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 and 2025 performance

Our strategy

Through collaboration and innovation, we will grow profitably, using our strength as a sustainable and diversified global woodfibre group, focused on dissolving wood pulp, packaging and speciality papers, graphic papers and biomaterials.

Grow our business

What this means

  • Grow dissolving wood pulp (DWP) capacity, matching market demand
  • Continue to expand and grow packaging and speciality papers
  • Continue to explore commercialisation of biomaterials opportunities
  • Optimise graphic papers segments ensuring we balance supply and demand.

How we performed in 2025

  • DWP sales volumes were slightly better than FY2024, however, pricing was weaker resulting in lower EBITDA margins
  • Pulp constitutes 29% of group sales volumes (excluding forestry) and contributes 46% of group Adjusted EBITDA
  • Packaging and speciality papers sales volumes increased by 8% year-on-year
  • Packaging and speciality papers constitute 30% of group sales volume (excluding forestry) and contributes 13% of group Adjusted EBITDA
  • Completed the conversion and expansion of Somerset Mill PM2 from graphic papers to paperboard, thereby reducing exposure to graphic papers and increasing growth in packaging grades.

Sustain our financial health

What this means

  • Target net debt at approximately US$1 billion
  • Optimise capital management
  • Maximise return on capital employed (ROCE)
  • Review pricing strategies to secure optimal value creation
  • Sustain dividends at 3x cover.

How we performed in 2025

  • Net debt at year-end US$1,920 million
  • Invested to grow and convert PM2 at Somerset Mill to paperboard, aligned with the Thrive strategy
  • Initiated further projects in Europe to reduce costs and/or exposure to graphic papers
  • Concluded our major capital projects during FY2025 and initiated a consolidation phase
  • Suspended the payment of a dividend for FY2025.

Drive operational excellence

What this means

  • Drive our safety-first culture
  • Continuously improve our cost position
  • Continue to maximise the benefits of our global footprint
  • Best-in-class production efficiencies to secure increased volumes.

How we performed in 2025

  • Group lost-time injury frequency rate (LTIFR) improved, but we had two unfortunate fatalities at our Saiccor Mill in South Africa
  • Group efficiency, procurement and continuous improvement savings of US$114 million
  • Maximised the benefits of OneSappi to achieve cost advantages
  • Challenging macro environment resulting in global trade tensions affecting all businesses.

Enhance trust

What this means

  • Improve our understanding of, and proactively partnering with, all stakeholders
  • Drive sustainability solutions. Meet the changing needs of every Sappi employee.

How we performed in 2025

  • Sustained platinum EcoVadis status in our European and North American businesses
  • Performance against our science-based carbon emission intensity reduction target showed an improvement compared to last year, but the target was not reached, mainly due to market-related production curtailments
  • Actively supported local communities through community forums
  • Employee engagement survey conducted during 2025 with 95% participation
  • Sustained our Supplier Code of Conduct compliance and EcoVadis supplier assessments
  • Ranked in the top 1,000 companies in the world by Forbes World’s best Employers 2025 (number 289 Globally and number five in South Africa)
  • Ranked in the top 1,000 Companies in the world by Forbes Top Companies for Woman (number 144 Globally and number two for South Africa)
  • Sustained Level 1 BBBEE in South Africa.

Measuring our progress

Guided by our strategy, we measure our progress holistically against our mission, collaborating and partnering with stakeholders as we strive to be a trusted and sustainable organisation with an exciting future in woodfibre.

 Please click on an indicator to view its performance:

ROCE (%)

ROCE (%)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

ROCE is an important measure that assesses long-term profitability by comparing how effectively assets are performing with how these assets are financed.

® Linked to executive remuneration

2026 objectives

  • Further grow volumes in DWP and packaging and speciality papers and improve our margins
  • Manage our graphic papers capacity to market demand.

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Adjusted EBITDA (US$ million)

Adjusted EBITDA (US$ million)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

Adjusted EBITDA measures how we performed operationally as a company.

® Linked to executive remuneration

2026 objectives

  • Consolidate capital projects, grow volumes in DWP and packaging and speciality papers and improve Adjusted EBITDA
  • Manage costs to maximise profitability
  • Maximise cash generation, reducing capex to below US$300 million per annum.

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Adjusted EBITDA margin (%)

Adjusted EBITDA margin (%)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

Adjusted EBITDA margin is an important and comparable measure of our profitability (excluding the impact of financing, accounting treatments and tax implications) against our revenue.

2026 objectives

  • Improve margins in all business segments
  • Focus on reducing fixed and variable costs
  • Increase volumes through better operating rates in all operations.

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Revenue (US$ million)

Revenue (US$ million)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

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.

2026 objectives

  • Grow the packaging and speciality papers segment in particular the new label paper business at Gratkorn Mill
  • Nurture DWP volumes and expand sales
  • Ramp-up the conversion and expansion at Somerset Mill as soon as possible
  • Sustain graphic papers volumes.

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Net debt (US$ million)

Net debt (US$ million)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

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, lease liabilities and bank overdrafts (net of cash, cash equivalents and short-term deposits).

2026 objectives

  • Maximise cash generation by reducing capital expenditure to below US$300 million per annum for the next few years
  • Manage fixed and variable costs to improve margins and pay down debt
  • Improve working capital management.

Legend

Net debt: Adjusted EBITDA (ratio)

Net debt: Adjusted EBITDA (ratio)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

The net debt-to-Adjusted EBITDA ratio measures our ability to pay off our debt should net debt and Adjusted EBITDA remain consistent. Adjusted 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

2026 objectives

  • Through the investments in growth markets and as we ramp-up production and sales we expect to improve our earnings and as a result reduce our leverage ratio in the medium term.

