Sappi Limited · JSE:SAP
Sappi — Investor Presentation (June 2022)
103 slides from Sappi's investor presentation, June 2022
Slide 1: Investor Presentation
Investor Presentation June 2022 1
Slide 2: Forward-looking statements and Regulation G disclosure
Forward-looking statements and Regulation G disclosure Forward-looking statements Certain statements in this presentation 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 i
Slide 3: At a glance: Sappi solutions
At a glance: Sappi solutions We are a diversified, innovative and trusted leader that unlocks the Dissolving pulp Graphic papers Packaging and speciality papers power of renewable resources for use in: Casting and Biomaterials Forestry release papers 3
Slide 4: Investment Case
Investment Case Successfully transitioning from a global graphic paper company to a global woodfibre business 1 Global presence and geographic diversification Long-standing customer relationships supported by product innovation 2 and customer service Clear strategic focus facilitating leading market
Slide 5: Sappi Group
Sappi Group A global diversified woodfibre company • Globally diversified business with 12,492 employees across 19 production facilities and 34 sales offices globally • Listed on the Johannesburg Stock Exchange with a market cap of US$2.12bn1 • Market leaders in dissolving pulp and coated woodfree p
Slide 6: Diversified and proactively managed product portfolio
Diversified and proactively managed product portfolio Sappi achieves geographic and product diversification • Ongoing diversification of our EBITDA by Product – FY 2018 EBITDA by Product – FY 2019 EBITDA by Product – LTM Mar 2022 product portfolio into higher 2022 margin and growing segments • The O
Slide 7: Unlocking the full potential of trees
Innovative R&D focus, leading to growth through new products Unlocking the full potential of trees Making the most of a renewable, natural material in order to capture the growing importance of sustainability Managed forest Cellulose Hemicellulose Lignin End use Dissolving fibre composites Nanocellu
Slide 8: Thrive 25 Strategy
Thrive 25 Strategy 8
Slide 9: Our vision
Our vision 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. 9
Slide 10: Our vision: What it means
Our vision What it means Exciting future in woodfibre Enhanced value • Investing in market segments with strong growth • Driving greater alignment, delivery, • Strengthening our competitive position in mature markets and agility through OneSappi • Making a clear commitment to innovation • Optimising
Slide 11: Our business strategy Thrive25
Our business strategy Thrive25 What this means Short-term objectives Drive operational excellence • Achieve zero fatalities and at least 10% reduction in LTIFR pa. • Strengthen our safety-first culture. • Maximise production outputs • Continuously improve our cost position. • Gain cost advantage thr
Slide 12: Two phases of strategic development
Our business strategy Thrive25 FY2023 moving into Phase 2 Two phases Phase 1 Strengthen balance sheet (2021 – 2022) Phase 2 Invest for profit growth (2022+) of strategic Objective Strategy Objective Strategy development— deleveraging Reduce debt and • Complete approved projects Invest in new growth
Slide 13: Clear strategic focus facilitating leading market positions
Clear strategic focus facilitating leading market positions Decisive management actions to strengthen product mix and position Sappi for profitable future growth • Maximise market share in declining Graphic Paper market • Shift graphic paper capacity to margin attractive and growing Packaging & Spec
Slide 14: Strategic capital projects FY18 –FY23
Strategic capital projects FY18 –FY23 Investments in packaging and speciality paper, dissolving pulp and decarbonisation Europe North America South Africa • Cham Paper acquisition • Conversion of PM1 at Somerset • Conversion of Maastricht Mill to • Expansion of Saiccor dissolving to solid bleached p
Slide 15: Financial Profile & Market Segments
Financial Profile & Market Segments 15
Slide 16: Key historical financial metrics
