
Achieve cost advantages
What this means
- Continuously improve cost position
- Continue to maximise global benefits
- Best-in-class production efficiencies
How we performed in 2020
- Group efficiency, procurement and continuous improvement savings > US$100 million
- Unfortunate significant downtime in graphic paper due to Covid-19 drop in demand resulted in increased cost per ton
- Maximised the benefits of OneSappi to achieve cost advantages
- Successfully integrated Matane Mill in Sappi
Closing out 2015-2020
- During the last five years, Sappi dramatically increased its focus on costs and embedded a culture of achieving ongoing efficiencies and savings throughout the group

Rationalise declining businesses
What this means
- Maximise production at low-cost mills
- Continuously balance paper supply and demand in all regions
- Continue to transition graphic papers capacity to higher margin and growing packaging and speciality papers
How we performed in 2020
- Where possible graphic paper production was allocated to the lowest cost machines to reduce cost per ton. Unfortunately, the supply and demand balance were severely affected by Covid-19
- Packaging and speciality paper volumes and profitability continued to grow
- Substituted growing packaging and speciality grades for graphic grades on swing machines which cushioned the drop in demand brought by Covid-19
- Announced the closure of graphic coated paper machine capacity in Stockstadt and Westbrook Mills
Closing out 2015-2020
- Sappi effectively managed and rationalised its graphic paper capacity through conversions, closures and carrousel opportunities to ensure it remains relevant and profitable in these segments

Maintain a healthy balance sheet
What this means
- Maintain net debt:EBITDA at ~2x
- Continuously improve working capital
- Continue to monitor bond market for opportunities
How we performed in 2020
- Net debt:EBITDA at 5.2x
- Reduced capital expenditure to essential projects to effectively manage liquidity and cash flow. Negotiated covenant suspension period until September 2021 – first measurement December 2021
Closing out 2015-2020
- The targeted net debt:EBITDA ratio of 2x was well maintained during the period to balance future growth opportunities with lower debt. Unfortunately, the unexpected Covid-19 pandemic negatively impacted the objective

Accelerate growth in higher margin growth segments
What this means
- Grow DP capacity, matching market demand
- Continue to expand and grow packaging and speciality papers in all regions, targeting 25% of group EBITDA by 2020
- Commence commercialisation of Sappi Biotech opportunities
How we performed in 2020
- Increased packaging and speciality volumes year on year up 12.9% vs 2019 sustained packaging and specialities EBITDA margin at 13.7%
- Saiccor Mill expansion was delayed by Covid-19, but project continues and should be concluded during 2021 providing additional DP capacity
- Strong growth in lignin sales and favourable advancement of other Sappi Biotech opportunities
Closing out 2015-2020
- The business was transformed during the period with the substantial growth in packaging and speciality papers, which contributes meaningfully to the growth of the business. Continued investment in DP and Sappi Biotech opportunities resulted in a stronger and more resilient business
- ROCE
- EBITDA (US$ million)
- EBITDA margin (%)
- Sales (US$ million)
- Net debt (US$ million)
- Net debt:EBITDA
- Lost-time injury frequency rate (LTIFR)
- Sustainable engagement (%)
- Energy intensity GJ/adt
- Certified fibre (%)
Indicator selector
Return on average capital employed (ROCE)
Our strategic performance indicators
ROCE (%)

Why is this important?
ROCE long-term profitability by comparing how effectively assets are performing with how these assets are financed
® Linked to executive remuneration
2021 objectives
Finalise Saiccor Mill expansion and ramp up Somerset and Maastricht Mill conversions. Maximise recovery of the graphic paper volume declines from 2020 Covid-19 impact
Self-assessment of 2020 performance |
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EBITDA (US$ million)
Our strategic performance indicators
EBITDA (US$ million)

Why is this important?
EBITDA measures how we performed operationally by excluding the impact of financing, accounting treatments or tax implications
® Linked to executive remuneration
2021 objectives
Focus on maximising cash generation through efficient capital expenditure and working capital management
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

EBITDA margin (%)
Our strategic performance indicators
EBITDA margin (%)

Why is this important?
EBITDA margin is an important and comparable measure of our profitability (excluding the impact of financing, accounting treatments or tax implications) against our revenue
2021 objectives
Focus on reducing fixed and variable costs and maximise pricing
Self-assessment of 2020 performance |
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Link to 3Ps ![]() |

Sales (US$ million)
Our strategic performance indicators
Sales (US$ million)

Why is this important?
While not the only determinant of financial success, sales is a key measure of demand, customer loyalty and a critical contributor to profit
2021 objectives
Continue to grow packaging and specialities post conversions and regain and grow graphic paper volumes from lower 2020 sales
Maximise DP volumes to capacity
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

Net debt (US$ million)
Our strategic performance indicators
Net debt (US$ million)

Why is this important?
Given the capital-intensive nature of our operations, we need to raise debt to complete significant projects that enable our long-term success. Net debt comprises current and non-current interest-bearing borrowings and bank overdrafts (net of cash, cash equivalents and short-term deposits)
2021 objectives
During 2021 net debt will increase due to finalising strategic capital projects
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

Net debt:EBITDA
Our strategic performance indicators
Net debt:EBITDA

Why is this important?
The net debt:EBITDA ratio measures our ability to pay off our debt should net debt and EBITDA remain consistent. EBITDA focuses on the operating decisions of a business as it looks at profitability from core operations before the impact of capital structure
® Linked to executive remuneration
2021 objectives
Covenant suspension negotiated during 2021
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

Lost-time injury frequency rate (LTIFR)
Our strategic performance indicators
LTIFR

Why is this important?
LTIFR is an important measure of our business's safety. We target zero harm and aim to improve LTIFR by at least 10% year-on-year
® Linked to executive remuneration
△ Identified sustainability goal1
2021 objectives
Reduce LTIFR and zero fatalities
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

Sustainable engagement (%)
Our strategic performance indicators
Sustainable engagement (%)

Survey takes place every second year
Why is this important?
We rely on a productive and engaged workforce. Employee engagement has been linked to higher safety performance, lower staff turnover, improved productivity and efficiency. We aim to maintain or improve from our 2015 base of 74%
△ Identified sustainability goal2
2021 objectives
Sustain and/or improve engagement
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

Energy intensity GJ/adt
Our strategic performance indicators
Energy intensity (GJ/adt)

Why is this important?
Energy intensity is a measure of how efficiently we are operating. By continually improving this metric, we manage costs and lower our impact
△ Identified sustainability goal1
2021 objectives
5% improvement from 2014 base year
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

Certified fibre (%)
Our strategic performance indicators
Certified fibre (%)

Why is this important?
We are committed to sourcing woodfibre from forests and timber plantations in a manner that promotes their health and supports community well-being
△ Identified sustainability goal1
2021 objectives
Maintain or improve percentage certified fibre
Self-assessment of 2020 performance |
Link to Thrive25 strategic objectives – for more info ![]() |
Link to 3Ps ![]() |

1 For this indicator, we have clear targets for 2020 that we are working towards. See our 2020 Sappi Group Sustainability Report for more information.
2 Not measured as survey takes place every second year.