Paper
Other: Sappi outlines 5-year growth strategy following refinancing
Paper manufacturer Sappi has said that there is scope for growth despite declining demand for graphic paper.
The company issued a strategy statement on (7 October), updating its plans for growth over the next five years. It follows a £319m ($510m) refinancing, completed in August.
Sappi said that it was clear that there was a "declining demand trend for graphic paper in our major markets".
However, it added: "We see opportunities in these businesses, which are currently the backbone of the group, to generate reasonable net profits and strong cashflows for many years."
The company is aiming to generate at least 60% of operating profit from its higher-margin growth businesses within three to five years. This includes chemical cellulose for the textiles, food and pharma industries, as well as products based on its Ultracast specialist paper technology and energy products.
Measures taken to shore up the graphic side of the business include the closure of the Biberist Mill in Europe earlier this year and the restructure of its South African business while a $340m investment in its Ngodwana mill in South Africa to boost chemical cellulose production.
Through these changes, the company will take impairment and restructuring charges of approximately $160m, which will appear in its Q4 2010/11 results to September 2011.
However, it said most of the benefits of the plan would come into effect in the current financial year.
Chief executive Ralph Bo�ttger said: "We are confident that the major interventions, the relationships we are continuing to build with our customers and the exciting investments in growth will position Sappi well for the future.
