Sappi out­lines R1.6bn capex plan

The Star Early Edition - - COMPANIES - Sandile Mchunu

PULP AND pa­per com­pany Sappi said yes­ter­day that it was ex­pect­ing to spend R1.6 bil­lion in South Africa in cap­i­tal in­vest­ment projects in its Ngod­wana mills and Saic­cor plants. The group sees the dis­solv­ing wood pulp (DWP) seg­ment as an area to in­vest in an ef­fort to in­crease the vol­umes for this seg­ment.

Chief ex­ec­u­tive Steve Bin­nie said South Africa re­mained im­por­tant for the com­pany, de­spite ex­pe­ri­enc­ing low eco­nomic growth.

“In Ngod­wana we are spend­ing about R900 mil­lion as we want to in­crease our dis­solv­ing wood pulp divi­sion. The project is on track and we are ex­pect­ing it to be com­pleted in mid-2018,” Bin­nie said. The group also said it is ex­pect­ing to spend R700m in Saic­cor to in­crease its ca­pac­ity.

Sappi’s over­all cap­i­tal ex­pen­di­ture in the last quar­ter is ex­pected to be $170m (R2.25bn).

“This in­cludes the next phase of the DWP de­bot­tle­neck­ing project at Ngod­wana mill, the Som­er­set mill wood­yard and the ini­tial phases of the spe­cial­ity pack­ag­ing con­ver­sions at Maas­tricht and Som­er­set mills,” the group said.

Bin­nie said the third quar­ter was sea­son­ally and his­tor­i­cally its weak­est quar­ter due to the slow­down in busi­ness ac­tiv­ity dur­ing the north­ern hemi­sphere sum­mer hol­i­day pe­riod and Sappi’s choice to use this quar­ter to un­der­take ma­jor an­nual main­te­nance shuts.

De­spite be­ing the weak­est quar­ter in the group’s his­tory, Sappi man­aged to post im­proved re­sults where prof­its were up by 81.25 per­cent to $58m, up from $32m, im­pacted neg­a­tively by once-off re­fi­nance costs of $23m.

Sappi’s share price rose 2.76 per­cent on the JSE yes­ter­day to close at R89.24.

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