Sappi (SAP) investor relations material

Executive summary

• Adjusted EBITDA for Q3 FY26 was $53 million, with a net loss of $181 million, reflecting ongoing market challenges, cost inflation, and adverse currency movements, partially offset by improved North American profitability and operational efficiencies at Somerset Mill PM2.

• Profitability was impacted by pricing pressure, cost inflation, and a significant forestry fair value loss of $152 million due to currency movements and higher fuel costs.

• Group performance was negatively affected by depressed selling prices, scheduled maintenance, and adverse currency movements.

• Strategic initiatives included $120 million in annualized cost savings, disciplined capital allocation, and a focus on liquidity preservation.

• North American packaging volumes reached record highs, with market share gains and ramp-up of the Somerset PM2 machine.

Financial highlights

• Revenue for Q3 FY26 was $1,334 million, up slightly from $1,321 million in Q3 FY25.

• Adjusted EBITDA for Q3 FY26 was $53 million, down from $80 million in Q3 FY25, with a margin of 4.0% versus 6.1% prior year.

• Net loss widened to $181 million from $33 million in Q3 FY25, driven by lower selling prices, adverse currency movements, and a $152 million forestry fair value loss.

• Net debt increased to $1,997 million, with a net debt/Adjusted EBITDA ratio of 6.5x.

• Net asset value per share declined to 294 US cents from 406 US cents a year ago.

Outlook and guidance

• Adjusted EBITDA for Q4 FY26 is expected to be materially above Q3, supported by improved pricing, operational momentum, and lower maintenance costs.

• Market conditions remain volatile due to geopolitical tensions, with ongoing inflationary pressures on energy, chemicals, and logistics.

• Strategic cost-saving initiatives and disciplined capital allocation continue to be prioritized.

• Packaging and speciality paper segments are expected to benefit from price increases and operational momentum.

• DWP segment profitability is supported by healthy VSF market fundamentals and lagged price increases.