Vigourexplore our theme

Lizards are estimated to have been around for 240 million years. Little wonder, given that they make use of a variety of antipredator adaptations, including venom, camouflage, reflex bleeding and the ability to sacrifice and regrow their tails. What’s more, as with other reptiles, the skin of lizards is covered in overlapping scales made of keratin, providing protection from the environment and reducing water loss through evaporation. This characteristic enables them to thrive in some of the driest deserts on earth.

Vigour, strength and adaptability have ensured lizards’ ability to thrive over the course of time.

So, too, at Sappi, our commitment to growing our business and maintaining a healthy balance sheet, has sustained us for almost 90 years. We are vigorous in our commitment to deliver on our Thrive strategy, including by reducing exposure to graphic paper markets while investing for growth in our target markets and capitalising on our leadership position in pulp supply to the lyocell market.

Evolveexplore our theme

Very little in nature is static – everything is constantly changing and evolving. One miraculous example of this is the metamorphosis of the egg, the caterpillar (larva) and the chrysalis (pupa) into the adult butterfly. This process embodies fresh ideas, renewal and unexpected outcomes.

The caterpillar’s new form as a butterfly opens new horizons, but also new risks, particularly in the form of climate change. Butterflies are particularly sensitive to environmental changes like climatic shifts. That is because they are strictly adapted to certain environmental conditions and their development depends on certain larval food plants and specific microhabitat structures.

In Sappi’s case, climate change presents both risks and opportunities. We are addressing short- and long-term physical and transitional climate risks identified through processes outlined by the Task Force on Climate-related Financial Disclosures (TCFD) to build resilience. In addition, we are determined, as a socially responsible business, to play our part in ensuring a just transition in South Africa as the country faces the reality of reducing its dependence on coal.

We are also determined to accelerate our science-based decarbonisation trajectory which we see as an opportunity to future-proof our business. So too, are the opportunities presented by evolving customer needs and legislation – notably growing demand for sustainable packaging, based on low-carbon impact, together with demand for more sustainable textile fibres.

We cannot achieve our vision of a thriving world without an evolving response to climate change. By collaborating with a broad range of stakeholders we are working to achieve energy security and climate resilience and transform our vision into reality.

Postureexplore our theme

Beauty and confidence. Pride and upright posture. These attributes have meant that many cultures over the ages have associated peacocks with royalty and power.

This image is appropriate to Sappi because we too, can stand tall with pride when we consider our past achievements and drive to create not just enterprise value, but value for our people and for communities.

We have achieved enterprise value through our ability to be nimble and optimise profitability in ever-changing markets, reshaping our products and processes to create value and growth for our own business and our customers. We continue to offer our customers a broad range of solutions based on the power of renewable resources that enable them to achieve their sustainability goals and contribute to the low-carbon, circular economy. In doing so, we have continued to focus on treading more lightly on the Planet.

Creating value for our people and communities is underpinned by the structures and programmes we have established which facilitate open, authentic communication, by our ongoing investment in training, development and transformative community programmes, as well as by our collaborative partnerships focused on workable solutions to industry challenges.

Our commitment to delivering sustainable value to our stakeholders is based on our focus on living our values at all times: At Sappi we do business safely with integrity and courage, making smart decisions which we execute with speed.

Diving deeper into our,
performance and prospects

Fortifyexplore our theme

Hermit crabs are shapeshifters, moulting as they grow, continually shedding their exoskeletons and growing new ones. As their exoskeletons are fragile, they need shells for protection. Rather than produce their own shell, as they grow, they use shells abandoned by other marine creatures. This process is not a one-off, but continues throughout their lifespan, depending on water temperature, habitat and species.

Many species will enhance their chances of survival by encouraging anemones to attach to their shell, as the latter’s stinging tentacles may deter predators. The crabs even transfer the anemones from shell to shell when they move house.

We can draw parallels with Sappi, fortified as we are by our iterative Thrive strategy and by our agility in responding to changes in our operating context to emerge stronger and better positioned for growth. This process is underpinned by ongoing engagement with our stakeholders, whose input helps us shape our response to our environment as we collaborate to build a thriving world.

