Slide 1: Q3 FY24 financial results
Steve Binnie Chief Executive Officer, Sappi Limited 08 August 2024 Q3 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 Q3 FY24
Summary Q3 FY24 Net debt to EBITDA* EPS* EBITDA** US$151m** 9 US cents 2.1x • Operating performance substantially above last year • Sustained strong market conditions in the pulp segment • Muted recovery in paper markets • Sale of the Stockstadt Mill land concluded; proceeds US$49 million • Net cash
Slide 4: Product contribution split
Product contribution split EBITDA* excluding special items Sales volumes** 100% 100% 90% 90% 80% 80% 70% 70% Graphic papers 60% 60% 50% 50% Pulp 40% 40% 30% Packaging and 30% speciality papers 20% 20% 10% 10% 0% 0% FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 ***LTM FY15 FY16 FY17 FY18 FY19 FY20 FY2
Slide 5: EBITDA reconciliation Q3 FY23 to Q3 FY24
EBITDA* reconciliation Q3 FY23 to Q3 FY24 180 120 US$ million From fiscal 2024, EBITDA excluding special items now includes the plantation fair value 60 price adjustment which was previously included as part of special items 0 106 45 (70) 67 (13) 15 (2) 3 151 Q3 FY23 Sales volume Price & mix Variabl
Slide 6: Cost inflation developments
Cost inflation developments Major variable input cost/ton impact since Q1 FY22 1.6 • Q-o-q* input costs increased for pulp but 1.4 remained flat or decreased across other 1.2 categories 1.0 • Total variable costs +2% q-o-q* 0.8 0.6 0.4 0.2 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY22 FY23 FY24 Energy P
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 2.1 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 1,340 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
Slide 8: Debt maturity profile
Debt maturity profile* Fiscal years Liquidity Debt maturity 1,200 500 2028 includes 1,000 EUR400m bond 472 400 Includes 2026 800 EUR240m bond US$ million 2032 662 US$221m bond 300 600 301 277 200 Includes SSA08 221 400 ZAR1.5bn bond (refinanced in April 2024) 200 100 365 33 33 27 16 63 19 19 49 44 4
Slide 9: Cash flow and capex
Cash flow and capex Cash flow Capital expenditure 1,400 600 1,267 1,200 500 1,000 800 761 400 709 673 659 643 600 506 462 472 416 300 371 400 323 256 210 214 166 200 200 1 29 0 100 -200 -254 -257 -271 -400 0 2018 2019 2020 2021 2022 2023 Jun 2024 2017 2018 2019 2020 2021 2022 2023 2024E* Cash genera
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: Summary Q3 FY24 - Dissolving pulp
Summary Q3 FY24 Sales tons -5% Selling price per ton EBITDA* margin y-o-y +4% y-o-y 20.3% 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 24***
Slide 13: Packaging and speciality papers
Summary Q3 FY24 Packaging and speciality Sales tons +22% y-o-y** Selling price per ton -10% y-o-y** EBITDA* margin 6.4% 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
Slide 14: Summary Q3 FY24 - Graphic papers
Summary Q3 FY24 Sales tons +13% Selling price per ton EBITDA* margin y-o-y -10% y-o-y** 9.0% 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*** Q3
Slide 15: Regional segments Summary Q3 FY24
Regional segments Summary Q3 FY24 Sappi Europe Sappi North America Sappi Southern Africa Sales tons +13% Sales tons +11% Sales tons*** +4% y-o-y** y-o-y** y-o-y** Selling price per ton (EUR) Selling price per ton (US$) Selling price per ton (ZAR) -12% y-o-y** -3% y-o-y** +2% y-o-y** EBITDA* margin E
Slide 16: Regional segments continued
Regional segments continued Summary Q3 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 Thrive
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: EcoVadis: all three manufacturing regions achieve platinum status
EcoVadis All three manufacturing regions achieve platinum status • All three Sappi manufacturing regions have achieved the highest EcoVadis rating for six consecutive years • Sappi is in the top 1% of companies worldwide rated by EcoVadis in the manufacture of pulp, paper and paperboard category Wha
Slide 19: Outlook
Outlook 19
Slide 20: Outlook
Outlook Demand Costs • Global macroeconomic conditions • Logistical challenges are driving up and consumer sentiment are slowly global shipping costs improving • Chemical costs, are anticipated to • DP market conditions remain robust increase as suppliers seek to pass on the higher logistics costs •
