Sappi reports robust results for quarter, year
Gibson also noted that out of the 250 turbine technicians in the wind industry in the country, only seven were women.
On the opening day of the conference, Sawea chairman Mark Pickering outlined the challenges which the wind industry is experiencing because of the stalling of Round 4 of the Renewable Energy Independent Power Producer Programme (Reipppp) projects, versus the proven potential of the industry to solve energy generation, economic and social issues in the country.
Pickering said South Africa had surpassed the all-important tipping point in renewables, in which new renewables are cheaper than existing thermal and coal plants. SAPPI pointed to strong growth from its dissolving wood pulp (DWP) and speciality packaging businesses as it delivered robust fourth-quarter and full-year results.
Sappi said the demand for DWP had grown by double digits throughout the year and the demand for speciality packaging was also growing.
Sappi chief executive Steve Binnie said yesterday that the company had delivered another strong set of results, with profits up 6% year-on-year.
“I am very pleased with the growth of the DWP and speciality packaging businesses,” Binnie said. “Furthermore, our initiatives to reduce variable costs, and the benefits of lower interest charges, were able to help mitigate higher paper-pulp prices and a stronger rand/ dollar exchange rate during the reporting period.”
Profit for the fourth quarter was $102 million (R1.447 billion), down from $112m year-on-year. Profit for the year was $338m, up from $319m the previous year.
Earnings before interest, taxes, depreciation and amortisation (Ebitda), excluding special items, was $221m, up from $209m for the quarter, while Ebitda for the year was $785m, compared with $739m last year.
Net debt was reduced from $1 322m to $86m year-on-year. A dividend of 15 cents was declared (11c in 2016).
Sappi said its success in reducing debt levels to below its targeted leverage ratio of less than two times net debt to Ebitda in the prior year meant that the company could turn its attention to increased investments in growth projects, with the main focus converting paper machines in Europe and the US to speciality packaging grades and DWP de-bottle-necking projects in South Africa.
“Capital expenditure in 2018 is expected to increase to $450m as we continue the conversions in Europe and North America, complete the Saiccor and Ngodwana de-bottle-necking and start the upgrade of the Saiccor wood yard,” Binnie said.
“The increase in expansionary capital spending during 2018 is focused on higher margin growth segments, including DWP and speciality packaging. This will position us for stronger profitability from 2019.” – ANA