Key historical financial metrics Strong sales, disciplined capex and positive cash flow Sales Adjusted EBITDA excluding special items US$m Sales impacted by Covid-19 US$m 7,000 6,373 1000 20% 5,806 5,746 EBITDA impacted by Covid- 899 6,000 5,265 900 19 4,609 800 762 5,000 687 700 15% 4,000 3,000 600
Slide 17: Graphic Paper
Graphic Paper (54% of Sales Volume and 33% EBITDA LTM Mar 20221) Maximising cash generation and leadership position in a structurally declining market Overview Trends and Developments • Second largest global producer of coated woodfree paper and • Long-term structural decline driven by digital media
Slide 18: Packaging & Speciality Papers
Packaging & Speciality Papers (25% of sales volumes and 33% of EBITDA LTM Mar 20221) Increasing capacity to capitalise on a resilient and growing market Overview Trends and Developments • High product diversification and attractive end markets • Market drivers: • Opportunity for growth at attractive
Slide 19: Pulp
Pulp (21% of Sales Volumes and 34% of EBITDA LTM Mar 20221) Strengthen Sappi’s leading position and optimize production processes Overview Developments and Trends • World’s largest non-integrated manufacturer of dissolving pulp (DP) by sales and volume (1.5m tons • Market drivers: capacity2) i. Glob
Slide 20: Balance sheet management
Balance sheet management De-leveraging and liquidity management is a key focus Net Debt/ EBITDA * Liquidity 2,600 6.0 US$m Matane acquisition in FQ1 2020 (US$160m) Weak Covid-19 quarters impacted net Medium term Target 2.0x leverage in FY2020 and FY2021 1,200 2,400 5.0 2,200 FY2018 Cham Paper acquis
Slide 21: Debt maturity profile
Debt maturity profile* fiscal years 600 Includes 2026 2028 EUR450m bond EUR400m bond 524 500 469 400 US$ million 2032 364 US$221m bond 300 2025 ZAR1.3bn convertible bond** 200 221 91 74 100 102 93 26 26 20 64 20 47 0 2022 2023 2024 2025 2026 2027 2028 2032 Short-term SPH term debt Securitisation SSA
Slide 22: Capital allocation
Capital allocation • Sappi proactively managed capital expenditure during Covid period in 2020: ‒ Postponing discretionary projects 600 ‒ Shifting certain annual maintenance shutdowns to FY2021 500 • Significant portion of capex in the past has been used to increase production capacity at efficient
Slide 23: Outlook FQ3
Outlook FQ3
Slide 24: Outlook – Market segments
Outlook – Market segments • Dissolving Pulp (DP) market indicators remain positive Pulp • CCF HW DP price 13th June US$1,190 per ton; Full benefit of rising pricing phased through future quarters due to lag in contract pricing Packaging and • Demand in the packaging and speciality papers segment rem
Slide 25: Dissolving pulp Prices
Dissolving pulp Prices 1,250 CCF HW DP price 13th June US$1,190 per 1,200 ton 1,150 1,100 1,050 1,000 US$/ton 950 900 850 800 750 700 650 600 Jan 2018 Apr 2018 Jan 2019 Jan 2020 Jan 2021 Jan 2022 Jul 2018 Apr 2019 Jul 2019 Apr 2020 Jul 2020 Apr 2021 Jul 2021 Apr 2022 Oct 2017 Oct 2018 Oct 2019 Oct 2
Slide 26: Cost inflation developments
Cost inflation developments Major variable input cost/ton impact on the Group since Q1 FY2020 2.5 • Energy +96% 2.0 ‒ Largely due to the Russian-Ukrainian conflict 1.5 • Pulp +18% • Chemical +19% 1.0 • Delivery +30% ‒ Global logistics challenges escalated 0.5 as economic recovery resumed 0.0 • Total
Slide 27: Global ocean freight developments
Global ocean freight developments Schedule reliability as of March 2022 WCI* decreased by 1.3% to $7,768.18 per 40ft 90% 80% Yantian congestion 70% Shanghai Covid closure Ningbo Covid Closure 60% Ukrainian Invasion 50% 40% 30% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 2019 2020 2021 2022
Slide 28: Outlook FQ3
Outlook FQ3 • Inflationary macroeconomic environment continues to exert Cost inflation pressures on our cost base across all regions • Delivery, chemicals and energy costs anticipated to increase further in the third quarter • No material damage to any of the plants and mill operations resumed from
Slide 29: Supplementary information
Supplementary information 29
Slide 30: Market Segments
Market Segments 30
Slide 31: Graphic papers
