Group overview

Adapt. Advance. Amplify.

Delivering sustained value

growexplore our theme

As a company based on the power of renewable resources, we are well placed to take lessons from nature: When plants grow too quickly and are not properly rooted, they become top heavy and prone to toppling over. Similarly, if there is not enough light, even though tall, they can become spindly and not fit for purpose.

So, while growth is one of our strategic fundamentals, our approach to it is purposeful and phased. This means being responsive to our environment and the impacts of constant change on our stakeholders. It also means being rooted in our legacy of innovation and excellence and grounded by our Thrive25 strategy. Accordingly, we leverage our existing strengths and grow our people to progress in high-impact, high-value areas. We also partner to shape new marketing opportunities and industry standards that will stimulate growth.

Above all, we recognise that growth can only be sustainable insofar as it supports the health and repair of the natural environment on which we depend. And it is only inclusive when value is shared and society is positively impacted.

This is our focus as we work to build a thriving world.

Responding to our context

illumeexplore our theme

Sky lanterns – traditionally called Khoom Fay in China – can be traced back thousands of years to one of the early Chinese dynasties. They were used not only as decorative light sources but also as military signals that could communicate messages across long distances. Today, it is said they are released at traditional festivals to emphasise the unity of family coming together to celebrate the lunar new year. This is represented by the lanterns collecting in the sky and expressing the wholeness of family.

Sappi is situated in many different regions across many different cultures and countries. But we come together as one whole, OneSappi, united by our purpose which is our guiding light: Sappi exists to build a thriving world by unlocking the power of renewable resources to benefit people, communities and the planet.

Passion and excellence are the sparks that ignite thriving. And they're what keep our commitment to create a thriving future for the world and our business burning so brightly. They're also what will continue to illuminate our way forward – today and tomorrow.

Diving deeper into our,
performance and prospects

createexplore our theme

We are creators, relentless in our drive to make everyday solutions more sustainable. We understand that the power of the imagination is one of our biggest strengths and that opportunities don't just happen. Which is why we apply our creative energy to seeking them out and leveraging our partnerships to realise them.

In doing so, we harness the intellectual curiosity and critical thinking of our people to let go of certainties and develop breakthroughs that delight our customers, enable lasting outcomes for our stakeholders and a more positive impact on the planet. This aligns with our values of "making smart decisions which we execute with speed". So that when we fail, we fail fast and move on.

While innovation is key to delivering profit and margin improvement, we do not create merely because we have the available manufacturing assets, skills, technology and IP.

We do so to lead by example, inspire others and create the thriving tomorrow to which we are committed.

Governance and compensation

reflectexplore our theme

Only in still waters do things reflect undistorted. As a business, we take the time to reflect on our past actions – including assessing our relationship with our stakeholders, particularly our people – to understand more clearly where we have succeeded, where we could have done better and how we can continue to build sustainable competitive advantage. This investment in reflection enables us to calibrate the solutions we provide and our response to the world around us.

As OneSappi, we understand that like dropping a stone into a pond creates outward ripples, in today's interconnected world, our actions and decisions can have a significant impact. For example, our decarbonisation actions alone cannot bring the world to net zero, but they can have a ripple effect that influences and encourages others.

Many people think of excellence as an upward journey, but at Sappi we view it as going round and round in ever-expanding, infinite waves. This view is reflected in the use of irregular waves which symbolise energy and unity used as a design element throughout this report and in the above image.

Going forward, we will continue to focus on excellence with energy and clarity and unity of purpose.


celebrateexplore our theme

Any sporting great will tell you that, even if they are an individual performer, their wins are due not just to their own prowess, but also to the work taking place behind the scenes. Most specifically, their win also belongs to the team backing them up – from the coaches who are with them every step of the way; to those who believe in them, even when obstacles seem insurmountable.

As we celebrate an outstanding year, we readily acknowledge that it is the outstanding perseverance, collaboration and commitment of our extraordinary people that delivered the results. We do not forget that it took tremendous courage from our people to implement the decisions that ultimately delivered so handsomely.

Together, over the last few years, we have been through some challenging times. We have taken some tough decisions and have had to make difficult calls.

Our people have countered volatility with agility, setbacks with courage and problems with perseverance and ingenuity. Through it all, they have held the flag of OneSappi and our purpose of building a thriving world high.

Together, even as we celebrate what we have accomplished, we are committed to maintaining our momentum.


