Sappi: Plan to cut debt by third in two years

Sappi, the world’s biggest producer of dissolving wood pulp, sees debt falling almost a third to $1.6 billion (R17bn) in two years as the Johannesburg-based company cuts costs and moves away from lower-margin paper. “We are confident that the level will come down to where we can invest in new ideas,” Steve Binnie, who takes over as chief executive next month, said yesterday. “Finances have improved tremendously. The big capital expenditure is behind us.” Sappi is increasing its focus on dissolving pulp, used to make luxury clothing, sportswear and pharmaceuticals, as the product carries a higher profit margin than paper. It is targeting production of 1.3 million tons of the pulp in the year to September, supplying about 20 percent of world demand, while continuing to reduce spending in Europe. The ratio of debt to earnings before interest, taxes, depreciation and amortisation would be about three times at the end of September, he said. Binnie will replace Ralph Boettger when he retires at the end of the month. Shares fell 1 percent to close at R38.55 yesterday. – Bloomberg