| Thu 31 Jan 2008, 8:59 | | SAP - Sappi Limited - Quarter Results Ended December 2007 |
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SAP
SAVVI
SAP - Sappi Limited - Quarter Results Ended December 2007
Sappi limited
(Registration number 1936/008963/06)
Issuer Code: SAVVI
JSE Code: SAP
ISIN: ZAE000006284
quarter results ended December 2007
Quarter 1
Financial highlights
- Operating profit (excluding special items) improved on last year
- Basic EPS 18 US cents for the quarter
- Prices improved except in Europe
- Saiccor expansion progresses well
- High input costs
Summary
Quarter ended
Dec Dec Sept
2007 2006 2007
Key figures: (US$ million)
Sales 1,377 1,267 1,422
Operating profit 91 92 87
Special items - losses (gains) * 1 (29) 9
Operating profit excluding
special items 92 63 96
EBITDA excluding special items ** 188 158 187
Basic EPS (US cents) 18 13 27
Net debt * 2,495 2,278 2,257
Key ratios: (%)
Operating profit to sales 6.6 7.3 6.1
Operating profit excluding special
items to sales 6.7 5.0 6.8
EBITDA excluding special items to sales 13.7 12.5 13.2
Operating profit excluding special
items to average net assets 8.3 6.4 9.1
Return on average equity (ROE) * 9.3 8.4 14.1
Net debt to total capitalisation * 45.6 46.7 43.2
* Refer to Supplemental Information for the definition of the term.
**Refer additional information in Supplemental Information for
the reconciliation of EBITDA excluding special items to profit for the
period.
Comment
Our operating performance improved further in the quarter. Forest Products
benefited from good demand for its products and increasing prices to report a
strong performance. Our fine paper business continued to improve its
profitability despite continued cost pressures and difficult market
conditions in Europe.
We continued to improve our margins in North America through improved coated
fine paper prices and cost reduction. In Europe coated web prices showed an
improving trend in the quarter while coated fine paper sheet prices declined.
We have announced coated fine paper sheet price increases in Europe for
February 2008 which are essential to offset high raw material and energy
prices. The impact of high pulp prices on our margins in Europe, where we
purchase a majority of our pulp, was offset by the benefit of high pulp
prices realised by our Forest Products and North American businesses.
Pulp markets were strong in the quarter. NBSK prices increased from an
average of US$800 per ton in the previous quarter to an average of US$840 per
ton.
Our sales increased by 8.7% compared to a year ago to US$1.38 billion largely
as a result of price increases and the strengthening of the Euro and Rand
against the US Dollar.
Operating profit excluding special items increased 46% to US$92 million from
US$63 million a year ago. Special items for the quarter were negligible but a
year ago included a plantation fair value gain of US$29 million. Details of
special items are set out in note 4. Operating profit including special items
was at a similar level to a year ago.
Net finance costs were US$28 million, down US$9 million compared to a year
ago largely as a result of increased interest capitalised in the quarter,
which relates to the Saiccor expansion project.
Taxation for the quarter of US$21 million includes US$8 million Secondary Tax
on Companies (STC), which relates to the declaration of Dividend Number 84
during the quarter. In the prior quarter taxation was a credit of US$1
million including once- off tax relief, resulting from tax rate changes and
reversal of tax provisions amounting to US$13 million. In the equivalent
quarter last year taxation was US$25 million. The effective tax rate
excluding STC was 21% for the quarter.
Basic EPS was 18 US cents for the quarter compared to 13 US cents (which
included the favourable plantation fair value gain of 9 US cents) a year ago.
Cash flow and debt
Cash generated by operations increased to US$155 million compared to US$125
million a year ago. Working capital increased by US$133 million during the
quarter largely as a result of seasonal working capital movements.
Capital expenditure on property, plant and equipment for the quarter was
US$109 million, of which US$81 million related to the Saiccor expansion.
Net debt increased US$238 million during the quarter. This amount includes
US$64 million of currency movements and fair value adjustments. Net debt to
total capitalisation was 45.6% compared to 43.2% for the prior quarter.
