Sappi Limited - Results of Annual General Meeting
SAPPI LIMITED
Incorporated in the Republic of south Africa
(Registration Number 1936/008963/06
JSE Code: SAP
ISIN: ZAE000006284
Results of Annual General Meeting
Sappi`s Annual General meeting was held in Johannesburg this morning (07 March
2005) and all resolutions as proposed were duly passed by the requisite
majority.
The chairman, Mr Eugene van As made the following statement at the meeting:
`As we said in our first quarter results announcement on 31 January 2005, the
market outlook for our major products is positive.
`Notwithstanding a seasonally quieter first calendar quarter, forecasts of
continued advertising spending growth and of an improving supply demand balance
of coated paper lead us to expect improving market conditions for our coated
paper.
`We have announced price increases in Europe of Euro 50 per ton for woodfree
coated sheets and reels and Euro 30 per ton for mechanical coated reels, for
deliveries made after 01 April 2005. To date, some other producers have
announced price increases and we are confident that because of rising input
costs and relatively high operating rates, the new prices should prevail. In
the USA we are proceeding with the implementation of the US$60 per short ton
price increase for web product which we announced in December and which will now
apply to all orders entered after the 21 February and all product shipped after
the 01 March 2005.
`We continue to experience cost pressure in all our operations particularly in
respect of energy costs but also on other raw materials and in North America on
wood costs. We have active profit improvement plans in each of our businesses
to help counteract these pressures and we are confident that they will be
largely successful. However, margins cannot be restored to reasonable levels
without the price increases which we have announced.
`Our focus is on improving the performance of our North American business.
Ronee Hagen, the new chief executive officer, has identified a number of actions
and her team is proceeding with implementing these. Some will have an immediate
short-term effect and others will only see the benefit towards the end of our
financial year. Key is logistics, where the combination of scheduling and
inventory management issues resulting from systems changes has been aggravated
by the tight demand for rail trucks and strong demand for our product from our
customers. This has resulted in unusually high distribution costs which will
continue, for at least the current quarter. Thereafter we expect to see a
gradual improvement both in inventory levels and in unit costs.
`The volatility of the Rand and its current strength relative to the us dollar
continues to put pressure on the margins of our South African businesses, where
prices are largely us dollar influenced. Although the Rand weakened briefly to
around ZAR6.25/US Dollar it has again strengthened and was ZAR5.80/US Dollar at
the end of February.
`Nevertheless, we are positive about the outlook for the balance of this year
and we expect our headline earnings per share for the second financial quarter
to be similar to the earnings per share reported in the equivalent quarter last
year.`
For further information
Andre Oberholzer
Group Head Corporate Affairs
Tel +27 (0)11 407 8044
Fax +27 (0) 403 8236
Andre.Oberholzer@sappi.com
Date: 07/03/2005 01:19:16 PM
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