Letter to the stakeholders: Chairman and CEO

 – Steve Binnie

 – Sir Nigel Rudd


The group delivered record EBITDA excluding special items of US$1,339 million, which was well above the previous record set in FY2000. Strong demand and the implementation of higher sales prices to offset rising costs, combined with a focus on product and customer mix optimisation, supported margin expansion in all product segments.

The outstanding performance was particularly noteworthy within the context of a challenging macro-economic environment. Significant headwinds included extreme weather-related events, lingering Covid-19 pandemic effects in China, as well as extraordinary global inflation, which was triggered by geopolitical turmoil and ongoing global supply chain disruptions. Amid this volatility, we demonstrated resilience and remained committed to our Thrive25 strategy.


The Covid-19 pandemic has transformed how we think about health and safety in the workplace. The year began with the onset of the highly infectious Omicron sub-variant. Although extremely contagious, it soon became apparent that the Omicron variants cause less severe illness compared to previous strains of the virus. A focused vaccination/booster campaign allowed us to significantly scale back on our Covid-19 operating protocols and quarantine measures for direct contacts. By year end, all our operations were back to pre-Covid-19 operating conditions. Nevertheless, we remain vigilant and fully prepared to launch our Covid-19 protocols at a moment’s notice if required.

We have worked very hard to create a culture that prioritises safety for our own employees and contractors at all times. Therefore, it was a particularly satisfying highlight for the year that we achieved a record safety performance. We do not accept that injuries and accidents are inevitable and our commitment to zero injuries underpins our value system. We comply with occupational health and safety legislation in all our operations.

We are very pleased to report that there were no work-related fatalities during the year and our performance with respect to safety improved in every region. In 2022 we reset our safety key performance indicator (KPIs) to include contractors, recognising that we have an obligation to keep every person who steps onto a Sappi site safe, regardless of whether they are an employee or not. The revised KPI of combined employee and contractor LTIFR replaced employee LTIFR in our management incentive schemes. A renewed focus on training, safety communication campaigns and reward and recognition programmes yielded results. Sappi Europe managed to reverse the previous year’s disappointing performance with a positive turnaround and Sappi North America and Sappi South Africa continued with their steady improvement trajectory, reaching their best ever LTIFR levels. A number of noteworthy milestones were achieved during the year. Alfeld, Ehingen and Stockstadt Mills achieved 1 million zero lost-time man hours, Somerset Mill achieved 3 million zero lost-time man hours and Sappi Forests’ Zululand Coastal business unit achieved a record-breaking safety milestone of working 6 million zero lost-time man hours. Our safety ambition remains zero injuries and we continue to implement enhanced procedures and focus on improved personal behaviour and leadership engagement.


In terms of our markets, the graphic papers segment generated record EBITDA of US$650 million. The remarkable turnaround from the lows of 2020 was driven by a number of factors, which led to an unprecedented global shortage of graphic paper. These included a surge in demand as economic activity normalised post-Covid-19 and a very tight market balance due to a combination of chronic global logistical challenges and reduced supply. Market capacity was impacted by permanent closures and a prolonged labour strike in Finland. The buoyant demand boosted sales volumes for the segment by 8% compared to the prior year. Furthermore, the favourable market conditions provided support for a series of selling price increases and energy/freight surcharges, which were necessary to compensate for substantial cost inflation and facilitated the material improvement in profitability for the segment.

The strategic priority to invest in packaging and speciality papers in recent years reaped rewards. The segment continued to grow and achieved record EBITDA of US$359 million compared to US$214 million in the prior year. Sales volumes increased by 9%, driven by robust global demand and renewed growth in Europe. However, sales were constrained by available capacity and low levels of inventory in South Africa and North America where demand exceeded supply. Successful selling price increases and mix improvement offset rising costs and lifted margins for the segment.

Sales volumes for the pulp segment increased by 15% compared to the prior year on the back of strong market demand and improved logistics as we secured regular breakbulk shipping alternatives for our South African exports. Demand for Verve1 during the year was particularly strong and sales were constrained by available production. The hardwood DP market price2 rallied during the first half of the year, peaking at US$1,220 per ton in July 2022. The rebound was primarily driven by positive momentum in global commodity markets, including viscose staple fibre, cotton and polyester combined with DP supply-side constraints including our own losses due to a flood in South Africa and a major fire at another large market player. DP pricing began to soften in late August as Covid-19 lockdowns in China constrained viscose staple fibre (VSF) operating rates and global recessionary fears began to dampen the outlook for textile markets.