Operating review - Quarter ended December 2007 compared with quarter ended
December 2006
Sappi Fine Paper
Quarter Quarter Quarter
ended ended ended
Dec 2007 Dec 2006 % Sept 2007
US$ million US$ million change US$ million
Sales 1,109 1,044 6.2 1,118
Operating profit 31 16 93.8 29
Operating profit to
sales (%) 2.8 1.5 - 2.6
Special items * - - - -
Operating profit
excluding special items 31 16 93.8 29
Operating profit excluding
special items to sales (%) 2.8 1.5 - 2.6
EBITDA excluding
special items 106 94 12.8 102
EBITDA excluding
special items to sales (%) 9.6 9.0 - 9.1
RONOA pa (%) 3.9 2.1 - 3.7
* See note (4) to the financial statements
Operating margins and returns improved slightly compared to the prior quarter
largely as a result of improved price realisation in North America.
Conditions in the European market remain difficult, in particular coated fine
paper sheet pricing. Input cost pressure remains a major factor in all our
regions.
Europe
Quarter Quarter
ended ended %
Dec 2007 Dec 2006 change
US$ million US$ million (US$)
Sales 638 587 8.7
Operating profit 19 13 46.2
Operating profit to sales (%) 3.0 2.2 -
Special items * (2) - -
Operating profit excluding
special items 17 13 30.8
Operating profit excluding
special items to sales (%) 2.7 2.2 -
EBITDA excluding special items 62 61 1.6
EBITDA excluding special items to sales (%) 9.7 10.4 -
RONOA pa (%) 3.5 2.8 -
Quarter
% ended
change Sept 2007
(Euro) US$ million
Sales (3.5) 619
Operating profit 29.8 17
Operating profit to sales (%) - 2.7
Special items * - -
Operating profit excluding
special items 16.1 17
Operating profit excluding
special items to sales (%) - 2.7
EBITDA excluding special items (9.7) 60
EBITDA excluding special items to sales (%) - 9.7
RONOA pa (%) - 3.5
* See note (4) to the financial statements
Market conditions for coated fine paper in Europe remained very challenging.
Our sales volumes for the quarter were 2% lower than a year ago. Although
this volume decrease is in line with demand in Europe our sales volume
includes an increased proportion of exports. Average prices achieved in Euro
terms declined slightly; however, prices translated to US Dollars increased
as a result of the stronger Euro.
Operating profit excluding special items improved compared to a year earlier
largely as a result of the successful cost reduction initiatives. High input
costs continue to put pressure on margins, in particular increasing pulp
prices and energy costs.
The strength of the Euro relative to the US Dollar had an unfavourable impact
on the margins of our dollar- based exports despite our success in improving
prices in many of our export markets.
North America
Quarter Quarter Quarter
ended ended ended
Dec 2007 Dec 2006 % Sept 2007
US$ million US$ million change US$ million
Sales 384 374 2.7 404
Operating profit 11 2 450.0 9
Operating profit to
sales (%) 2.9 0.5 - 2.2
Special items * 2 - - -
Operating profit
excluding special items 13 2 550.0 9
Operating profit
excluding special items
to sales (%) 3.4 0.5 - 2.2
EBITDA excluding
special items 40 28 42.9 35
EBITDA excluding
special items
to sales (%) 10.4 7.5 - 8.7
RONOA pa (%) 5.0 0.7 - 3.4
* See note (4) to the financial statements
Our North American business reported its best quarterly performance for
several years. The return on net operating assets of 5% is however well short
of acceptable levels.
Prices realised for coated fine paper and pulp improved during the quarter.
Demand was strong and the supply/demand balance remains favourable following
the closure of capacity by North American producers; however, competition in
the market for economy sheets had an unfavourable impact on our volumes and
prices in this segment.
Our sales volume increased marginally compared to a year ago. Input cost
pressure continues to squeeze margins.
The implementation of our new brand line up and launch of new products in
North America has progressed well and has contributed to strengthening
relationships with our customers.
South Africa
Quarter Quarter
ended ended %
Dec 2007 Dec 2006 change
US$ million US$ million (US$)
Sales 87 83 4.8
Operating profit 1 1 -
Operating profit to sales (%) 1.1 1.2 -
Special items * - - -
Operating profit excluding
special items 1 1 -
Operating profit excluding
special items to sales (%) 1.1 1.2 -
EBITDA excluding special items 4 5 (20.0)
EBITDA excluding special items
to sales (%) 4.6 6.0 -
RONOA pa (%) 2.6 2.5 -
Quarter
% ended
change Sept 2007
(Rand) US$ million
Sales (3.6) 95
Operating profit (8.0) 3
Operating profit to sales (%) - 3.2
Special items * - -
Operating profit excluding
special items (8.0) 3
Operating profit excluding
special items to sales (%) - 3.2
EBITDA excluding special items (26.4) 7
EBITDA excluding special items
to sales (%) - 7.4
RONOA pa (%) - 7.9
* See note (4) to the financial statements
Lower sales volumes in the quarter were largely offset by improved pricing in
local currency terms.