Balanceexplore our theme

Bubbles are things of fragility, wonder – and balance. That’s because the inward surface tension forces of the water film are exactly balanced by the outward-pushing pressure of the air inside.

Blowing more air in to make a bigger bubble means more air pressure inside and also means the bubble must get thinner in the process, because there is only so much water to go around. Should one keep blowing more air in, the film eventually won’t have enough reserve water to spread out into a bigger surface, and the ultimate catastrophe occurs: the bubble bursts.

The success of Sappi’s business is also based on balance. This includes continuous capital prioritisation as we look to reduce costs and grow the business while sustaining a healthy balance sheet. It involves reshaping our product portfolio to meet changing market needs and taking advantage of growth opportunities while being mindful of the risks. It means balancing the needs of people and communities with our responsibility to our shareholders.

As we move forward into the future, we know we can rely on the expertise and passion of our people and the ongoing cooperation of our stakeholders to maintain this balance and drive sustainable value creation.

Connectexplore our theme

Some mushrooms are bioluminescent, due to luciferins, the same compounds that make fireflies light up at night. This ability is used to attract insects which then spread the mushroom spores elsewhere in the forest, allowing the fungi to reproduce.

But that’s not where connection ends. Beneath every forest and wood lies a complex network of roots and fungi that connects trees and plants to one another. This network – sometimes called the Wood Wide Web – is almost 500 million years old and is vital for most plants on earth. Trees and plants obtain nutrients that the fungi acquire from the soil, such as nitrogen and phosphorus by means of enzymes that the trees do not possess. In return, the fungi receive carbon-rich sugar from the roots of the trees.

This symbiotic relationship enables all connected organisms to thrive.

Similarly, at Sappi our connection with our stakeholders shapes our work to build a thriving world. This connection enables us to meet the changing needs of every employee at Sappi and to offer our partners the renewable innovation they need to be successful. By understanding and connecting with community needs, we drive positive social impact, playing a role beyond making and selling.

Like mushrooms, our business is a living organism – growing, adapting and evolving in a continually shifting context. As we shape our response to this context, we prioritise value creation for all stakeholders.


Letter to the stakeholders from the Chairman and CEO

“Against a backdrop of a volatile and challenging macroeconomic environment, Sappi delivered EBITDA excluding special items of US$731 million for the year ended September 2023. The widespread disruption caused by ongoing geopolitical instability, weak global economic growth, rising interest rates and an underperforming Chinese economy negatively impacted markets for our products.”

Sir Nigel Rudd

Steve Binnie

Operating review

The unfavourable trading conditions faced in 2023 were further exacerbated by a prolonged period of downstream inventory destocking as buyers slowly worked through inventories that had been built up in the second half of 2022. In response to these headwinds, we concentrated on preserving selling prices, efficiently managed our capacity and inventories to optimise working capital and implemented various cost-saving initiatives across our operations, all of which positively contributed to the earnings performance.

Despite 2023 being one of the most challenging downcycles experienced in the pulp and paper industry, with demand for our paper products falling below that of the Covid-19 pandemic years, we achieved some significant milestones. The South African business delivered record EBITDA (in SA Rand) and North America the second highest ever EBITDA. Additionally, the group generated significant cash enabling a further reduction of net debt at year-end to US$1,085 million, the lowest level in 30 years.


Safety is intricately woven into our strategic framework as a non-negotiable core value and embedded in our values statement: As OneSappi, we do business safely, with integrity and courage, making smart decisions that we execute with speed. We recognise that a culture of safety is paramount to our success and have incorporated it into every facet of our operations. This commitment to safety is an integral and ingrained element of Sappi’s overarching Thrive strategy, aligning with our broader goals of sustainability, operational excellence and stakeholder trust.

