Wrap Text
Results for the third quarter ended June 2026
Sappi Limited
Registration number: 1936/008963/06
JSE code: SAP
ISIN code: ZAE000006284
Issuer code: SAVVI
("Sappi" or "the Group")
Results for the third quarter ended June 2026
Quarter ended Nine months ended
US$ million Jun 2026 Jun 2025 % Jun 2026 Jun 2025 %
Change Change
Revenue 1 334 1 321 1% 3 955 4 031 -2%
Adjusted EBITDA 53 80 -34% 195 390 -50%
EBITDA excluding special items (99) 71 N/M (67) 363 N/M
Profit (loss) for the period (181) (33) N/M (631) 17 N/M
Net debt 1 997 1 947 3% 1 997 1 947 3%
Headline EPS (US Cents) (27) (5) N/M (55) 4 N/M
Basic EPS (US Cents) (30) (5) N/M (104) 3 N/M
Adjusted EPS (US Cents) (8) (4) N/M (19) 11 N/M
Net asset value (US Cents) 294 406 -28% 294 406 -28%
N/M - Not meaningful
Sappi uses renewable resources to make woodfibre-based products. We are a diversified,
innovative and trusted leader focused on sustainable processes and products, and are
building a circular economy that benefits the world.
Our pulp, packaging and speciality papers, graphic papers and biomaterials are manufactured
from woodfibre sourced from sustainably managed forests, in production facilities which, in
many cases use internally generated bioenergy. Many of our operations are energy self
sufficient.
We have manufacturing operations on three continents and sell our products in more than 150
countries. Our global presence allows us to optimise for different markets, while sharing best
practices and the latest technological achievements.
Together with our partners, we work to build a thriving world by acting boldly to support
Prosperity, People and Planet while upholding our Principles.
Commentary on the quarter(1)
Against the backdrop of a challenging macroeconomic environment, Sappi delivered Adjusted
EBITDA of US$53 million, in line with the updated and improved outlook guidance provided to
shareholders on 09 July 2026. The highlight for the quarter was improved profitability in the
North American region, where paperboard sales volumes from Somerset Mill PM2
and operational efficiencies improved. While these positive contributions provided some
offset, group performance was adversely impacted by depressed selling prices across many
of our product categories, cost inflation associated with the conflict in the Middle East and the
US$22 million impact of the scheduled maintenance shut at Ngodwana Mill. In addition,
the stronger ZAR/US$ exchange rate significantly lowered the profitability of the South African
business. The forestry fair value price adjustment for the quarter was a loss of US$152 million,
driven largely by adverse currency movements on hardwood timber pricing and the negative
impact of escalating fuel costs.
The pulp segment operated within a more supportive market backdrop during the quarter.
Demand for dissolving wood pulp (DWP) remained robust despite it being a seasonally slower
period, underpinned by healthy viscose staple fibre (VSF) industry operating rates and
favourable demand for cellulosic fibres as higher petrochemical costs associated with the
conflict in the Middle East continued to pressure competing polyester textile fibres. High VSF
industry operating rates, healthy backlog orders and low inventories throughout the value
chain supported the positive DWP pricing momentum established in the prior quarter. As a
result, the Chinese hardwood DWP market price(2) increased by a further US$53 per ton to
US$898 per ton at quarter end. Sales volumes for the segment were broadly in line with the
prior year. However, US Dollar selling prices remained 4% below last year's levels. Although
the positive pricing momentum in DWP markets improved segment profitability compared to
the prior quarter, the lower year-on-year selling prices and unfavourable currency movements
in South Africa continued to pressure earnings, resulting in profitability remaining below last
year's level.
The packaging and speciality papers segment delivered significant sales volume growth of
14% compared to the prior year, driven by improving paperboard demand in North America
and the continued commercial ramp-up of Somerset Mill PM2. However, segment profitability
deteriorated year-on-year due to higher operating costs, which included the impact of the
scheduled maintenance shut at Ngodwana Mill. In Europe, sales volumes were marginally
ahead of last year, driven by growth in label paper sales. Despite the successful
implementation of price increases to recover higher input costs, selling prices and margins in
the European region remain depressed. In South Africa, demand for containerboard was
robust but selling prices remained under pressure from low-cost imports supported by the
strength of the ZAR against the US Dollar.
The graphic papers segment continued to operate in a challenging environment characterised
by structural demand decline and ongoing industry overcapacity, resulting in sales volumes
that were 6% below the prior year. Despite these market pressures, profitability was only
marginally lower than last year, supported by strategic fixed cost reductions in Europe and
resilient pricing in North America, where the capacity reduction following the Somerset Mill
PM2 conversion has contributed to a more balanced market. Furthermore, industry-wide price
increases implemented during the quarter in response to rising input costs helped offset
inflationary pressures and supported margins.