1 Sappi Verve is the brand name for our DP products.
2 Market price for imported hardwood DP into China is issued on a daily basis by the CCF Group.


Heightened geopolitical tensions, extraordinary cost inflation, extreme weather events and global supply chain disruptions continued to challenge businesses in 2022. Within this extremely challenging context, we continued to make the tough decisions necessary to protect and enhance our business’s resilience and sustainability; looking beyond our current situation to the thriving future we wish to create.

Fiscal 2022 was the second year of our Thrive25 strategic programme.

The five-year strategy leverages the power of OneSappi to drive real and sustained value creation. We recognise that society in general and our people in particular expect us to play a role beyond making and selling. Therefore, every action we take is aligned to our ambition to build a thriving world by unlocking the power of renewable resources to benefit people, communities and the planet.

Our Thrive25 strategy encompasses the following four main objectives:

Grow our business – Committing to core business segments while investing in innovation, growth opportunities and ongoing customer relationships
Sustain our financial health – Reducing and managing our debt, growing EBITDA, maximising product value, optimising processes globally, and strategically disposing of non-core assets
Drive operational excellence – Strengthening our safety-first culture and reducing resource use while enhancing efficiency and making smart data investments
Enhance trust – Improving our understanding of – and proactively partnering with clients and communities, driving sustainability solutions, and meeting the changing needs of every employee at Sappi

To achieve our ambition for a thriving world, we acknowledge the need to invest in a broader set of stakeholder considerations that impact our ability to attract capital, draw top talent, and future-proof our businesses. There are increasing expectations from investors and other stakeholders such as employees, our communities and consumers in our product value chains who want to be part of a sustainability narrative. Sustainability forms the foundation of our Thrive25 strategy as we strive to be a trusted, transparent, and innovative partner in building a bio-based circular economy.

We made significant progress against the first phase of the Thrive25 strategy to deleverage the business. The priority for 2022 was to strengthen the balance sheet by maximising cash generation and reducing debt.

Initiatives and actions undertaken in 2022 to support our strategic objectives are outlined below.

Grow our business

In 2022 we focused on commissioning of the 110,000 ton Saiccor Mill expansion project and, growing the sales volumes and optimising the product mix to higher margin categories from our packaging and speciality paper assets in Europe and North America.

The Saiccor Mill expansion project was successfully commissioned, and all new equipment operated as anticipated. However, production volumes were below expectations and were negatively impacted by a number of external factors such as unplanned stoppages due to the flood in KwaZulu-Natal, Eskom3 power outages and raw material supply shortages, which severely disrupted operational stability at the mill. The mill operations stabilised in the fourth quarter and the ramp-up will be completed in the 2023 financial year.

3 Eskom is the South African electricity public utility.

The underlying demand for packaging and speciality paper grades remained resilient and in 2022 we continued to optimise margins by shifting into more high-end label and packaging markets while expanding on our base folding carton business. The segment achieved a record EBITDA and is gaining critical mass in terms of contribution to group profitability. Over the last five years, since 2017, the segment contribution to group EBITDA increased from 15% to 27% and sales volumes grew from 13% to 25% of group sales volumes. The EBITDA margin of 17% for the segment is the highest to date and was boosted by selling price increases, which offset rising costs.

In South Africa, the containerboard market continued to grow, driven by robust fruit exports and sales volumes were constrained by capacity. A critical quality upgrade and product range extension was completed at Ngodwana Mill to optimise our portfolio to better meet the needs of our customers. The tight supply situation was further exacerbated by very strong sales early in the year, which reduced inventories, and the extended shut for the upgrade. In Europe, market traction for our new range of label papers from Gratkorn Mill was better than anticipated and there is significant opportunity to grow this category further in 2023.

In North America, the focus in 2022 was on optimising product and customer mix to higher margins on Somerset paper machine (PM) 1. The demand was particularly robust and sales were constrained by capacity. A debottlenecking project on PM1 was initiated, which will deliver a further 30,000 tons of paperboard in 2023. This additional capacity will be absorbed by our existing customers who are actively seeking to increase their volumes with Sappi. Demand from the foodservice board sector is anticipated to increase significantly in the coming years as legislation banning the use of polystyrene foam packaging products in several US states catalyses the shift from plastic to paper packaging.

