Sappi halts dividends as market conditions deteriorate

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The paper and pulp manufacturer says profits declined by half compared to the same quarter in 2018

Storage towers at Sappi’s Ngodwana wood mill in Mpumalanga. Picture: BLOOMBERGmanufacturer of dissolving wood pulp said low prices for its products had resulted in a decision to temporarily halt dividends.

In an update for the quarter to end-September, the company’s fourth, Sappi said it would temporarily halt dividends until markets improve. It said profits declined by half compared to the same quarter in 2018. Profit for the year to end-September is expected to decline by more than a third, while headline earnings per share is expected to fall 29% to 42 dollar cents.

Dissolving wood products pricing remained under pressure, having declined to historic lows of $638/ton at the time of the report, Sappi said.“We believe that current pricing is below the cash cost of production for a significant proportion of global supply and is therefore unsustainable over any prolonged period,” the company said.

 

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