Letter to stakeholders and Q&A with CEO

Every trail we follow is shaped by people – the communities we serve, the teams we empower, and the values we uphold. At Sappi, we believe that sustainable progress begins with understanding local needs and investing in shared value.

Like the fox navigating snow-covered terrain, we move with agility and intent – alert to change, guided by experience, and grounded in ethical purpose. This instinctive adaptability mirrors our approach: making smart decisions swiftly, with courage and integrity, and always with safety foremost in mind.

The communities beyond our fence lines are places we are also proud to call home. Their prosperity is not only linked to our own – it is deeply valued and actively nurtured. Our social impact approach is collaborative. We partner with communities to jointly identify and leverage opportunities that support local needs while aligning with Sappi’s purpose. While each region has its own programmes, they share common themes – forestry-related activities, environmental protection and conservation, education, and community welfare.

Through targeted enterprise and supplier development (ESD) programmes, we support local businesses and foster inclusive economic growth. We maintain open, proactive dialogue with stakeholders to build trust and mutual understanding.

Internally, we invest in training, succession planning, and skills development to prepare our workforce for future demands. We manage reputation with care and uphold ethical standards in every decision – ensuring that our path is shaped by smart choices and ethical resolve, moving swiftly but never at the expense of safety or integrity.

Our people-centred approach strengthens our social licence to operate and reinforces our commitment to shared progress – with every step, we remain alert, responsive, and purposeful.

A channel is more than a passage – it is a chosen course, shaped by intention and skill. As we begin the next phase of our Thrive strategy, we reflect on a journey steered with stamina, precision, and responsiveness. Like a gondolier navigating shifting waters, we have moved through capacity expansion, product realignment, and strategic repositioning – attuned to our environment and guided by purpose.

At Sappi, prosperity is not defined by profit alone. It is the ability to create enduring value – financial, social, and environmental. For shareholders, it means disciplined stewardship and operational excellence. For communities, it means investing in renewable resources and partnering for shared progress. For the planet, it means embracing sustainable solutions with eco-effective ingenuity.

Looking ahead, for the immediate future we return to our basics: sustaining financial health, optimising asset utilisation, cash generation and managing costs. While demand for graphic papers continues its structural decline, our focus on market-share growth is delivering results and reinforcing our competitive position. In the dissolving wood pulp (DWP) segment, we remain cautiously optimistic. Despite global headwinds, the long-term outlook is positive, and we are well-positioned to respond with agility and clarity.

In a resource-constrained world, prosperity flows through the channels we choose – those defined by resilience, ethical resolve, and collective strength. As we navigate toward our next horizon, we do so with quiet confidence and a steady hand, steering toward value that endures.

Every course we chart is shaped by our relationship with the natural world. At Sappi, we are custodians of land and forests, committed to using woodfibre responsibly – not only to drive business success, but to contribute to long-term environmental and social value across generations.

Our environmental strategy is rooted in certification, traceability, and continuous improvement in sourcing and land management. Through precision forestry practices, we optimise plantation health and productivity while advancing biodiversity protection. These efforts ensure that our raw materials are sourced from responsibly managed plantations that meet rigorous sustainability standards.

We take proactive steps to reduce our environmental footprint. Our operations are guided by robust environmental management systems that help us lower emissions, conserve water, and improve energy efficiency – often with internally generated bioenergy. As part of our climate action strategy, we are accelerating decarbonisation across our value chain, aligning with science-based targets and global climate frameworks.

Stewardship at Sappi means moving beyond compliance. We integrate circular design principles, regenerative land-use practices, and climate resilience into our operations, balancing business needs with ecological integrity. Our approach is intentional, adaptive, and informed by the evolving expectations of our stakeholders and the realities of a changing climate.

As we adjust our sails to meet the shifting tides of climate change and global expectations, our direction remains clear: to protect, restore, and regenerate the natural systems that sustain us, through measurable action, transparent reporting, and continuous innovation.

Our voyage is powered by innovation – guided by purpose, leadership, and a steadfast commitment to sustainability. Sappi uses renewable resources to make woodfibre-based products, and we are a diversified, innovative, and trusted leader focused on sustainable processes and solutions. From dissolving wood pulp to packaging and speciality papers, we continue to expand our portfolio with offerings that meet evolving customer needs and rising environmental standards.

