 85,000 tons across its paper machines in Europe and North ...
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