In November, the board has therefore approved a US$418 million investment at Somerset Mill to convert PM2 from coated woodfree graphic paper to solid bleached sulphate board (SBS). The machine capacity will also be increased during the conversion from 240,000 tons per annum (tpa) to 470,000 tpa. The project is expected to be completed in early 2025 and will be funded from free cash flow from operations. The capex will be phased over three years with the majority of the spend taking place in 2024 and 2025. This investment is fully aligned with our Thrive25 strategic focus to reduce our exposure to graphic papers and transition our portfolio to packaging and speciality papers, pulp and biomaterials.

The graphic papers segment delivered excellent profits in 2022, generating an extraordinary EBITDA margin of 16%, which was well above historical margins. However, the favourable market conditions are anticipated to decline rapidly as recessionary fears soften demand in 2023. A key element of our Thrive25 strategy is to reduce our exposure to declining graphic papers markets. Aligned to this objective, on 29 September 2022, Sappi signed an agreement with Aurelius Investment Lux One S.à.r.l. to divest the Maastricht Mill in the Netherlands, the Stockstadt Mill in Germany and the Kirkniemi Mill in Finland. The decision was taken following a detailed and thorough strategic review and will significantly reduce our exposure to graphic papers markets. The sale will be subject to various standard suspensive conditions and is anticipated to close in the second financial quarter of 2023. The enterprise value of the transaction amounts to approximately €272 million. The proceeds will be used to reduce debt further, which will provide a platform for future expansions in our identified growth market segments.

We are committed to exploring opportunities to utilise our graphic papers assets to produce packaging and speciality paper grades without significant capital investment, hence further reducing our exposure to graphic papers markets and improving the profitability of our assets. In mid-2021, we expanded the product portfolio at the Gratkorn Mill in Austria to produce non-wet-strength, wet-glue label papers. The product is ideal for many different applications, such as standard labels for bottles, tins and jars, as well as wrappers for various products. In January 2022, this was followed by the launch of a high-performance, semi-gloss face stock paper for self-adhesive labels for a wide range of applications – such as food, non-food, beverages and health and beauty care products. Today, these products are firmly established in the market and sales volumes in 2022 significantly exceeded expectations. In 2023, the production capabilities for label papers will be further extended at the Gratkorn Mill. The relatively modest investment in technological innovations, such as a new embossing calendar, will enable the mill to produce high-quality, wet-strength wet-glue label paper used in the beverage industry, for instance on returnable beer bottles. With this portfolio extension, Sappi will further strengthen its market leadership in label paper production.

In our quest to offer customers state-of-the-art, sustainable alternatives to traditional film and foil-based packaging material solutions, we expanded our capacity to produce barrier papers at the speciality paper mill Alfeld Mill in Germany. A cutting-edge coating machine was commissioned in September 2022. This in-house technology will not only increase coating capabilities, but also boost the development of innovative sustainable packaging solutions in collaboration with our customers.

Our commitment is to do more with less by making the most out of every tree used in our production processes. Therefore, our Sappi biotech business remains a long-term strategic focus as we develop new circular products for adjacent markets. We made pleasing progress in 2022 growing lignin and commercialising our Symbio fibre composite and Valida fibrillated cellulose product offerings. A positive development in 2022 was accelerated demand for lignin, with year-on-year sales revenue growth of approximately 25%. We are using Valida in our own paper production where its value lies in the strength it imparts to paper and its barrier functionality. It is also being assessed for use in adhesives, frost protection for fruit trees and industrial cleaning, to name a few. Furfural is a platform chemical for the production of numerous biochemicals. It is produced from C5 sugars in hemicellulose through hydrolysis and dehydration. Furfural is used in a large range of products including adhesives, antacids, fertilisers, flavouring compounds, inks and plastics, to solvents for the refining of lubricating oils. It can also be used as a fungicide, nematicide and weed killer or converted to furfural alcohol for furan resins. C5 sugars are present in large quantities in our Saiccor Mill spent cooking liquor and therefore beneficiation of these hemicellulose sugars presents an interesting commercial opportunity. We have established a pilot plant to determine the feasibility for producing furfural at Saiccor Mill with the objective to taking a decision on a commercial plant in 2023.

