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Name | Symbol | Market | Type |
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Qnb Fin 24 | LSE:79CK | London | Medium Term Loan |
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RNS Number:7331X Sappi Ld 24 January 2001 Press Release Johannesburg, 24th January 2001 Sappi announces further growth in first quarter Sappi, one of the world's leading producers of fine paper, today announced results for the first quarter 2001. Results - Highlights * Operating profit up 13% to US$ 143 million * Headline EPS up 31% to 34 US cents * Inventory correction slows sales * Forest Products continues its strong performance * Share buy-back commenced "Despite a tougher operating environment in North America in particular, we had another strong earnings quarter, and our margins and returns are better than a year earlier. This is a direct result of our strategy over the past decade to spread our asset base geographically, to minimise risk, deliver growth and value to shareholders and show greater consistency of earnings," said Sappi Executive Chairman Eugene van As. Results for the Quarter There have been numerous changes to South African accounting standards to harmonise them with recently changed International Accounting Standards. Sappi has adopted the new policies for 2001 and, to avoid further changes, also those applicable for 2002. These changes have had negligible effect on the earnings per share but many balance sheet positions have changed marginally. The group's earnings increased 24% compared to the comparative quarter last year, to US$ 82 million. Earnings per share before exceptional items were 31% up to 34 US cents. Operating profit increased 13% to US$ 143 million with all the businesses, except North America, contributing to the improvement. Net finance costs for the quarter were US$24 million, 19% below last year on a comparative basis. As AC 133 does not allow restatement, the finance costs reported are 11% below last year. Taxation for the quarter was US$36 million, an effective tax rate of approximately 30%, which is lower than the rate last year largely as a result of the regional split of profit and the impact of the lower German tax rate. Sappi's strong cash flow continued with EBITDA of US$237 million. This was offset by a seasonal increase in working capital of US$80 million and capital expenditure of US$93 million, much of which (US$29 million) related to one-off environmental expenditure in North America (to comply with the EPA "cluster rules") and in Southern Africa. Continued debt reduction was offset during the quarter by the effect of accounting standards changes and currency movements. Operational Review Fine Paper In North America operating profit of US$18 million was extremely weak and only half of last year. Volumes for the quarter were essentially flat with shipments dropping off sharply in November and December. Two capital projects - one involving EPA "Cluster Rule" compliance and the other relating to paper quality improvement - resulted in downtime during the quarter. The impact of buying pulp during the downtime, pulp price increases and the increase in the cost of energy could not be covered by price increases, which were only 2% higher than last year. Management expects both performance and returns in North America to improve in the next periods, although they are unlikely to match last year. In Europe, sales volumes were slightly lower than a year earlier as a result of some inventory correction. However profits increased slightly as a result of continued tight cost control and excellent operating efficiencies. In South Africa, the fine paper operations showed a much improved performance. Operating income increased by 20% to US$6 million, operating margins increased to 10.5% and return on net operating assets increased to 22.3%. Forest Products Forest Products continued its strong performance. It provides the group with an economic hedge for the pulp purchase of its paper businesses. Sales volumes increased by 10% and average prices achieved increased by 20% in local currency. The operating margin was 31.5% with the return on net operating assets at 26.4%, two and a half times the return a year earlier. Share buy back Shareholder approval was obtained on 15th December 2000 for the purchase of up to 10% of Sappi's shares by a subsidiary. This buy back has now commenced. To date, the subsidiary has bought 5,7 million shares representing approximately 2.4 % of the issued share capital, at an average price of R53,47 per share. Prospects Many market analysts are expecting a slower start to the calendar year, although to date contract pulp prices have remained at US$ 710 per ton and producer and customer inventories remain at reasonable levels. Demand for woodfree paper remains firm and although there is continued pressure on prices in North America, prices in Europe are firm. Commenting on group prospects van As said that Sappi was well positioned. "Through our focus on cost control and operational efficiencies we are driving good performance from our asset base despite toughening operating environments in some of our markets " he said. "Performance in North America is expected to improve and global growth should still be reasonable. In these circumstances we still expect to match last year's US dollar earnings per share for the full year." ENDS FORWARD-LOOKING STATEMENTS Certain statements in this report 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 events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors, that could cause actual results and company plans and objectives to differ materially from those expressed or implied in the forward-looking statements (or from past results). Such risks, uncertainties and factors 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 and pricing), adverse changes in the markets for the group's products, consequences of substantial leverage, changing regulatory requirements, unanticipated