Sappi releases financial results for the fourth quarter reporting sequential performance improvement amid challenging operating environment

Sappi, a global leader in the woodfibre and bioeconomy, has released its fourth quarter and full year results for the year ended 30 September 2026.

Against a backdrop of persistent macroeconomic headwinds, ongoing geopolitical tensions and escalating conflict in the Middle East, market conditions remained challenging throughout the quarter and the year.

Key financial results for the fourth quarter include:

•    Adjusted EBITDA¹ US$99 million (Q4 FY25 US$111 million)
•    Loss for the period US$116 million (Q4 FY25 loss of US$194 million)
•    Adjusted EPS² 3 US cents loss (Q4 FY25 3 US cents loss)

¹ Adjusted EBITDA is EBITDA excluding special items and plantation fair value price adjustment. 
² Adjusted EPS is EPS excluding special items and plantation fair value price adjustment.

Commenting on the financial results for the quarter, Group Chief Executive Officer Steve Binnie says: “Our Adjusted EBITDA for the fourth quarter was substantially above the prior quarter and in line with guidance. The sequential improvement was driven by steady progress against targeted operational and cost savings initiatives, improving profitability in the North American packaging business as the commercial ramp-up of Somerset Mill PM2 continued to gain momentum and reduced scheduled maintenance compared to the third quarter.”

As a globally diversified business, Sappi provides the following high-level update across its operating segments and geographies:

Market fundamentals for both dissolving wood pulp (DWP) and viscose staple fibre (VSF) remained healthy throughout the quarter and were further supported by a seasonal increase in textile fibre demand towards quarter end. DWP pricing momentum continued, with market prices increasing by US$22 per ton during the quarter to end at US$920 per ton. However, pulp segment profitability was adversely impacted by the stronger ZAR/USD exchange rate, significant cost inflation and the scheduled maintenance shutdown of one line at Saiccor Mill, which reduced earnings by approximately US$8 million.

North America

Profitability in the North American region improved substantially compared to the prior year, driven by the continued commercial ramp-up of Somerset Mill PM2. The machine delivered further operational improvements during the quarter, with higher production efficiencies and growing sales volumes supporting a meaningful contribution to earnings. Regional sales volumes increased by 13% year-on-year, but lower average selling prices and ongoing inflation in logistics and certain raw material categories continued to weigh on profitability.

The packaging and speciality papers segment delivered a marked improvement in operational performance during the quarter, with sales volumes increasing by 31% compared to the prior year, driven by a 48% increase in paperboard sales volumes as the commercial ramp-up of Somerset Mill PM2 gained significant momentum. Market conditions in North America continued to improve, supported by tightening industry capacity. The primary focus during the quarter was the implementation of announced price increases.

The graphic papers segment continued to face structural demand decline, with sales volumes 7% lower than the prior year. Despite this, market conditions in North America remained relatively balanced following the capacity reduction associated with the Somerset Mill PM2 conversion. The tighter supply-demand dynamics supported pricing, with average selling prices increasing by 6% year-on-year. This stronger pricing environment helped offset cost inflation, allowing the segment to maintain healthy margins despite lower volumes and continued market contraction.

South Africa

Profitability in the South African region continued to be adversely affected by exchange rate headwinds and significant cost inflation during the fourth quarter. Sales volumes (excluding forestry) were substantially lower than the prior year, primarily due to reduced pulp sales following congestion at the Port of Durban, which delayed approximately 38,000 tons of DWP shipments into the first quarter of FY2027, and lower containerboard volumes resulting from low inventory levels and a production shortfall at Ngodwana Mill.

The pulp segment continued to operate against a supportive demand backdrop, with demand for Sappi’s DWP remaining strong. Sales volumes were 26% below the prior year, largely due to the Durban Port delays and the scheduled maintenance shut at the Saiccor Mill, which also negatively impacted quarterly profitability.

Demand for containerboard remained robust during the quarter, supported by the seasonal strength of agricultural export markets as the citrus season progressed to completion. However, sales volumes were 14% below the prior year, reflecting low inventory levels following the Ngodwana Mill maintenance shut in the previous quarter, which were further exacerbated by boiler tube leaks at the mill that adversely impacted production during the quarter.

Europe

Market conditions in Europe remained challenging during the fourth quarter, reflecting subdued demand, industry overcapacity and continued cost pressures. Sales volumes declined by 10% compared to the prior year, while selling prices remained broadly flat. Despite these headwinds, profitability improved year-on-year as the benefits of strategic capacity rationalisation and fixed cost reduction initiatives continued to be realised.

The graphic papers segment continued to face extremely challenging market conditions during the quarter driven by excess capacity. Sales volumes declined by 13% compared to the prior year, with a muted seasonal demand recovery following the summer slowdown. Across the industry, fierce competition for market share severely constrained our ability to recover rapidly rising input costs resulting in average selling prices dropping 1% below the prior year levels and placing further pressure on profitability.

The packaging and speciality papers business continued to operate in a subdued demand environment during the fourth quarter, with sales volumes 5% below the prior-year period, although full-year FY2026 volumes were 3% higher than FY2025. Growth remained concentrated in the labels business, where we continued to gain market share, particularly in the wet glue label segment.

Outlook

The operating environment remains uncertain as ongoing geopolitical tensions, particularly the conflict in the Middle East, continue to contribute to volatility across global markets. Elevated oil prices and disruptions to global supply chains are sustaining pressure on fuel, chemical and logistics costs, while broader macroeconomic uncertainty and trade tensions continue to weigh on business and consumer confidence. Foreign exchange volatility remains a key risk to the group's earnings and net debt given our exposure to multiple currencies. Encouragingly, demand for dissolving wood pulp and North American packaging papers continues to improve.

Against this backdrop, we remain focused on executing initiatives within our control. Our strategic cost reduction programmes continue to target both fixed cost savings and operational efficiency improvements to mitigate ongoing inflationary pressures and enhance competitiveness.

Binnie concludes: “While conditions across several key product categories are improving, supported by firmer pricing dynamics, when taking into account current market conditions for our products, the maintenance shuts scheduled for the first quarter and the impact of elevated oil prices on our raw materials and logistics costs, we anticipate that the Adjusted EBITDA for the first quarter of FY2027 will be below that of the fourth quarter of FY2026.”

ENDS

About Sappi

At Sappi, we believe the true value of what we make is measured by what it helps others achieve. We put decades of experience and deep expertise to work helping our customers make better products, create new opportunities and efficiencies, and meet the challenges of today and tomorrow.

It all starts with woodfibre from sustainably managed forests. We turn this renewable resource into materials and ingredients that people depend on every day, including pulp, packaging and speciality papers, graphic papers and biomaterials.

We're always looking for better ways to use resources, reduce waste and work toward a more circular economy. Many of our facilities generate their own bioenergy, helping us reduce our reliance on outside energy sources.

With manufacturing operations on three continents and products sold in more than 150 countries, we bring together global capabilities with local market knowledge and shared expertise to better serve our customers wherever they do business.

Together, with our partners, we work to build a thriving world by acting boldly to support Prosperity, People and Planet while upholding our Principles.

Issued by Nadia Rossouw Communications & PR (NRPR)

Bilqees Gabier
Tel +27 (0)83 923 9939
bilqees@nadiarossouwpr.co.za 

Nadia Rossouw
Tel +27 (0)83 679 8338
me@nadiarossouwpr.co.za 

For further information

André F Oberholzer
Group Head Corporate Affairs
Sappi Limited
Andre.Oberholzer@sappi.com

Tracy Wessels
Group Head Investor Relations and Sustainability
Sappi Limited
Tracy.Wessels@sappi.com