Slides
Page 1
1 Steve Binnie Chief Executive Officer, Sappi Limited 08 May 2025 Q2 FY25 financial results
Page 2
2 Forward-looking statements Certain statements in this release that are neither reported financial results nor other historical information are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “assume”, “positioned”, “will”, “may”, “should”, “risk” and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters, identify forward-looking statements. In addition, this document includes forward-looking statements relating to our potential exposure to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity price risk. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to: • the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing); • the impact on our business of adverse changes in global economic conditions; • unanticipated production disruptions (including as a result of planned or unexpected power outages); • changes in environmental, tax and other laws and regulations; • adverse changes in the markets for our products; • the emergence of new technologies and changes in consumer trends, including increased preferences for digital media; • consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed; • adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems; • the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructurings or other strategic initiatives, and achieving expected savings and synergies; • currency fluctuations. We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events, circumstances, or otherwise. Regulation G disclosure Certain non-GAAP financial information is contained in this presentation that management believes may be useful in comparing the company’s operating results from period to period. Reconciliations of certain of the non-GAAP measures to the corresponding GAAP measures can be found in the quarterly results booklet for the relevant period. These booklets are available on our website: https://www.sappi.com/quarterly-reports Forward-looking statements and Regulation G disclosure
Page 3
3 Q2 in context Challenging market conditions across all segments Demand Refinancing Demand Shut impact • Issues that arose during the scheduled maintenance shuts in South Africa required additional repairs and extended the shutdowns beyond the planned timeline thereby reducing production for the period • This resulted in an additional financial impact of US$13 million over and above the US$45 million guidance 180 107 Q2 FY24 Q2 FY25 Adjusted EBITDA* US$ million 12 1 Q2 FY24 Q2 FY25 Adjusted EPS* US cents Quarter • Overall volumes stable with modest recovery in packaging and speciality papers sales volumes • Heightened uncertainty from global trade tensions and a broader economic slowdown placed downward pressure on selling prices * Refer to the supplementary information in this presentation for a reconciliation of EBITDA to reported operating profit and page 25 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA and Adjusted EPS.
Page 4
Leverage ratio broadly in line with expectations and the prior year 4 Summary FY25 Leverage in line with expectations 466 585 Q2 FY24 Q2 FY25 Cash generated from operations US$ million 2.3 2.4 Q2 FY24 Q2 FY25 Net debt/Adjusted EBITDA Last twelve months Markets Leverage Successfully completed a €300 million bond issuance of 4.500% sustainability- linked senior notes due in 2032 Refinancing
Page 5
0 40 80 120 160 200 180 (1) 7 (10) (68) 2 (3) 107 (17) 90 Q2 FY24 Adjusted EBITDA* Sales volume Price & mix Variable & delivery costs Fixed costs Other Currency conversion Q2 FY25 Adjusted EBITDA* Plantation price fair value adjustment Q2 FY25 EBITDA** 5 1. The following variances were calculated, excluding Sappi Forestry – Sales volume, price & mix, variable & delivery costs and fixed costs. 2. Currency conversion reflects translation and transactional effect on consolidation. * Adjusted EBITDA = EBITDA excluding special items and plantation fair value price adjustment. ** = Excluding special items. US$ million Sales revenue EBITDA* reconciliation Q2 FY24 to Q2 FY25 Largely driven by personnel cost inflation, maintenance shut impact, inventory movement and other fixed costs
Page 6
• Chemical costs decreased in North America and South Africa • Energy costs up in Europe and in South Africa due to shuts • Logistics costs marginally up • Benefit of decline in pulp prices • Wood costs decreased in Europe and South Africa 6 Cost inflation developments Major variable input cost/ton impact quarter-on-quarter Energy Pulp Chemicals DeliveryWood
