Sappi (SAP) investor relations material

Executive summary

• The quarter was marked by global economic weakness, trade tensions, and lower selling prices, especially in Europe due to oversupply in paper markets.

• Somerset Mill PM2 conversion and expansion completed, causing a $22 million negative EBITDA impact and operational disruptions, but ramp-up is progressing.

• Strategic investment cycle completed; focus shifts to cost management, operational excellence, and debt reduction, with no major new projects planned.

• Revenue for Q3 FY2025 was $1,321 million, down from $1,370 million year-over-year, reflecting challenging conditions in DWP and graphic papers.

• Adjusted EBITDA fell to $80 million from $148 million year-over-year, with a net loss of $33 million versus a $51 million profit last year.

Financial highlights

• Adjusted EBITDA for the quarter was $80 million, down from $148 million year-over-year, mainly due to lower selling prices and operational disruptions.

• Net debt increased to $1,947 million, impacted by CapEx, currency translation, and weak operating performance.

• Adjusted EPS was -4 US cents, compared to 9 US cents in Q3 FY24.

• No dividend declared for FY2025; focus is on debt reduction.

• Net cash utilized in the quarter was $136 million, with capital expenditure of $129 million, mainly for the Somerset Mill project.

Outlook and guidance

• Adjusted EBITDA for Q4 expected to be above Q3, supported by operational efficiency improvements, recovering DWP prices, and PM2 ramp-up.

• CapEx for FY2025 reduced to $510 million, with further reductions planned for FY2026 and FY2027.

• Focus on debt reduction, cost control, and maximizing production efficiency; no major capex projects planned.

• DWP prices are expected to recover as current market prices are below industry marginal cost.

• Ongoing monitoring of tariffs and trade flows; cost discipline and cash generation prioritized.