Sappi delivers record earnings for Q3 FY2022

Commenting on the group’s results, Sappi Chief Executive Officer Steve Binnie says, “I am very proud of another quarter of record earnings against a backdrop of significant geopolitical turmoil, supply chain headwinds and extraordinary global inflationary pressures.

"Strong global paper demand and pricing momentum offset sharply rising costs and the negative impact of scheduled maintenance shuts at four mills. EBITDA improved to a record US$371 million, up from US$337 million in the prior quarter and US$145 million in the equivalent quarter a year ago.

"COVID lockdowns in China and the ongoing Russian-Ukrainian war exerted renewed pressure on global supply chains and energy prices resulting in further broad-based inflation during the quarter. During April, a flood in South Africa forced the temporary closure of our three mills in the KwaZulu-Natal region and resulted in a loss of 24,000 tons of production and 32,000 tons of inventory which was damaged in a warehouse at the Durban Port.

"Despite these challenges, the sizeable cash generation during the quarter of US$170 million supported our strategic objective to de-gear the balance sheet and accelerated our timeline to reduce debt. To this effect, net debt of US$1,530 million was US$525 million less than the prior year and earnings per share excluding special items of 39 US cents was a substantial improvement on the 5 US cents in the prior year.

“Notwithstanding inflationary cost pressures, we are anticipating another strong performance in the fourth quarter, with EBITDA below the record levels achieved in the third quarter.”