JOHANNESBURG, April 4, 2011 /PRNewswire/ -- Sappi is issuing this trading update in connection with the capital markets transaction that it announced today.
We expect demand for coated paper to remain reasonably firm in our major markets.
Our raw material input costs are gradually increasing as commodity prices rise. We continue to focus on more efficient procurement and use of our inputs.
In response to rising costs, we announced price increases for coated woodfree web products in North America and for coated and uncoated woodfree products in Europe, with effect from March and April 2011.
On 31 March we announced that we would enter into a consultation process with the employee representatives of Biberist Mill. The aim is to identify ways of improving the profitability of our European business, which may include the full closure of Biberist Mill. If the full closure of Biberist Mill were to occur, Sappi would reduce its coated fine paper capacity by 435,000 tons and its uncoated fine paper capacity by 65,000 tons.
Our chemical cellulose business is performing strongly and we intend to accelerate our plans for expanding this business through investment in additional capacity.
In the second financial quarter of 2011 we expect the group's operating profit (excluding special items) to continue the improving trend compared to the equivalent quarter last year, but to be below that of the first financial quarter as a result of seasonal factors and the additional accounting week in the first financial quarter. We expect to generate positive net cash for our second financial quarter.
Financial statements for the second financial quarter of 2011 are not yet finalised. The information above is based on certain preliminary financial data. This information is subject to change as financial data becomes available, and our financial statements are prepared.
Forward looking statement
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.
The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends, which do not relate to historical matters, identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences 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);
- the impact on our business of the global economic downturn;
- unanticipated production disruptions (including as a result of planned or unexpected power outages);
- changes in environmental, tax and other laws and regulations;
- adverse changes in the markets for our products;
- consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
- adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
- the impact of investments, acquisitions and dispositions (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions and achieving expected savings and synergies; and
- currency fluctuations.
We undertake no obligation to publicly update or revise any of these forwardlooking statements, whether to reflect new information or future events or circumstances or otherwise.
SOURCE Sappi Limited