Graphic papers Coated woodfree paper Coated mechanical paper Uncoated woodfree paper Newsprint Sappi Europe Sappi Europe Sappi Europe Sappi Southern Africa Sappi North America Sappi Southern Africa 31
Slide 32: Global graphic paper production sites
Global graphic paper production sites Stockstadt Mill (Germany) Maastricht Mill (Netherlands) Lanaken Mill (Belgium) Gratkorn Mill (Austria) Coated Woodfree, Uncoated Woodfree Coated Woodfree Coated Woodfree Coated Woodfree Somerset Mill (USA) Cloquet Mill (USA) Ehingen Mill (Germany) Kirkniemi Mill
Slide 33: World paper demand
World paper demand World paper demand by grade 600 Forecast 500 400 300 200 Markets in decline 100 0 2000 2005 2010 2015 2020 2025 2030 2035 33 Source: AFRY
Slide 34: Global printing market trends
Global printing market trends 2020-2025 is expected to see recovery in the global print market, while the earlier trends will return by 2025. COVID-19 COVID-19 Print volume 2019-2020 2020-2025 2025-2030 Print volume 2019-2020 2020-2025 2025-2030 Publishing Western Europe Graphics Eastern Europe All
Slide 35: Competitive landscape – Graphic papers
Competitive landscape – Graphic papers Sappi market share by capacity Coated woodfree graphic paper (CWF) Coated mechanical graphic paper (CM) Total 22,471MT Total 10,314MT 2 UPM Asia Pulp & 22.4% Paper 16.0% Others Sappi 47.8% Others 10.7% 49.7% Sappi 10.8% Shandong Chenming Paper Holdings 7.5% Lei
Slide 36: Coated paper deliveries and prices
Coated paper deliveries and prices Western Europe* 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 CWF demand MCR demand CWF 100 gsm sheets LWC 60 gsm offset reels 36 Source: Cepifine, Cepiprint and RIS
Slide 37: Coated paper deliveries and prices
Coated paper deliveries and prices United States* 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 Domestic CWF shipments Domestic CWF purchases RISI price CFS #3 60 lb rolls 37 Source: AF&PA and RISI; Indexed t
Slide 38: Sappi competitive strengths – Graphic papers
Sappi competitive strengths – Graphic papers • Global manufacturing platform • Broad product portfolio of leading brands • Sustainability commitment & recognised environmental performance • Well-maintained and invested mills • Viewed as a long-term supplier committed to the industry • Highly regarde
Slide 39: Packaging and speciality paper product portfolio
Packaging and speciality paper product portfolio 39
Slide 40: Global packaging and speciality paper production sites
Global packaging and speciality paper production sites Alfeld Mill (Germany) Stockstadt Mill (Germany) Condino Mill (Italy) Somerset Mill (USA) Tugela Mill (South Africa) Flexible packaging, label paper, paperboard, Label paper, flexible packaging, Flexible packaging, silicone base paper, Label pape
Slide 41: Sappi competitive strengths – Packaging and Speciality Papers
Sappi competitive strengths – Packaging and Speciality Papers • Global manufacturing platform • Sustainability commitment & recognised environmental performance • Well-maintained and invested mills • Independent producer • Bulk advantage in paperboard • Coating expertise and know-how key competitive
Slide 42: Dissolving pulp
Dissolving pulp General Fabrics Viscose staple Lyocell Microcrystalline Ethers Cellophane Acetate Sappi Verve fibre (VSF) cellulose (MCC) Almost two thirds of the world’s Lyocell dissolving pulp is produced at a Sappi mill. Excellent binding properties. 42
Slide 43: Global pulp production sites
Global pulp production sites Stockstadt Mill (Germany) Lanaken Mill (Belgium) Gratkorn Mill (Austria) Kirkniemi Mill (Finland) Bleached chemical pulp1,2 Bleached chemi-thermo mechanical pulp1 Bleached chemical pulp1 Bleached mechanical pulp1 Tugela Mill (South Africa) Stanger Mill (South Africa) Som
Slide 44: Dissolving wood pulp demand
Dissolving wood pulp demand Increasing demand for sustainable wood-based textiles driving commodity dissolving wood pulp demand Global textile fibre demand outlook, Mtpa Dissolving wood pulp demand outlook, Ktpa CAGR -1-0% 4-5% 2-3% 1-2% 2020-2025 2% p.a. 9,000 120 113.6 116.0 118.4 109.1 111.3 107.