production disruptions, economic and political conditions in international markets, the impact of investments, acquisitions and dispositions (including related financing) and currency fluctuations. The company undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise. Released on behalf of Sappi by Brunswick. For further information: Robert Hope Director Strategic Development Sappi Limited Tel: +27 (0) 11 407 8492 Fax: +27 (0) 11 403 1493 robho@za.sappi.com SAPPI LIMITED Group income statement Unaudited Quarter ended December 2000 December 1999 US$ million US$ million % change Sales 1,115 1,116 (0.1) Cost of sales 882 900 Gross profit 233 216 7.9 Selling, general & 90 89 administrative expenses Operating profit 143 127 12.6 Non-trading (loss) profit (1) 6 Net finance costs 24 27 Net paid 32 36 Capitalised (8) (9) Profit before tax 118 106 Taxation - current 23 12 - deferred 13 25 Profit after tax 82 69 18.8 Income attributable to 3 minority interests Net profit 82 66 24.2 EBITDA 237 227 4.4 Basic earnings per share (US 34 29 cents) Basic earnings before exceptional items (Headline earnings) per share 34 26 (US cents) Weighted average number of 238.9 230.6 shares in issue (millions) Diluted earnings per share 34 28 (US cents) Diluted earnings before exceptional items (Headline earnings) per share 34 26 (US cents) Weighted average number of shares on fully diluted basis (millions) 245.0 236.3 Calculation of Earnings before exceptional items (Headline) net of tax Net profit 82 66 Profit on disposal of (4) business and fixed assets Decrease in other provisions (1) (3) Earnings before exceptional 81 59 items (Headline) SAPPI LIMITED Group balance sheet Unaudited Audited December 2000 September 2000 US$ million US$ million ASSETS Non-current assets 3,633 3,600 Property, plant and equipment 3,139 3,095 Plantations 362 372 Deferred taxation 35 37 Other non-current assets 97 96 Current assets 1,165 1,168 Cash and cash equivalents 211 294 Trade and other receivables 323 319 Inventories 631 555 Total assets 4,798 4,768 EQUITY AND LIABILITIES Capital and reserves Ordinary shareholders' interest 1,649 1,618 Minority interest 5 53 Non-current liabilities 1,938 1,996 Interest bearing liabilities 1,198 1,278 Deferred taxation 515 500 Other non-current liabilities 225 218 Current liabilities 1,206 1,101 Interest bearing liabilities 245 162 Bank overdraft 37 76 Other current liabilities 924 863 Total equity and liabilities 4,798 4,768 Number of shares in issue 237.8 239.1 (millions) Net Debt (US$ million) 1,269 1,270 * Net Debt to Total Capitalisation (%) 32.8 32.5 * Net asset value per share (US 895 870 cents) * - Restated for reclassification of minority interest to debt in December 2000, as if processed in September 2000. SAPPI LIMITED Group cash flow statement Unaudited Unaudited Quarter ended Quarter ended December 2000 December 1999 US$ million US$ million Cash generated by operations 231 254 Movement in working capital (80) (220) Net finance costs (32) (36) Taxation paid (1) 3 Cash retained from operating activities 118 1 Cash effects of investing activities (94) 23 24 24 Cash effects of financing activities (109) 141 Net movement in cash and cash equivalents (85) 165 SAPPI LIMITED Group statement of changes in shareholders' equity Unaudited Unaudited Quarter ended Quarter ended December 2000 December 1999 US$ million US$ million Balance - beginning of year 1,618 1,463 Changes in accounting policies 8 (27) Balance - beginning of year restated 1,626 1,436 Net profit 82 66 Foreign currency translation reserve 9 3 Dividends declared - US$ 0.25 (1999: US$ (60) (45) 0.19) per share (Share buybacks) / issuance of ordinary (8) 114 shares Balance at 31 December 1,649 1,574 Reconciliation of opening balance of equity Balance - September 2000 as previously 1,621 reported Changes in accounting policies: Events after balance sheet date 60 (dividends) Employee benefits (53) Provisions (3) Special purpose entities (7) Restated balance - September 2000 1,618 SAPPI LIMITED Notes to the group results 1. Basis of Preparation The group results have been prepared in conformity with South African Statements of Generally Accepted Accounting Practice. The same accounting policies have been followed as in the annual financial statements for September 2000, except for the following new or revised accounting standards adopted for this period: Leases - AC 105 (revised), Events after the balance sheet date - AC 107 (revised), Employee Benefits - AC 116 (revised), Discontinuing operations - AC 117 (revised), Impairment of Assets - AC 128, Intangible Assets - AC 129, Provisions, contingent liabilities and contingent assets - AC 130, Business combinations - AC 131, Consolidated financial statements and accounting for investments in subsidiaries - AC 132, Financial instruments: recognition and measurement - AC 133, Government grants - AC 134, Consolidation: special purpose entities - AC 412 and Share capital - reacquired own equity instruments (Treasury shares) - AC 416. The effect on equity for the above changes is reflected in the Group statement of changes in shareholders' equity. The effect on net profit for the current and comparable period is not material. Where appropriate, comparative figures have been restated. The financial results for the quarter have been reviewed by the group's auditors, Deloitte & Touche. Their report is available for inspection at the company's registered offices. Unaudited Quarter ended December 2000 December 1999 US$ million US$ million 2. Cost of sales Included in cost of sales are: Depreciation 80 84 Fellings 8 10 88 94 3. Capital expenditure Fixed assets 86 32 Plantations 7 8 Unaudited Audited December 2000 September 2000 US$ million US$ million 4. Capital Commitments Contracted but not provided 96 73 Approved but not contracted 215 150 311 223 5. Contingent liabilities Guarantees and suretyships 63 80 Bills discounted - Other contingent liabilities 51 46
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