Financial summary for Q4 and full FY20 ended September 2020:
- EBITDA excluding special items
- For the quarter US$82 million (Q4 FY19 US$185 million)
- For the year US$378 million (FY19 US$687 million)
- Loss for the period
- For the quarter US$88 million (Q4 FY19 profit of US$50 million)
- For the year US$135 million (FY19 profit of US$211 million)
- EPS excluding special items
- For the quarter -4 US cents (Q4 FY19 10 US cents)
- For the year -5 US cents (FY19 44 US cents)
- Cash generation for the quarter of US$88 million (Q4 FY19 US$173 million)
- Net debt US$1,957 million (FY19 US$1,501 million)
Sappi announces financial results for fourth quarter and full year
Commenting on the group’s results, Sappi Chief Executive Officer Steve Binnie said: “The group’s performance over the past year was severely impacted by the Covid-19 pandemic, the related government lockdowns and the ensuing economic after-effects. While the first half of the year was satisfactory given that we started the year with dissolving pulp prices at historic lows, the third quarter saw the full impact of Covid-19 before a gradual recovery began in the fourth quarter, in particular for Dissolving Pulp (DP). The improvement is further evidenced by the quarter-on-quarter improvement in EBITDA from US$26 million to US$82 million.”
Throughout this unprecedented time the health and safety of our employees remained paramount. A comprehensive Covid-19 action plan enabled us to operate in a safe and uninterrupted manner where demand permitted. Working closely with our customers and suppliers we systematically increased activity and output in response to improved market demand and our support for local communities helped mitigate the impact of the pandemic and the ensuing socio-economic consequences on them.
In response to the challenging market conditions we focused on the preservation of liquidity, lowering costs and re-prioritising various strategic actions. Commercial downtime of 1.1 million tons was taken across all segments as required, in order to match supply to demand and prevent the build-up of inventory. However, this had major repercussions for operating efficiency, fixed cost absorption and profitability. Additionally, non-critical capex projects were deferred, and some annual maintenance shuts were postponed for a short period. The project to expand the Saiccor Mill capacity, which was put on hold through the initial months of the Covid-19 outbreak, is 75% complete and we expect completion in the third quarter of FY2021.
Turning to the financial results for the full year, Binnie said: “The positive highlight for the year was strong growth in sales and profitability for the packaging and specialities segment. This segment has proven to be resilient through the Covid-19 crisis and in difficult economic circumstances. Our strategy to diversify our product portfolio into higher margin and growing segments has been justified fully. Unfortunately, graphic paper usage across the globe declined significantly in line with the Covid-19 related slowdown in economic activity. We believe demand is unlikely to return to pre-Covid-19 levels and responded by reducing capacity at two mills. Lower DP volumes due to Covid-19 exacerbated an already tough operating environment for the segment, as historic low pricing levels persisted throughout the year. Fortunately demand and pricing began to recover in the fourth quarter.”
Looking forward, Binnie stated: “While we are confident of a continued recovery through 2021, it is unclear what the potential negative impact will be of the increased Covid-19 infections rates and associated stricter lockdown regulations across Europe.”
You can download and view all of the latest financial results below, alongside our 2020 Annual Integrated Report.