Sustain our financial health

Our Thrive25 strategic objective to reset the balance sheet was largely achieved. Substantial cash generation and a positive translation impact of a weaker EUR/US Dollar exchange rate on the predominantly Euro-denominated debt facilitated a material reduction in our net debt which reached the lowest level in over 20 years at year end of US$1,163 million (FY2021: US$1,946 million). The covenant leverage ratio also reduced substantially from 3.7 at the end of the prior year to 0.9, the lowest level since global expansionary investments began in the early 1990s.

A healthy balance sheet is a prerequisite for phase two of our Thrive25 strategy, where we aim to grow the business by investing in higher margin and growing market segments. We also recognise that global macro-economic volatility and uncertainty remain significant risks to our business. We have therefore set a long-term strategic objective to target net debt of approximately US$1 billion and a net debt to EBITDA ratio of 1.5 times through the cycle. This materially lower debt level will provide more flexibility to withstand market downturns and, combined with strong anticipated future cash generation, should provide sufficient opportunity to fund growth in our targeted market segments.

With interest rates rising sharply over the past year, future debt financing is likely to become increasingly expensive. While there are no significant maturities due before 2026 and we remain comfortable with the maturity profile of our debt, the strong cash generation in 2022 and relatively weak bond market presented an opportunity to reduce absolute debt through the repurchase of a portion of the 2026 bonds which were trading below par. Shortly after year end on 12 October 2022, a tender offer to purchase for cash a portion of the outstanding 3.125% senior notes due 2026 was concluded. As a result, US$206 million of the aggregate principal amount of the 2026 bonds in the tender offer was repurchased at a purchase price of 92.41% (plus accrued and unpaid interest). The transaction not only yielded a capital gain of US$15 million but will also reduce gross annual interest payments by US$6 million per annum.

A further highlight was a decision by the board on 10 November to resume the payment of dividends, which have been suspended since 2018. The dividend decision was considered in light of a number of strategic priorities including paying down debt, converting graphic paper exposure to packaging and speciality paper, positioning the business for growth. Paying the dividend does not supersede nor put any of these priorities at risk given Sappi's robust cash generation and stabilised balance sheet.

Capex in FY2023 is estimated to be US$430 million and includes approximately US$70 million for the Somerset PM2 conversion project, US$60 million for sustainability projects and US$20 million capex spill-over from FY2022.

As a global leader in sustainable woodfibre products and solutions, sustainability and moving towards a circular economy underpin Sappi’s business strategy. In 2022 we took an important step to create a bridge between Sappi’s financing and sustainability strategies by establishing a sustainability-linked finance framework. This is an important strategic step for Sappi and supports our long-term vision to be a sustainable business with an ambitious sustainability strategy. The Sustainable Financing Framework will be used to guide any sustainability-linked characteristics of future financing solutions. The framework was verified by ISS ESG with a second party opinion that defines four material sustainability KPIs and provides a basis for future KPI-linked credit and capital market activities of the group. The KPIs focus on decreasing specific GHG (Scope 1 and 2) emissions, certified fibre supplied to Sappi mills, reducing solid waste to landfill and securing zero workplace injuries. The renewal of our international revolving credit facility (RCF) in August 2022 marked the first application of the framework. The new facility of €515 million matures in February 2027 and comprises a consortium of eight relationship banks. The RCF was structured with a margin adjustment mechanism, linked to progress in achieving the KPIs.

Drive operational excellence

Reducing both variable and fixed costs throughout the business is integral both to maintaining or improving margins and to the sustainability of our operations. The surge in costs for many of our raw materials over the past year has put significant pressure on the business. We set ourselves a target of a US$41 million reduction in third party expenditure compared to 2021 through efficiency and raw material usage improvements, as well as delivering savings through various procurement initiatives. We are pleased to report that savings of US$110 million were realised, which helped offset the significant increase in purchased pulp, chemicals and energy costs. In 2023 we are targeting approximately US$45 million in variable cost savings.

We have committed to a capital allocation of approximately US$70 million per annum to achieve our sustainability goals. In 2022 we completed the conversion of the calcium cooking line at Saiccor Mill to the more sustainable magnesium bisulphite technology, as well as decarbonisation investments in Europe to convert boilers at Gratkorn Mill and Kirkniemi Mill from coal to biomass and an electric boiler at Maastricht Mill. In 2023 we will begin with phase two of the Gratkorn Mill boiler conversion, which is to install the biomass handling equipment which will enable us to switch completely from natural gas to biomass. The Saiccor Mill calcium conversion will reduce the need for coal-based power generation at the mill, significantly reducing the carbon footprint, and will additionally facilitate considerable variable cost savings. The kraft liner board machine at Ngodwana Mill was upgraded to improve quality and efficiency which will allow the mill to remain competitive against imported grades. The South African containerboard market is growing at a rate of 5% per annum on the back of increasing fruit exports and this is seen as a strategic investment to retain our customer footprint in preparation for further potential expansions in this product segment. Over the next few years, we will allocate capital for several information technology projects which are critical for addressing both the risk and opportunities offered by Industry 4.0 and will support the various advanced analytics projects across all three regions which are focused on improving operating efficiencies.

