Sappi Falls To 2Q Loss On Demand Drop

NEW YORK (AP) — Coated paper company Sappi Ltd. reported a second-quarter loss Tuesday, saying a sharp drop in demand for its paper used in magazines forced it to extensively cut back on production in its major markets.

The South African company reported a loss of $35 million, or 7 cents per share, compared with a profit of $155 million, or 43 cents per share, in the year-ago quarter. Sales fell 11 percent to $1.3 billion.

Analysts polled by Thomson Reuters were expecting a loss of 6 cents per share on revenue of $1.24 billion.

Sappi said average prices were 6 percent lower because of a 32 percent drop in the price of pulp.

The company said it expects demand to remain weak as the "general economic outlook and market conditions remain depressed." Sappi expects to continue to cut production as demand falls further.

Those cuts have included a decision to shut down a mill in Muskegon, Mich. Sappi said in March the shutdown would take effect April 1 and last at least six months.

American Depositary Shares of the company fell 16 cents, or 5.2 percent, to $2.92 in afternoon trading.