2012 Integrated report - Sappi

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Section 2
Financial performance
The discussion in this section focuses on the group financial
performance in 2012 compared with 2011. A detailed discussion
on the performance, in local currencies, of each of our three
operating regions follows in Section 3.
When comparing our results it is important to note that the
2011 financial year contained 53 weeks compared with our
2012 financial year which had 52 weeks. The estimated net
impact of the additional week in 2011, on operating profit
excluding special items, was a positive US$8 million (assuming
a pro-rata accumulation of operating profit over the period).
Income statement
Our group financial results can be summarised as follows:
Income statement 2012 2011 % Change
Sales volume
(metric tons ’000) 7,705 7,898 (2)
US$
million
US$
million
% Change
Sales revenue 6,347 7,286 (13)
Variable manufacturing
and delivery costs (3,919) (4,559) (14)
Fixed costs (1,992) (2,296) (13)
Sundry items 1 (33) (27) 22
Operating profit
excluding special items 403 404 –
Special items 18 (318) n/a
Operating profit 421 86 390
Finance costs (283) (307) (8)
Taxation (34) (11) 209
Profit (loss) for the period 104 (232) n/a
Basic earnings (loss) per
share (US cents) 20 (45) n/a
1. Sundry items include all income and costs not directly related to
manufacturing operations such as debtor securitisation costs,
commissions paid and received and results of equity accounted
investments.
Sales volume
In 2012, sales volume decreased by 193,000 tons, or 2%,
compared with 2011. The regional contributions to sales volumes
are shown below.
Sales volume (metric tons ’000) 2012 2011 % Change
Sappi Fine Paper Europe 3,507 3,845 (9)
Sappi Fine Paper
North America 1,400 1,436 (3)
Sappi Southern Africa 2,798 2,617 7
Paper and pulp (excluding
dissolving wood pulp) 933 968 (4)
Dissolving wood pulp 743 732 2
Forestry 1,122 917 22
Group 7,705 7,898 (2)
Trading conditions in many of our markets remained challenging
throughout the year and demand for our products continued to
be under pressure. The notable exception was the Specialised
Cellulose business which manufactures and sells dissolving
wood pulp and extended its volume growth into financial
year 2012.
The 9% reduction in Sappi Fine Paper Europe sales volume was
largely attributable to weaker demand for coated paper
compared to last year and the closure of the Biberist Mill during
August 2011. This reduced the capacity of our European
business by 500,000 tons. The supply for many of the Biberist
Mill customers was transferred to our other European mills which
boosted their capacity utilisation.
Despite the difficult trading environment experienced during the
year, capacity utilisation remained on par with last year in all
regions as shown in the table below.
2012 2011
Sappi Fine Paper Europe 93% 94%
Sappi Fine Paper North America 95% 96%
Sappi Southern Africa 87% 86%
Group 92% 92%
sappi Integrated Report 2012 51