File picture: Supplied

Johannesburg - Sappi, the world’s biggest maker of glossy paper, said second-quarter net income fell 88 percent as sales in Europe, its main market, weakened.

Profit declined to $7 million in the three months through March, compared with $58 million a year earlier, the Johannesburg-based company said in a statement today.

Sales dropped to $1.5 billion in the quarter compared with $1.6 billion a year ago, it said.

“The European business experienced very weak market conditions during the quarter and, despite the significant cost reductions implemented over the past year, the performance of the business was substantially weaker than a year ago,” the company said.

Sappi shares fell as much as 7.6 percent and were down 3.5 percent at 24.80 rand at 9:13 a.m. in Johannesburg, the lowest level since November.

The share price has declined 19 percent this year, according to data compiled by Bloomberg, compared with a 34 percent gain for papermaker Mondi Ltd.

Sappi, which generates 55 percent of revenue in Europe, is converting mills at a cost of about $540 million in South Africa and Minnesota to produce specialty pulp used to make goods from sports clothing to mobile-phone screens and pills.

The company hasn’t paid a dividend to shareholders since 2008.

Sappi is rated Ba3 by Moody’s Investors Service, three levels below investment grade.

It issued bonds worth 1.5 billion rand ($166.62 million) on April 16. - Bloomberg News