Sappi tries to raise its earnings in 2019 Q1 |
SAPPI is looking to increase its earnings in the first quarter of 2019 after putting behind the challenges it experienced during the current year.
The group battled a stronger rand, higher raw material costs and increased capital expenditure, which resulted in Sappi reporting a decline in earnings before interest, tax, depreciation and amortisation (Ebitda) in the year to end September.
Ebitda was marginally down to $762 million (R10.96 billion) as compared to last year’s figure of $785m. However, Ebitda for the fourth quarter of 2018 was slightly up to $224m, compared to $221m reported last year.
Chief executive Steve Binnie said the results were 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. The rand also strengthened to below R12 to the dollar in 2018 and it was not good for the group as Sappi is an export business. But the rand has since weakened to above R14 to the dollar and this augurs well for the group in 2019,” Binnie said.
He said in the fourth quarter the group delivered increased earnings, having resolved the third quarter production challenges and benefited from higher graphic paper prices and stable demand across most product categories.
Sappi is a global diversified wood fibre company focused on providing dissolving wood pulp (DWP), specialities and packaging papers, printing and writing papers as well as biomaterials and biochemicals to its direct and indirect customer base across more than 150 countries.
Profit for the fourth quarter increased by 4.90 percent to $107m, while it declined by 4.44 percent for the year to $323m. Earnings per share (Eps), excluding special items, was flat during the quarter to 19 US cents a share, but Eps declined by 6.25 percent for the year to 60 US cents.
The group said its net debt increased to $1.57bn, up from $1.32bn as a result of the cash utilisation.
The group declared a dividend of 17 US cents a share, up from 15c compared to last year.
Going forward the group said the de-bottle-necking of Saiccor, Ngodwana and Cloquet as well as fewer production disruptions in 2019 should lead to increased DWP sales volumes to meet growing demand.
Sappi’s share price closed 1.49 percent higher on the JSE at R82.25 yesterday.