Newspaper giant Sappi turns around.

HILTON TARRANT: Ralph Boettger is the chief executive of Sappi, joining us in the studio. Ralph, in your company results you mention decisive action that was taken. Wayne McCurrie, who really liked the company a lot and owned a fair amount in the company spoke about this as being the most torrid time that your company's gone through. A return to operating profit though, so some good news.

RALPH BOETTGER: Good afternoon, yes. It's been a tough year, it really has been. I think we've done a lot to put us in a  better position to take on the future, and at the end of last year we thought we had done what was necessary with the M-real transaction, and with the consolidation that took place in Europe. Obviously, markets globally deteriorated to an extent where I can safely say it's one of the most difficult periods that Sappi has ever seen.

HILTON TARRANT: Ralph, revenue back to where you were roughly this time last year, and this obviously with the addition of M-real. So it kind of gives you a picture of how tough things are out there.

RALPH BOETTGER: It really was very tough. We saw demand for coated fine paper in Europe drop by about 20%, about 25% in North America, and also for some of our southern African business's domestic products. But things are improving and, as you can see, yes, our fourth quarter back into operating profits and the demand for all our products steadily improving.

HILTON TARRANT: How much visibility do you have with the demand that's coming through?

RALPH BOETTGER: For our chemicals cellulose business we have quite a lot of visibility - about six months  - and our order books are absolutely choc-a-block. We can sell every ton of chemical cellulose we can produce, and we are now running at full operating rates in our expanded plant. For coated fine paper there we have order books running for about three weeks, and we do talk to customers, but visibility there still not very far - perhaps a month.

HILTON TARRANT: You are extracting synergies from that acquisition, some good numbers coming through there and on target.

RALPH BOETTGER: Yes. Our team in Europe have done a really good job of integrating this business. We are standing at €73m versus a target of €60m, and we are well on our way to achieve a €120m run rate, which we said [we'd do] in three years, but we think we'll do it perhaps by the end of next year.

HILTON TARRANT: You did a lot of refinancing in the period, and the company's in a much healthier position now.

RALPH BOETTGER: Well, we've done a massive refinancing. Our liquidity position is a good one. Our maturity profile is much better than it used to be. However, this did come at a  cost, and our finance costs will be increasing by about $50m to $60m per annum.

HILTON TARRANT: Looking ahead - plans for capex?

RALPH BOETTGER: We certainly are concentrating on debt reduction and cash generation, and therefore for the next year we aim to curtail capex to below $200m, which is what we did the previous year. After that it will increase slightly, but twice now de-gearing the balance sheet and producing cash. Better returns for our shareholders is our priority.

HILTON TARRANT: A lot of special items coming through in this period and previous periods with closures, with more closures, etc. Are you expecting to remain profitable, excluding those items in the first quarter of next year? Looking forward, how many more quarters can we expect these special item charges to come through?

RALPH BOETTGER: The special items in terms of restructuring provisions, we believe, will be much less going forward. The one wild card that we've always had to deal with is the plantation fair-value price adjustments. This is an accounting adjustment that does not affect operating profitability underlying to the company, or cash indeed. It's value increases, which we might harvest only in 10 or 20 years from now on, and those are ongoing. The net result after doing this now for five or six years is an increase in value of $200m, but in the last year it's been a decrease.

HILTON TARRANT: The CEO of Sappi, Ralph Boettger. A much-relieved Ralph Boettger.

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