Page 7
7 Net debt/EBITDA* development ~ capex cycle 2,432 2,370 2,475 2,100 2,175 2,133 2,213 1,979 2,095 2,152 2,297 2,214 2,380 2,248 2,286 1,946 2,040 1,916 1,917 1,771 1,734 1,652 1,583 1,408 1,338 1,329 1,318 1,322 1,349 1,632 1,603 1,568 1,557 1,680 1,728 1,501 1,916 1,879 1,977 1,957 2,056 2,070 2,055 1,946 1,917 1,793 1,530 1,163 1,241 1,225 1,176 1,085 1,216 1,366 1,340 1,422 1,406 1,670 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20*** Q2 FY20*** Q3 FY20*** Q4 FY20*** Q1 FY21*** Q2 FY21*** Q3 FY21*** Q4 FY21*** Q1 FY22*** Q2 FY22*** Q3 FY22*** Q4 FY22*** Q1 FY23*** Q2 FY23*** Q3 FY23*** Q4 FY23*** Q1 FY24*** Q2 FY24*** Q3 FY24*** Q4 FY24*** Q1 FY25*** Q2 FY25*** US$ million Net debt Net debt/LTM EBITDA** * Adjusted EBITDA = EBITDA excluding special items and Plantation fair value price adjustment. ** The covenant Net debt/LTM Adjusted EBITDA calculation has adjustments and therefore differs from that shown above. *** Quarters impacted by IFRS 16 leases (Q2 FY25 ~US$98m) and Matane Mill acquisition (Q1 FY20 US$158m). DWP expansion projects Repaid $400m 2017 bond with cash Somerset PM1 conversion, Cham and Matane acquisitions Covid pandemic, DWP expansion at Saiccor European closures, Somerset PM2 conversion
Page 8
8 Debt maturity profile* Fiscal years * Excludes US$98 million in IFRS 16 leases; average time to maturity of approximately four years. 72 43 43 476 19 19 49 326 221 259 81 33 33 16 54 0 100 200 300 400 500 2025 2026 2027 2028 2029 2030 2031 2032-1 2032-2 Short-term SPH term debt Securitisation SSA RCF Liquidity Debt maturity 2028 includes EUR400m bond Includes 2032 EUR300m bond 2032 US$221m bond 156 612 0 100 200 300 400 500 600 700 800 900 Mar-25 US$ million Cash Undrawn RCF
Page 9
9 Cash flow and capex * Capital expenditure forecast for FY2025 has risen to US$550 million due to the delay in the start-up and substantially increased labour costs associated with the Somerset PM2 project. We anticipate that net debt will peak in the third quarter as the capital expenditure for the project is completed. We remain committed to disciplined capital allocation and reducing net debt is our priority for FY2026 and FY2027 ** Free cash flow = Cash generated from operations less working capital, less maintenance and regulatory/environmental capex. 472 1,267 659 550 284256 761 643 362 5929 506 210 -306 -269 -400 -200 0 200 400 600 800 1,000 1,200 1,400 2021 2022 2023 2024 Mar-25 YTD US$ million Cash generated from operations Free cash flow** Net cash generated (utilised) 0 100 200 300 400 500 600 2021 2022 2023 2024 2025E* 2026E* 2027E* US$ million Cash flow Capital expenditure
Page 10
0% 5% 10% 15% 20% 25% 30% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10-year Average ROCE - Act WACC - Nominal Pre-tax 10 Returns consistently above WACC Covid pandemic, DWP expansion at Saiccor Mill
Page 11
External regulatory and environmental requirements Balance sheet sustainability: reducing debt Shareholder value: dividends & share buy backs Expansion of existing products Regulatory & environmental Sustaining Profit improvement Shareholder returns Growth Protect against future decline Cost reduction Increase efficiency Mix optimisation Priorities Targets 11 Disciplined capital allocation strategy High Low FY25 < US$50 million for sustainability Long-term net debt target ~US$1 billion Grow the label paper business Execute the SBS conversion and expansion Improve margins in all business segments Focus on reducing fixed and variable costs Dividend payment 14 US cents in Q2 FY25 SBS conversion and expansion successfully completed in early May 2025
Page 12
• Somerset Mill PM2 conversion and expansion from 235,000 tpa CWF to 470,000 tpa SBS successfully completed in early May 2025 and commissioning is in progress • Aligned with our Thrive strategy to reduce exposure to declining graphic papers markets and grow packaging and speciality papers • Our focus is to execute the commercial ramp- up of the PM2 machine 12 Successful completion of the conversion and expansion of Somerset Mill PM2
Page 13
13 Segmental overview
Page 14
