Wrap Text
Results for the fourth quarter and year ended September 2026 and changes to board committees
Sappi Limited
Registration number: 1936/008963/06
JSE code: SAP
ISIN code: ZAE000006284
Issuer code: SAVVI
(“Sappi” or “the Group”)
Results for the fourth quarter and year ended September 2026 and changes to board
committees
Reviewed
Quarter ended Year ended
% %
US$ million Sep 2026 Sep 2025 Change Sep 2026 Sep 2025 Change
Revenue 1 322 1 389 -5% 5 277 5 420 -3%
Adjusted EBITDA 99 111 -11% 294 501 -41%
EBITDA excluding special items 92 116 -21% 25 479 -95%
Profit (loss) for the period (116) (194) N/M (747) (177) N/M
Net debt 2 050 1 920 7% 2 050 1 920 7%
Headline EPS (US Cents) (14) (19) N/M (69) (15) N/M
Basic EPS (US Cents) (19) (32) N/M (123) (29) N/M
Adjusted EPS (US Cents) (3) (3) N/M (21) 8 N/M
Net asset value (US Cents) 280 382 -27% 280 382 -27%
N/M - Not meaningful
At Sappi, we believe the true value of what we make is measured by what it helps others
achieve. We put decades of experience and deep expertise to work helping our customers
make better products, create new opportunities and efficiencies, and meet the challenges of
today and tomorrow.
It all starts with woodfibre from sustainably managed forests. We turn this renewable resource
into materials and ingredients that people depend on every day, including pulp, packaging and
speciality papers, graphic papers and biomaterials.
We're always looking for better ways to use resources, reduce waste and work toward a more
circular economy. Many of our facilities generate their own bioenergy, helping us reduce our
reliance on outside energy sources.
With manufacturing operations on three continents and products sold in more than 150
countries, we bring together global capabilities with local market knowledge and shared
expertise to better serve our customers wherever they do business.
Together, with our partners, we work to build a thriving world by acting boldly to support
Prosperity, People and Planet while upholding our Principles.
Year ended September 2026 (1)
Sappi delivered Adjusted EBITDA of US$294 million for FY2026 in a difficult and volatile
operating environment. Management responded to persistent macroeconomic headwinds,
geopolitical disruptions and cost inflation with a targeted cost savings programme, liquidity
management, ongoing capital allocation discipline and a focus on driving operational
performance. Market conditions remained challenging across many of our paper categories
while a stronger ZAR against the US Dollar reduced profitability in the South African region.
Higher fuel, logistics and chemical costs as a result of the Middle East conflict added
further pressure. Demand for dissolving wood pulp (DWP) remained robust and pricing
recovered in the second half of the year. In North America, the commercial ramp-up of
Somerset Mill PM2 progressed more slowly than initially anticipated. However, focused
operational interventions stabilised production and sales volumes lifted during the second half
of the year enabling the asset to make an increasingly positive contribution. The forestry fair
value price adjustment for the year was a loss of US$269 million, largely attributable to
adverse currency movements on ZAR-denominated hardwood timber prices and
persistent fuel cost inflation.
The pulp segment faced several headwinds during FY2026, with profitability declining year-
on-year, primarily due to lower selling prices early in the year and the adverse exchange rate
impact in South Africa. Segment sales volumes decreased by 3% compared to the prior year,
with DWP sales volumes down 4%. The lower DWP sales volumes reflected the combined
impact of very low inventory levels entering FY2026 and a spillover of approximately 38,000
tons of DWP sales that were delayed from the fourth quarter into the first quarter of FY2027
due to congestion at the port of Durban. Following a weaker start to the year, DWP market
conditions strengthened after the Chinese New Year, supported by high downstream viscose
staple fibre (VSF) operating rates and low fibre inventories. High petrochemical costs and
ongoing volatility in oil markets improved the relative competitiveness of cellulosic fibres
compared with polyester staple fibre, supporting favourable substitution trends across the
textile value chain. At the same time, elevated production costs across the industry provided
additional support for DWP market pricing. Despite this recovery, average US Dollar selling
prices for the pulp segment remained 6% below the prior year. Profitability was further
impacted by substantial cost inflation, most notably higher sulphur costs, which adversely
affected the Saiccor Mill. In North America, the business continued to optimise pulp integration
across its operations, balancing external sales of DWP and high-yield pulp with internal
consumption. This included increasing the integration of Cloquet Mill pulp producti on into
graphic papers production and Matane Mill high-yield pulp into paperboard production at
Somerset Mill, supporting the group’s broader strategy of maximising value across its assets.
