|Our European business maintained a good level of profitability, with increased sales volumes and prices, along with an expanded proportion of specialities and packaging products offsetting significant cost pressure from purchased paper pulp costs. The latter part of the year however was particularly weak across both coated grades and all indications are that the European economy is slowing, and that the accumulative impact of selling price increases has affected downstream demand.
||Multiple coated paper selling price rises, supported by supply tightness in the market, offset the negative sales volume and cost impact of the major project to convert PM1 at Somerset Mill, resulting in an improved performance for the year. Although the project overran both time and cost, the subsequent customer qualification trials to date have been successful. Dissolving wood pulp (DWP) production at Cloquet Mill was increased in order to meet growing customer demand.
||Margins in the Southern African business were under pressure due to the stronger Rand/US Dollar exchange rate during the first three quarters of the year. Delayed start-ups post upgrade projects at Saiccor and Ngodwana Mills resulted in lower production and reduced DWP sales volumes for the year and exacerbated the situation. Containerboard sales did well, with both sales volumes and prices improving as strong growth in the agricultural sector led to increased exports of fruit, the primary driver of demand for this product.