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4th quarter results

Sappi is a global diversified woodfibre company focused on providing dissolving wood pulp, specialities and packaging papers, printing and writing papers as well as biomaterials and biochemicals to our direct and indirect customer base across more than 150 countries.

Q4 2018
Financial results
conference call
Webcast


Our dissolving wood pulp products are used worldwide mainly by converters to create viscose fibre for fashionable clothing and textiles, as well as other consumer products; quality specialities and packaging papers are used in the manufacture of such products as soup sachets, luxury carry bags, cosmetic and confectionery packaging, boxes for agricultural products for export, tissue wadding for household tissue products and casting release papers used by suppliers to the fashion, textiles, automobile and household industries; our market-leading range of printing and writing papers are used by printers in the production of books, brochures, magazines, catalogues, direct mail and many other print applications; biomaterials include nanocellulose, fibre composites and lignosulphonate; biochemicals include second generation sugars.

The wood and pulp needed for our products are either produced within Sappi or bought from accredited suppliers. Sappi sells almost as much as it buys.

Sales by source*
(%)

Sales by product*
(%)

Sales by destination*
(%)

Net operating assets**
(%)


* For the period ended September 2018.
** As at September 2018.


Highlights for the quarter

EBITDA excluding special items
US$224 million
(Q4 FY17: US$221 million)

Profit for the period
US$107 million
(Q4 FY17: US$102 million)

EPS excluding special items
19 US cents
(Q4 FY17: 19 US cents)

Highlights for the year

EBITDA excluding special items
US$762 million
(FY17: US$785 million)

Profit for the period
US$323 million
(FY17: US$338 million)

EPS excluding special items
60 US cents
(FY17: 64 US cents)

Net debt
US$1,568 million
(FY17: US$1,322 million)

Dividend of
17 US cents
(FY17: 15 US cents)

Financial highlights

Quarter ended Year ended
Sep 2018 Sep 2017 Jun 2018 Sep 2018 Sep 2017
Key figures: (US$ million)
Sales 1,535 1,411 1,445 5,806 5,296
Operating profit excluding special items(1) 148 152 85 480 526
Special items – loss (gain)(2) 13 1 1 (9)
EBITDA excluding special items(1) 224 221 155 762 785
Profit for the period 107 102 51 323 338
Basic earnings per share (US cents) 20 19 9 60 63
EPS excluding special items (US cents)(3) 19 19 10 60 64
Net debt(3) 1,568 1,322 1,603 1,568 1,322
Key ratios: (%)    
Operating profit excluding special items to sales 9.6 10.8 5.9 8.3 9.9
Operating profit excluding special items to capital employed (ROCE)(3) 17.0 20.2 9.7 14.6 18.0
EBITDA excluding special items to sales 14.6 15.7 10.7 13.1 14.8
Net debt to EBITDA excluding special items 2.1 1.7 2.1 2.1 1.7
Interest cover(3) 11.0 9.1 11.0 11.0 9.1
Net asset value per share (US cents)(3) 361 327 342 361 327
(1) Refer to note 2 to the group results for the reconciliation of EBITDA excluding special items and operating profit excluding special items to segment operating profit, and profit for the period.
(2) Refer to note 2 to the group results for details on special items.
(3) Refer to supplemental information for the definition of the term.

Commentary

The overall result was in line with that of the prior year on a like-for-like basis, notwithstanding the downtime related to the completion of several large strategic growth projects during the year. Market demand for dissolving wood pulp (DWP) and speciality and packaging papers ensured our production capacity in these grades was fully utilised, further supporting our decision to invest in additional capacity in these business segments. In the graphic paper market, a series of successful selling price increases throughout the year enabled margins to be maintained notwithstanding significantly higher raw material costs, mainly from paper pulp and various process chemicals. A stronger Rand during most of the year placed the profitability of the South African business under pressure.


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