2008 Annual report - Sappi

Chief financial officer’s report // continued
The largest increases were experienced in Europe (17%) and
Forest Products (17%) with the increases for North America
and Fine Paper South Africa being 6% and 9% respectively.
Fixed costs
Fixed costs increased by US$111 million in 2008 compared to
2007. The major components of fixed costs (shown here in
US Dollars) were as follows:
Fixed costs
US$ million 2008 2007 2006
Personnel 1,016 926 878
Maintenance 253 236 229
Depreciation 370 372 387
Other 280 274 305
Total 1,919 1,808 1,799
In fiscal 2008, fixed costs increased by 6% in US Dollars
compared to fiscal 2007. Of this increase, 76% (US$84 million)
was due to the impact of exchange rates when translating costs
in Euro and Rand into the US Dollar reporting currency. Thus,
excluding the currency impact, fixed costs were well controlled,
increasing by only 1.5% (US$27 million) year-on-year.
An analysis of fixed costs by region is as follows:
Regional fixed costs
US$ million 2008 2007 2006
SFPNA* 543 542 561
SFPE* 863 778 770
SFPSA* 111 107 104
Forest Products 403 374 377
Total 1,919 1,808 1,799
* SFPNA – Sappi Fine Paper North America, SFPE – Sappi Fine Paper Europe,
SFPSA – Sappi Fine Paper South Africa.
Sales and costs per ton
In the tables below we set out the sales and costs per ton in
both the local currency and US Dollars for each of the divisions
and the group for the past three years.
Sappi Fine Paper North America
SFPNA sales and cost 2008 2007 2006
per ton US$/ton US$/ton US$/ton US$/ton
Sales 1,071 1,003 1,009
Costs 1,010 988 1,030
Operating profit
excluding special items 61 15 (21)
Although cost management and product re-design have been
major focus areas in recent years, the region experienced
a 2.2% increase in cost per ton as a result of international
commodity price pressures. An improved supply-demand
balance in the market during fiscal 2008 facilitated a 7% selling
price increase per ton.
Sappi Fine Paper Europe
2008 2007 2006
SFPE sales and cost per ton €/ton US$/ton €/ton US$/ton €/ton US$/ton
Sales 709 1,068 718 957 728 896
Costs 694 1,046 701 935 724 891
Operating profit excl special items 15 22 17 22 4 5
In local currency (Euro), sales prices declined 3% compared to fiscal 2006, although, due to the weakening US Dollar over that period,
sales prices increased in US Dollar terms. In Euro, costs per ton decreased from €724 to €694 (4%) compared to fiscal 2006.
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