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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Our Thrive strategy

As we bring the 2020 – 2025 Thrive strategic cycle to a close, we reflect on a period dominated by the impact of COVID-19 that tested our resilience, sharpened our strategic focus, and strengthened the foundations of our business. Over the past five years, Sappi has navigated an increasingly complex external environment characterised by geopolitical uncertainty, supply chain disruptions, volatile market conditions and shifting consumer dynamics. Despite these challenges, the Thrive strategy has provided a clear and consistent framework, enabling us to strengthen our competitive position, advance our sustainability commitments and create long-term value for our stakeholders.

Our commitment to operational excellence, financial discipline and responsible resource management has remained steadfast. We continued to invest in technology and efficiency, progressed key decarbonisation initiatives, deepened stakeholder engagement and strengthened our focus on safety and people development. Through turbulent macroeconomic cycles, we remained committed to strengthening our balance sheet, optimising our asset base, and fostering trusted relationships across our global value chain.

The Thrive strategy has served as a compass during a transformative era, enabling us to adapt, grow, and build resilience in a rapidly changing world. As we now turn the page, the achievements of the past five years provide a strong platform for the next phase of our journey. The following section reflects on our 2020 – 2025 strategy and introduces the path forward – a strategy designed to consolidate our gains, reinforce our financial health, and unlock new opportunities beyond 2025.

As we embark on the next phase of our strategic journey to 2030, the guiding principles of our Thrive strategy remains relevant, however, in the current environment our focus is ‘Back to Basics’.

Thrive strategy
Grow our business
  • Grow dissolving wood pulp capacity to match market demand
  • Continue to grow packaging and speciality papers in all regions
  • Further commercialisation of biotech opportunities
  • Reduce exposure to declining graphic papers business.
Sustain our financial health
  • Target absolute net debt <US$1 billion
  • Reduce absolute debt level and improve EBITDA*
  • Optimise capital management
  • Optimise debt maturity profile and finance charges.
Drive operational excellence
  • Strengthen our safety-first culture
  • Continuously improve our cost position
  • Continue to maximise the benefits of our global footprint
  • Best-in-class production efficiencies.
Enhance trust
  • Improving our understanding of and proactively partnering with all stakeholders
  • Driving sustainability solutions
  • Meeting the changing needs of every Sappi employee.
Our business strategy – next phase is ‘Back to Basics’
Thrive investment phase 2020 – 2025
  • Major investments
    • Saiccor Mill expansion
    • Gratkorn Mill PM9 (labels)
    • Somerset Mill PM2 (SBS)
  • Graphic capacity closures
    • Stockstadt Mill closure
    • Lanaken Mill closure
  • Various cost improvement projects.

For a summary of our Thrive investment phase see strategic review in our Letter to stakeholders.

Thrive consolidation phase (Back to Basics) 2026 – 2027/8
  • Sustaining our financial health
    • Net debt reduction
    • Working capital optimisation
      • 11% of net revenue
  • Cost savings
    • Fixed and variable cost savings
      • European rationalisation US$60 million* (FY2026)
      • Group-wide cost savings
    • Capex management
      • <US$300 million for next two years
  • Driving operational excellence
    • Ramp-up of production
    • Achieve production efficiency.
Thrive advance phase 2028 and beyond
  • When our stated targets are managed at sustained levels
    • Dividend payments will resume
    • Share buy-back opportunities revisited
    • Growth opportunities explored.

See how we performed against our Thrive strategic targets in 2025.

Four key messages to shareholders
Focus on reducing leverage
  • Target <US$1 billion net debt
  • Reduce capex to <US$300 million for at least the next two years.
Maximise earnings growth
  • EBITDA growth as we ramp-up Somerset Mill PM2
  • ROCE target of WACC +2% consistently.
Enhanced shareholder return post de-gearing
  • Re-evaluate dividend once debt target met
  • Consider share buy-backs as a return mechanism dependent on share price.
Strategic portfolio optimisation
  • Portfolio optimisation
  • Sustainability opportunities explored
  • Match graphic papers capacity to market demand.