Margins remain low as a result of high input costs.
Forest Products
Quarter Quarter
ended ended %
Dec 2007 Dec 2006 change
US$ million US$ million (US$)
Sales 268 223 20.2
Operating profit 55 76 (29.5)
Operating profit to sales (%) 20.5 35.0 -
Special items * 1 (29) -
Operating profit excluding
special items 56 49 14.3
Operating profit excluding
special items to sales (%) 20.9 22.0 -
EBITDA excluding special items 77 66 16.7
EBITDA excluding special items
to sales (%) 28.7 29.6 -
RONOA pa (%) 12.9 14.7 -
Quarter
% ended
change Sept 2007
(Rand) US$ million
Sales 10.6 304
Operating profit (35.1) 52
Operating profit to sales (%) - 17.1
Special items * - 9
Operating profit excluding
special items 5.1 61
Operating profit excluding
special items to sales (%) - 20.1
EBITDA excluding special items 7.3 79
EBITDA excluding special items
to sales (%) - 26.0
RONOA pa (%) - 15.1
* See note (4) to the financial statements
Forest Products continued to perform well. Operating profit excluding special
items increased to US$56 million from US$49 million a year ago. Special items
were negligible in the quarter compared to a gain of US$29 million relating
to plantation fair value a year ago.
Pulp and paper sales volumes increased 4% compared to a year ago and prices
in both local currency and US Dollar terms improved further in strong
markets.
The improved international pulp prices and good demand for pulp had a major
favourable impact on performance during the quarter.
The impact of higher prices was partly offset by the stronger Rand during the
quarter. High labour and input costs also impacted margins unfavourably.
Progress on the Saiccor expansion has been good despite abnormally high
rainfall in recent weeks.
Directors
Dr Daniel (Danie) Christiaan Cronje joined the Sappi Limited board with
effect from 01 January 2008 as a non-executive director (independent).
Outlook
Global macroeconomic conditions are less favourable than expected, with
commentators concerned about a possible slowdown in the US economy and the
strong Euro dampening European growth. Input costs are increasing at the same
time. Our South African businesses are also affected by the national power
shortage and we are working to minimise the impact.
In the coated fine paper sector the global supply/demand balance is generally
favourable. Advertising forecasts remain positive. The pulp industry
continues to experience strong demand and prices continue to increase.
Given that cost pressure is unlikely to abate, we will continue to emphasise
cost reduction. We will also continue our efforts to improve prices for our
products, in particular coated fine paper sheets in Europe.
As reported last quarter we expect our net debt to increase further in the
second quarter before reducing towards the end of the year, as we complete
the Saiccor expansion.
We expect strong operating performance from our Forest Products business and
continued improvement in North America. Margins in Europe will remain under
pressure. Operating profit excluding special items is expected to improve in
the next quarter compared to a year ago.
On behalf of the board
R J Boettger M R Thompson
Director Director 31 January 2008
sappi limited
(Registration number 1936/008963/06)
Issuer Code: SAVVI
JSE Code: SAP
ISIN: ZAE000006284
forward - looking statements
Certain statements in this release that are neither reported financial
results nor other historical information, are forward-looking statements,
including but not limited to statements that are predictions of or indicate
future earnings, savings, synergies, events, trends, plans or objectives.
Undue reliance should not be placed on such statements because, by their
nature, they are subject to known and unknown risks and uncertainties and can
be affected by other factors, that could cause actual results and company
plans and objectives to differ materially from those expressed or implied in
the forward - looking statements (or from past results). Such risks,
uncertainties and factors include, but are not limited to the highly cyclical
nature of the pulp and paper industry (and the factors that contribute to
such cyclicality, such as levels of demand, production capacity, production,
input costs including raw material, energy and employee costs, and pricing),
adverse changes in the markets for the group`s products, consequences of
substantial leverage, including as a result of adverse, changing regulatory
requirements, unanticipated production disruptions, economic and political
conditions in international markets, the impact of investments, acquisitions
and dispositions (including related financing), any delays, unexpected costs
or other problems experienced with integrating acquisitions and achieving
expected savings and synergies and currency fluctuations. The company
undertakes no obligation to publicly update or revise any of these forward-
looking statements, whether to reflect new information or future events or
circumstances or otherwise.