14 Pulp Summary Q2 FY25 * Adjusted EBITDA margin. Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA. • Textile and apparel markets slowed on back of increasing geopolitical trade tensions and macroeconomic uncertainties • Demand for our DWP remained steady • Profitability negatively impacted by issues that arose during the maintenance shuts • DP market prices decreased by US$70/ton during the quarter 0% 5% 10% 15% 20% 25% 30% 35% 40% 100 150 200 250 300 350 400 450 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 EBITDA* margin Tons (‘000) Volume EBITDA* margin Sales tons -6% y-o-y Selling price per ton +8% y-o-y EBITDA* margin 16.8%
Page 15
Sales tons +9% y-o-y 15 Packaging and speciality papers Summary Q2 FY25 * Adjusted EBITDA margin. Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA. • Modest recovery in demand in North America and South Africa but overall global market sentiment remained subdued • Pricing pressure due to intense competition across all product categories - deliberate product mix adjustments in North America ahead of the Somerset PM2 commissioning • Profitability impacted by the extended maintenance shut at Ngodwana 0% 4% 8% 12% 16% 20% 24% 100 150 200 250 300 350 400 450 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 EBITDA* margin Tons (‘000) Volume EBITDA* margin Selling price per ton -4% y-o-y EBITDA* margin 1.8%
Page 16
16 Graphic papers Summary Q2 FY25 * Adjusted EBITDA margin. Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA. • Sales volumes relatively stable year-on-year reflecting positive market share gains • Lower raw material costs exerted some downward pressure on selling prices, which negatively impacted profitability 0% 5% 10% 15% 20% 25% 100 200 300 400 500 600 700 800 900 1000 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 EBITDA* margin Tons (‘000) Volume EBITDA* margin Sales tons -1% y-o-y Selling price per ton -4% y-o-y EBITDA* margin 7.5%
Page 17
17 Regional segments Summary Q2 FY25 Sappi Europe Sappi North America Sappi Southern Africa * Adjusted EBITDA margin. Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA. ** Sales tons and price per ton excludes forestry operations. Sales tons -1% y-o-y Selling price per ton (EUR) -1% y-o-y EBITDA* margin 4.8% Sales tons flat y-o-y Selling price per ton (US$) flat y-o-y EBITDA* margin 6.6% Sales tons** +1% y-o-y Selling price per ton (ZAR) +4% y-o-y EBITDA* margin 13.4% Variable cost per ton (EUR) -1% y-o-y Variable cost per ton (US$) +5 y-o-y Variable cost per ton (ZAR) +11% y-o-y
Page 18
18 Sappi Europe * Adjusted EBITDA margin. Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA. Sappi North America Sappi Southern Africa 0% 5% 10% 15% 20% 25% 0 100 200 300 400 500 600 700 800 900 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Volume EBITDA* margin 0% 5% 10% 15% 20% 25% 0 100 200 300 400 500 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Volume EBITDA* margin 0% 5% 10% 15% 20% 25% 30% 35% 0 100 200 300 400 500 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Volume EBITDA* margin • The business remained under pressure due to persistent macroeconomic weakness and significant oversupply in paper markets • Profitability adversely affected by higher costs related to the planned shut for Somerset PM2 combined with lower SBS selling prices • Challenging quarter • The planned maintenance shuts at Ngodwana and Saiccor Mills adversely impacted profitability Regional segments continued Summary Q2 FY25
Page 19
Thrive strategy • Improving our understanding of and proactively partnering with all stakeholders • Driving sustainability solutions • Meeting the changing needs of every Sappi employee * Earnings before interest, tax, depreciation and amortisation. (1) EBITDA excluding special items. • Strengthen our safety-first culture • Continuously improve our cost position • Continue to maximise the benefits of our global footprint • Best-in-class production efficiencies Drive operational excellence Enhance trust Grow our business Sustain our financial health • Grow dissolving wood pulp capacity to match market demand • Continue to grow packaging and speciality papers in all regions • Further commercialisation of biotech opportunities • Reduce exposure to declining graphic papers business • Target net debt / EBITDA (1) at 1.5x • Reduce absolute debt level and improve EBITDA* • Optimise capital management • Optimise debt maturity profile and finance charges 19
Page 20
