Storage towers at Sappi’s Ngodwana wood mill in Mpumalanga. Picture: BLOOMBERG
Workers stand beside storage towers at Sappi’s Ngodwana wood mill in Mpumalanga. Picture: BLOOMBERG

SHARES in Sappi rose 0.90% to R67.60 in early morning trade on Wednesday after it reported that operating profit for the first quarter to December 31 2015 surged 51% to $112m compared with the year-earlier period.

Shares in Sappi have risen 3.45% so far this year, compared with 54% last year.

The wood pulp, paper pulp and paper-based solutions group said operating performance in the quarter was strong and substantially above the same quarter last year.

A recovery in coated paper sales volumes, the stabilisation of selling prices and lower variable costs enabled the North American business to deliver higher profits than in the comparable quarter last year.

Profitability for the paper business in SA progressed further in the quarter, notwithstanding the sale of the Cape Kraft and Enstra Mills.

Net finance costs for the quarter were $25m, a reduction from the $37m in the year-earlier period.

Net cash generated for the quarter was $19m compared with net cash utilised of $121m last year.