Group income statement
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million % change
Sales 1,377 1,267 8.7
Cost of sales 1,197 1,092
Gross profit 180 175 2.9
Selling, general and
administrative expenses 92 88
Other operating expenses (income) 1 (4)
Share of profit from associates
and joint ventures (4) (1)
Operating profit 91 92 (1.1)
Net finance costs 28 37
Net interest 37 36
Finance cost capitalised (9) (1)
Net foreign exchange gains (1) (2)
Net fair value loss on financial
instruments 1 4
Profit before taxation 63 55 14.5
Taxation 21 25
Current 3 6
Deferred 18 19
Profit for the period 42 30 40.0
Basic earnings per share (US cents) 18 13
Weighted average number of shares
in issue (millions) 228.5 227.0
Diluted basic earnings per share
(US cents) 18 13
Weighted average number of shares
on fully diluted
basis (millions) 230.6 229.9
Group balance sheet
Dec 2007 Sept 2007
US$ million US$ million
ASSETS
Non -current assets 4,670 4,608
Property, plant and equipment 3,554 3,491
Plantations 639 636
Deferred taxation 52 60
Other non- current assets 425 421
Current assets 1,877 1,736
Inventories 793 712
Trade and other receivables 625 660
Restricted cash 41 -
Cash and cash equivalents 418 364
Total assets 6,547 6,344
EQUITY AND LIABILITIES
Shareholders` equity
Ordinary shareholders` interest 1,781 1,816
Non -current liabilities 2,666 2,612
Interest -bearing borrowings 1,884 1,828
Deferred taxation 397 385
Other non- current liabilities 385 399
Current liabilities 2,100 1,916
Interest -bearing borrowings 966 771
Bank overdraft 63 22
Other current liabilities 873 998
Taxation payable 123 125
Shareholders for dividend 75 -
Total equity and liabilities 6,547 6,344
Number of shares in issue at
balance sheet date (millions) 228.8 228.5
Group cash flow statement
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million
Profit after taxation per income statement 42 30
Adjustment for:
Depreciation, fellings and amortisation 117 112
Taxation charge 21 25
Net finance costs 28 37
Post employment benefits (14) (27)
Other non- cash items (39) (52)
Cash generated from operations 155 125
Movement in working capital (133) (39)
Net finance costs paid (59) (46)
Taxation paid (7) (4)
Cash (utilised in) retained from operating
activities * (44) 36
Cash utilised in investing activities * (89) (128)
(133) (92)
Cash effects of financing activities 223 94
Net movement in cash and cash equivalents 90 2
* Reclassification
Cash outflows relating to contributions to post employment benefit funds
previously reflected in cash utilised in investing activities, have been
included in cash (utilised in) retained from operating activities.
Group statement of recognised income and expenses
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million
Pension fund asset not recognised - (2)
Deferred tax asset released (raised) 2 (1)
Exchange differences on translation of foreign
operations (10) 113
Net (expense) income recorded directly in equity (8) 110
Profit for the period 42 30
Total recognised income for the period 34 140
notes to the group results
1. Basis of preparation
The condensed financial statements have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting. The
accounting policies and methods of computation used in the preparation of the
results are consistent, in all material respects, with those used in the
annual financial statements for September 2007 which are compliant with the
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The results are unaudited.
Comparative figures - Cash outflows relating to contributions to post
employment benefit funds previously reflected in cash utilised in investing
activities, have been included in cash (utilised in) retained from operating
activities.
2. Reconciliation of movement in shareholders` equity
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million
Balance - beginning of year 1,816 1,386
Total recognised income for the period 34 140
Dividends declared (73) (68)
Transfers to participants of the
share purchase trust 2 7
Share Based Payment Reserve 2 2
Balance - end of period 1,781 1,467
3. Operating profit
Included in operating profit are the following
non-cash items:
Depreciation of property, plant and equipment 96 95
Fair value adjustment on plantations (included
in cost of sales)
Changes in volume
Fellings 21 17
Growth (18) (17)
3 -
Plantation price fair value adjustment 1 (29)
4 (29)
Included in other operating expenses (income) for the quarters ended December
2007 and December 2006 are items (b), (c) and (d) as disclosed in note 4.
