Trading Update

 

TIDMSAZ 
 
RNS Number : 9277V 
Sappi Ld 
20 July 2009 
 

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|                                                           | Sappi Limited       | 
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This notice does not constitute an offer to sell or the solicitation of an offer 
to buy securities 
 
 
Announcement 
 
 
Immediate release 
 
 
20 July 2009 
 
 
TRADING UPDATE IN RESPECT OF DEBT REFINANCING AND BOND ISSUE 
 
 
 
 
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 prioritise 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. 
 
 
Forward-looking statements 
 
 
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. 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 impact of the global economic downturn, 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), adverse 
changes in the markets for the group's products, consequences of substantial 
leverage, including as a result of adverse changes in credit markets that affect 
our ability to raise capital when needed, changing regulatory requirements, 
unanticipated production disruptions, 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 with integrating 
acquisitions and achieving expected savings and synergies 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. 
 
 
Contact details 
 
 
Brunswick South Africa Tel [phone] 
Robert Hope 
Group Head Strategic Development 
Sappi Limited 
Tel [phone] 
e-Mail [e-mail] 
 
 
André F Oberholzer 
Group Head Corporate Affairs 
Sappi Limited 
Tel [phone] 
Mobile [phone] 
e-Mail [e-mail] 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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