Our global business strategy

 

This is a time of truly exciting evolution for Sappi. Our aspirational 2020Vision sets out a range of medium-term targets with the end goal of substantially increasing EBITDA (earnings before interest, taxes, depreciation and amortisation) by the conclusion of the decade.

Expanding our product portfolio is key to this aim. We’ll continue to grow Sappi into a profitable and cash-generative diversified woodfibre group – focused on dissolving wood pulp, paper and products in adjacent fields.

We made great progress in 2016, with significantly higher earnings and some sizeable strides in our five main, intertwining objectives:

  • Achieving cost advantages
  • Rationalising declining businesses
  • Growing through moderate investments
  • Generating cash to strengthen the balance sheet, and
  • Accelerating growth in adjacent businesses from a strong base.

 

This provides the basis to progress further towards those 2020 targets – thriving on the diversified nature and global interconnectivity of our business.

Our strategic 2020Vision was developed during the course of the year, and whilst the core focus remains on improving profitability, cash generation and growth, we can now turn our attention to more specific growth targets and aspirations over the next five years.
Steve Binnie, Sappi CEO and Danie Cronjé, Sappi Chairman

Objectives in 2017

Following the successes of 2016, we are continuing to pursue our core objectives this year:

Achieve cost advantages

This includes investing in a number of energy initiatives in Southern Africa to increase our self-sufficiency and lower costs. As a whole, we are striving to:

  • Continuously improve cost position
  • Continue to maximise global procurement benefits, and
  • Best-in-class production efficiencies.

 

Rationalise declining businesses

We will continue to maximise production efficiencies, while minimising waste and base costs. This includes:

  • Maximising production at low-cost mills, and
  • Continuing to convert low contributing graphic capacity to higher profitable speciality packaging grades.

 

Grow through moderate investments

While Sappi’s focus remains on debt reduction, we are nonetheless always looking at opportunities to make moderate investments in growth areas that may achieve improved margins and returns. This includes:

  • Expanding speciality paper and packaging grades up to 20% of group EBITDA, and
  • Growing dissolving wood pulp capacity by up to 100,000 tons over the next two years.

 

Generate cash to strengthen the balance sheet

We must strengthen the balance sheet to make moderate investments in near and adjacent businesses. On this basis, we will:

  • Maintain net debt/EBITDA below 2x
  • Continuously improve working capital, and
  • Use liquidity sources to repay the maturing 2017 US$400 million bond.

 

Accelerating growth in adjacent businesses from a strong base

Sappi is a progressive company with a proud history of research and development (R&D). We believe that new business could comprise as much as 10% of the group’s EBITDA within five years. We will continue to:

  • Commercialise biotech opportunities, and
  • Assess new business opportunities for commercial application.

Take a look through Sappi’s successes in the first fiscal quarter ended December 2016.

Explore Sappi’s latest share information. This includes a range of in-depth information, tools and interactive feeds.

Our global activity extends to three continents, selling millions of tons of high quality products to customers all over the world.