Sappi (SAP) Q2 2026 earnings summary

Executive summary

• Adjusted EBITDA for Q2 FY2026 was $52 million, down from $107 million year-over-year, reflecting a challenging macroeconomic environment, lower selling prices across all regions, and significant currency impacts.

• Loss for the period was $413 million, compared to a $20 million loss in Q2 FY2025, driven by significant impairments and adverse fair value adjustments.

• Impairments and write-downs, mainly in European graphics and North American pulp assets, totaled $276 million.

• Cost inflation, especially in logistics, shipping, energy, and raw materials, increased costs and squeezed margins, particularly in South Africa.

• Negative revaluation of forestry assets and scheduled maintenance shutdowns further weighed on earnings.

Financial highlights

• Revenue for the quarter was $1,334 million, slightly down from $1,347 million year-over-year.

• Adjusted EBITDA dropped 51% year-over-year to $52 million; Adjusted EPS was a loss of 8 US cents.

• Net debt increased to $1,964 million, with a leverage ratio of 6.1x; net cash utilized during the quarter was $53 million.

• Capex for FY2026 reduced to $250 million, focused on essential maintenance and regulatory compliance.

• Interest expense for Q2 was $26 million, expected to remain at similar levels for the next two quarters.

Outlook and guidance

• Operating environment remains challenging with persistent macroeconomic and geopolitical headwinds, including the Middle East conflict and rising input costs.

• DWP demand expected to remain strong, with prices rising to $880/ton, but full benefit to be realized over coming quarters.

• Packaging and speciality papers segment faces continued pricing pressure; graphic papers to continue structural decline.

• Adjusted EBITDA for Q3 FY2026 is expected to be below Q2 FY2026 due to ongoing market uncertainty and cost inflation.

• Maintenance shutdown at Ngodwana Mill in Q3 FY2026 will reduce earnings by ~$23 million.