We invest in meaningful engagement across the value chain – collaborating with customers as well as brand owners, converters, and suppliers to unlock shared value. By listening closely and partnering widely, we identify opportunities to enhance product performance, all the while looking to reduce environmental impact, and supporting long-term returns.

Our product strategy is dynamic and forward-looking, anchored in circularity, and market relevance. Through fact-based support and technical expertise, we help customers navigate their own ESG challenges with confidence and clarity.

In a world transitioning from a fossil-based economy to a circular bioeconomy, Sappi offers a compelling vision: a sustainable business with an exciting future in woodfibre – delivering relevant solutions, enhanced value, and trusted partnerships. Beyond our product portfolio, we offer a suite of technical and development services supported by highly qualified teams of technicians to improve customer efficiencies and scientists who continuously explore new applications for woodfibre and collaborate with customers through targeted R&D initiatives.

On this voyage of delivering traceable, responsibly sourced products, we deploy state-of-the-art technology to ensure precision, reliability, and transparency. Every offering is a step forward – advancing purpose-led growth, regenerative design, and global impact. We are actively building a circular economy that benefits both business and the world.

Just as rivers carve their course over centuries – shaping landscapes through persistence and adaptability – our journey begins with a path defined by nearly 90 years of resilience, reinvention, and purpose. Sappi’s Thrive business strategy is more than a roadmap; it is a long-term commitment to sustainable growth, operational excellence, and enduring trust, all while creating meaningful value for our stakeholders.

As Thrive evolves, we stand at an inflection point. The environment around us is shifting – reshaped by global forces that continue to redefine business: climate change, resource scarcity, consumer and employee expectations, and the rapid pace of technological innovation. Our strategy evolves in response, slightly adjusted to remain fit for purpose, reaffirming our commitment to building a thriving world through renewable innovation and shared prosperity.

Our path is not static – it adapts with intention. Whether responding to market pressures or environmental imperatives, we remain focused on long-term value creation. Strategic clarity, technological innovation, and disciplined execution keep us on course – propelling us forward with purpose.

As we look ahead, our focus sharpens: sustaining financial health, deepening stakeholder value, and unlocking opportunity through collaboration and eco-effective ingenuity. The river may change course, but its direction remains true.

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Five-year strategic review

for the year ended September 2025

US$ million 2025 2024 2023 2022 2021
Income statement          
Sales 5,420 5,458 5,809 7,296 5,265
Variable manufacturing and delivery costs 3,341 3,208 3,538 4,380 3,238
Fixed costs 1,836 1,803 1,788 1,832 1,777
Sundry expenses (income)1 67 40 51 46 47
Operating profit excluding special items 176 407 432 1,038 203
Special items – (gains) losses 170 225 52 268 57
Operating profit (loss) 6 182 380 770 146
Net finance costs 89 67 49 97 134
Profit (Loss) before taxation (83) 115 331 673 12
Taxation charge 94 82 72 137 (1)
Profit (Loss) for the year (177) 33 259 536 13
Adjusted EBITDA 501 684 731 1,339 532
Balance sheet          
Total assets 6,072 6,206 5,796 6,229 6,186
Non-current assets 4,333 4,208 3,742 3,430 4,255
Current assets 1,739 1,998 2,054 2,799 1,931
Current liabilities 1,454 1,329 1,316 1,524 1,309
Shareholders’ equity 2,308 2,578 2,445 2,358 1,970
Net debt 1,920 1,422 1,085 1,163 1,946
   Gross interest-bearing debt 2,139 1,739 1,686 1,943 2,312
   Cash (219) (317) (601) (780) (366)
Capital employed 4,228 4,000 3,530 3,521 3,916
Cash flow          
   Cash generated from operations 443 550 659 1,267 472
   Decrease (Increase) in working capital (89) 29 178 (270) 39
   Closure and restructuring costs paid (7) (280)
   Finance costs paid (100) (69) (121) (102) (110)
   Finance income received 16 28 30 10 8
   Taxation paid (90) (50) (56) (23) (2)
   Dividends paid (85) (84) (85)
Cash generated from operating activities 88 124 605 882 407
Net cash generated (utilised) (369) (306) 210 506 29
Cash effects of financing activities 263 4 (416) (43) 33
Capital expenditure (gross) 496 458 382 368 374
   To maintain operations 175 196 170 196 176
   To expand operations 321 262 212 172 198
Exchange rates          
US$ per one Euro exchange rate – closing 1.173 1.116 1.057 0.980 1.172
US$ per one Euro exchange rate – average (financial year) 1.106 1.084 1.068 1.085 1.196
ZAR to one US$ exchange rate – closing 17.272 17.116 18.930 18.154 14.966
ZAR to one US$ exchange rate – average (financial year) 18.068 18.536 18.179 15.783 14.851

