Sappi bullish on its prospects. After reporting an improved fourth-quarter, the paper and pulp producer has

predicted a strong start to 2019.

Sappi has reported an improved fourth quarter after overcoming the production

challenges it faced earlier this year. Although the recovery wasn't enough to

lift its full-year metrics, the pulp and paper producer has raised its annual

dividend, sending its shares higher yesterday.

The group said it also benefited from higher graphic paper prices and stable

demand across most product categories in the three months to end-September.

Demand and pricing for dissolving wood pulp (DWP) remained healthy but net

sales were negatively affected currency translation losses related to currency

hedges it took earlier in the year when the rand was a lot stronger. It said

the impact of lost DWP production volumes in the third quarter, following

start-up issues after mill upgrade projects, was felt in the fourth quarter as

investors levels held back sales growth.

Its European businesses did well as coated paper price increases offset cost

increases. Market share gains helped offset weaker graphic paper markets

during the quarter, it said.

Fourth-quarter sales improved by 8.8% to $1.54 billion from a year earlier.

For the year to end-September, they rose 9.6% to $5.81 billion. Earnings

before interest, tax, depreciation and amortisation (EBITDA), excluding

special items, increased by 1.4% in the fourth quarter. However, full-year

EBITDA was still 2.9% lower at $762 million. Earnings per share excluding

special items were flat at 19c for the fourth quarter but were 6.3% lower at

60c for the year. It's raised its dividend for the year by 13% to 17c.

Sappi said fewer disruptions to its production this year should lead to

increased DWP sales to meet growing demand. It says DWP spot prices are

expected to remain range-bound at current levels. Meanwhile, demand for paper-

based packaging and legislative changes promoting recycling and the use of

recyclable materials is expected to support the market for speciality and

packaging papers.

Having completed significant projects in 2018 to convert paper machines to

higher margin and growing packaging grades, in addition to the debottlenecking

of both Saiccor and Ngodwana mills, we expect EBITDA in the first quarter of

financial year 2019, given current exchange rates, to be comfortably higher

than that of 2018," Sappi said.

Sappi's shares closed 1.5% up at 82.25 rand.

In this video Sappi CEO Steve Binnie talks about Sappi's solid full year

performance and improved 4th quarter results. https://t.co/VPT4CHB1Nl

#SappiQ4results

-- Sappi Group (@SappiGroup) November 15, 2018