20 Tariffs Evolving situation ~ currently no material direct impact on Sappi’s profitability • Pulp and chemical purchases from Canada are exempt from tariffs under the USMCA free trade agreement • We purchase a small volume of chemicals from other countries which could be exposed to reciprocal tariffs • The US is a net importer of graphic paper and tariffs may create opportunities for Sappi as a domestic producer • Our European business exports approximately 50,000 tons of graphic papers to the US • The US is a net importer of boxboard and tariffs may create opportunities for Sappi as a domestic producer • The timing of the tariff announcement is also useful as we ramp-up SBS production on PM2 at Somerset Mill • Our European business exports approximately 25,000 tons of packaging and speciality papers to the US US raw materials Graphic and packaging papers Packaging papers ~ SBS
Page 21
21 Tariffs continued Evolving situation ~ currently no material impact on Sappi’s profitability • Our South African business exports approximately 30,000 tons of DWP to the US • Our US business exports approximately 200,000 tons to other countries, which could be at risk if these countries were to implement reciprocal tariffs • We could mitigate potential impacts by swinging some DWP production at the Cloquet mill to paper pulp and integrating into our paper operations in the US Dissolving wood pulp • The indirect impact of tariffs on global inflation and the disruption of trade flows could materially weaken consumer demand across all our key markets • In particular, tariffs imposed by the US on textile and apparel manufacturers in China is impacting demand and pricing for DWP Indirect impact
Page 22
22 Outlook
Page 23
23 Outlook Demand Costs Somerset Mill PM2 • The disruption of trade flows related to tariff actions could contribute to global inflationary pressures which may materially weaken consumer demand across all our key markets • Demand for VSF and DWP in China has slowed in recent weeks as the value chain assesses the implications of these newly imposed tariffs causing the DWP market price to drop to US$847/ton in early May • Despite current raw material costs being relatively low, potential global inflationary impacts associated with trade tensions pose a risk for our input costs • Maintenance shuts at Cloquet and Saiccor Mills in Q3 FY25, will have a negative impact on earnings ~US$20 million • We expect the forestry fair value price adjustment will be negative in the third quarter due to lower wood pricing in South Africa • The conversion and expansion project was successfully completed in early May 2025; machine commissioning is in progress • Our strategic focus for the packaging and speciality papers segment is to execute the commercial ramp-up of the PM2 machine
Page 24
24 Outlook continued * Adjusted EBITDA = EBITDA excluding special items and plantation fair value price adjustment. Capital allocation Guidance for Q3 FY25 • Given the uncertainty in our markets due to tariffs and their broader indirect effects on global macroeconomic conditions; • Tariffs imposed by the US on textile and apparel manufacturers in China which is impacting demand and pricing for DWP • We are adopting a cautious outlook and estimate that Adjusted EBITDA for the third quarter of FY2025 will be at a similar level to that of the second quarter • Capital expenditure forecast for FY25 has risen to US$550 million due to the delay in the start-up and substantially increased labour costs for the Somerset PM2 project • We anticipate net debt will peak in Q3 FY25 as the capital expenditure for the project is completed • We remain committed to disciplined capital allocation and reducing net debt is our priority for FY2026 and FY2027
Page 25
25 Thank you
Page 26
26 Supplementary information
Page 27
27 Adjusted EBITDA and operating profit* * Operating profit excluding special items. Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 & 26 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA and special items. 98 112 145 177 240 337 371 391 290 167 106 168 130 180 148 226 203 107 16 31 64 92 161 259 300 318 225 101 41 65 86 116 85 120 132 19 0 50 100 150 200 250 300 350 400 450 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 US$ million Adjusted EBITDA* Operating profit excluding special items
Page 28