Profitability in the packaging and speciality papers segment remained below historical levels
during FY2026, reflecting the combined impact of the Somerset Mill PM2 commercial ramp-
up, subdued demand across several packaging markets and significant input cost inflation,
while average selling prices remained broadly flat year-on-year. In North America, earnings
were negatively impacted during the first half of the year by lower operating efficiencies and
an initially slower-than-anticipated PM2 ramp-up. Operational performance improved
significantly in the second half of the year as production stability, product quality and sales
volumes strengthened, contributing positively to earnings. As a result, segment sales volumes
increased by 9% compared to the prior year, driven primarily by the higher paperboard
volumes from Somerset Mill. Market conditions improved progressively through the year,
particularly in North America, where stronger downstream demand, industry capacity
reductions and a more balanced supply-demand environment supported improving pricing
dynamics in the second half of the year. In Europe, demand remained subdued across most
packaging grades and competitive pressures persisted, although label papers continued to
perform well, supported by the ongoing commercial ramp-up of the Gratkorn Mill PM9
investment. In South Africa, containerboard demand was healthy, underpinned by robust
agricultural activity. However, profitability was adversely affected by continued pressure from
low priced imports, supported by the stronger ZAR.
The graphic papers segment continued to face significant structural decline, driven by ongoing
digital substitution. Although sales volumes declined by 7% compared to the prior year,
disciplined fixed-cost reduction initiatives and ongoing operational efficiency improvements
enabled the segment to maintain overall margins in line with FY2025. Regional performance
remained mixed, with North America delivering substantially higher margins than Europe,
reflecting more balanced supply-demand conditions and more resilient pricing dynamics. In
Europe, persistent industry overcapacity continued to place pressure on volumes, pricing and
profitability. Profitability of the South African newsprint and office papers businesses was
adversely impacted by heightened import competition, supported by a relatively strong Rand,
which improved the competitiveness of imported products in the domestic market.
Special items reduced earnings by US$405 million for the year, comprising primarily
impairments of US$319 million, together with US$26 million of costs associated with strategic
projects. Net finance costs for the year increased to US$114 million due to hi gher debt levels.
As a result of these special items, the increase in finance costs and the negative forestry fair
value price adjustment of US$269 million, the group recorded a net loss of US$747 million.
Cash flow and debt
Net cash utilised during FY2026 was US$146 million, reflecting lower profitability, a working
capital outflow of US$16 million and European closure and restructuring costs of US$32
million. Capital allocation remained disciplined throughout the year with a strong focus on
liquidity preservation, strengthening the balance sheet and maintaining financial flexibility.
Capital expenditure was actively controlled at US$210 million, below guidance of US$240
million and concentrated on essential maintenance, regulatory requirements and operational
reliability.
Net debt increased to US$2,050 million (FY2025: US$1,920 million) at financial year-end as
a result of cash utilised by operations. Liquidity remained satisfactory at US$707 million
comprising cash on hand of US$165 million and US$542 million of committed, undrawn
revolving credit facilities (RCF) in South Africa and Europe, which have been extended to
2031.
In response to the weaker earnings environment and elevated leverage, Sappi engaged
proactively with its lending group during the fourth quarter to ensure continued financial
flexibility and alignment with the group’s strategic priorities. The suspension of covenant
testing under the group’s international revolving credit facility and bank term debt, which was
due to expire in March 2027, was extended to June 2027. Sappi and its lenders have also
agreed revised leverage covenant thresholds for the period thereafter, which gradually
decrease over time and will provide the group with sufficient flexibility and headroom through
to December 2027. We will continue to engage proactively with our lenders regarding
covenant arrangements beyond December 2027.
