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Sappi Says Cheap China Paper Threatens Profit, South Africa Jobs

Feb. 12 (Bloomberg) -- Sappi Ltd., the world biggest maker of glossy paper, said that cheap products from China and Korea are hurting its cash flow and earnings.

Investment in South African production and jobs are under threat if the situation continues, Alex Thiel, the company’s Southern Africa chief executive officer, said in an e-mailed response to questions. There is a “clear trend over a number of years of uncompetitive behavior from these countries.”

Sappi has submitted an anti-dumping application to the International Trade Administration Commission against the two countries. The Johannesburg-based company is in discussions with the Department of Trade and Industry and the Department of Economic Development for support, he said.

Sappi’s net income fell 62 percent to $17 million in the first quarter through December, it said Feb. 6. The company stopped payouts to shareholders in 2008 as it struggled with a high debt burden and weakening paper sales in Europe.

The stock rose 0.2 percent to 28 rand as of 9:48 a.m., valuing the company at about 15.2 billion rand ($1.7 billion). Sappi has declined 9.4 percent this year.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Ana Monteiro at amonteiro4@bloomberg.net

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