1 Sundry items include all income and costs not directly related to manufacturing operations such as debtor securitisation costs, commissions paid and received and results of equity accounted investments.

US$ million 2025 2024 2023 2022 2021
Statistics          
Number of ordinary shares (millions)1          
In issue at year end 604.6 599.4 558.8 565.2 561.5
Basic weighted average number of shares in issue during the year 603.9 582.4 563.6 563.3 549.7
Per share information (US cents)          
Basic earnings (loss) (29) 6 46 95 2
Diluted earnings (loss) (29) 6 44 90 2
Headline earnings (loss) (15) 1 50 130 5
Diluted headline earnings (loss) (15) 1 47 122 5
Adjusted EPS (US cents) 8 41 52 138 15
Net asset value 382 430 438 417 351
Profitability ratios (%)          
Operating profit (loss) to sales 0.1 3.3 6.5 10.6 2.8
Operating profit excluding special items to sales 3.2 7.5 7.4 14.2 3.9
Adjusted EBITDA to sales 9.2 12.5 12.6 18.4 10.1
Operating profit excluding special items to capital employed (ROCE) 4.3 10.8 12.3 27.9 5.4
Net debt to EBITDA excluding special items 4.0 2.1 1.5 0.9 3.7
Interest cover 6.1 10.9 11.4 15.6 5.5
Return on average equity (ROE) (7.2) 1.3 10.8 24.8 0.7
Debt ratios (%)          
Net debt to total capitalisation 45.4 35.6 30.7 33.0 49.7
Efficiency ratios          
Asset turnover (times) 0.9 0.9 1.0 1.2 0.9
Inventory turnover ratio 5.9 5.6 6.3 7.6 5.6
Liquidity ratios          
Current asset ratio 1.2 1.5 1.6 1.8 1.5
Trade accounts receivable days outstanding (including receivables securitised) 43 48 37 44 47
Cash interest cover (times) 4.6 7.2 11.2 12.9 4.5
Other non-financial information2          
Sales volumes 6,081 5,967 6,282 7,937 7,339
Number of full-time equivalent employees 10,655 11,235 12,329 12,495 12,492
LTIFR (including contract employees) 0.19 0.20 0.24 0.30 0.38
Energy          
   Energy intensity (GJ/adt) 25.38 24.92 26.19 22.11 22.30
   Renewable and clean energy to total energy (%) 64.77 63.32 58.07 55.02 54.96
Water          
   Specific process water extracted (m3/adt) 40.08 40.81 45.24 35.33 35.88
Waste          
   Specific total landfill (kg/adt) 60.03 64.23 80.13 58.680 60.020
Emissions          
   Specific Scope 1 emissions (ton CO2e/adt) 0.62 0.62 0.70 0.62 0.68
   Absolute Scope 1 (ton CO2e) 3,174,735 3,202,668 3,506,813 4,112,099 4,296,971
   Specific Scope 2 emissions (ton CO2e/adt) 0.14 0.18 0.22 0.20 0.18
   Absolute Scope 2 (ton CO2e) 742,900 924,179 1,076,535 1,325,659 1,146,302
1 Net of treasury shares (refer to note 19 to the group financial statements).
2 Certain energy, water, waste and emissions data for the comparative years have been restated using the latest reporting standards and measurement methodology.

Refer to share statistics section for other market and share-related information.

Note: Definitions for various terms and ratios used above are included in the Glossary section.