Sappi announces results for the second financial quarter of 2023

Commenting on the group’s results, Sappi Chief Executive Officer Steve Binnie said: “Following the record profitability achieved last year, the group faced a severe downstream inventory destocking cycle. This led to production curtailment in both the European and North American regions to match the sluggish market demand and to prevent excess inventory accumulation. Profitability was negatively affected by reduced sales volumes, cost inflation and operational inefficiencies associated with the commercial downtime. However, paper selling prices remained relatively stable through the quarter and were significantly above the levels in the prior year. Dissolving pulp (DP) market conditions improved during the quarter.

Sappi delivered an EBITDA excluding special items of US$167 million against a backdrop of a challenging global economy and significantly weaker paper and pulp markets. Our long-term net debt target of approximately US$1 billion remains a strategic imperative and we continued to progress towards this goal. Net debt decreased by US$568 million compared to the prior year and ended the quarter at US$1,225 million. Net debt/EBITDA improved materially to 1.0 from 2.0 in the prior year.”

Looking forward, Binnie stated: “Sappi is well positioned to withstand the current market pressures given our significantly reduced debt profile and healthy cash reserves. We remain committed to our strategy to reduce exposure to graphic paper markets while investing for growth in renewable packaging, dissolving pulp and biomaterials.”

Financial summary for the quarter
*EBITDA excluding special items US$167 million (Q2 FY22 US$337 million)
*Net debt of US$1,225 million (Q2 FY22 US$1,793 million)
*Profit for the period US$69 million (Q2 FY22 US$188 million)
*EPS excluding special items 11 US Cents (Q2 FY22 35 US Cents)
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