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Sappi to Cut Jobs This Month on South African Unit Reforms

Sappi Ltd., the world’s largest maker of glossy paper, will have “some” job losses this month and next year in a reorganization of its South African paper and packaging business, a company executive said.

Claims by the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union that Sappi will cut 1,200 jobs are premature, said Andre Oberholzer, Sappi’s corporate affairs manager, confirming comments reported earlier by Business Day. The number of jobs lost this month will be a “small portion” of the 172 estimated by the union, Oberholzer said.

“Since 2010 we’ve been restructuring in order to return the business to acceptable profitability and this is part of that process,” Oberholzer said. “Those that will be impacted have been informed, but it’s specific to certain production processes at certain mills.”

Sappi announced plans over the past year to shut mills in South Africa and Switzerland, and the Johannesburg-based company cut about 800 jobs in the nine months through June. Rising costs and weaker paper sales have also led Helsinki-based competitors Stora Enso Oyj and UPM Kymmene Oyj to close mills.

Sappi’s shares rose for the first time in three days, climbing 2 percent to 25.70 rand at 4:32 p.m. in Johannesburg. That pared the stock’s slump this year to 24 percent.

Once Sappi’s reorganization is completed, the changes at businesses in southern Africa will result in savings of about 250 million rand ($30 million) a year, with an additional 100 million rand a year saved as a result of avoided maintenance, the company said in October.

Alex Thiel, chief executive officer for southern Africa, will meet with the union tomorrow, Oberholzer said. The company had more than 15,000 workers at the end of the 2010 fiscal year, according to Bloomberg data.

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