Sappi’s shift in strategy is paying off

On track for 2020 target

JSE-LISTED Sappi said its strategic shift to place more emphasis on dissolving pulp and speciality packaging was starting to pay off, placing it in a good position to reach its 2020 target.

Sappi yesterday said it had put emphasis on strong cashgeneration and cost-management initiatives to reduce variable costs to reach its target.

The group said it had set aside nearly $350 million (R4.6 billion) for capital expenditure in 2017.

Sappi said it managed to improve its European and US businesses, with speciality-packaging paper units achieving strong sales growth and profit margins. In South Africa, the group said, the paper business experienced a strong recovery in sales volumes in the six months to end March.

Chief executive Steve Binnie said the business was on track to deliver projects it set to achieve locally and abroad.

“Our projects to increase capacity of speciality packaging in Europe and North America are progressing as planned,” Binnie said. “Capital expenditure in 2017 is expected to be about $350m.”

This includes the next phase of the dissolving pulp debottlenecking projects at Ngodwana and Saiccor mills, the Somerset Mill wood yard and the initial phases of the speciality-packaging conversions.”

Sappi has manufacturing operations in Europe, America and South Africa and customers in over 150 countries.

The graphic-paper markets in Europe and the US remained sluggish during the sixthmonth period.

But the group said orders improved in late March and April while rising paper pulp