Slide 45: Dissolving wood pulp markets
Dissolving wood pulp markets End-uses Sappi FY21 Sales Volumes 5% 95% Source: Hawkins Wright – The Outlook For Dissolving Pulp (March 2022) Commodity grade Speciality grade 45
Slide 46: Textile fibre Prices
US$\ton 500 1,000 1,500 2,000 2,500 3,500 4,000 0 3,000 Jan 2018 Source: CCF Group. Apr 2018 Jul 2018 Oct 2018 Textile fibre Prices Jan 2019 Cotton 328 Apr 2019 Jul 2019 Oct 2019 Cotton "A" Index Jan 2020 Apr 2020 PSF 1.4 D Jul 2020 Oct 2020 Jan 2021 VSF 1.2 D Apr 2021 Jul 2021 VSF 1.5 D Oct 2021 Ja
Slide 47: Textile substitution drivers
Textile substitution drivers VSF discount to cotton should incentivize cotton substitution Source: CCF Group 47 Abbreviations: VSF = Viscose Staple fibre
Slide 48: Competitive landscape – Dissolving wood pulp
Competitive landscape – Dissolving wood pulp Top 10 producers by capacity Total 8,787MT 2 RGE *, 19% Others, 24% Jari, 2% GP, 2% Sappi, 14% Stora Enso3, 4% Arauco, 1 Rayonier, 9% 5% Lenzing *, 7% Birla *, 7% Sun Paper, 7% 1 Source: Hawkins Wright (March 2022) 2 Source: Internal. Capacity 2021; swing
Slide 49: Sappi competitive strengths – Dissolving Pulp
Sappi competitive strengths – Dissolving Pulp • Global manufacturing platform • Sustainability commitment, recognised quality performance and forestry certification • Low-cost quartile assets • Well-maintained and invested mills • Independent dissolving pulp producer • Technical know-how and custome
Slide 50: Biomaterials
Biomaterials Nanocellulose Nanocellulose Hemicellulose sugars Lignosulphonate Lignosulphonate 50
Slide 51: Regional Overview
Regional Overview
Slide 52: Global presence and geographic diversification
Global presence and geographic diversification Manufacturing operations on three continents, with products sold in more than 150 countries worldwide c. 12,492 5.5m 2.5m 1.4m 394k Employees in 20 countries Tons of Paper capacity Tons of Paper Pulp capacity Tons of Dissolving Pulp capacity Hectares**
Slide 53: At a glance: Sappi Europe (SEU)
At a glance: Sappi Europe (SEU) 10 5,531 production facilities employees 3.5 million tons per annum 15 paper production capacity sales offices 1.1 million tons per annum paper pulp production capacity Statistics FY2021 53
Slide 54: Sappi Europe
Sappi Europe Significant recovery in Europe post Covid and steady growth in packaging and speciality paper segment EBITDA and Margin * Sales volume evolution FY2018 to LTM Mar 2022 300 16% 14% 250 12% 19% 12% EBITDA Margin (%) EBITDA (EURm) 200 impacted by 10% Covid 19 150 8% 6% 81% 100 88% 4% 50 2%
Slide 55: Sappi share of European graphic paper market
Sappi share of European graphic paper market 60% 50% 43% 40% 40% 37% 34% 31% 41% 30% 30% 35% 30% 28% 28% 20% 26% 15% 13% 13% 12% 11% 10% 10% 0% 2017 2018 2019 2020 2021 2022 CWFS CWFR CMR Objective is to reduce exposure to graphic paper through conversion to packaging and speciality paper, sale or c
Slide 56: Capacity closures/rebuilds coated graphics Europe
Capacity closures/rebuilds coated graphics Europe Coated Woodfree Capacity Reductions in Europe (2,045,000 tons) Company Mill Capacity Closure time Scheufelen Lenningen, Germany 70,000 Q2/18 Lecta Torras Zaragossa and Motril, Spain 160,000 2018/2019 AWA Besse-Sur-Braye / Le Bourray 260,000 Feb-19 Ar
Slide 57: Packaging and speciality papers Sappi Europe
Packaging and speciality papers Sappi Europe SPECIALITY PAPERS (FOCUS) PACKAGING (NICHE) Flexible packaging Functional papers Label papers Silicone base papers Dye sublimation Containerboard Paperboard papers (Glassine & CCK) papers 57
Slide 58: Sappi share of European specialities market
Sappi share of European specialities market 60% 51% 50% 46% 45% 42% 42% 40% 30% Label Market 20% share Jan-April 8.4% 10% 7.0% 7.0% 7% 7% 5% 7% 7% 0% 5% 4% 5% 2018 2019 2020 2021 2022 YTD ** % Ctd Flexpack % Uctd Flexpack % Label * Source: CEPI/ Internal **2022 YTD: Oct-April (7 months) * Label figu
Slide 59: SEU: Thrive25 strategy
SEU: Thrive25 strategy Grow our business Sustain financial Drive operational Enhance Trust health excellence • Accelerate growth in • Grow EBITDA and • Continuously improve • Sustainability at the core speciality papers margin in packaging safety of all we do and speciality paper • Streamline proces