4. Special items
Special items cover those items which management believe are material by
nature or amount to the results and require separate disclosure in
accordance with IAS 1 paragraph 86. Such items would generally include profit
and loss on disposal of property, investments and businesses, asset
impairments, restructuring charges, natural disasters and non-cash gains or
losses on the price fair value adjustment of plantations.
Special items, excluding interest and tax effects, for the relevant periods
are:
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million
(a) Plantation price fair value adjustment 1 (29)
(b) Asset impairments 2 -
(c) Restructuring provisions released (1) -
(d) Profit on sale of assets (1) -
1 (29)
5. Headline earnings per share
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million
Headline earnings per share (US cents) * 19 13
Weighted average number of shares in issue
(millions) 228.5 227.0
Diluted headline earnings per share (US cents) * 19 13
Weighted average number of shares on fully
diluted basis (millions) 230.6 229.9
Calculation of Headline earnings *
Profit for the period 42 30
Asset impairments 2 -
Headline earnings 44 30
* Headline earnings disclosure is required by the JSE Limited.
6. Capital expenditure
Quarter Quarter
Dec 2007 Dec 2006
US$ million US$ million
Property, plant and equipment 109 138
7. Capital commitments
Dec 2007 Sept 2007
US$ million US$ million
Contracted 220 188
Approved but not contracted 267 249
487 437
8. Contingent liabilities
Guarantees and suretyships 52 43
Other contingent liabilities * 7 26
59 69
* The decrease in contingent liabilities reflects management`s revised
estimate of losses which could arise from taxation queries to which certain
group companies are subject. These amounts have now been recognised as
liabilities.
9. Material balance sheet movements
Interest-bearing borrowings, other current liabilties and cash and cash
equivalents The group drew down US$147 million of its committed facilities to
settle certain other current liabilities, thereby maintaining adequate
funding to settle the dividend.
Restricted cash
Cash previously available to the group has now been specifically restricted
to settle certain post retirement medical liabilities.
Supplemental information
general definitions
Average - averages are calculated as the sum of the opening and closing
balances for the relevant period divided by two
Fellings - the amount charged against the income statement representing the
standing value of the plantations harvested
NBSK - Northern Bleached Softwood Kraft pulp. One of the main varieties of
market pulp, mainly produced from spruce trees in Scandinavia, Canada and
north eastern USA. The NBSK is a benchmark widely used in the pulp and paper
industry for comparative purposes
SG&A - selling, general and administrative expenses
Non - GAAP measures
The group believes that it is useful to report these non- GAAP measures for
the following reasons:
- these measures are used by the group for internal performance analysis;
- the presentation by the group`s reported business segments of these
measures facilitates comparability with other companies in our industry,
although the group`s measures may not be comparable with similarly titled
profit measurements reported by other companies; and
- it is useful in connection with discussion with the investment analyst
community and debt rating agencies.
These non-GAAP measures should not be considered in isolation or construed as
a substitute for GAAP measures in accordance with IFRS
Headline earnings - as defined in Circular 8/2007 issued by The South African
Institute of Chartered Accountants, separates from earnings all separately
identifiablere - measurements. It is not necessarily a measure of sustainable
earnings. It is a listing requirement of the JSE Limited to disclose headline
earnings per share
Net debt - current and non- current interest - bearing borrowings, and bank
overdrafts (net of cash, cash equivalents and short - term deposits)
Net debt to total capitalisation - net debt divided by shareholders` equity
plus minority interest, non - current liabilities, current interest-bearing
borrowings and overdraft
Net operating assets - total assets (excluding deferred taxation and cash)
less current liabilities (excluding interest- bearing borrowings and bank
overdraft)
Net assets - total assets less current liabilities
Net asset value - shareholders` equity plus deferred tax liabilities minus
deferred tax assets
Net asset value per share - net asset value divided by the number of shares
in issue at balance sheet date
ROE - return on average equity. Profit for the period divided by average
shareholders` equity
RONOA - operating profit excluding special items divided by average net
operating assets
Special items - special items cover those items which management believe are
material by nature or amount to the results and require separate disclosure
in accordance with IAS 1 paragraph 86. Such items would generally include
profit and loss on disposal of property, investments and businesses, asset
impairments, restructuring charges, natural disasters and non-cash gains or
losses on the price fair value adjustment of plantations
EBITDA excluding special items - earnings before interest (net finance
costs), tax, depreciation, amortisation and special items
The above financial measures are presented to assist our shareholders and the
investment community in interpreting our financial results. These financial
measures are regularly used and compared between companies in our industry.
