Although sales were up to 2.9bn for the year from 2.7bn in 2004, operating profit dropped from 107.7m to the 78.5m loss. Restructuring charges of 133.5m for two mills in Muskegon in Michigan, US and Usutu in Swaziland also affected pre-tax profits.

Sappi chief executive Jonathan Leslie said that recent events had also stretched the firm's profitability.

"Input costs, especially energy and chemicals, escalated still further due in part to the hurricanes in the US. There were no paper price increases to offset these higher costs," he said.

However, he added that Sappi's market share in Europe had improved in the last quarter after attempts to increase prices in the previous quarter had resulted in the loss of volumes.