UPDATE 1-Sappi's Q3 loss widens y/y, outlook tough
* Q3 diluted headline loss at 20 U.S cts per share
* Q3 operating profit steady at $60 mln
* Sees tough market conditions ahead (Add details)
JOHANNESBURG, Aug 3 (Reuters) - South African paper maker Sappi said on Friday its third-quarter loss widened by 54 percent, hit by slow demand and planned annual maintenance shutdowns, and the company expected market conditions to remain tough.
Sappi, the world's largest maker of fine paper used in glossy magazines, said diluted headline loss per share for the quarter to end-June totaled 20 U.S. cents, compared with a loss of 13 U.S. cents a year earlier.
Headline earnings are the main profit gauge in South Africa and exclude certain one-off, financial and non-trading items.
The company said operating profit, excluding special items, was steady at $60 million from the same period last year.
The global paper industry is struggling to recover from a slump caused by sluggish demand and overcapacity and Sappi said market conditions would remain tough.
"Trading conditions are expected to be weaker than a year ago, with lower volumes for most of our products and pricing, particularly for pulp, to remain under pressure," it said in a statement.
Sappi has said chemical cellulose, which it produces from its own woods for conversion into raw materials for clothing, plastics, food and pharmaceutical products, is one of the higher-margin businesses it plans to expand on.
The company, which is also the world's top producer of chemical cellulose, is currently investing a total of about $500 million to boost its total capacity to more than 1.3 million tonnes a year by 2013.
Sappi shares were down 1.65 percent to 24.00 rand as of 0728 GMT. (Reporting by Olivia Kumwenda; Editing by Ed Stoddard)
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