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Lost-time injury frequency rate (LTIFR) (per million work hours)

Lost-time injury frequency rate (LTIFR) (per million work hours)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

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

2026 objectives

  • Bring every employee and contractor safely home every day, by investing in behavioural safety and accountability policies.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

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Gender diversity (%)

Gender diversity (%)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 23%

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

We view diversity as a strategic advantage that enhances our competitiveness and viability as a business and contributes to a thriving world; we commit to appoint more women in senior positions.

△ Identified sustainability goal1

2026 objectives

  • Continue to advance our gender diversity to promote more women to senior positions (HRL16 and upwards) in line with our new global 2030 target.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

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Supplier Code of Conduct (%)

Supplier Code of Conduct (%)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 80%

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

Research indicates that 85% of consumers are more likely to buy from a company with a reputation for sustainability. By working together in partnership with suppliers, we can better identify risk, assess social and environmental performance, and encourage commitment to sustainable choices and the SDGs throughout our value chain.

△ Identified sustainability goal1

2026 objectives

  • Target 85% procurement spend with declared compliance with Supplier Code of Conduct in line with our new 2030 global target.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

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Employee engagement (%)

Employee engagement (%)

Our strategic performance indicators

Self-assessment of 2025 performance

Link to Thrive strategic objectives

Link to 4Ps and SDGs

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.

△ Identified sustainability goal1

2026 objectives

  • In 2026 we will focus on closing out action items identified by employee focus groups post our 2025 survey.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

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Specific GHG (Scope 1 and 2) emissions (kg CO2e/adt)

Specific greenhouse gas (GHG) (Scope 1 and 2) emissions (kg CO2e/adt)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 735.3 kg CO2e/adt

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

Since the UN Climate Change Conference (COP26) in Glasgow, Scotland in November 2021, climate impacts have worsened, and carbon emissions have risen to record levels.

We align with the climate science by having our targets approved by the SBTi and are taking focused action to future-proof our business against the physical and transitional impacts of climate change and be part of the solution.

® Linked to executive remuneration

△ Identified sustainability goal1,2

2026 objectives

  • Continue to advance our climate transition plan through targeted abatement initiatives and operational efficiency improvements in line with our validated science-based target to decreasing specific GHG emissions (Scope 1 and 2) by 41.5% by 2030 against a base year of 2019.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

2 Restatement of data for specific GHG (Scope 1 and 2) emissions due to divestment of Lomati Sawmill and improved data quality for Sappi North America.

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Share of renewable and clean energy (%)

Share of renewable and clean energy (%)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 61.5%

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

This target supports our commitment to carbon emissions reduction and focused action to future-proof our business against the physical and transitional impacts of climate change and be part of the solution.

△ Identified sustainability goal1,3

2026 objectives

  • Continue to leverage our fuel switching abatement lever and energy procurement strategy to further increase our share of renewable and clean energy in our operations.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

3 Restatement of data for share of renewable and clean energy due to divestment of Lomati Sawmill.

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Energy intensity (GJ/adt)

Energy intensity (GJ/adt)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 21 GJ/adt

Link to Thrive strategic objectives

Link to 4Ps and SDGs

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 environmental impact.

△ Identified sustainability goal1,2

2026 objectives

  • Improve our energy intensity through operational efficiency improvements.

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2024 Sappi Group Sustainability Report for more information.

2 Restatement of data for energy intensity due to divestment of Lomati Sawmill.

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Specific process water usage (m3/adt)3

Specific process water usage (m3/adt)3

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 35.4 m3/adt

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

Water has been identified as one of the most serious sustainability challenges facing the planet, partly due to the impacts of climate change. Forests and plantations, pulp and paper operations are highly dependent on the use and responsible management of water resources.

△ Identified sustainability goal1,4

2026 objectives

  • Reduce water use in line with our new 2030 global water target that now applies to all manufacturing sites.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

3 This indicator applied to mills in South Africa for the strategic period 2020 to 2025 but will be a global target for period 2026 to 2030.

4 Restatement of data for specific process water usage due to divestment of Lomati Sawmill.

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Specific landfilled solid waste (kg/adt)

Specific landfilled solid waste (kg/adt)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of 61.3 kg/adt

Link to Thrive strategic objectives

Link to 4Ps and SDGs

Why is this important?

Our continued focus to reduce solid waste-to-landfill supports the move towards a circular economy. This approach aligns with our purpose of contributing to a thriving world, one with less waste, lower costs and reduced environmental impact.

△ Identified sustainability goal1,2

2026 objectives

  • Reduce specific landfilled waste in line with our new 2030 global target.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

2 Restatement of data for specific landfilled solid waste due to divestment of Lomati Sawmill and improved data quality for Sappi North America.

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Certified fibre4

Certified fibre (%)

Our strategic performance indicators

Self-assessment of 2025 performance against a target of >75%

Link to Thrive strategic objectives

Link to 4Ps and SDGs

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 wellbeing.

△ Identified sustainability goal1,3

2026 objectives

  • Increase our share of certified fibre in line with our new 2030 global target.

1 For this indicator, we have clear targets for 2030 that we are working towards. See our 2025 Sappi Group Sustainability Report for more information.

3 Due to a difference in timing of data collection for Matane Mill, the 12-month reporting period for Matane Mill is 01 July 2024 to 30 June 2025. All other mill data is aligned with Sappi’s financial year.

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