Enhance trust

Maintaining a sound ethical culture forms the foundation of Sappi’s long-term value creation for our stakeholders. We live and work in a constantly changing environment and operate in many different countries and jurisdictions. As an ethical global corporate citizen, presenting a coherent and consistent culture of the highest integrity is a core value and integral to our Thrive25 strategy and purpose to build a thriving world.

The expected behaviour is encapsulated in our Code of Ethics, which guides our directors, employees, suppliers and customers in their day-to-day interactions and transactions. We continued to build on our commitment with an ongoing communication and training campaign. Shortly after year end, we launched our refreshed Code of Ethics to align more closely with our Thrive25 strategy. The Code, which has been translated into relevant languages, references several group policies, where heightened levels of awareness and compliance are required. In line with the refresh of the Code, global online training has been revamped with new scenarios and relevant examples. For our Code to be effective, we must live our core values of doing business safely, with integrity and courage, making smart decisions that we execute with speed.

Our Thrive25 strategy recognises that we need to be more proactive in our dealings with various stakeholder groups and that we must become a trusted partner to these groups and create shared value while minimising risk and pursuing growth opportunities in a complex operating environment. Our people strategy focuses on leadership and creating a culture that enhances OneSappi; builds capability for current and future requirements; and strengthens employee engagement. In 2022 we executed our action plans to address issues raised in the employee engagement survey conducted in 2021 and are confident that we will see the benefits of this work in the 2023 survey. We are actively working to increase gender equality, while finding ways to nurture emerging talent and creating inclusive growth opportunities.

Supporting the communities in which we operate is one of the ways in which we enhance trust. In South Africa where poverty and unemployment are key social imperatives, our community engagement agreements commit both ourselves and our communities to work together in driving shared value for mutual benefit. Integrated community forums (ICFs) are the key platforms which we use to build trust, gain advocacy and achieve shared value. Community participants range from traditional leaders and councillors to local business and environmental groups. The ICFs focus on three key areas: community skills development, asset-based community development (ABCD) and corporate social investment, as well as enterprise and supplier development (ESD). Through shared value, our overarching aim is to move our communities towards a sustainable future independent of Sappi.

In 2022 the Russia-Ukraine conflict in Europe and devastating floods in KwaZulu-Natal, South Africa were events that spurred Sappi to action to support urgent humanitarian relief on the ground. We made donations to the Ukraine Humanitarian Fund and Gift of the Givers, Robin Hood Foundation and The Angel Network and launched employee donation drives, which encouraged Sappi employees to make in-kind and monetary donations towards the relief efforts.

Values and ethics are critical for driving operational performance and developing stakeholder trust. We place a high premium on adherence to sustainable business practices and ethical behaviour as encapsulated in our Supplier Code of Conduct and in 2022 we made further progress towards our supplier engagement target with 74% of suppliers in compliance. Thus we are well positioned to achieve our 2025 target of 80%. Our partnership with EcoVadis gained momentum and we have almost 200 of our most strategic suppliers onboarded to the platform. The EcoVadis methodology allows us to assess the sustainability performance of our suppliers and identify risk within our supply chain.

Through heightening our focus and ambition on climate action, we seek to increase our contribution to building a resilient, thriving world and have aligned our decarbonisation pathway with climate science. In 2022 our 2030 GHG emission reduction target was validated by the SBTi and our capital allocation plan approved by the board.


Sappi has always focused on the sustainable management of our operations, on increasing efficiency and maximising value from our sustainable natural resources, but as we look to the future, it is clear we have an obligation to play a role beyond making and selling. Policy measures to enable the transition to low-carbon economies, with a general goal for net zero emissions of greenhouse gases (GHG) by 2050 are being rolled out globally. The private sector has a key role to play in this just transition and in line with this obligation, we have set 2030 science-based decarbonisation targets which were validated by the SBTi in July 2022. As we navigate the challenges of decarbonising our value chain, we recognise that collaboration is a critical element of our journey. We became a full member of the World Business Council for Sustainable Development (WBCSD) and, together with our peers in the Forest Solutions Group (FSG), we are developing net zero and nature positive roadmaps that are appropriate for the forest sector.

