May 11, 2004 -- Johannesburg - Sappi, the world's leading producer of coated fine paper, today announced results for the second quarter to March 2004.
Strong demand in Europe
US Shipments increasing
Low price levels for coated paper, however increases announced
Strong Sappi Forest Products performance despite continued Rand strength
Cash generated from operations of US$184 million
EPS of 10 US cents for quarter
Commenting on the results, Sappi CEO Jonathan Leslie, said:
"After three quarters of declining earnings, we have now reversed that trend. The overall improved performance from the previous quarter reflects the coated paper sales volume increases in all regions, particularly Europe.
"There is increasing recognition of the value of print in the marketing media mix and during the quarter we launched our 'Life with Print' programme, aimed at promoting print as a powerful communications medium to marketing decision makers.
"Increased demand for coated fine paper in Western Europe and a reduction in losses in North America despite high costs of wood and energy positively impacted overall results.
"The forest products business performed well notwithstanding the strong Rand, particularly our dissolving pulp business which had strong demand and higher Dollar pulp prices. We have taken the first step to increase the output of dissolving pulp by 20,000 tons and we are investigating adding a further 30,000 tons of annual capacity."
Looking forward, Leslie said:
"Pricing for coated fine paper in both the US and Europe remained low in the quarter, although we believe that we are now at an inflection point in pricing. We are encouraged by what appears to be a turnaround in the advertising cycle and the increase in activity at commercial printers in the USA along with the already positive demand developments in Europe. While facing continued pressure from rising energy costs globally and high wood costs in North America, we nonetheless expect to see a further improvement in our earnings in our third quarter compared to our second quarter."
The full results announcement is available at www.sappi.com
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