JOHANNESBURG - Paper company Sappi said on Monday its operating performance in the third quarter ended June was in line with previous guidance, with the group generating earnings before interest, taxes, depreciation and amortization (EBITDA) of US$155 million.
Diluted headline earnings per share dipped slightly to nine U.S. cents compared with 11 cents during the same period in 2017, Sappi said.
"The strong performance of our European operations was offset by a number of non-recurring operational and production issues in our South African and North American businesses," it said.
"Profit for the period declined from US$58 million to US$51 million due to an increased depreciation expense following the higher capital expenditure activity."
Sappi said dissolving wood pulp (DWP) demand and pricing remained healthy, although net sales pricing was slightly below that of a year ago. During the quarter, all three of its DWP mills underwent scheduled maintenance shuts as well as some additional debottlenecking.
Demand for specialities and packaging papers continued to grow across the various product segments, with production capacity being the limiting factor to sales in some markets.
"The DWP market remains tightly supplied, with limited new capacity in the medium term," Sappi said.
"Market prices are expected to remain stable at current levels given historically high paper pulp prices that are supporting DWP pricing and viscose staple fibre prices that remain under pressure from new capacity entering the market."
Fourth quarter average realised DWP prices should be in line with those of the third quarter, it added.
Sappi is a global diversified woodfibre company which provides dissolving wood pulp, specialities and packaging papers, printing and writing papers as well as biomaterials and biochemicals to its direct and indirect customer base across more than 150 countries.