AGI
    LITYEXPAND

Group overview

Hummingbirds are the trapeze artists of the avian world. They can fly forwards, backwards, even upside down and are also the only vertebrae capable of hovering in place. In addition to being agile, hummingbirds are extraordinarily fast. They have been observed at speeds of nearly 48 kilometres per hour (km/h) in direct flight and over 72 km/h during courtship dives.

Adaptability is another hummingbird characteristic. These tiny birds have fewer feathers than other birds, because they need to have an efficient body that is as lightweight as possible in order for the flight aerobics they perform. As the insulation that they get from their feathers is insufficient, at night they go into torpor, a hibernation-like state that allows them to conserve energy by slowing down their metabolism, heartbeat and respiration rate. Furthermore, hummingbirds remember migration routes and every flower they’ve ever visited. They can also figure out how long to wait between visits so the flowers have time to generate more nectar.

Inherent in our approach is being agile to stay ahead of market changes, preferences, customer needs and expectations.

ON
    WARDSEXPAND

Creating value by responding strategically

When presented with a dandelion, few people can resist the urge to hold the flower and blow at it to see how far the seeds will travel. It’s the same when presented with a beautiful coffee table book or an impactful piece of print – there is an almost irresistible urge to pick it up, examine it and touch it. Studies have shown that even the simple act of touching objects, like premium packages, brochures and direct mail, can subconsciously increase the perceived value of a brand and its products in the eyes of customers.

Touch can make a stronger impact than sight or sound alone. That’s because touch has the power to shift the brain into a deeper level of engagement, one more conducive to building lasting knowledge. In fact, a number of studies have found that communication through physical media, particularly paper, is more likely to lead to knowledge than communication via digital media.

The haptics of paper and board, together with our need to touch and feel, have created high-growth, cash-generative niche opportunities for Sappi.

We continue to move onwards in terms of paper and paper packaging: Our paperboard packaging product lines are some of the most renowned and valued brands with high-finish premium solutions for cosmetics and perfume, health and beauty care, consumer electronics, confectionery, luxury drinks, food packaging and more. Our packaging brands constitute a great portion of the food packing and labels on shop shelves today. And our graphic papers are used to grab the attention of consumers all over the world.

BLO
    SSOMEXPAND

Our performance review

In mythology, the beautiful, delicate dragonfly symbolises change, transformation and adaptability. This change is said to be about understanding the deeper meaning of life, with the dragonfly’s scurrying flight across water representing an act of going beyond what’s on the surface to look into the deeper implications of life.

Looking beyond – and deeper – is reflected in our Thrive25 sustainability strategy which incorporates our belief that to continue thriving as a global business, we must create long-term value for all stakeholders by supporting a low-carbon circular economy through relevant products from sustainable woodfibre.

Our strategy also recognises that we must understand the forces that heavily impact our lives and work.

Dragonflies have huge compound eyes with thousands of lenses and photoreceptors sensitive to different wavelengths of light, each bringing in information about the insect's surroundings. In other words, they have near-360- degree vision. Which is why they’re able to go after their prey – butterflies, moths, bees and flies – with such accuracy.

At Sappi, we understand that by widening our scope to the broader ecosystem and a wide range of stakeholders, we can identify uncertainty and opportunity beyond our periphery of vision. We leverage insights into our operating context and patterns from our data, stay ahead of nascent technologies and draw on the acumen of our people, to embrace change and create innovative solutions that are relevant to all our stakeholders.

VELO
    CITYEXPAND

Governance and compensation

The cheetah’s light, streamlined body makes it well-suited to short, explosive bursts of speed, rapid acceleration and executing extreme changes in direction while moving at high speed. Contrary to the common belief that cheetahs – known to be the fastest land animal – hunt by simply chasing their prey at high speeds, they are in fact extremely strategic. They don’t randomly sprint towards anything, but wait until the timing is right, varying their speed during the chase. Speed and smartness are attributes that resonate with us at Sappi, given that ‘making smart decisions which we execute with speed’ are among our core values.

Under our Thrive25 strategy, we foster a safety-first culture, using collaboration and the power of partnerships to respond to changes in our environment, moving Sappi forward and deliver value to our customers.

AMP
    LIFYEXPAND

Governance and compensation

In a continuous flow of energy and life, water always finds the lowest level in an incredibly efficient manner. It penetrates any crevice or path that will facilitate its downward flow, steadily meandering and descending in search of lower planes.

In a similar fashion, our focus is on amplifying value creation for all our stakeholders. The landscape around us is changing rapidly. Stakeholders’ needs and expectations have shifted, in particular as regards the environment and social equity.

We are responding to natural resource constraints by seeking responsible alternatives to non-renewables and solutions that are truly sustainable from seed to final product. We strictly monitor and control our use of energy, water and other raw materials and are investing in reducing our reliance on fossil fuels.

We work to amplify value creation through innovation and R&D. Innovation is the way we operate that provides competitive advantages and ensures we grow, flourish and progress. R&D is focused on realising our ambitious but achievable strategy of extracting more value from each tree. Our strategy is supported by technology centres in each region which cover every section of the value chain. We deliver value by optimising our production processes, maximising existing capacity and work to constantly improve our best overall machine efficiency levels.

