2nd quarter results

Sappi is a global diversified woodfibre company focused on providing dissolving wood pulp, packaging and speciality papers, printing and writing papers as well as biomaterials and biochemicals to our direct and indirect customer base across more than 150 countries.

Q2 2019

Financial results conference call

Our dissolving wood pulp products are used worldwide mainly by converters to create viscose fibre for fashionable clothing and textiles, as well as other consumer products; quality packaging and speciality papers are used in the manufacture of such products as soup sachets, luxury carry bags, cosmetic and confectionery packaging, boxes for agricultural products for export, tissue wadding for household tissue products and casting release papers used by suppliers to the fashion, textiles, automobile and household industries; our market-leading range of printing and writing papers are used by printers in the production of books, brochures, magazines, catalogues, direct mail and many other print applications; biomaterials include nanocellulose, fibre composites and lignosulphonate; biochemicals include second generation sugars.

The wood and pulp needed for our products are either produced within Sappi or bought from accredited suppliers. Sappi sells almost as much as it buys.

Sales by source* (%)

Sales by product* (%)

Sales by destination* (%)

Net operating assets** (%)

* For the period ended March 2019. ** As at March 2019.

Highlights for the quarter

EBITDA excluding special items
US$187 million
(Q2 2018 US$211 million)

EPS excluding special items
13 US cents
(Q2 2018 17 US cents)

Profit for the period
US$72 million
(Q2 2018 US$102 million)

Net debt
US$1,680 million
(Q2 2018 US$1,632 million)

Commentary on the quarter

Graphic paper markets were much weaker than expected during the quarter, with demand in our major product categories down between 8% and 13% in Europe and North America. Consequently, we were compelled to take production downtime of 85,000 tons across our paper machines in these regions. Also, raw material costs, particularly pulp, continued to be elevated, packaging and specialities markets were inconsistent and the ramp-up of recently converted paper packaging machines was ongoing. Against this difficult backdrop, the group generated EBITDA excluding special items of US$187 million, 11% below that of the equivalent quarter last year. Profit for the period decreased from US$102 million to US$72 million due to the lower operating profit, higher depreciation charge and profit on the sale of property included in the prior year.
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