28 Planned shut schedule FY25 Note: Only major shuts with an EBITDA impact of more than US$5 million are disclosed in the table above Unit Q1 FY25 Q2 FY25 Q3 FY25 Q4 FY25 Gratkorn Mill X Cloquet Mill X Somerset Mill X Ngodwana Mill X Saiccor Mill X X • Q2 FY25 shut cost impact was US$78 million • US$58 million for Ngodwana and Saiccor Mills, and US$20 million for Somerset Mill which is project related • Q3 FY25 shut cost impact for Cloquet, Saiccor and Gratkorn Mills is estimated to be US$27 million
Page 29
29 Packaging and speciality papers Production facilities Alfeld Mill (Germany) Flexible packaging paper, label paper, paperboard, silicone base paper, functional paper Carmignano Mill (Italy) Flexible packaging paper, label paper, dye sublimation paper Condino Mill (Italy) Flexible packaging paper, silicone base paper, dye sublimation paper Cloquet Mill (United States) Label paper Rockwell Solutions (Scotland) Functional paper, flexible packaging paper, coated barrier film Somerset Mill (United States) Label paper, paperboard, flexible packaging paper Tugela Mill (South Africa) Containerboard Westbrook Mill (United States) Casting and release paper Maastricht Mill (Netherlands) Paperboard Ngodwana Mill (South Africa) Containerboard Ehingen Mill (Germany) Containerboard Gratkorn Mill (Austria) Label paper
Page 30
30 Packaging and speciality papers Product split 13% 6% 23% 7%10%1% 36% 0% 1% 4% FY23 Flexible packaging paper Label paper Paperboard Silicone base paper Functional paper Dye sublimation paper Containerboard Coated barrier film Casting and release paper Other 12% 7% 25% 7%11%1% 33% 0% 1% 4% FY24 Flexible packaging paper Label paper Paperboard Silicone base paper Functional paper Dye sublimation paper Containerboard Coated barrier film Casting and release paper Other
Page 31
31 Product portfolio • Paperboard • Flexible packaging • Containerboard • Dissolving wood pulp • High-yield pulp • Kraft pulp • Biochemicals • Fibrillated cellulose • Lignin • Label & self-adhesive • Casting & release • Dye sublimation • Tissue • Coated woodfree • Coated mechanical • Newsprint • Office
Page 32
32 Sappi Europe Q2 FY25 Q1 FY25 Q2 FY24 Tons sold (‘000) 491 465 495 - Packaging and speciality papers 118 107 120 - Graphic papers 373 358 375 Revenue (EURm) 523 517 534 Price/Ton (EUR) 1,065 1,112 1,079 Cost/Ton* (EUR) 1,057 1,084 1,059 Operating profit excluding special items** (EURm) 4 13 10 Adjusted EBITDA** (EURm) 25 35 32 * Sales less operating profit excluding special items divided by tons sold. ** Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 & 26 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA and special items.
Page 33
33 Coated paper Deliveries and prices Western Europe* * Western Europe shipments, including export. Source: Cepifine, Cepiprint and RISI indexed to Q1 08. 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19 Q1 20 Q1 21 Q1 22 Q1 23 Q1 24 Q1 25 CWF demand MCR demand CWF 100 gsm sheets LWC 60 gsm offset reels
Page 34
34 Net pulp integration FY24 Sappi Europe Based on pulp production capacity (1,500) (1,200) (900) (600) (300) 0 300 600 900 Europe Production capacity Pulp requirement ‘000 tons Net pulp purchases
Page 35
35 Sappi North America * Included in pulp volumes are BCTMP and kraft market pulp volumes of Q2 FY25 – 41 Kt, Q1 FY25 – 38 Kt and Q2 FY24 – 49 Kt. ** Sales less operating profit excluding special items divided by tons sold. *** Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 & 26 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA and special items. Q2 FY25 Q1 FY25 Q2 FY24 Tons sold (‘000) 362 371 361 - Pulp* 105 104 122 - Packaging and speciality papers 127 131 112 - Graphic papers 130 136 127 Revenue (US$m) 440 458 439 Price/Ton (US$) 1,215 1,235 1,216 Cost/Ton** (US$) 1,202 1,108 1,136 Operating profit excluding special items*** (US$m) 5 47 29 Adjusted EBITDA*** (US$m) 29 71 51
Page 36
36 Coated paper Deliveries and prices United States* * US industry purchases are defined as industry shipments plus imports, less exports. Source: AF&PA and RISI indexed to Q1 08. 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19 Q1 20 Q1 21 Q1 22 Q1 23 Q1 24 Q1 25 Domestic CWF shipments Domestic CWF purchases RISI price CFS #3 60 lb rolls
Page 37
37 SBS Production, shipments and prices United States* Source: AF&PA and RISI indexed to Q1 18. 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Production Shipments RISI price - 16 pt Folding Carton
Page 38
38 Net pulp integration FY24 Sappi North America Based on pulp production capacity and includes annual production capacity of 370,000 tons of dissolving wood pulp. (1,200) (900) (600) (300) 0 300 600 900 1,200 North America Production capacity Pulp requirement ‘000 tons Net pulp sales