Slide 21: Outlook continued
Outlook continued Profitability Capital Guidance for expenditure Q4 FY24 • Margin management remains our • Capital expenditure for FY24 is • We anticipate that the plantation fair primary focus for the paper expected to be slightly below value price adjustment for the fourth businesses to mitigate t
Slide 22: Thank you
Thank you 22
Slide 23: Supplementary information
Supplementary information 23
Slide 24: EBITDA and operating profit excluding special items
EBITDA and operating profit Excluding special items* 450 391 400 371 337 318 350 300 290 300 259 240 225 224 250 US$ million 211 197 187 185 183 177 172 200 168 167 161 156 148 155 142 151 139 145 131 128 150 117 116 118 109 105 112 106 101 92 98 86 85 85 100 82 65 64 62 52 48 41 31 50 26 16 0 -5 -5
Slide 25: 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 26: 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 27: 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 27
Slide 28: Sappi Europe
Sappi Europe Q3 FY24 Q2 FY24 Q3 FY23 Tons sold (‘000) 492 494 434 - Packaging and speciality papers 125 120 107 - Graphic papers 367 375 327 Sales (EURm) 543 540 543 Price/Ton (EUR) 1,104 1,091 1,251 Cost/Ton* (EUR) 1,096 1,071 1,288 Operating profit excluding special items** (EURm) 4 10 (16) EBITDA
Slide 29: 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 30: Sappi North America
Sappi North America Q3 FY24 Q2 FY24 Q3 FY23 Tons sold (‘000) 340 361 305 - Pulp* 98 122 119 - Packaging and speciality papers 119 112 83 - Graphic papers 123 127 103 Sales (US$m) 429 450 395 Price/Ton (US$) 1,262 1,247 1,295 Cost/Ton** (US$) 1,229 1,166 1,282 Operating profit excluding special items
Slide 31: Coated paper deliveries and prices United States
Coated paper deliveries and prices United States* 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19 Q1 20 Q1 21 Q1 22 Q1 23 Q1 24 Domestic CWF shipments Domestic CWF purchases RISI price CFS #3 60 lb rolls * US industry pu
Slide 32: Sappi Southern Africa
Sappi Southern Africa Q3 FY24**** Q2 FY24**** Q3 FY23 Tons sold* (‘000) 413 384 399 - Pulp 261 255 259 - Packaging and speciality papers 117 95 106 - Graphic papers 35 34 34 Sales* (ZARm) 6,749 6,154 6,389 Price/Ton* (ZAR) 16,341 16,026 16,013 Cost/Ton** (ZAR) 13,337 12,490 13,652 Operating profit e
Slide 33: Paper pulp prices
US$/ton 1,000 1,200 1,400 1,600 1,800 400 600 800 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 2-Mar-19 Paper pulp prices 2-May-19 2-Jul-19 2-Sep-19 NBSK Europe (US$) 2-Nov-19 NBSK Europe (EUR) 2-Jan-20 2-Mar-20 2-May-20 2-Jul-20 2-Sep-20 2-Nov-20 2-J
Slide 34: Dissolving pulp prices
US$/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 Oct 2019 Imp SW DP Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Imp HW DP Apr 2021 Jul 2021
Slide 35: Textile fibre prices
US$\ton 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0 500 Jan 2018 Source: CCF Group. Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Textile fibre prices Jul 2019 Cotton 328 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Cotton "A" Index Oct 2020 Jan 2021 Apr 2021 Jul 2021 PSF 1.4 D Oct 2021 Jan 2022 Apr 2022 VSF
Slide 36: Cash flow
Cash flow US$m Q3 FY24 Q2 FY24 Q3 FY23 Cash generated from operations 122 128 91 Movement in working capital 44 (45) 89 Closure and restructuring costs paid (61) (133) - Finance costs paid (15) (25) (33) Finance income received 6 7 7 Taxation (paid) refund (3) (17) (14) Dividend paid - (84) - Cash g
Slide 37: EBITDA and operating profit reconciliation to reported operating profit
EBITDA and operating profit Excluding special items* reconciliation to reported operating profit US$m Q3 FY24** Q2 FY24** Q3 FY23 EBITDA excluding special items* 151 183 106 Depreciation and amortisation (66) (67) (65) Operating profit excluding special items* 85 116 41 Special items* – gains (losse
Slide 38: Who we are
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 39: 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 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
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