Johannesburg - South African-listed paper maker Sappi is considering closing more mills in Europe as falling demand and rising costs for inputs such as pulp put pressure on margins, its chief executive said on Tuesday.
Sappi, the world's largest maker of fine paper used in glossy magazines, has been cutting capacity in all its operations as the paper industry struggles to recover from a slump caused by sluggish demand and over capacity.
But recovery has been slow for Sappi with weak consumer demand in Europe and an acceleration to digital devices from traditional print.
Chief executive Ralph Boettger said the company was cutting costs in “every single area” of its European business, which is its biggest, to boost margins.
“We are going to have to also take out further capacity and that will most probably involve closure of either mills or machines or both,” Boettger told Reuters in an interview.
“We are still the process of evaluating exactly what to do and then there will be consultations.”
Sappi, also operating in South Africa and North America, posted a one-third drop in quarterly profit earlier this month due to the tough market conditions.
Sappi has said it was now focusing on higher margin businesses such as chemical cellulose.
The company, which is the world's largest producer of chemical cellulose, is investing $500 million to boost its capacity of the product to more than 1.3 million tonnes a year. - Reuters