Slide 60: SEU: Summary
SEU: Summary o Highly competitive in service, quality and cost in Europe o Market leading position in coated wood free paper o Strong cash flows o Highly attractive and growing packaging and specialities business o Intentionally transitioning graphic paper capacity to packaging and speciality paper
Slide 61: At a glance: Sappi North America (SNA)
At a glance: Sappi North America (SNA) 4 2,037 production facilities employees 1.3 million tons per annum 6 paper production capacity sales offices 795,000 tons per annum 370,000 tons per annum paper pulp production capacity dissolving pulp production capacity Statistics FY2021 61
Slide 62: Sappi North America
Sappi North America Strong recovery from Covid 19 and steady growth in packaging and specialities segment EBITDA and Margin * Sales volume evolution FY2018 to LTM Mar 2022 250 25% 200 20% 19% 27% EBITDA Margin (%) 9% 43% EBITDA (US$m) 150 15% impacted by Covid 19 72% 100 10% 30% 50 5% Graphic Paper
Slide 63: Sappi share of North American graphics market
Sappi share of North American graphics market NA CFS Apparent Consumption - Indexed SNA Graphics Volume and Market Share Trend 110% 1,200 34% 100% 33% 1,000 90% 32% 800 31% 80% 30% 600 70% 29% 400 28% 60% 27% 200 50% 26% - 25% 40% F15 F16 F17 F18 F19 F20 F15 F16 F17 F18 F19 F20 F21 F22 F23 F24 F25 S
Slide 64: Sappi share of North American SBS paperboard and FSB market
Sappi share of North American SBS paperboard and FSB market Folding Carton Food Service Board Sappi Clearwater Sappi 6% Evergreen 16% 7% 8% Georgia- WestRock Clearwater Pacific 46% 12% 31% Graphic Pkg 31% WestRock 21% Graphic Pkg 22% 2.3M tons 1.7M tons 64 Source: Internal
Slide 65: Packaging success - Paperboard
Packaging success - Paperboard Ramp up of volumes from Somerset PM1 conversion SNA SBS Volume and Market Share Trend 80 6% 5% 60 K Short Tons 4% 40 3% 2% 20 1% - 0% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 SNA Volume SNA Share Somerset PM1 hybrid capability facilitated an optimal ramp u
Slide 66: Packaging success – LusterCote (C1S)
Packaging success – LusterCote (C1S) Ramp up of volumes from Somerset PM1 conversion LusterCote Volume and Market Share Trend 40 70% 35 60% 30 50% K Short Tons Volume Domestic Share 25 40% 20 30% 15 20% 10 5 10% - 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 15 15 15
Slide 67: Transformational strategic acquisition – Matane
Transformational strategic acquisition – Matane Achieve cost advantages by improving pulp integration, enabling growth in higher margin packaging and specialty segment paper • $158 million acquisition of 270,000ton Matane high yield pulp mill completed in November 2019 • Increases overall pulp integ
Slide 68: SNA: Thrive25 strategy
SNA: Thrive25 strategy Grow our business Sustain financial Drive operational Enhance Trust health excellence • Maintain/grow #1 • Drive cash generation • Continuously improve • Sustainability at the core share position in from graphics assets safety of all we do graphics and C1S • Streamline process
Slide 69: SNA: Summary
SNA: Summary • Market leading position in CWF – domestic supplier of choice • Diversified product portfolio • Established brands with strong market position ‒ Exposure to most attractive end-market segment ‒ Unmatched reputation for product innovation and customer service • A low-cost producer with
Slide 70: At a glance: Sappi Southern Africa (SSA)
At a glance: Sappi Southern Africa (SSA) 5 4,752 production facilities employees 690,000 tons per annum 6 paper production capacity sales offices 624,000 tons per annum 394,000 hectares 1 million tons per annum paper pulp production capacity plantations (owned, leased dissolving pulp supply) product
Slide 71: Sappi Southern Africa
Sappi Southern Africa Sales portfolio predominantly servicing export markets EBITDA and Margin * Sales volumes evolution FY2018 to LTM Mar 2022 6000 30% 5000 25% 13% 10% 4000 impacted by 20% EBITDA Margin (%) 32% EBITDA (ZARm) Covid 19 28% 58% 59% 3000 15% 2000 10% 1000 5% Graphic Paper Graphic Pape
Slide 72: Sappi share of South African containerboard market
