Sappi Limited results for the fourth quarter and year ended September 2013. Strategic initiatives successfully completed and commissioned
Summary
-Dissolving wood pulp and speciality paper conversions commissioned and running well -Operating profit excluding special items US$70 million (Q4 2012 US$118 million) -Net cash generated US$111 million (Q4 2012 US$203 million) -Special items charges US$177 million of which US$94 million are non-cash -Earnings per share excluding special items 2 US cents (Q4 2012 11 US cents) -Net debt US$2,214 million (Q4 2012 US$1,979 million)
The year and quarter under review
Operating profit excluding special items for the year amounted to US$191 million. Special items amounted to a charge of US$161 million, comprising mainly impairment and restructuring charges of US$252 million related to both our European and Southern African businesses. This was partly offset by plantation fair value pricing gains of US$87 million.
Operating profit excluding special items for the quarter was US$70 million compared to US$118 million for the equivalent quarter last year and US$8 million in the quarter ended June 2013. As a result of impairment and restructuring charges in the quarter, the group incurred a net loss for the quarter. The loss per share for the quarter was 27 US cents (including a charge of 29 US cents in respect of special items) compared to earnings per share of 21 US cents (including a gain of 10 US cents in respect of special items) in the equivalent quarter last year.
Special items for the quarter were a charge of US$177 million. Included in these special items were impairment and restructuring charges following a strategic review of our operations, the implementation of a number of cost-saving and efficiency initiatives in South Africa and Europe and the announced consultation process regarding the future of the Nijmegen Mill. These restructuring charges amounted to US$190 million, of which US$109 million were non-cash. The charges were offset partially by a post-retirement medical plan amendment gain of US$24 million.
Net cash generated for the quarter was lower at US$111 million (2012 US$203 million). Capital expenditure of US$103 million for the quarter reflects the culmination of the capital expenditure related to the dissolving wood pulp conversion projects at Ngodwana and Cloquet.
For the year net cash utilised was US$247 million compared to generation of US$127 million last year. This increase in utilisation of cash was primarily due to the increase in capital expenditure related to the dissolving wood pulp conversions and the lower operating performance of our European operations in particular.
Our net debt at financial year end increased from US$1,979 million as of September 2012 to US$2,214 million as of the end of September 2013 as a result of the capital investments during the year. At the end of September 2013 we had liquidity comprising US$385 million of cash in addition to US$577 million available from the undrawn committed revolving credit facilities in South Africa and Europe.
