* Q1 headline EPS 8 U.S. cents vs 7 U.S. cents
* Says Q2 profit to rise quarter-on-quarter
(Adds details, quotes, analyst)
By Agnieszka Flak
JOHANNESBURG, Feb 8 (Reuters) – South African paper
maker Sappi posted a slight rise in first-quarter
earnings on Wednesday, lifted by lower input prices and
aggressive cost cuts, and said it expected more improvement
ahead.
As the paper industry struggles to recover from a slump
caused by anaemic demand and overcapacity, Sappi has closed
mills and is targeting higher-margin businesses such as chemical
cellulose, a move analysts say is finally showing results.
“They have improved the quality of the business. They may
finally be getting the story right, but it may take a while for
it to fully come through into the bottom line,” said Mohamed
Kharva, an analyst at Nedbank Securities.
“The greatest concern is the Chinese and how much capacity
they have added and how that will impact on the business in
coming months.”
Should market conditions remain stable, Sappi, the world’s
largest maker of fine paper used in glossy magazines such as
Vogue, said it expected core profit for the second quarter to
improve from the first quarter.
Shares in the company rose 1.69 percent to 27 rand by 0810
GMT, outperforming a 0.63 percent rise in the JSE All-share
index. The stock is up nearly 12 percent so far this
year.
Continued…
