May 10, 2010. /Lesprom Network/. Sappi's operating profit excluding special items was $54 million for the 2Q, a substantial improvement compared to the $17 million loss reported a year ago, company said in a statement received by Lesprom Network. Higher pulp prices in Europe and maintenance shuts in South Africa negatively impacted 2Q result which was below the $81 million reported in the December quarter. Including special items, operating profit was $28 million compared to $6 million a year ago. Cash generated from operations increased to $122 million for the quarter, up from $99 million a year ago as a result of improved operating performance and increased sales volumes. Net debt decreased to $2.4 billion, which is below the debt level prior to the financing of the European Acquisition in December 2008. Liquidity remains strong, and cash and cash equivalents at the end of the quarter were $724 million. Net finance costs of $62 million were $11 million lower than the prior quarter largely as a result of a $7 million gain on the redemption of $106 million of US Municipal Bonds. Commenting on the results, Sappi chief executive Ralph Boettger said: "Demand for our products continued to improve through the quarter with the result that our sales volume increased 17% compared to a year earlier and 3% compared to the December quarter. Our North American business performed strongly in the quarter as a result of our market positioning, continued cost reduction and improved pulp sales prices, and each of the other regions generated operating profits (excluding special items). "The quarter was characterised by rapid increases in market pulp prices accelerated by a major earthquake in Chile and a strike by stevedores in Finland which disrupted pulp supplies from Chile and pulp and paper deliveries from Finland. Pulp prices (NBSK) rose from an average of $796 per ton in December to $889 per ton at the end of March. Our Southern African and North American businesses, which are net sellers of pulp, benefited from the pulp price increases but our European business, which buys more than half of its pulp requirements, experienced a significant margin squeeze as it could not raise its paper selling prices enough to absorb the higher pulp costs. In March, we implemented price increases on coated fine paper in Europe to help mitigate the higher pulp prices and have announced a further 10% increase with effect from June in response to strengthening demand and the spike in pulp prices. Sappi is a global paper and pulp group, which produces coated fine paper, newsprint, uncoated graphic and business papers, premium quality packaging papers, a range of coated speciality papers and a range of paper grade pulp.