Our performance in 2009 - Sappi

52 Chief financial officer’s report continued
Major sensitivities
Some of the more important factors which impact the group’s operating profit excluding special
items, based on current anticipated revenue and cost levels, are summarised in the table below.
SFPE SFPNA SFPSA
Forest
Products Group
Operating profit excluding EUR US$ ZAR ZAR US$
special items sensitivity million million million million million
Volumes change 1% 10 5 10 37 25
Selling prices change 1% 24 14 27 34 56
Pulp price change/ton US$10 8 0 7 (52) 6
Variable costs change 1% 12 7 19 40 32
Fixed costs change 1% 5 4 9 34 15
The calculation of the impact of these sensitivities on operating profit excluding special items
assumes all other factors remain the same and does not take into account potential management
interventions to mitigate negative impacts or enhance benefits. As the table shows, the impact
on the individual businesses of one sensitivity may be different as indeed is the case with changes
in international pulp prices which affect Forest Products (which is a net seller of pulp) and the
European business (which is a net purchaser of pulp) in opposite ways.
The previous table shows that operating profit excluding special items is most sensitive to
changes in the selling prices of our products.
Special items
Special items are those items which management believe are material by nature or amount to
the operating results and require separate disclosure. Such items generally include profit and
loss on disposal of property, investments and businesses, asset impairments, restructuring
charges, non-recurring integration costs related to acquisitions, financial impacts of natural
disasters, non-cash gains or losses on the price fair value adjustment of plantations and unusual
government subsidies such as the alternative fuel tax credits paid to qualifying pulp producers in
the USA.
Special items for the year compared to 2008 are shown in the table below:
US$ million gain (loss) 2009 2008
Plantation price fair value adjustment (67) 120
Restructuring provisions raised (34) (41)
Asset impairments (79) (119)
Fuel Tax Credits in North America 87 –
Fire, flood and related events (11) (17)
Other (2) 5
Loss for the period (106) (52)
Our operating profit in 2009 was negatively affected by a plantation price fair value adjustment
of US$67 million, restructuring charges of US$34 million and impairment charges of US$79 million,
partly offset by alternative fuel tax credits earned in North America of US$87 million (alternative
fuel tax credits are discussed in more detail in note 2 of this annual report). Our plantation price
fair value adjustment was negative for the year due to increases in wood delivery costs exceeding
wood price increases. The restructuring charges relate mainly to the closure of the Muskegon
Mill and the impairment charges represent the impairment of the coated mechanical paper
business unit in Europe to take account of weak market conditions.
After taking account of these items, our operating loss for fiscal 2009 was US$73 million
compared to an operating profit of US$314 million in fiscal 2008.