Sappi share of South African containerboard market 1,060 50% Other+Import 6% 44% 1,040 45% 36% 37% 40% 1,020 36% 36% 36% Neopak 10% 33% 33% 35% 1,000 Sappi Market Share 30% 33% Market Size New Era 980 11% Reduction 25% 1,038 1,036 1,034 960 due to 1,015 Covid -19 20% Corruseal 940 10% 992 15% 967 96
Slide 73: Sappi share of South African office paper market
Sappi share of South African office paper market Imports 180 49% 5% 160 48% 140 47% Market Capacity Market Share 120 46% 100 Sappi 45% Mondi 48% 80 47% 44% 60 43% 40 20 42% 0 41% 2017 2018 2019 2020 2021 2022 Market Capacity ('000 tons) % Market share • Growth of ~1% p.a. • Sales mostly into educati
Slide 74: Sappi share of South African Tissue market
Sappi share of South African Tissue market Imports 300 14% 5% Sappi 12% 250 10% Market Capacity 10% Market Share 200 8% 150 6% 100 4% Others 85% 50 2% 0 0% 2017 2018 2019 2020 2021 2022 Market Capacity ('000 tons) % Market share • Demand growing at 4% p.a. • Shifted to at-home product categories • N
Slide 75: Sappi share of South African Newsprint market
Sappi share of South African Newsprint market Repurposing newsprint machine to packaging 180 90% 160 80% 140 70% Sappi Market Capacity Market Share 120 60% 37% 100 50% Imports 80 40% 50% 60 30% 40 20% 20 10% Mondi 13% 0 0% 2017 2018 2019 2020 2021 2022 Market Capacity ('000 tons) % Market share • Ne
Slide 76: SSA: Thrive25 strategy
SSA: Thrive25 strategy Grow our business Sustain financial Drive operational Enhance Trust health excellence • Grow Containerboard • Grow margins and • Continuously improve • Collaborate & Innovate safety with strategic partners to • Increase owned/ EBITDA harness the benefits of controlled Forests
Slide 77: SSA: Summary
SSA: Summary • Dissolving pulp and containerboard serving export markets • World class dissolving pulp assets ‒ Large-scale, modern and well-invested assets ‒ Technical know-how and excellent customer relationships • Low-cost and fast-growing certified woodfibre from state-of-the-art plantations • S
Slide 78: Sustainability
Sustainability
Slide 79: Sustainability is a priority for all of us
Sustainability is a priority for all of us Sappi exists to build a thriving world by unlocking the power of renewable resources to benefit people, communities, and the planet. 79
Slide 80: Sappi has joined forces with the United Nations
Sappi has joined forces with the United Nations to further our global sustainability leadership Produce Innovate Partner Sustainable paper-based Products for the bio-based, Throughout the value chain solutions circular economy to accelerate change We have identified seven SDGs globally where we can
Slide 81: Sustainable leadership: How we do it
Sustainable leadership: How we do it Circular economy Renewable resources Eco-effective We are thoughtfully sourcing We practice and promote We strictly monitor and control materials, reducing material sustainable forestry that our use of energy, water, and waste, mitigating carbon, and keeps forest
Slide 82: Sustainability statistics and associations
Sustainability statistics* and associations • Globally, 77% of the fibre we use is certified. The balance is procured from known and controlled sources. • Globally, 52.4% of our energy use is derived from renewable resources. • Over five years, we have reduced our global specific scope1 and 2 emissi
Slide 83: ESG - continuously rethinking what we do and how we do it
ESG - continuously rethinking what we do and how we do it Sustainability is embedded into Sappi’s business and work culture Sappi’s commitment to sustainable growth • Sappi Forests: 100% FSC certified, • Sappi Forests: 100% PEFC certified • Awarded Platinum Level in sustainability performance by ind
Slide 84: 2025 Sustainability targets aligned with UN SDGs
2025 Sustainability targets are aligned with United Nation´s Sustainable Development Goals (SDGs) Global 2025 Targets (baseline year is 2019) Level Advanced Broad-based Black Economic Empowerment 1* contributor status Explore our global and regional Thrive 25 sustainability targets 23%* Reduction in
Slide 85: The world needs urgent action to combat global warming
