Sappi Ltd.
Sappi Ltd.: Resignation of CEO
Ad hoc announcement transmitted by DGAP – a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
——————————————————————————
RESIGNATION OF SAPPI LIMITED CEO AND TRADING UPDATE TO BE GIVEN AT ANNUAL
GENERAL MEETING AT 11.00AM, MONDAY 6 MARCH 2006, JOHANNESBURG.
The following announcement will be made by the Group’s Chairman, Eugene van
As, on behalf of the Board of Sappi at today’s Annual General Meeting:
Resignation of CEO:
The Sappi Limited Board has announced today that Jonathan Leslie, Chief
Executive Officer of Sappi Limited, has tendered his resignation from the
company with immediate effect. Mr. Leslie joined Sappi in April 2003 and
has been Chief Executive of the business for 3 years. The Board would like
to thank Mr. Leslie for the contribution he has made during his tenure and
wishes him well for the future.
The Board has asked the Chairman to assume executive responsibility for the
Group until a new appointment is made. In accordance with the principles of
good corporate governance, the Board has appointed David Brink as the
Senior Independent Non-Executive Director.
Trading update:
We have been positive about the demand outlook for our major products for
some time and shareholders must be wondering why, when international
commodity markets are booming and the demand for our product is positive,
our results continue to disappoint.
The main elements affecting our performance have been the supply / demand
balance and the extraordinary rise in input costs. However, our own
internal performance has also been a factor.
The global supply / demand balance for coated fine paper is reasonably
positive. Significant new capacity had been commissioned in the early 2000s
at a time when we entered one of the sharpest recorded declines in
advertising. This had a major impact on the industry; however, conditions
have changed. There is no major capacity now under construction. The demand
outlook continues to be good and we foresee an improvement in the supply /
demand balance for at least the next two years. It is already in excess of
90%, a level at which most industries ought to be very profitable.
Most of the major producers have announced price increases for coated fine
papers in Europe and the United States. We believe we are in a much better
position to achieve these increases than when we failed in Europe last
year. The new prices are unlikely to have a material impact on our second
quarter’s performance although we should see significant benefit towards
the end of the quarter and a positive impact in the third quarter.
Input costs continue to rise. While wood costs have largely levelled off in
North America, they continue to rise in Europe and prices of energy in
various forms and their spin off effects remain high. The average cost of
Brent crude in this quarter to date was US$62 compared to US$48 per barrel
a year ago. For Sappi, every dollar per barrel of oil cost represents an
earnings impact of between one and two cents per share per annum after tax.
There is a clear need for price rises to enable the industry to restore
margins, ensuring it is viable and thus able to supply its customers over
the long term.
We have placed a significant focus on trying to reduce costs across the
Group. In November 2005, we announced a target cost saving of US$100
million run rate by the end of this fiscal year and we still aim to achieve
that.
While the performance of all our business units has room to improve, the
key focus will be in turning our North American business around. This
business has under performed for some considerable time. We have advanced
on the restructuring of the Muskegon Mill but the benefits have been slower
to materialise than anticipated. We have also had some significant
production cost variances at our other North American mills.
Our business objective remains to earn our cost of capital through the
cycle and, while not meeting it in every quarter or every year, to meet it
on average.
There are many projects aimed at achieving this objective and we will
report more fully on them next quarter. In the meantime, the short-term
outlook is still not very positive notwithstanding the good demand. We
expect to see some deterioration in the underlying earnings of our business
in the second quarter.
If price increases can be realised and the cost reduction programmes are
efficiently executed, shareholders should begin to see a return to
profitability in the latter half of the year. The management team is
absolutely focused on attaining that objective.
Contact :
Mr Andre F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Tel +27 (0) 11 407 8044
Mobile +27 (0)83 235 2973
(c)DGAP 06.03.2006
—————————————————————————
language: English
emitter: Sappi Ltd.
48 Ameshoff Street, Sappi House, Braamfontein
2001 Johannesburg Südafrika
phone: +27 (0)11 407 8391
fax: +27 (0)11 403 1493
email: richard.boorman@sappi.com
WWW: www.sappi.com
ISIN: ZAE000006284, DE0008843004, US8030692029,
WKN: 860275, 884300, 921789,
indexes:
stockmarkets: Amtlicher Markt in Frankfurt (General Standard); Freiverkehr
in Berlin-Bremen, Stuttgart; Foreign Exchange(s) NYSE, London
End of News DGAP News-Service
—————————————————————————
Latest News
Latest Reports
No Reports found
Upcoming Events
No Events found
Webcasts
No Webcasts found