Supplemental information
additional information
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million
Profit for the period to EBITDA excluding
special items (1) reconciliation
Profit for the period 42 30
Net finance costs 28 37
Taxation - current 3 6
- deferred 18 19
Special items - losses (gains) 1 (29)
Operating profit excluding special items 92 63
Depreciation and amortisation 96 95
EBITDA excluding special items (1) 188 158
Dec 2007 Sept 2007
US$ million US$ million
Net debt (US$ million) (2) 2,495 2,257
Net debt to total capitalisation (%) (2) 45.6 43.2
Net asset value per share (US$) (2) 9.29 9.37
(1) In connection with the U.S. Securities Exchange Commission (SEC) rules
relating to "Conditions for Use of Non- GAAP Financial Measures", we have
reconciled EBITDA excluding special items to net profit rather than operating
profit. As a result our definition retains minority interest as part of
EBITDA
excluding special items.
Operating profit excluding special items represents earnings before interest
(net finance costs), taxation and special items. Net finance costs includes:
gross interest paid; interest received; interest capitalised; net foreign
exchange gains; and net fair value adjustments on interest rate financial
instruments. See the group income statement for an explanation of the
computation of net finance costs. Special items cover those items which
management believe are material by nature or amount to the results and
require separate disclosure in accordance with IAS 1 paragraph 86. Such items
would generally include profit and loss on disposal of property, investments
and businesses, asset impairments, restructuring charges, natural disasters
and non - cash gains or losses on the price fair value adjustment of
plantations.
EBITDA excluding special items represents operating profit before
depreciation, amortisation and special items.
We use both operating profit excluding special items and EBITDA excluding
special items as internal measures of performance to benchmark and compare
performance, both between our own operation s and as against other companies.
Operating profit excluding special items and EBITDA excluding special items
are measures used by the group, together with measures of performance under
IFRS, to compare the relative performance of operations in planning,
budgeting and reviewing the performances of various businesses. We believe
they are useful and commonly used measures of financial performance in
addition to net profit, operating profit and other profitability measures
under IFRS because they facilitate operating performance comparisons from
period to period and company to company. By eliminating potential differences
in results of operations between periods or companies caused by factors such
as depreciation and amortisation methods, historic cost and age of assets,
financing and capital structures and taxation positions or regimes, we
believe both operating profit excluding special items and EBITDA excluding
special items can provide a useful additional basis for comparing the current
performance of the operations being evaluated. For these reasons, we believe
operating profit excluding special items and EBITDA excluding special items
and similar measures are regularly used by the investment community as a
means of comparison of companies in our industry. Different companies and
analysts may calculate operating profit excluding special items and EBITDA
excluding special items differently, so making comparisons among companies on
this basis should be done very carefully. Operating profit excluding special
items and EBITDA excluding special items are not measures of performance
under IFRS and should not be considered in isolation or construed as a
substitute for operating profit or net profit as indicators of the company`s
operations in accordance with IFRS.
(2) Refer to Supplemental Information for the definition of the
term.