Page 39
39 Sappi Southern Africa * Tons sold, sales and price per ton exclude forestry operations. ** Sales less operating profit excluding special items divided by tons sold. *** Refer to the supplementary information in this presentation for a reconciliation of Adjusted EBITDA to reported operating profit and page 25 & 26 in our Q2 FY25 financial results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA and special items. Q2 FY25 Q1 FY25 Q2 FY24 Tons sold* (‘000) 386 371 384 - Pulp 249 242 255 - Packaging and speciality papers 110 87 95 - Graphic papers 27 42 34 Revenue* (ZARm) 6,283 5,972 6,021 Price/Ton* (ZAR) 16,277 16,097 15,680 Cost/Ton** (ZAR) 15,894 12,771 12,143 Operating profit excluding special items*** (ZARm) 148 1,234 1,358 Adjusted EBITDA*** (ZARm) 883 1,663 1,678
Page 40
40 Paper pulp Prices Source: FOEX, CCF group, RISI. 400 600 800 1,000 1,200 1,400 1,600 400 600 800 1,000 1,200 1,400 1,600 1,800 2-Jan-18 2-Mar-18 2-May-18 2-Jul-18 2-Sep-18 2-Nov-18 2-Jan-19 2-Mar-19 2-May-19 2-Jul-19 2-Sep-19 2-Nov-19 2-Jan-20 2-Mar-20 2-May-20 2-Jul-20 2-Sep-20 2-Nov-20 2-Jan-21 2-Mar-21 2-May-21 2-Jul-21 2-Sep-21 2-Nov-21 2-Jan-22 2-Mar-22 2-May-22 2-Jul-22 2-Sep-22 2-Nov-22 2-Jan-23 2-Mar-23 2-May-23 2-Jul-23 2-Sep-23 2-Nov-23 2-Jan-24 2-Mar-24 2-May-24 2-Jul-24 2-Sep-24 2-Nov-24 2-Jan-25 2-Mar-25 EUR/ton US$/ton NBSK Europe (US$) BHKP Europe (US$) Net BHKP China (US$) NBSK Europe (EUR) BHKP Europe (EUR) BCTMP, HW, Imports China (US$)
Page 41
41 Dissolving pulp Prices Source: CCF Group. 600 650 700 750 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 Oct 2017 Jan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Jul 2023 Oct 2023 Jan 2024 Apr 2024 Jul 2024 Oct 2024 Jan 2025 US$/ton Imp SW DP Imp HW DP China origin DP
Page 42
42 Textile fibre Prices Source: CCF Group. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Jan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Jul 2023 Oct 2023 Jan 2024 Apr 2024 Jul 2024 Oct 2024 Jan 2025 Apr 2025 US$\ton Cotton 328 Cotton "A" Index PSF 1.4 D VSF 1.2 D VSF 1.5 D
Page 43
43 Net pulp integration FY24 Sappi Southern Africa Based on pulp production capacity and includes annual production capacity of 370,000 tons of dissolving wood pulp. (600) (300) 0 300 600 900 1,200 1,500 1,800 Southern Africa Production capacity Pulp requirement ‘000 tons Net pulp sales
Page 44
44 Cash flow US$m Q2 FY25 Q1 FY25 Q2 FY24 Cash generated from operations 78 206 128 Movement in working capital 4 (130) (45) Closure and restructuring costs paid (2) (2) (133) Finance costs paid (2) (34) (25) Finance income received 4 5 7 Taxation (paid) refund (21) (49) (17) Dividend paid (85) - (84) Cash generated from operating activities (24) (4) (169) Cash utilised in investing activities (183) (58) (65) Capital expenditure (182) (101) (65) Proceeds on disposal of assets - 4 1 Proceeds on held-for-sale assets - 43 - Movements to non-current and intangible assets (1) (4) (1) Net cash generated (utilised) (207) (62) (234)
Page 45
45 Adjusted EBITDA and operating profit Earnings reconciliation to reported operating profit * Refer to pages 25 & 26 in our Q2 FY25 results booklet (available on www.sappi.com) for a definition of Adjusted EBITDA and special items. US$m Q2 FY25 Q1 FY25 Q2 FY24 Adjusted EBITDA* 107 203 180 Plantation fair value price adjustment (17) (1) 3 EBITDA excluding special items 90 202 183 Depreciation and amortisation (71) (70) (67) Operating profit excluding special items* 19 132 116 Special items* – gains (losses) (17) (11) (46) Net restructuring charge 1 - (5) Profit (loss) on disposal and written off assets (1) 2 - Asset (impairments) impairment reversal - (1) (3) Write down of held-for-sale assets - (4) - Insurance - - (2) Fire, flood, storm and other events (17) (8) (36) Operating profit 2 121 70
Page 46
4646 Sustainability is at the core of our business and work culture. Who we are Every solution we create supports our goal to make everyday products more sustainable. We know that the long-term sustainability of our business will only be ensured by delivering sustained value for our stakeholders. We will be a sustainable business with an exciting future in woodfibre that provides relevant solutions, delivers enhanced value and is a trusted partner to all our stakeholders.