Adjusted earnings per share for the quarter was a loss of 8 US cents, compared to a loss of 4
US cents in the prior year, reflecting the continued challenging operating environment. Special
items reduced earnings by US$26 million, comprising primarily impairment charges of US$15
million resulting from weakened market conditions and lower future cash flow projections,
principally related to the tissue machine in Sappi Southern Africa.
Cash flow and debt
Net cash utilised during the quarter amounted to US$30 million. Consistent with our focus on
preserving liquidity and maintaining financial flexibility, capital allocation remained disciplined
throughout the period. Capital expenditure of US$62 million was substantially below the prior
year and was focused on essential maintenance activities. Cash flow benefited from a working
capital inflow of US$19 million, partially offset by closure and restructuring costs of
US$11 million in Europe.
Net debt increased by US$33 million, compared to the prior quarter, to US$1,997 million,
primarily as a result of the net cash utilised. Liquidity remained healthy, comprising cash on
hand of US$204 million and a further US$579 million of committed, undrawn revolving credit
facilities in South Africa and Europe. As previously communicated, leverage covenant testing
remains suspended until March 2027. As at June 2026, the covenant leverage ratio was 6.9
times.
Post-balance sheet events
Shareholders are referred to the SENS announcement released on 23 July 2026 confirming
that, at a general meeting held on the same date, Sappi shareholders approved the proposed
formation of a 50/50 graphic papers joint venture between Sappi and UPM. The parties
continue to work towards the fulfilment of the remaining conditions precedent and currently
expect these to be completed by the end of 2026.
The ongoing conflict in the Middle East continues to contribute to volatility across global
markets. Elevated geopolitical tensions have sustained pressure on energy, chemical and
logistics costs, increasing the risk of broader inflationary impacts across our value chains.
Continued geopolitical uncertainty may also contribute to heightened foreign exchange
volatility, which remains a key risk to the group's earnings and net debt given our exposure to
multiple currencies. While demand in several of our end-markets has shown signs of
improvement, underlying macroeconomic conditions remain uncertain.
Against this backdrop, we continue to execute strategic cost-saving initiatives, targeting both
fixed cost reductions and variable cost efficiencies through enhanced operational
performance. These actions are critical to offsetting inflationary pressures across our cost
base. Alongside these initiatives, we are maintaining a disciplined approach to capital
allocation, balance sheet management and liquidity preservation, ensuring the group retains
the flexibility to respond effectively to evolving market conditions.
Conditions across a number of our key product categories are improving, driven by
strengthening pricing dynamics and operational momentum. In the pulp segment, healthy VSF
market fundamentals continue to underpin DWP demand, while the lag benefit of hardwood
DWP price increases realised during the third quarter is expected to support profitability in the
fourth quarter. Sentiment in global packaging and speciality paper markets is slowly improving,
and the segment is expected to benefit from the continued ramp-up of Somerset Mill PM2 and
recent paperboard price increases in North America. Containerboard demand in South Africa
remains healthy, supported by agricultural export markets. Graphic papers demand is
expected to continue its structural decline, and we remain focused on optimising capacity
utilisation across our asset base. The segment should also benefit from the pricing initiatives
implemented during the third quarter.
A scheduled annual maintenance shut for one of the lines at the Saiccor Mill is planned for
the fourth quarter and is expected to reduce earnings by approximately US$7 million. Capital
expenditure for FY2026 is expected to be approximately US$240 million, which is slightly
below our previous guidance of US$250 million. Our disciplined approach to capital allocation
remains focused on essential maintenance, regulatory requirements and projects that support
operational reliability. The forestry fair value price adjustment for the fourth quarter is expected
to be positive.
Taking into account current trading conditions, the continued ramp-up of Somerset Mill PM2
and the lower maintenance costs anticipated in the quarter, offset by ongoing geopolitical
uncertainty and volatility in global markets, we estimate that Adjusted EBITDA for the fourth
quarter of FY2026 will be materially above that of the third quarter.
On behalf of the board
SR Binnie
Director
GT Pearce
Director
06 August 2026
(1) "year-on-year" or "prior/previous/last year" is a comparison between Q3 FY2026 versus
Q3 FY2025; "Quarter-on-quarter" or "prior/previous/last quarter" is a comparison between
Q3 FY2026 and Q2 FY2026.
(2) Market price for imported hardwood dissolving wood pulp into China issued daily by the
CCF Group.
This results announcement has been prepared in compliance with the JSE Listings
Requirements and is the responsibility of the directors. It is only a summary of the information
in the full results for the third quarter ended June 2026 and does not contain full or complete
details. Any investment decisions should be based on the full results for the third quarter ended
June 2026 accessible from 06 August 2026 via the JSE link and also available on the home
page of the Sappi website at www.sappi.com.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2026/jse/isse/savvi/Q32026.pdf
05 August 2026
JSE Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 06-08-2026 08:00:00
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