Sappi (SAP) Q4 2022 earnings summary

Executive summary

• FY22 EBITDA excluding special items reached a record US$1,339 million, versus US$532 million in FY21; profit rose to US$536 million from US$13 million.

• Q4 EBITDA excluding special items set a quarterly record at US$391 million, while quarterly profit was US$26 million versus US$35 million a year earlier.

• Higher selling prices, strong demand and product-mix improvements supported profitability, despite inflation, supply constraints and weakening demand late in the year.

Financial highlights

• FY22 sales were US$7,296 million versus US$5,265 million; operating profit was US$770 million versus US$146 million.

• FY22 net finance costs declined to US$97 million from US$134 million, aided by positive foreign-exchange movements and higher cash balances.

• FY22 special items reduced earnings by US$268 million, including a US$183 million write-down and divestment costs for European assets.

• Q4 sales were US$1,923 million versus US$1,425 million; EBITDA excluding special items was US$391 million versus US$177 million.

Outlook and guidance

• Q1 FY23 EBITDA is expected to exceed Q1 FY22 despite inflationary pressures and weaker demand in some product segments.

• FY23 capital expenditure is estimated at US$430 million, including ~US$70 million for Somerset PM2, US$60 million for sustainability projects and US$20 million carried over from FY22.

• A US$418 million Somerset PM2 conversion is planned, increasing annual capacity from 240,000 to 470,000 tons; completion is expected in early 2025.

• Long-term net debt target set at ~US$1 billion; divestiture proceeds from three European mills are intended to reduce debt.