Feb 10, 2011. /Lesprom Network/. Sappi Group's financial performance improved and that operating profit in the 1Q (excluding special items) increased to $137 million compared to $81 million in the 1Q 2009, as the company said in a press release received by Lesprom Network. “The trend of improving performance continued in the quarter. Demand for our products remained good and prices increased gradually. Pulp prices remained high, benefiting our Southern African and North American businesses, which performed strongly," Sappi's CEO, Ralph Boettger said. "The fine paper business’ operating profit (excluding special items) improved 30% compared to the equivalent quarter last year. The performance of the European business, compared with a year earlier, showed significant improvement in sales volumes and average prices. However, as a result of input cost pressure particularly of purchased pulp, the business’ operating margins remain below expectations. "Our North American business delivered a strong underlying performance, however, an extended planned outage for an upgrade in the pulp mill at Somerset mill commencing in October 2010 reduced output and profitability in the quarter. Going forward the Somerset Mill will benefit from increased pulp production while improving energy efficiency and further reducing its carbon footprint. The performance of the Southern African business improved further during the quarter. "Demand for the chemical cellulose business remains strong, driven by demand for viscose fibres, particularly in Asia, and the Saiccor mill’s post expansion output and efficiency continued to improve. Our paper and paper packaging business had improved demand for containerboard, sackkraft and newsprint, but weaker demand for fine paper. "The group achieved an annualised return on capital employed (ROCE) of 12.8% for the quarter, which was an improvement on the quarter ended September 2010 and ahead of our target minimum of 12%. "Group sales for the quarter increased by 16% to $1.9 billion over the equivalent quarter last year as a result of improved sales volumes and prices. Cash generated from operations was $245 million for the quarter. Net cash utilised for the quarter was $196 million. We expect positive cash generation for the rest of our financial year and good net cash generation for the full year. "Operating profit for the quarter excluding special items improved to $137 million, compared to $81 million a year ago. Including special items, operating profit for the quarter was $121 million compared to a profit of $1 million for the equivalent quarter a year ago,” Boettger said. "In our second financial quarter we expect the group’s operating profit (excluding special items) to continue the improving trend relative to the equivalent quarter last year, but to be below that of the first financial quarter,” Boettger concluded. Sappi produces coated fine paper widely used in books, brochures, magazines, catalogues and many other print applications.