2012 Integrated report - Sappi

service
Sappi Fine Paper North America
2012 2011 % Change
Sales volume (metric tons ’000) 1,400 1,436 (3)
US$ million
2012
US$ million
2011 % Change
US$ per ton
2012
US$ per ton
2011 % Change
Sales 1,438 1,520 (5) 1,027 1,058 (3)
Variable manufacturing and delivery costs (879) (899) (2) (628) (626) –
Contribution 559 621 (10) 399 432 (8)
Fixed costs (458) (482) (5) (327) (336) (3)
Sundry costs and consolidation entries (7) (10) n/a (5) (6) n/a
Operating profit excluding special items 94 129 (27) 67 90 (26)
The North American business performed well in the face of
weak market conditions and pricing pressure on coated paper,
speciality products and particular pressure on paper pulp pricing
during 2012. The coated paper business mitigated the impact of
the weak market conditions to a large extent and increased
market share with its continued focus on differentiation through
excellent service and product quality. Strong manufacturing
performance and good cost control also benefited the coated
business performance. Operating profit excluding special items
decreased by 27% from US$129 million in 2011 to US$94 million
this year.
Total sales volume decreased by 3% compared with last year
including a 2% reduction in coated paper sales volume, a 6%
reduction in pulp sales volume and a 14% reduction in speciality
product sales volume. The pulp business was negatively
impacted by unplanned production outages in the first quarter
as well as the severe flooding which led to the closure of the
pulp and paper mill at Cloquet. The specialities business was
particularly hard hit by the weak global economy and the impact
this had on demand from China for our release papers.
Overall average net selling prices decreased by 3% compared
with 2011. Selling prices of our coated paper and speciality
products held up relatively well considering the weak markets
for these products and decreased on average by 2% and 1%
respectively, from 2011. However, pulp selling prices came under
severe pressure and reduced by 13% on average.
Cost management remained a priority and costs continued to be
well controlled. Variable manufacturing and delivery costs per ton
of US$628 remained on par with last year. Increases in wood
and chemical input prices were offset by lower priced purchased
pulp. Improved manufacturing efficiencies and successful
procurement initiatives kept costs low by reducing overall
material usage. Fixed costs decreased by US$24 million, or 5%,
largely due to a reduction in manpower costs.
The Cloquet pulp mill conversion from kraft pulp to dissolving
wood pulp remains on track to commence production during
the third financial quarter of fiscal 2013.
Sappi Southern Africa
Sales volume (metric tons ’000) 2012 2011 % Change
ZAR million
2012
Pulp & paper 1,676 1,700 (1)
Forestry 1,122 917 22
Total 2,798 2,617 7
ZAR million
2011 % Change
ZAR per ton
2012
ZAR per ton
2011 % Change
Sales 12,555 12,531 – 4,487 4,788 (6)
Variable manufacturing and delivery costs (6,801) (6,584) 3 (2,431) (2,516) (3)
Contribution 5,754 5,947 (3) 2,056 2,272 (10)
Fixed costs (4,284) (4,485) (4) (1,531) (1,714) (11)
Sundry costs and consolidation entries (37) (77) n/a (13) (29) n/a
Operating profit excluding special items 1,433 1,385 3 512 529 (3)
The Southern African business returned an operating profit excluding special items of ZAR1,433 million compared with
ZAR1,385 million in financial year 2011.
sappi Integrated Report 2012 57