Sappi Reports Strong Fourth Quarter and Full Year 2024 Results

"Following a strong last quarter, I am pleased we were able to exceed our expectations for the year with Adjusted EBITDA of US$684 million for the year ended September 2024." – Steve Binnie, CEO of Sappi.

Nov. 7, 2024 - Sappi today reported fiscal fourth quarter and full year 2024 results. Commenting on the group's results, Sappi's CEO, Steve Binnie, said the company's strong performance exceeded expectations.

"Following a strong last quarter, I am pleased we were able to exceed our expectations for the year with Adjusted EBITDA of US$684 million for the year ended September 2024. Our strong performance occurred against the backdrop of the subdued macroeconomic environment, ongoing low consumer confidence, and persistent geopolitical uncertainty.

"A key highlight was the pulp segment's strong performance, driving record profitability for the South African region. However, paper markets remained subdued, with the expected recovery in demand after the prolonged destocking phase of 2023 unfolding slower than anticipated. Significant fixed costs savings were achieved through our strategic rationalisation actions."

"The principles of our Thrive strategy remain a focus on sustaining our financial health, enhancing trust and driving operational excellence. Growing the business in the packaging and speciality papers segment with the conversion and expansion of Somerset PM2 is a vital part of the plan which will offset the decline in the graphic papers markets. The project is on schedule, with commissioning set to begin early in the third quarter of FY2025.

"Demand for dissolving pulp (DP) remained strong throughout the year, with selling prices rallying through the second half. Favourable market conditions were supported by a tight supply landscape and strong demand buoyed by high viscose staple fibre (VSF) operating rates and low inventory levels. Supply was tight following closures at competitors and little additional capacity added in the past two years.

"Graphic papers sales volumes were up 2% from the previous year but the pace of recovery slowed as the year progressed, which suggests a likely permanent structural shift in demand. Lower selling prices were partially mitigated by variable cost savings. The closure of the Stockstadt and Lanaken Mills reduced the fixed cost base and enhanced European capacity utilisation, contributing to improved profitability of the segment compared to the prior year.

"Demand for packaging and speciality papers products improved steadily through the year as the destocking cycle of 2023 reversed, leading to an overall 8% increase in sales volumes compared to the prior year. Market dynamics varied across the regions, with North America and South Africa experiencing stronger recoveries and returning to full operating rates compared Europe, where downstream demand remained suppressed due to lingering poor consumer sentiment. Although higher sales volumes and variable cost savings were achieved, these gains were offset by lower selling prices, leading to margin erosion for the segment.

"Sustainability lies at the heart of our Thrive strategy as we aim to be a trusted, transparent, and innovative partner in advancing a biobased circular economy. We are proud of the progress made toward our Planet and People targets with steady year-on-year improvements. We remain committed to providing a safe and inclusive workplace and promoting sustainable practices to protect the environment."

Looking Forward

Looking forward, Binnie stated, "Challenging global macroeconomic conditions and ongoing geopolitical tensions continue to cause disruptions in our markets. Additionally, supply chain instability and fluctuating input costs have added pressure to both production and pricing strategies, making market dynamics unpredictable. In this environment, we are sharpening our focus on operational excellence by proactively managing capacity utilisation and vigorously pursuing cost saving opportunities.

"Notwithstanding the ongoing global macroeconomic challenges, we anticipate that the Adjusted EBITDA for the first quarter of FY2025 will be significantly above that of the equivalent quarter of the prior year."

Sappi is a leading global provider of sustainable woodfibre products and solutions in the fields of dissolving pulp, printing papers, packaging and speciality papers, casting and release papers, biomaterials and bio-energy.

SOURCE: Sappi Limited