Supplemental information
regional information
Quarter Quarter
ended ended
Dec 2007 Dec 2006
Metric tons Metric tons
(000`s) (000`s) % change
Sales volume
Fine Paper - North America 373 372 0.3
Europe 624 635 (1.7)
Southern Africa 76 87 (12.6)
Total 1,073 1,094 (1.9)
Forest Products - Pulp and paper
operations 345 331 4.2
Forestry operations 200 271 (26.2)
Total 1,618 1,696 (4.6)
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million % change
Sales
Fine Paper - North America 384 374 2.7
Europe 638 587 8.7
Southern Africa 87 83 4.8
Total 1,109 1,044 6.2
Forest Products - Pulp and paper
operations 252 207 21.7
Forestry operations 16 16 -
Total 1,377 1 ,267 8.7
Operating profit
Fine Paper - North America 11 2 450.0
Europe 19 13 46.2
Southern Africa 1 1 -
Total 31 16 93.8
Forest Products 55 78 (29.5)
Corporate 5 (2) -
Total 91 92 (1.1)
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million % change
Special items - losses (gains)
Fine Paper - North America 2 - -
Europe (2) - -
Southern Africa - - -
Total - - -
Forest Products 1 (29) -
Corporate - - -
Total 1 (29) -
Operating profit excluding special items
Fine Paper - North America 13 2 550.0
Europe 17 13 30.8
Southern Africa 1 1 -
Total 31 16 93.8
Forest Products 56 49 14.3
Corporate 5 (2) -
Total 92 63 46.0
EBITDA excluding special items
Fine Paper - North America 40 28 42.9
Europe 62 61 1.6
Southern Africa 4 5 (20.0)
Total 106 94 12.8
Forest Products 77 66 16.7
Corporate 5 (2) -
Total 188 158 19.0
Net operating assets
Fine Paper - North America 1,029 1,106 (7.0)
Europe 1,991 1,867 6.6
Southern Africa 153 170 (10.0)
Total 3,173 3,143 1.0
Forest Products 1,830 1,474 24.2
Corporate and other (38) (48) -
Total 4,965 4,569 8.7
Supplemental information
summary Rand convenience translation
Quarter Quarter
ended ended
Dec 2007 Dec 2006
US$ million US$ million % change
Key figures: (ZAR million)
Sales 9,293 9,294 -
Operating profit 614 675 (9.0)
Special items - losses (gains) * 7 (213) -
Operating profit excluding
special items 621 462 34.4
EBITDA excluding special items * 1,269 1,159 9.5
Profit for the period 283 220 28.6
Basic EPS (SA cents) 121 95 27.4
Net debt * 16,983 15,963 6 .4
Cash generated from operations 1,046 917 14.1
Cash (utilised in) retained from
operating activities (297) 264 -
Net movement in cash and cash
equivalents 607 15 3,946.7
Key ratios: (%)
Operating profit to sales 6.6 7.3
Operating profit excluding
special items to sales 6.7 5.0
EBITDA excluding special
items to sales 13.7 12.5
Operating profit
excluding special items
to average net assets 8.2 6.4
Net debt to total capitalisation * 45.6 46.7
* Refer to Supplemental Information for the definition of the term.
exchange rates
Dec Sept June
2007 2007 2007
Exchange rates :
Period end rate: US$1 = ZAR 6.8068 6.8713 7.0393
Average rate for the Quarter: US$1 = ZAR 6.7488 7.0453 7.1095
Average rate for the YTD: US$1 = ZAR 6.7488 7.1741 7.2121
Period end rate: EUR 1 = US$ 1.4717 1.4272 1.3542
Average rate for the Quarter: EUR 1 = US$ 1.4556 1.3782 1.3498
Average rate for the YTD: EUR 1 = US$ 1.4556 1.3336 1.3178
March Dec
2007 2006
Exchange rates :
Period end rate: US$1 = ZAR 7.2650 7.0076
Average rate for the Quarter: US$1 = ZAR 7.1532 7.3358
Average rate for the YTD: US$1 = ZAR 7.2783 7.3358
Period end rate: EUR 1 = US$ 1.3358 1.3199
Average rate for the Quarter: EUR 1 = US$ 1.3160 1.2926
Average rate for the YTD: EUR 1 = US$ 1.3021 1.2926
The financial results of entities with reporting currencies other than the US
Dollar are translated into US Dollars as follows:
-Assets and liabilities at rates of exchange ruling at period end; and
-Income, expenditure and cash flow items a average exchange rates.
This report is available on the Sappi website www.sappi.com
Other interested parties can obtain printed copies of this report from:
South Africa:
Computershare Investor
Services 2004 (Proprietary) Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Tel +27 (0)11 370 5000
United States
ADR Depositary:
The Bank of New York
Investor Relations
PO Box 11258
Church Street Station
New York, NY 10286 -1258
Tel +1 610 382 7836
United Kingdom:
Capita Registrars
The Registry
34 Beckenham Road
Beckenham, Kent
BR3 4TU, DX 91750
Beckenham West
Tel +44 (0)208 639 2157
Date: 31/01/2008 08:59:01 Produced by the JSE SENS Department.
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