(Source: PRNewswire-FirstCall)
JOHANNESBURG, July 20 /PRNewswire-FirstCall/ -- Sappi is issuing this trading update in connection with the capital markets transaction that it announced today and the ongoing syndication of a new secured revolving credit facility and a new secured OeKB term loan facility.
Market conditions remained weak in the quarter in all our major markets. Sales volumes for the group were similar to the prior quarter. Prices realised were under pressure in most regions.
For the quarter ended June 2009 we expect to report improved operating results, excluding special items, compared to the quarter ended March 2009 for our European business, which we expect to return to profitability and for our North American business, as a result of synergy achievements in Europe, and cost and input price reductions. In addition the North American business expects to report the benefit of alternative fuel credits in the range of US$30 - US$40 million.
Our Southern African business was impacted by the strengthening of the Rand relative to the US Dollar, weak domestic demand and low pulp prices, which we expect will result in a loss before special items for the quarter for the region.
For the group, operating loss excluding special items for the quarter is expected to be largely in line with the quarter ended March 2009.
The group continues to prioritize cash generation and expects to report a positive net cash generation for the quarter.
Financial statements for the quarter ended June 2009 are not yet finalised. The information above is based on certain preliminary financial data. This information is subject to change as final financial data becomes available, and our financial statements are prepared and reviewed by us and our auditors.
Outlook
Demand and prices for chemical cellulose have strengthened and the Saiccor mill has a strong order book. The mill is progressing well with the ramp up of production and expects to improve sales volumes in the next quarter. Global markets for coated paper remain depressed; however, we expect stronger seasonal demand during the next quarter for web products and stable demand for sheet products. The extent of inventory reduction in our customer supply chain appears to be reducing and we therefore expect an improvement in coated paper demand on paper producers. We expect alternative fuel credits of approximately US$40 million in the next quarter.
We expect to generate positive net cash flow in the quarter ended September 2009.
