Sappi’s Q3 sales hold at US$1.3B as cost cuts offset graphic paper decline, pulp headwinds

SOUTH AFRICA – Sappi has reported third-quarter sales of US$1.3 billion with adjusted EBITDA of US$53 million, as the pulp and paper group’s European cost reduction initiatives offset pressure from graphic papers decline, while the company awaits regulatory approval for its UPM joint venture.

The group’s loss for the period was US$181 million, compared with a US$33 million loss in Q3 2025, amid global market conditions that remained challenging. 

Sappi continued to face pressure on selling prices across a number of product categories, while the ongoing Middle East conflict resulted in higher logistics and chemical costs.

European Business Improves Despite Market Pressures

Sappi’s European business delivered an improved financial performance compared with the prior year, primarily due to strategic cost reduction and rationalisation initiatives. 

Although sales volumes remained under pressure from weak market conditions and the structural decline in graphic papers demand, profitability benefited from lower fixed costs and improved operational efficiencies. 

Sappi’s product range spans packaging papers, speciality papers, graphic papers, pulp and biomaterials, with the company focusing on executing its strategy and strengthening the balance sheet.

South African Operations Face Currency and Import Challenges

Sappi’s South African operations faced headwinds including unfavourable exchange rates and lower US dollar prices for pulp, while CEO Steve Binnie flagged concerns about low-cost paper imports. 

Binnie stated that South Africa remains a strong business with competitive assets and healthy demand in several markets, but increasing levels of imported product continue to create challenges for local manufacturers and deserve greater policy attention. 

The South African packaging paper market is experiencing growing demand for sustainable packaging, but local producers face competition from lower-cost imports from Asia and other regions.

Outlook and UPM Joint Venture Progress

Regarding the overall outlook, Sappi stated that market conditions across some key products were improving. 

Binnie noted that while uncertainty remains in the global economic and geopolitical environment, the company is encouraged by improving market fundamentals and the momentum building across its businesses. 

On 23 July, Sappi’s shareholders approved the proposed graphic papers joint venture with UPM, with the deal continuing to progress through the regulatory approval process and the remaining conditions expected to be completed by the end of the calendar year. 

The company expects a stronger performance in the fourth quarter, with management focused on strengthening the balance sheet and delivering improved financial results.

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