DURBAN – Sappi's share price declined by more than 8 percent on the JSE after the group reported a 29 percent decline in profits for the second quarter to end March to $72 million (R1.04 billion), negatively impacted by a declining demand of its major graphic paper product categories, which were down between 8 percent and 13 percent in Europe and North America.
The profits for the quarter declined from $102m compared to the second quarter of 2018.
Earnings before interest, tax, depreciation and amortisation excluding special items also declined to $187m, compared to the second quarter of last year of $211m.
As a result the share price declined 8.53 percent to R61.10 a share, down from the previous close of R66.80.
Chief executive Steve Binnie said graphic paper markets were much weaker than expected, due to an economic slowdown and the impact from selling prices implemented last year.
“However, demand from our major dissolving wood pulp (DWP) customers remained healthy. Solid container board demand and a recovery of consumer packaging were offset by continued weakness in the self-adhesives and release paper segments,” Binnie said.
He added that the business continued to be supported by the investments made in recent years to diversify the product portfolio with packaging and specialities sales volumes for the group up 18 percent and DWP increasing by 16 percent year on year.