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Shares in Sappi shoot higher as profits surge

by , 12 November 2015

This morning, Sappi released its results for its final quarter, the three months to the end of September.

The company reported a sharp rise in profits as well as showing that cost cutting measures were having the desired effect.

Let's take a closer look at what the company revealed…


Sappi grew profits 24%

 
Sappi reported a rise in profit of over 24% for the full year to the end of September, says IOL. The company said it managed to bolster profits as it “reduced financing costs”.
 
Sappi says this is thanks to it refinancing it “higher cost debt and the continued reduction in net debt,” adds IOL. This has led the company to “significantly lower” its interest charges.
 
The company boosted net income from $135 million last year to $167 million this year, says MoneyWeb. Its net debt fell from $1.95 billion last year to $1.77 billion this year.
 
Sappi raised some concerns about what could lie ahead as South Africa deals with a drought, says BDLive. With the company requiring water for its mill operations, it says this could impact production and could have a knock on effect on profitability.
 

The market welcomed Sappi’s results well

 
Investors welcomed the results this morning, pushing the share “more than 15%” higher at one stage, says BDLive. Investors appeared happy with Sappi managing to reduce the amount of debt it had.
 
Shares in the company have done well this year, up 40% so far, notes Bloomberg. But this has also led some traders to believe the stock is trading at too much of a premium and could be due a fall.
 
At time of writing, shares in Sappi were trading 9.93% higher at R59.22.
 
So a positive set of results for Sappi, which shareholders have received well.
 
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Shares in Sappi shoot higher as profits surge
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