Fourth quarter September 2026(2)
Sappi delivered Adjusted EBITDA of US$99 million for the fourth quarter, substantially above
the prior quarter and in line with guidance. The sequential improvement was driven by steady
progress against targeted operational and cost savings initiatives, improving profitability in the
North American packaging business as the commercial ramp-up of Somerset Mill PM2
continued to gain momentum and reduced scheduled maintenance compared to the third
quarter. Elevated fuel prices increased logistics and raw material costs in all three regions.
These inflationary pressures continued to weigh on profitability and were only partially offset
by the ongoing improvement in DWP and packaging market conditions. The pulp segment
was adversely affected by congestion at the port of Durban, which delayed approximately
38,000 tons of DWP sales. The forestry fair value price adjustment for the quarter was a loss
of US$7 million, driven by fuel cost inflation.
Market fundamentals for both DWP and VSF remained healthy throughout the quarter and
were further supported by a seasonal increase in textile fibre demand towards quarter-end.
DWP pricing momentum continued, with market prices increasing by US$22 per ton during
the quarter to end at US$920 per ton. However, pulp segment profitability was adversely
impacted by the stronger ZAR/US$ exchange rate, significant cost inflation and the scheduled
maintenance shutdown of one line at Saiccor Mill, which further reduced earnings by
approximately US$8 million. Segment sales volumes declined by 18% compared to the prior
year, due to the spillover of DWP sales into the first quarter of FY2027, low inventories and
boiler tube leaks at Ngodwana Mill which impacted production. Although average US Dollar
selling prices were 6% higher than the prior year, these benefits were more than offset by
exchange rate impacts on the ZAR cost base and substantial cost inflation, particularly for
sulphur, fuel and its impact on logistics.
The profitability of the packaging and speciality papers segment improved year-on-year,
supported by the continued commercial ramp-up of Somerset Mill PM2 and early signs of
recovery in global packaging markets. In North America, market conditions for paperboard
continued to improve, supported by further industry capacity rationalisation. The focus during
the quarter was on implementing our price increases announced in the prior quarter. In South
Africa, underlying containerboard demand remained robust; however, sales volumes were
constrained by low inventory levels during the quarter. Domestic pricing conditions improved,
supported by rising global containerboard prices. Although European demand remained
subdued, we continued to pursue cost-recovery price increases, which negatively impacted
sales volumes. Across all regions, cost inflation remained a significant headwind to
profitability.
The graphic papers segment continued to face the effects of global structural decline, with
sales volumes 11% below the prior year. While European markets remained challenged by
overcapacity and competitive pressures, disciplined cost management and stronger North
American margins enabled the segment to offset inflationary pressures and deliver improved
profitability compared to the prior year.
Adjusted earnings per share for the quarter was a loss of 3 US cents, which was in line with
the loss of 3 US cents in the prior year and indicative of the ongoing challenging operating
environment. Special items for the quarter reduced earnings by US$73 million due to asset
and equity investment impairments of US$28 million and strategic project costs of
US$20 million.
Update on the European merger control process regarding the proposed graphic papers joint
venture with UPM
We continue to engage with the European Commission as part of the regulatory review
process for the proposed European graphic papers joint venture with UPM. Sappi and UPM
formally submitted remedy proposals to the European Commission on 04 November 2026.
The European Commission will now assess the proposed remedies as part of its ongoing
review process and we expect a decision early in January 2027. While the outcome and timing
remain subject to the regulatory process, we remain confident in the strategic rationale and
long-term value creation potential of the transaction.
Directorate
On 05 November 2026, the board approved the following changes to the directorate.
Ms Busisiwe Silwanyana is appointed as a member of the Audit and Risk Committee and the
Human Resources and Compensation Committee. Mr Charles Brand is appointed as
a member of the Audit and Risk Committee and the Social, Ethics, Transformation
and Sustainability Committee. These appointments are effective from 04 November 2026.
Mr Brian Beamish is appointed as Lead Independent Director, succeeding Mr Michael (Mike)
Fallon following his retirement at the Annual General Meeting on 10 February 2027.
Outlook
The operating environment remains uncertain as ongoing geopolitical tensions, particularly
the conflict in the Middle East, continue to contribute to volatility across global markets.
Elevated oil prices and disruptions to global supply chains are sustaining pressure on fuel,
chemical and logistics costs, while broader macroeconomic uncertainty and trade tensions
continue to weigh on business and consumer confidence. Foreign exchange volatility remains
a key risk to the group’s earnings and net debt given our exposure to multiple currencies.
