Sappi posts FY2025 results, prioritizes debt reduction and operational efficiency

SOUTH AFRICA – Sappi has released its audited results for the year ended 30 September 2025, reporting steady liquidity and renewed focus on strengthening its balance sheet as the global pulp and paper industry continues to face volatile market conditions.

The diversified woodfibre-based solutions provider, which operates manufacturing sites on three continents and sells into more than 150 countries, says it will now concentrate on extracting operational benefits from its major North American investment while tightening cost controls.

“Sappi’s immediate focus remains on internal levers within the company’s control,” said CEO Steve Binnie.

“Our ‘Back to Basics’ approach is centred on reducing debt and strengthening the balance sheet through targeted cost-saving initiatives and operational efficiency improvements.”

For the period, Sappi reported an Adjusted EBITDA of US$501 million and a full-year loss of US$177 million.

In March, the group successfully raised €300 million through a 4.500% sustainability-linked bond due in 2032, a move the company described as strong market validation of its sustainability strategy and long-term outlook.

Year-end liquidity remained healthy, with US$219 million in cash and US$602 million in unutilized revolving credit facilities across South Africa and Europe. Sappi also noted ongoing support from institutional investors and a generally positive analyst sentiment.

Regional performance

Despite weaker global paper markets, lower dissolving wood pulp (DWP) prices, and currency volatility, Sappi’s South African operations delivered revenue of R26.18 billion and Adjusted EBITDA of R5.2 billion.

Stronger containerboard demand, driven by a robust citrus season, supported the segment.

Revenue reached US$1.73 billion, with Adjusted EBITDA at US$133 million. A major milestone was the completion of the Somerset Mill PM2 conversion and expansion project.

While start-up experienced delays, the ramp-up is now surpassing expectations, supported by strong customer feedback. Sales volumes for packaging and speciality papers rose 22%; however, profitability dipped due to weaker pricing and higher operational costs during the PM2 transition phase.

Operating conditions remained highly competitive amid oversupply and weak demand. The region generated €2.03 billion in revenue and €58 million in Adjusted EBITDA.

Packaging and speciality paper sales improved 8%, with label papers performing strongly and flexible packaging showing early signs of recovery.

Sappi expects ongoing geopolitical and economic pressures to continue disrupting market stability into FY2026.

In line with its debt-reduction strategy, the group has capped capital expenditure at below US$300 million annually for the next two years, with no expansionary projects planned.

Adjusted EBITDA for Q1 FY2026 is expected to come in below Q4 FY2025 due to market headwinds and a scheduled maintenance shutdown at Somerset Mill.

Binnie said Sappi remains confident, “Our strategic investments in packaging, speciality papers and DWP have positioned us well for eventual market recovery.

“We remain disciplined in driving cash generation to reinforce our balance sheet and ensure long-term resilience.”

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