In the communities where we operate, we prioritise projects that support education, entrepreneurship and environment, as well as health and welfare, while working to break the cycle of poverty through stable, safe employment.

By amplifying value creation in this way, we accelerate and advance meaningful change.

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  • Inputs The resources and relationships we rely on
  • Our activities Our value streams
  • Outputs Our products, services and waste products
  • Outcomes The broader impacts of our business activities
  • Actions to enhance outcomes
  • Examples of our trade-offs The most difficult decisions made during the year

Capitals


Financial


Intellectual


Manufactured

  • 19 production facilities across the globe (see here)
  • Debt: US$1,946 million
  • Equity and liabilities: US$6,186 million
  • Research and development (R&D) investment: US$43 million
  • Investment in growth: US$376 million to grow the business
  • Total assets: US$6,186 million
  • EBITDA: US$532 million, an increase of 41% year-on-year
  • Net debt: down 1%
  • US$64 million paid to governments through taxation
  • US$1,045 million paid to employees as salaries, wages and other benefits
  • US$154 million paid to lenders as interest
  • Earnings per share (excluding special items): 15 US cents
  • Our high levels of innovation give our customers a competitive edge in global markets
  • New products developed to meet changing customer expectations and market trends
  • Implemented a series of price increases in our paper businesses to offset rising input costs
  • Increased investment in R&D to ensure cutting-edge solutions for customers (FY2021: US$43 million, FY2020: US$39 million)
  • Consolidation and alignment of Global Business Services: sales, supply chain and finance, as well as logistics and manufacturing
  • Ongoing diversification of our product portfolio into higher margin segments
  • Commercialisation of bioproducts gaining traction

The sale of the southwestern part of our site at Maastricht Mill in the Netherlands has necessitated a relocation of activities and associated construction. However, the costs thereof will be offset by the proceeds of the sale.

Risk     Cyclical macro-economic factors
Risk     Liquidity

Capitals


Human


Social and
relationship

  • Employees: 12,492
  • South African contractor employees: approx. 9,250 contractor employees (average)
  • Average training spend per employee per region: SEU US$473, SNA US$238, SSA US$671, Sappi Trading US$504
  • Ongoing stakeholder engagement
  • Corporate social responsibility investment: US$3.49 million
  • Zero fatalities
  • Global average of 48.29 training hours per employee
  • Productivity: 4 hours worked/adt saleable production
  • Level 1 BBBEE contributor
  • Continued investment in embedding a safety culture across the group
  • Focus on entrenching transformation in our South African operations to support inclusive growth
  • Investment in training and development of our employees, 74.4% allocated to skills training and 25.6% allocated to compliance training
  • Strong governance and ethical culture reinforced by the Code of Ethics
  • Initiated our first campaign to onboard suppliers onto the EcoVadis platform, with the number of suppliers now on this platform accounting for 33% of our total global procurement spend
  • Formulated a social impact strategy in SSA
Balancing employee health and safety with operational continuity

A comprehensive Covid-19 action plan enabled us to operate in a safe and uninterrupted manner where demand permitted.

Closure of operations because of the civil unrest in KwaZulu-Natal, South Africa in order to mitigate the risks to our operations and our employees negatively impacted EBITDA ex SI.

Risk     Safety
Risk     Employee relations

Capitals


Natural

  • Plantations:
    – 394,000 owned and leased, of which    258,000 is planted
    – The remainder is managed to conserve    the natural habitat and biodiversity found    there
  • Energy purchased: 2,547.29MW
  • Energy generated on site: 1,934.81MW
  • Renewable energy 52.44%, of which 66.35% own black liquor
  • Water extracted: 287.14 million litres in absolute terms, 34.86m3/adt in specific terms
  • Certified fibre used: 77%
  • Energy intensity: 22.35 GJ/adt
  • High levels of wood certification result in competitive advantage
  • World-leading tree improvement programmes have led to shorter growth times and enhanced fibre gain
  • Training of smallholders in SNA and SSA to educate them on more sustainable forestry practices
  • PEFC certification in SSA
  • DP used for clothing and household textiles, baby wipes and wet wipes – reducing environmental impact
  • Lighter-weight packaging products – reduction in carbon footprint
  • Expanded packaging portfolio offers customers and consumers more sustainable alternatives to fossil-fuel based packaging (plastics)
  • Progressed our decarbonisation roadmap in each region
  • Increased energy self-sufficiency by 6.3% over five years due to focus on reducing purchased energy
  • GHG emissions offset by carbon sequestration
  • Continued to adjust our tree breeding strategy to mitigate the impacts of climate change
  • Made progress in terms of our 2025 biodiversity goal (vegetation assessment on our land)
Balancing afforestation and biodiversity

At stand level, our plantations have a negative impact on biodiversity. At plantation level, we manage this impact by managing approximately one third of our landholdings for biodiversity.

Risk     Sustainability expectations
Risk     Climate change
  • Forests
  • Manufacturing excellence
  • Biomaterials
  • Pulp
  • Packaging and speciality papers
  • Graphic papers

Products:

  • 6.3 million tons of saleable production

Waste:

  • 1.4 million tons of which 332,680 tons (23.3%) is sent to landfill

Emissions:

  • 4.3 million tCO2e absolute direct (Scope 1) GHG, in specific terms: 0.679 tCO2e/adt