Encouragingly, demand for DWP and North American packaging papers continues to improve.
Against this backdrop, we remain focused on executing initiatives within our control. Our
strategic cost reduction programmes continue to target both fixed-cost savings and
operational efficiency improvements to mitigate ongoing inflationary pressures and enhance
competitiveness. At the same time, we are maintaining a disciplined approach to capital
allocation, cash generation, balance sheet management and liquidity preservation. The
benefits of the commercial ramp-up of Somerset Mill PM2, continued progress in optimising
our asset utilisation and a relentless focus on improving our competitive cost position are
expected to strengthen underlying performance and position the group to respond decisively
as markets evolve.
Capital expenditure for FY2027 is estimated to be approximately US$240 million and will
remain focused on essential maintenance activities, regulatory compliance requirements
and projects that support operational reliability and business continuity. The first quarter
includes significant planned maintenance that is expected to impact earnings by
approximately US$41 million(3). In addition, the forestry fair value price adjustment is expected
to remain negative as ongoing fuel cost escalation continues to increase the cost base
underpinning forestry operations.
Conditions across several key product categories are improving, supported by firmer pricing
dynamics. In the pulp segment, strong VSF market fundamentals including high operating
rates, low inventories and healthy backlog orders continue to underpin demand for DWP,
aided by favourable cellulosic fibre substitution trends. DWP pricing momentum extended into
October 2026 with strong seasonal demand and ongoing industry cost pressures providing
support for further price increases. The benefit to earnings is expected to be realised
progressively due to the contractual lag between market price movements and customer
pricing. We anticipate that a large proportion of the approximately 38,000 ton backlog of DWP
sales spilling over from the fourth quarter will be resolved in the first quarter of FY2027.
Sentiment continues to improve gradually in packaging and speciality papers markets,
particularly in North America, where tighter industry capacity, strengthening demand and
recent market price increases are expected to support earnings. The realisation of paperboard
price increases will similarly lag implementation due to customer contract structures. We will
also benefit from continued operational improvement and commercial momentum at Somerset
Mill PM2; however, this is likely to be partially tempered by lower seasonal demand typically
experienced in North American packaging markets during the first quarter. Containerboard
demand in South Africa remains healthy and domestic pricing conditions are expected to
improve gradually due to rising global containerboard prices. The European packaging and
speciality papers business continues to struggle with muted demand.
The graphic papers segment remains challenged by structural demand decline and industry
overcapacity, particularly in Europe; however, ongoing cost reduction initiatives, disciplined
capacity management and recently announced pricing and fuel surcharge actions may provide
some support to profitability in the first quarter.
Taking into account current market conditions for our products, the scheduled maintenance
shuts and the impact of elevated oil prices on our raw materials and logistics costs, we
anticipate that the Adjusted EBITDA for the first quarter of FY2027 will be below that of the
fourth quarter of FY2026.
On behalf of the board
SR Binnie
Director
GT Pearce
Director
05 November 2026
(1)“Year-on-year” or “prior/previous/last year” is a comparison between FY2026 versus
FY2025.
(2)“Year-on-year” or “prior/previous/last year” is a comparison between Q4 FY2026 versus Q4
FY2025; “Quarter-on-quarter” or “prior/previous/last quarter” is a comparison between Q4
FY2026 and Q3 FY2026.
(3)Scheduled maintenance includes Cloquet Mill extended total mill outage US$23 million;
Somerset Mill utilities and paper machine outage US$10 million; Saiccor Mill (one production
line) US$8 million.
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 condensed consolidated financial statements for the year ended September 2026 and
does not contain full or complete details. Any investment decisions should be based on the
condensed consolidated financial statements for the year ended September 2026 accessible
from 06 November 2026 via the JSE link and also available on the home page of the Sappi
website at www.sappi.com.
The condensed consolidated financial statements for the year ended September 2026 have
been reviewed in accordance with ISRE 2410 by KPMG Inc. An unmodified review opinion
has been issued.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2026/JSE/ISSE/SAVVI/Q42026.pdf
06 November 2026
JSE Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 06/11/2026 08:00:00
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