The world needs urgent action to combat the effects of global warming. Every solution we create supports our goal to make everyday products more sustainable. 85
Slide 86: Sappi’s focus on decarbonisation
Sappi’s focus on decarbonisation Committed to science-based targets 4. Reducing SCOPE 3 EMISSIONS: 1. Investing in ENERGY EFFICIENCY: Collaborating with our suppliers to reduce Making our mills more eco-effective by their carbon footprint improving energy efficiency and investing in state-of-the-art
Slide 87: Financial Trends
Financial Trends 87
Slide 88: Highlights: Five-year review
Highlights: Five-year review 88
Slide 89: Highlights: Five-year review
Highlights: Five-year review 89
Slide 90: Highlights: Five-year review
Highlights: Five-year review 90
Slide 91: Highlights: Five-year review
Highlights: Five-year review 91
Slide 92: Breakdown of key cash flow items
Breakdown of key cash flow items US$m 2018 2019 2020 2021 LTM Mar 2022 Key cash flow items Cash generated by operations 709 673 323 472 831 Change in net working capital (79) (15) 65 39 (177) Maintenance capex (167) (148) (126) (176) (178) Free cash flow 463 510 262 335 476 Expansion capex (374) (32
Slide 93: Reconciliation of Adj. EBITDA and Adj. EBITDA excluding Special Items
Reconciliation of Adj. EBITDA and Adj. EBITDA excluding Special Items US$m 2018 2019 2020 2021 LTM Mar 2022 Profit for the period 323 211 (135) 13 364 Depreciation and amortisation 282 285 321 329 323 Net finance costs 68 85 88 134 107 Taxation 98 87 9 (1) 39 Adjusted EBITDA 771 668 283 475 833 Plan
Slide 94: Efficient asset base with flexible cost structure
Efficient asset base with flexible cost structure Downturns Flexible cost structure provides resilience during cyclical downturns Total Operating Costs Variable Costs² FY2021 US$5,015m Delivery Wood • Cost base provides resilience during downturns 10% 11% (65% of operating expenses¹ are variable) •
Slide 95: Dissolving Wood Pulp
Dissolving Wood Pulp 95
Slide 96: Dissolving wood pulp (DWP)
Dissolving wood pulp (DWP) • DWP is the most abundant natural organic polymer on earth and is found in all plant materials • The plant material (wood from certified forests or plantations) is processed and purified by applying specialised chemistry to extract the cellulose polymers from the wood • T
Slide 97: An introduction to the textile market value chain
An introduction to the textile market value chain 97 97
Slide 98: Why dissolving wood pulp?
Why dissolving wood pulp? Capitalising on MEGA-TRENDS 120% • Global population growth from a current 6.9bn to 100% 112% 94% 8.3bn by 2030 80% 85% 70% 70% 60% 49% 40% 39% 32% • Increasing need for food and clothes 26% 27% 20% 20% 11% 0% 0% -5% -10% -14% -20% -18% • Increasing need for more comfortabl
Slide 99: Cellulose gap theory
Cellulose gap theory Dissolving wood pulp share of the textiles market is expected to grow further • Production of cotton is forecast to remain stagnant or shrink • Growth in total fibre consumption will be covered by man-made fibres • However, certain moisture management properties of cellulose fib
Slide 100: Driver of DP demand
Textile market Cellulosic fibres (e.g. Viscose) 100% = 107Mtpa (2020) Driver of DP demand 6.1 6.5 (5.7%) (6.1%) 24.7 (23.1%) 69.7 (65.1%) Cotton Polyester Cotton Viscose Other* 100 Other* includes man-made fibres such as acrylic, polyamide, polyprolene and natural fibres such as wool
Slide 101: Market paper pulp and DP industry
Market paper pulp and DP industry: 69 million metric tons Total: 6 MMT Dissolving Pulp Specialities 4% 6% 1.6 MMT Dissolving Pulp Viscose 6 MMT Fluff 6 MMT 90% Market Pulp Modal Lyocell Viscose 55 MMT Source: Hawkins Wright, Company Estimates 101 Note: Market pulp dynamics expected to remain balance
Slide 102: Megatrends accelerating adoption of sustainable cellulosic fibres
Megatrends accelerating adoption of sustainable cellulosic fibres Growing Population • Expanding middle class and urbanization • Increase consumer spending, emerging markets • World textile growth + 2- 3% p.a. Less Plastic World, Carbon Conscious Planet • Increasing legislation • Pressurising synthe
Slide 103: Thank you
‘Thank you \ 103