Sappi swings full-year loss on weak demand in Europe

Sappi, the world’s largest maker of glossy paper, swung to a loss in 2013 as demand fell in its main European markets.

The loss of $161-million for the 12 months through September compared with a profit of $104-million a year ago, the Johannesburg-based company said in a statement on Thursday. Sales fell 7 per cent to $5.93-billion, it revealed.

Sappi plans to shut down part of its European operations over a three-year period in order to boost margins and cut costs, resulting in a charge of $190-million during the fourth quarter. The company said results would improve for 2014, helped by the restructuring and commissioning of new plants for specialised cellulose in North America and South Africa.

“Our profitability in the 2014 financial year is expected to be better than that of 2013 as a result of a larger specialised cellulose business,” the company said. A gradual improvement in Europe will be supported by the profitability of southern African and North American paper businesses, it said.

Sappi shares fell 1.5 per cent to R29.30 by 10:15 am in Johannesburg on Thursday. The stock has declined 5.1 per cent this year, compared with a 17 per cent gain in the 165-member FTSE/JSE Africa All Share Index. – Bloomberg

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