We are making great progress towards our Thrive25 sustainability goals and are confident that a resilient and growing Sappi is well placed to lead as it adapts to an uncertain future.


Looking ahead, our focus will be on the execution of our Thrive25 strategy, while ensuring that we remain ahead of emerging trends to deliver sustained value creation for our stakeholders.

In a fluid operating context, a forward-looking risk management capability is crucial for proactive risk management, with risk appetite and tolerance at the core of our decision making. This will ensure that management and the board have a balanced view of risks and opportunities to make informed strategic choices and deliver sustainable value for our stakeholders.

Macro-economic uncertainty has increased considerably in the past year. Ongoing lockdowns in China, the geopolitical turmoil in Europe and unprecedented inflation are increasing the likelihood of a global recession in 2023. This poses a risk to our business as weakening consumer sentiment and diminishing discretionary spend will likely weaken demand in our graphic papers and DP segments in upcoming quarters. Order activity in these segments has slowed and destocking is occurring across the value chain. The Covid-19 pandemic demonstrated that the underlying demand for packaging and speciality papers is more resilient in economic downturns, particularly for product categories in food, beverage and healthcare.

Furthermore, the shift from plastic to paper offers significant opportunity to grow this segment.

Rising input costs remain a risk in the year ahead although the prices for some raw materials, specifically natural gas and pulp, have started to decrease in the first quarter of FY2023. We remain focused on maximising our operational efficiency and will balance our production with demand to proactively manage our costs and preserve pricing.

In South Africa, a fire at a municipal electrical substation in KwaZulu-Natal impacted production at our three local mills for a few days in October 2022. In addition, a strike at Transnet has negatively impacted DP supply chains once again and we anticipate that severe congestion at the Durban port may impact sales volumes in the first quarter of FY2023. Sales volumes for the first quarter of FY2023 in North America will be impacted by the annual maintenance shut at Somerset Mill.

Deleveraging our balance sheet has been material and combined with substantial cash reserves, we are well positioned to navigate any market downturn. We remain encouraged by the increasing resilience of our business and opportunities for growth in our packaging and speciality papers segment.

Notwithstanding the inflationary cost pressures and weakening demand in some product segments, we anticipate that the EBITDA for the first quarter of FY2023 will be above that of equivalent quarter in FY2022.


No business operates in isolation from a wide and varied group of stakeholders who all contribute to our development and performance. We thank all our stakeholders for their ideas, constructive criticism and support, which guide our thinking and actions and contribute towards making Sappi a better corporate citizen.

To our customers in all our different markets and geographies, we extend our gratitude. We are committed to collaborating and will work together to provide relevant bio-based products and services, which provide sustainable value while impacting our natural capital as little as possible.

Our success depends on the wellbeing, skills, knowledge, expertise, productivity, motivation and behaviour of our employees. We aim to resource the company with a capable, engaged and productive workforce and are committed to ensuring no harm comes to any of those who work with us. We thank our employees for their unwavering dedication, resilience and agility which allowed us to meet every challenge head on, achieving a record level of profitability.

Our gratitude goes to the board for their continued commitment to the group, their valuable insights and encouragement and for holding us to the highest ethical standards. We welcomed to the board non-executive directors Mr Louis von Zeuner with effect from 1 September 2022 and Mr Nkululeko Sowazi and Ms Eleni Istavridis with effect from 3 October 2022.

Mr Peter Mageza, a longstanding member of the board and Chairman of the Audit and Risk Committee has indicated that he would like to retire. The board and Mr Peter Mageza have agreed that he should continue in his role until his retirement in 2024 to ensure a smooth transition to his successor.

In conclusion, we value the support which our shareholders have provided as we work to enhance sustainable long-term shareholder returns. We look forward to their participation at the Annual General Meeting (AGM) on 8 February 2023.

Personal note from the Chairman, Sir Nigel Rudd. My current term as Chairman of the board ends in February 2024. I would like to inform shareholders that I will not be seeking re-election in 2024. In line with governance best practice, the board has established a committee led by Mr Valli Moosa, the Lead Independent Director, who will be responsible for making a recommendation to the board for my successor.