JOHANNESBURG, Nov. 15, 2018 /PRNewswire/ -- Commenting on the results, Sappi Chief Executive Officer Steve Binnie said: "I am very satisfied that we have delivered results for the year in line with that of the prior year, notwithstanding the downtime related to the completion of several large strategic growth projects. These projects facilitated a further shift in the product mix of the group towards higher margin and growth segments."
Reflecting on the 4th quarter, Binnie indicated: "We delivered increased earnings having resolved the 3rd quarter production challenges and benefited from higher graphic paper prices and stable demand across most product categories. To further build and strengthen our market leading position, during the quarter we launched the Verve brand as the umbrella brand for our DWP products, emphasising Sappi's commitment to producing a natural fibre sourced from sustainably managed forests."
Binnie confirmed that: "Strong market demand for dissolving wood pulp (DWP) and speciality and packaging papers ensured our production capacity in these grades was fully utilized, further supporting our decision to invest in additional capacity in these business segments. We were also able to reduce net finance costs by 15% due to lower average debt levels during the year.
I am also pleased that we have been able to declare an increased dividend of 17 US cents."
Turning to the next quarter, Binnie stated: "having completed the significant projects in 2018 to convert paper machines to higher margin and growing packaging grades, in addition to the debottlenecking of both Saiccor and Ngodwana Mills, we expect EBITDA in the first quarter of financial year 2019, given current exchange rates, to be comfortably higher than that of 2018."
Financial summary for the quarter and full year
The major factors which influenced the fourth quarter's results include:
Outlook
The debottlenecking of Saiccor, Ngodwana and Cloquet as well as fewer production disruptions in 2019 should lead to increased DWP sales volumes to meet growing demand. DWP spot prices are forecast to remain range-bound at current levels in the coming year as VSF prices are expected to be under pressure from excess VSF capacity, while paper pulp prices which are forecast to remain at high levels should provide support.
Demand for speciality and packaging papers continues to grow, driven by increasing consumer preference for paper based packaging and legislative changes promoting recycling and the use of recyclable materials. The completion of the conversion projects at Somerset and Maastricht in the past year will allow us to increase production of paperboard grades to serve this growing market.
Industrywide conversion and closure of graphic paper machines in the US and Europe are expected to keep the markets balanced in the coming year should demand contract at similar levels to those of the past few years. Recent European data however, indicates that a potential downturn may be realised in 2019. Cost control measures will be implemented in order to support margins as we manage the price elasticity in our paper markets.
Capital expenditure in 2019 is expected to increase to US$590 million as we proceed with the Saiccor 110kt expansion having recently received initial EIA approval for the project, complete the Saiccor woodyard upgrade, convert Lanaken PM8 from coated mechanical to woodfree paper production and upgrade the Gratkorn Mill.
The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investors; Latest financial results
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. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters, identify forward looking statements. In addition, this document includes forward looking statements relating to our potential exposure to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity price risk. You should not rely on forward looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:
We undertake 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.
SOURCE Sappi North America, Inc.
These press releases may also interest you
|