Page 47
2024 TCFD Report 47 ESG - Continuously rethinking what we do and how we do it Our commitment to sustainable growth Sappi Forests 100% FSC- and PEFC-certified Validated Science-Based GHG reduction target Rated ‘Prime’ by Oekom Research, an improvement from C+ to B- (December 2022) Sappi Southern Africa is a Level 1 broad-based black economic empowerment contributor (2025) Report to the CDP (www.cdp.net/en) under its climate change (2024 B), forest (2024 A-) and water (2024 B) programmes making our responses publicly available on www.sappi.com 2024 Group Sustainability Report2024 Annual Integrated Report Awarded Platinum Level in sustainability performance by independent rating agency EcoVadis MSCI rating BBB (August 2024)
Page 48
48 Our approved science-based targets • Reduce Scope 1 and Scope 2 GHG emissions by 41.5% per ton of product by 2030 from a 2019 base year.* • 44% of our suppliers by spend will have science-based targets by 2026. * The target boundary includes biogenic emissions and removals from bioenergy feedstocks.
Page 49
49 Our Thrive sustainability commitments FOR THE GOALS PARTNERSHIPSLIFE ON LAND CLIMATE ACTION RESPONSIBLE CONSUMPTION AND PRODUCTION DECENT WORK AND ECONOMIC GROWTH AFFORDABLE AND CLEAN ENERGY CLEAN WATER AND SANITATION QUALITY EDUCATION NO POVERTY Creating positive social impact
Page 50
50 2025 Sustainability targets are aligned with United Nation´s Sustainable Development Goals (SDGs) What we need to achieve in Sappi Europe between 2021–2025*: * Our baseline year is FY19. Pts increase share of renewable and clean energy year-on-year improvement Safety: Achieve zero harm in the workplace (LTIFR) Return on net operating assets (RONOA) Products launched with defined sustainability benefits Reduction in GHG emissions (ton CO 2eq/adt) (Scope 1+2 combined) Certified fibre input AFFORDABLE AND CLEAN ENERGY DECENT WORK AND ECONOMIC GROWTH RESPONSIBLE CONSUMPTION AND PRODUCTION CLIMATE ACTION LIFE ON LAND 11% 10% WACC+2% 15 25% >75% Declared compliance with Sappi Supplier Code of Conduct Participation in employee engagement survey 80% >85% Improvement in specific total energy (GJ/adt) 5% Reduction in solid waste to landfill (ton/adt) 5% Pts increase in the proportion of women in management roles Employees engaged with the business 5.8% >75%
Page 51
51 2025 Sustainability targets are aligned with United Nation´s Sustainable Development Goals (SDGs) What we need to achieve in Sappi North America between 2021–2025*: * Our baseline year is FY19. Share of renewable and clean energy Baseline = 79.1% year-on-year improvement Safety: Achieve zero harm in the workplace (LTIFR) Return on net operating assets (RONOA) Products launched with defined sustainability benefits Reduction in GHG emissions (ton CO 2eq/adt) (Scope 1+2 combined) Certified fibre input AFFORDABLE AND CLEAN ENERGY DECENT WORK AND ECONOMIC GROWTH RESPONSIBLE CONSUMPTION AND PRODUCTION CLIMATE ACTION LIFE ON LAND Within 5% of baseline or higher 10% WACC+2% 5 5% >55% Declared compliance with Sappi Supplier Code of Conduct Participation in employee engagement survey 80% >85% Improvement in specific total energy (GJ/adt) 5% Reduction in solid waste to landfill (ton/adt) 10% Pts increase in the proportion of women in management roles Employees engaged with the business 4% >75%
