Commenting on the group’s results, Sappi Chief Executive Officer Steve Binnie said: “I am very pleased with an excellent performance from the group. We outperformed the guidance provided at the end of the last quarter with EBITDA at US$240 million, a 36% increase over the prior quarter (US$177 million) and more than double the equivalent quarter last year (US$98 million). Robust market demand in all product segments combined with the implementation of higher sales prices facilitated the growth and offset rising costs. This achievement was despite logistics and transport bottlenecks, as well as significant increases in energy, pulp and other raw materials.”
The recovery has taken place within the context of the Covid-19 pandemic. Throughout this unprecedented time the health and safety of our employees remained paramount. A comprehensive Covid-19 action plan enabled us to operate in a safe and uninterrupted manner across all our regions.”
Looking forward, Binnie stated: “Given the favourable demand outlook for all of our product segments we anticipate a further improvement in EBITDA for the second quarter of FY2022 from the excellent results achieved in the first quarter.”
Financial summary for the quarter
• EBITDA excluding special items US$240 million (Q1 FY21 US$98 million)
• Net debt US$1,917 million (Q1 FY21 US$2,056 million)
• Profit for the period US$123 million (Q1 FY21 loss of US$17 million)
• EPS excluding special items 20 US cents (Q1 FY21 loss of 1 US cent)
Global logistical challenges continued unabated and posed headwinds for our export sales and raw material procurement in all regions. Substantial energy, raw material and delivery cost inflation in the quarter was offset by selling price increases in the paper business.
Pulp sales volumes increased by 48% compared to the prior quarter as we secured more shipping capacity, albeit at higher cost, for our South African exports. The hardwood dissolving pulp (DP) market price decreased to US$905 per ton on the back of weakening viscose staple fibre (VSF) demand and pricing in China. VSF prices rebounded towards the end of the quarter which stabilised DP pricing. Sappi’s three dissolving pulp mills were fully sold throughout the quarter.
Markets for packaging and speciality papers continued to be robust across all regions with our sales volumes up 26% on a year ago. The successful implementation of price increases combined with product mix optimisation led to further progress in profitability for the segment.
Buoyant demand for graphic papers boosted sales volumes by 20% compared to last year and provided support for price increases, which were necessary to offset significant cost inflation and restore EBITDA margins for the segment. Notably, all assets ran at full operating capacity during the quarter.
Renewed strong demand in domestic and export markets supported price increases across all paper grades and facilitated the return of the European business to profitability. An unprecedented surge in energy prices for gas, power and coal compelled the implementation of an energy surcharge on all European products. This extraordinary measure was a key component of our strategy to offset the escalating energy costs and restore margins in the European business.
https://www.sappi.com/sappi-delivers-excellent-performance-for-first-financial-quarter-2022