Sappi reported an operating loss of $7-million for the company’s third quarter ending June 30, the paper manufacturer said on Thursday.
The loss for the quarter compared with a profit of $6-million in the prior quarter and a loss of $23-million a year ago, the Johannesburg-based company said.
The basic loss per share for the quarter was 12 United States cents compared to a loss of 17 cents in the equivalent quarter a year earlier, the company added.
However, chief executive Ralph Boëttger said strong cash generation was a feature of Sappi’s results for the quarter as management had reduced working capital and limited capital expenditure to essential items.
Global economic conditions remained depressed in the quarter resulting in continued weak conditions in most of Sappi’s coated paper markets, he said.
”There are indications that the reduction of inventories in the customer supply chain has run its course, resulting in improved order inflows in many markets towards the end of the quarter,” Boëttger said.
He added that conditions in pulp markets, including the chemical cellulose markets, had improved significantly in terms of demand and US dollar prices, late in the quarter.
Sales volumes for the quarter were slightly up on the prior quarter but 3% down on the equivalent quarter last year, Boëttger noted.
Looking ahead, he said Sappi expected to return to operating profitability — excluding special items — during the next quarter.
”Cash generation is expected to be positive for the quarter,” he noted.
The company would continue to focus on cash generation and debt reduction.
”We expect capital expenditure for the full year to be less than $200-million and we will continue to carefully manage capex at that level in order to prioritise debt reduction,” he said.
The successful completion of Sappi’s refinancing would take care of Sappi’s liquidity and significant debt maturities for at least the next three years, Boëttger added.
”With our well-structured business and decisive management action, we are strongly placed to ride out the current economic downturn and take full advantage of our leading market positions and efficient asset base when conditions improve. — Sapa