Page 52
NO POVERTY Pts increase share of renewable and clean energy year-on-year improvement Safety: Achieve zero harm in the workplace (LTIFR) Return on net operating assets (RONOA) Products launched with defined sustainability benefits Reduction in GHG emissions (ton CO 2eq/adt) (Scope 1+2 combined) Certified fibre input Reduction in specific water use 52 2025 Sustainability targets are aligned with United Nation´s Sustainable Development Goals (SDGs) What we need to achieve in Sappi Southern Africa between 2021–2025*: * Our baseline year is FY19. AFFORDABLE AND CLEAN ENERGY DECENT WORK AND ECONOMIC GROWTH RESPONSIBLE CONSUMPTION AND PRODUCTION CLIMATE ACTION LIFE ON LAND CLEAN WATER AND SANITATION 7% 10% WACC+2% 5 20% >82% 23% Improvement in specific total energy (GJ/adt) Declared compliance with Sappi Supplier Code of Conduct Participation in employee engagement survey Reduction in solid waste to landfill (ton/adt) Reduction in specific purchased fossil energy Biodiversity improvement on our own forestry landholdings 9% 80% >85% 24% 21% 10% Pts increase in the proportion of women in management roles 3.1% Employees engaged with the business >75% Sustainable annual growth in our plantations >4 Mt BBBEE contributor statusLevel 1
Page 53
53 Sustainability metrics Energy self-sufficiency 25.1% 64.0% 47.7% 45.2% 24.0% 63.8% 42.9% 42.9% 22.6% 61.6% 46.4% 42.9% 22.0% 60.9% 48.1% 44.8% 21.5% 60.5% 50.1% 45.9% 0% 10% 20% 30% 40% 50% 60% 70% EU NA SA Global 2020 2021 2022 2023 2024
Page 54
54 Sustainability metrics Renewable and clean energy 39.7% 79.9% 47.8% 54.8% 42.6% 82.2% 44.2% 54.9% 42.6% 78.6% 48.3% 55.0% 49.1% 78.2% 50.3% 58.0% 64.6% 77.4% 52.7% 63.3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% EU NA SA Global 2020 2021 2022 2023 2024
Page 55
55 Sustainability metrics GHG emissions intensity 719.6 634.6 573.2 545.1 362.3 504.0 403.5 413.5 510.8 483.9 1,750.1 1,854.2 1,799.0 1,716.3 1,638.1 932.6 878.0 829.0 934.7 814.7 0.0 200.0 400.0 600.0 800.0 1,000.0 1,200.0 1,400.0 1,600.0 1,800.0 2,000.0 EU NA SA Global kg CO2e/adt Scope 1 Scope 2
Page 56
56 Sustainability metrics Absolute GHG emission 1,924,021 1,850,684 1,813,655 1,013,300 715,591 795,678 720,565 768,857 729,585 730,619 2,667,448 2,957,973 2,933,666 2,919,559 2,771,359 5,387,148 5,529,222 5,516,178 4,662,444 4,217,568 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 EU NA SA Global t CO2e Scope 1 Scope 2
Page 57
57 Chemicals from lignin Binding agent Dispersion agent Emulsion stabiliser Extraction and beneficiation of C5 sugars Furfural Dissolving wood pulp Textiles Pharmaceuticals Foodstuffs Nanocellulose Reinforcing agent Control release agent Viscosity modifier Casting & release papers Textures for materials Functional films Automotive wraps Packaging papers Product packaging Paperboard Speciality papers Label papers Dye sublimation papers Graphic papers Commercial print and publishing Innovative R&D focus Unlocking the full potential of each tree
Page 58
58 Thank you