Sappi Limited announced yesterday (8 August) its financial results for the third quarter (Q3) of the 2024 financial year (FY24).
The company reported a robust performance, with earnings before interest, taxes, depreciation, and amortisation (excluding special items) surging more than 40% to $151m compared to $106m in the same period last year.
Profit for the quarter climbed more than 25% to $51m.
Despite a seasonally slower period and a challenging global economic climate, Sappi’s results aligned with its guidance.
Underlying profitability remained steady, excluding a $30m impact from scheduled maintenance at its Saiccor and Somerset Mills.
Sappi said the performance was primarily driven by sustained demand in the pulp segment, partially offset by a subdued recovery in the paper markets.
According to Sappi, the dissolving pulp (DP) market continued to thrive, supported by tight supply and robust demand.
DP sales volumes and pricing remained consistent with the previous year and quarter.
However, the company's graphic paper segment experienced a mixed performance.
While sales volumes increased by 13%, leading to improved profitability compared to the weak prior year, the gradual market recovery following the destocking cycle slowed during the quarter.
The packaging and speciality paper segment also faced challenges.
Paperboard demand rebounded in North America but was countered by declining selling prices and the impact of the Somerset Mill maintenance shutdown.
European demand improved, but market sentiment remained cautious. Despite headwinds, sales volumes rose 22% year-on-year.
Sappi also announced the sale of the Stockstadt Mill site and the upcoming sale of the Lanaken Mill.
Looking ahead, Sappi anticipates continued strength in the DP market but expects a gradual recovery in graphic paper demand.
The company will focus on margin management in its paper businesses to offset rising costs.
Capital expenditure for FY24 is expected to be approximately $480m.
“Despite the third quarter being a seasonally slower period for our business, and the sluggish global economy, our results were in line with our guidance,” said Steve Binnie, CEO of Sappi.
“Thanks to our very competitive dissolving pulp business, and our strategic focus on growing the packaging and speciality paper segment, Sappi remains well-positioned to benefit from a global economic rebound.”
