Slide 1: Q2 FY24 financial results
Steve Binnie Chief Executive Officer, Sappi Limited 09 May 2024 Q2 FY24 financial results 1
Slide 2: Forward-looking statements and Regulation G disclosure
Forward-looking statements and Regulation G disclosure 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 indicat
Slide 3: Summary Q2 FY24
Summary Q2 FY24 Net debt to EBITDA* EPS* EBITDA* US$183m** 12 US cents 2.2x • Operating performance slightly ahead of expectations • Improved profitability from the pulp segment • Modest recovery in global paper markets • Closures of Stockstadt and Lanaken Mills were completed • Significant cost sav
Slide 4: Product contribution split
Product contribution split EBITDA* excluding special items Sales volumes** 100% 100% 90% 90% 80% 80% 70% 70% Graphic papers 60% 60% 50% 50% Pulp 40% 40% 30% Packaging and 30% speciality papers 20% 20% 10% 10% 0% 0% FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 ***LTM FY15 FY16 FY17 FY18 FY19 FY20 FY2
Slide 5: EBITDA reconciliation Q1 FY24 to Q2 FY24
EBITDA* reconciliation Q1 FY24 to Q2 FY24 200 US$ million 160 From fiscal 2024, EBITDA excluding special items now includes the plantation fair value price adjustment which was previously included as part of special items 120 80 156 30 2 (10) 22 5 1 (23) 183 Q1 FY24 Sales volume Price & mix Variable
Slide 6: Cost inflation developments
Cost inflation developments Major variable input cost/ton impact since Q1 FY22 1.6 • Q-o-q* input costs decreased for energy 1.4 and chemicals but increased across all 1.2 other variable cost categories 1.0 • Total variable costs fairly flat q-o-q* 0.8 0.6 0.4 0.2 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 F
Slide 7: Net debt/EBITDA development
Net debt/EBITDA* development 2,200 7.0 6.0 2,070 2,000 2.0 2,056 2,055 1,977 1,957 1,946 2.2 5.0 1,917 1,916 1,879 1,800 1,793 US$ million 4.0 1,728 1,680 1,600 3.0 1,557 1,530 1,501 1,400 2.0 1,366 1,200 1,085 1,241 1.0 1,225 1,216 1,163 1,176 1,000 0.0 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20*** Q2
Slide 8: Debt maturity profile
Debt maturity profile* Fiscal years Liquidity Debt maturity 1,200 500 2028 includes 1,000 EUR400m bond 476 400 Includes 2026 800 EUR240m bond US$ million Includes SSA08 2032 662 ZAR1.5bn bond US$221m bond 300 (refinanced in April 2024) 303 600 281 200 221 159 400 100 392 200 63 19 19 49 44 44 0 0 Ma
Slide 9: Cash flow and capex
Cash flow and capex Cash flow Capital expenditure 1,400 600 1,267 1,200 500 1,000 800 761 400 709 673 659 643 600 506 462 472 416 300 400 323 256 249 210 166 200 200 85 1 29 0 100 -200 -254 -257 -303 -400 0 2018 2019 2020 2021 2022 2023 Mar 2024 2017 2018 2019 2020 2021 2022 2023 2024E* Cash generat
Slide 10: Disciplined capital allocation
Disciplined capital allocation Category Strategic priority FY24 Targets High Sustainability projects: SSA renewable energy Regulatory & External regulatory & Mandatory license to operate contract for 2025, Saiccor Mill turbine, Gratkorn Mill environmental environmental requirements Mandatory to meet
Slide 11: Segmental overview
sappi Segmental overview
Slide 12: Pulp: Summary Q2 FY24
Summary Q2 FY24 Sales tons +13% Selling price per ton EBITDA* margin q-o-q** +3% q-o-q** 22.5% 450 40% 400 35% 350 30% 25% Tons (‘000) 300 20% 250 15% 200 10% 150 5% 100 0% 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 Q4 23 Q1 24*** Q2 2
Slide 13: Packaging and speciality papers
Summary Q2 FY24 Packaging and speciality Sales tons +15% q-o-q** Selling price per ton -1% q-o-q** EBITDA* margin 9.5% papers 450 400 350 24% 20% 300 16% Tons (‘000) 250 12% 200 150 8% 100 4% 50 - 0% 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 2
Slide 14: Graphic papers: Summary Q2 FY24
Summary Q2 FY24 Sales tons -3% Selling price per ton EBITDA* margin q-o-q** +1% q-o-q** 10.8% 1,000 23% 18% 800 13% Tons (‘000) 600 8% 3% 400 -2% 200 -7% 0 -12% 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*** V
Slide 15: Regional segments Summary Q2 FY24
Regional segments Summary Q2 FY24 Sappi Europe Sappi North America Sappi Southern Africa Sales tons flat Sales tons +13% Sales tons*** +8% q-o-q** q-o-q** q-o-q** Selling price per ton (EUR) Selling price per ton (US$) Selling price per ton (ZAR) +1% q-o-q** flat q-o-q** flat q-o-q** EBITDA* margin
Slide 16: Regional segments continued
Regional segments continued Summary Q2 FY24 Sappi Europe Sappi North America Sappi Southern Africa 900 500 25% 500 35% 23% 800 30% 700 18% 400 20% 400 25% 600 13% 15% 300 300 20% 500 8% 10% 15% 400 3% 200 200 10% 300 5% -2% 5% 200 100 100 -7% 0% 100 0% 0 -12% 0 -5% 0 -5% Q1 19 Q3 19 Q1 20 Q3 20 Q1 2
Slide 17: Our business strategy
Our business strategy Thrive What this means Strategic objectives Drive operational excellence • Achieve zero fatalities and at least a 10% reduction in LTIFR pa • Maximise production outputs • Strengthen our safety-first culture • Gain cost advantage through a global footprint • Continuously improv
Slide 18: Conversion and expansion of Somerset Mill PM2
Conversion and expansion of Somerset Mill PM2 • Conversion and expansion of Somerset Mill PM2 from 235,000 tons per annum CWF to 470,000 tons SBS • Approved by the board on 09 November 2022 • Progressing well PM2 extension - external • Start-up H2 FY25 • Aligned with Thrive strategy to reduce exposu
Slide 19: ESG - Continuously rethinking what we do and how we do it
ESG - Continuously rethinking what we do and how we do it Our commitment to sustainable growth Awarded Platinum Level in sustainability performance by independent rating agency EcoVadis Sappi Forests 100% FSC- and PEFC-certified 2023 Annual 2023 Group Sustainability Report Integrated Report Rated ‘P
Slide 20: Outlook
Outlook 20
Slide 21: Outlook
Outlook Demand Strategy • Market sentiment is generally • Our European restructuring improving across all of our product programme has significantly segments increased our capacity utilisation which, combined with the fixed • DP demand remains healthy costs savings, is expected to improve our compet
Slide 22: Outlook continued
Outlook continued Profitability Capital Guidance for expenditure Q3 FY24 • Globally, pulp market prices have • Capital expenditure for FY24 is • The plantation fair value price started rising which could negatively estimated to be in the region of adjustment for the third quarter is impact the profi
Slide 23: Thank you
Thank you 23
Slide 24: Supplementary information
Supplementary information 24
Slide 25: EBITDA and operating profit excluding special items
EBITDA and operating profit Excluding special items* 450 400 391 318 350 371 300 337 300 259 290 225 250 US$ million 240 200 224 161 211 148 142 197 128 187 185 183 150 177 117 116 172 109 168 167 105 101 145 156 155 92 139 86 85 131 100 118 65 64 112 62 106 52 98 48 41 82 31 50 16 26 0 -5 -50 -52 -
Slide 26: EBITDA reconciliation Q2 FY23 to Q2 FY24
EBITDA* reconciliation Q2 FY23 to Q2 FY24 Pulp – (US$9m) Packaging and speciality papers – (US$57m) From fiscal 2024, EBITDA excluding special Graphic papers – (US$105m) items now includes the plantation fair value price adjustment which was previously included as part of special items 240 US$ milli
Slide 27: Packaging and speciality papers Production facilities
Packaging and speciality papers Production facilities Alfeld Mill (Germany) Ehingen Mill (Germany) Rockwell Solutions (Scotland) Flexible packaging, label paper, Containerboard Functional papers and flexible paperboard, silicone base paper, packaging, coated barrier film functional paper Carmignano
Slide 28: Product portfolio
Product portfolio • Paperboard • Label & self-adhesive • Coated woodfree • Dissolving pulp • Biochemicals • Flexible packaging • Casting & release • Coated mechanical • High-yield pulp • Fibrillated cellulose • Containerboard • Dye sublimation • Newsprint • Kraft pulp • Lignin • Tissue • Office 28
Slide 29: Sappi Europe
Sappi Europe Q2 FY24 Q1 FY24 Q2 FY23 Tons sold (‘000) 495 494 438 - Packaging and speciality papers 120 102 110 - Graphic papers 375 392 328 Sales (EURm) 540 534 592 Price/Ton (EUR) 1,091 1,081 1,352 Cost/Ton* (EUR) 1,071 1,077 1,352 Operating profit excluding special items** (EURm) 10 2 - EBITDA ex
Slide 30: Coated paper deliveries and prices Western Europe
Coated paper Deliveries and prices Western Europe* 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 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 CWF demand MCR demand CWF 100 gsm sheets LWC 60 gsm offset reels * Western Europe
Slide 31: Sappi North America
Sappi North America Q2 FY24 Q1 FY24 Q2 FY23 Tons sold (‘000) 361 320 330 - Pulp* 122 104 108 - Packaging and speciality papers 112 95 91 - Graphic papers 127 121 131 Sales (US$m) 450 398 458 Price/Ton (US$) 1,247 1,244 1,388 Cost/Ton** (US$) 1,166 1,172 1,258 Operating profit excluding special items
Slide 32: Coated paper deliveries and prices United States
Coated paper Deliveries and prices United States* 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19 Q1 20 Q1 21 Q1 22 Q1 23 Q1 24 Domestic CWF shipments Domestic CWF purchases RISI price CFS #3 60 lb rolls * US industry pu
Slide 33: Sappi Southern Africa
Sappi Southern Africa Q2 FY24**** Q1 FY24**** Q2 FY23 Tons sold* (‘000) 384 357 399 - Pulp 255 231 260 - Packaging and speciality papers 95 88 98 - Graphic papers 34 38 41 Sales* (ZARm) 6,154 5,749 6,231 Price/Ton* (ZAR) 16,026 16,104 15,617 Cost/Ton** (ZAR) 12,490 12,955 13,213 Operating profit exc
Slide 34: Paper pulp prices
US$/ton 1,000 1,200 1,400 1,600 400 600 800 2-Jan-18 2-Mar-18 2-May-18 2-Jul-18 Source: FOEX, CCF group, RISI. 2-Sep-18 2-Nov-18 2-Jan-19 Paper pulp Prices 2-Mar-19 2-May-19 2-Jul-19 2-Sep-19 NBSK Europe (US$) NBSK Europe (EUR) 2-Nov-19 2-Jan-20 2-Mar-20 2-May-20 2-Jul-20 2-Sep-20 2-Nov-20 2-Jan-21
Slide 35: Dissolving pulp prices
US$/ton 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 600 650 700 750 800 850 900 950 Oct 2017 Source: CCF Group. Jan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Dissolving pulp Prices Jul 2019 Imp SW DP Oct 2019 Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Imp HW DP Apr 2021 Jul 2021
Slide 36: Textile fibre prices
US$\ton 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0 500 Jan 2018 Source: CCF Group. Apr 2018 Jul 2018 Oct 2018 Jan 2019 Textile fibre Prices Apr 2019 Jul 2019 Cotton 328 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Cotton "A" Index Oct 2020 Jan 2021 Apr 2021 PSF 1.4 D Jul 2021 Oct 2021 Jan 2022 Apr 2022 VSF
Slide 37: Cash flow
Cash flow US$m Q2 FY24 Q1 FY24 Q2 FY23 Cash generated from operations 128 121 148 Movement in working capital (45) (43) 99 Closure and restructuring costs paid (133) (43) - Finance costs paid (25) (13) (26) Finance income received 7 9 8 Taxation (paid) refund (17) (10) (11) Dividend paid (84) - (85)
Slide 38: EBITDA and operating profit reconciliation to reported operating profit
EBITDA and operating profit Excluding special items* reconciliation to reported operating profit US$m Q2 FY24** Q1 FY24** Q2 FY23 EBITDA excluding special items* 183 156 167 Depreciation and amortisation (67) (70) (66) Operating profit excluding special items* 116 86 101 Special items* – gains (loss
Slide 39: Sustainability is at the core of our business and work culture
Who we are Sustainability is at the core of our business and work culture. 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
Slide 40: Our approved science-based targets
Our approved science-based targets Our commitment • 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 bioene
Slide 41: Our Thrive sustainability commitments
Our Thrive sustainability commitments Creating positive social impact RESPONSIBLE AFFORDABLE DECENT WORK CONSUMPTION NO QUALITY CLEAN WATER AND AND ECONOMIC AND CLIMATE LIFE PARTNERSHIPS POVERTY EDUCATION AND SANITA TION CLEAN ENERGY GROWTH PRODUCTION ACTION ON LAND FOR THE GOALS 41
Slide 42: 2025 Sustainability targets: Sappi Europe
2025 Sustainability targets are aligned with United Nation´s Sustainable Development Goals (SDGs) What we need to achieve in Sappi Europe between 2021–2025*: 11% Pts increase share of renewable and clean energy 5% Improvement in specific total energy (GJ/adt) 10% 80% 5.8% year-on-year improvement De
Slide 43: 2025 Sustainability targets: Sappi North America
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*: Within 5% of 5% Share of renewable and clean Improvement in specific total baseline or energy energy (GJ/adt) higher Baseline = 79.1% 1
Slide 44: 2025 Sustainability targets: Sappi Southern Africa
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*: 7% Pts increase share of renewable and clean energy 9% Improvement in specific total energy (GJ/adt) 10% 80% 3.1% year-on-year improv
Slide 45: Innovative R&D focus: Unlocking the full potential of each tree
Innovative R&D focus Unlocking the full potential of each tree Graphic papers Packaging and speciality papers Chemicals from lignin Commercial print and publishing Binding agent Product packaging Dispersion agent Technical papers Emulsion stabiliser Dissolving pulp Textiles Pharmaceuticals Foodstuff
Slide 46: Thank you
Thank you 46