We are very pleased to report that there were no work-related fatalities during the year and all regions achieved their best ever LTIFR performance. The relentless focus on robust safety training programmes, regular audits, hazard assessments and proactive risk management combined with reward and recognition programmes are essential to ensuring the wellbeing of our employees and the communities in which we operate. A number of noteworthy milestones were achieved during the year; Ehingen Mill achieved 2 million zero lost-time man hours, Stockstadt Mill achieved 1 million zero lost-time man hours, Somerset Mill achieved 5 million zero lost-time man hours, Ngodwana Mill achieved 3 million zero lost-time man hours and Sappi Forests’ Zululand Coastal business unit continued with their record-breaking safety performance achieving 7 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.


Graphic paper demand declined sharply and remained weak throughout the year due to weak consumer confidence related to the slowing global economy and an inventory destocking cycle which took longer than anticipated. Sales volumes declined 38% year-on-year and production curtailments were required to manage these weak demand dynamics. Selling prices were 14% higher than the prior year and remained resilient. However, cost inflation and operational inefficiencies associated with low capacity utilisation significantly eroded profitability. The prolonged market weakness with no immediate signs of a meaningful rebound suggests a substantial erosion of underlying demand for graphic papers. As a result, industry operating rates fell to an unsustainable level. In response to the market overcapacity and in line with Sappi’s strategy to reduce exposure to graphic paper markets, we made the difficult decision to close the Stockstadt Mill and initiated a consultation process for the potential closure of the Lanaken Mill shortly after year-end.

The packaging and speciality papers segment faced similar weak trading conditions related to high levels of downstream inventory and muted consumer demand. Positive year-on-year pricing gains of 7% were insufficient to offset input cost inflation and a 22% reduction in sales volumes leading to a decline in the segment’s profitability.

The same market dynamics of elevated stock levels and negative consumer sentiments dampened demand and pricing for textile fibres in the early part of the year. However, viscose staple fibre (VSF) operating rates in China improved steadily as economic activity resumed from the third quarter onwards. Operating rates in the VSF industry remained at a high level through the remainder of the year and downstream VSF inventories dropped below historical levels, which supported demand for DP. The hardwood DP market price fell more than US$200 from the elevated levels of last year to reach a low of US$840 in August. The movement was driven primarily in the early part of the year by high-retail inventories and weak consumer sentiment and then in the latter part of the year by relatively subdued VSF pricing and the weak Chinese Renminbi exchange rate against the US Dollar. Sales volumes for the pulp segment increased by 7% compared to the prior year but profitability was adversely impacted by the lower average pricing and cost inflation.

Strategic review

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.

Sappi’s Thrive strategy underscores the company’s commitment to creating a sustainable future. Anchored in sustainability, innovation and transparency, Thrive aims to position Sappi as a trusted and innovative partner in building a biobased circular economy. Thrive embodies Sappi’s dedication to long-term growth, responsible resource management and the wellbeing of our workforce and the communities in which we operate, ultimately reflecting the company’s mission to thrive while advancing the principles of a sustainable, circular economy.

Our Thrive 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.

Initiatives and actions undertaken in 2023 to support our strategic objectives are outlined below.

Grow our business

The substantially reduced debt levels provide us with the necessary headroom to navigate any market headwinds and provide us with flexibility to accelerate our investments in higher-margin businesses while reducing our exposure to declining paper markets.

In 2023, the packaging and speciality paper segments constituted 29% of group EBITDA and represented 26% of sales volumes (excluding forestry). Within the context of the challenging market conditions, this was a satisfactory performance and demonstrates the resilience of the segment. The long-term outlook for packaging and speciality paper products remains favourable and we will continue to maximise profitability by growing our capacity and optimising our product mix. The conversion and expansion of Somerset PM2 from coated woodfree graphic paper to solid bleached sulphate paperboard commenced during the year and is progressing well. The US$418 million investment is fully aligned with our strategy to reduce exposure to graphic papers and grow in the higher-margin packaging papers segment. The project is on track for commissioning in 2025 and will add 470,000 tpa of capacity to our packaging papers segment.

We made good progress in expanding our packaging and speciality papers portfolio during the year with the development of a number of new products.

We expanded our portfolio of wet-glue label papers with the development of a new wet-strength, alkali-resistant Parade Label Pro WS, produced at Gratkorn Mill. The product is suitable for high-quality labels for returnable containers in the beverage and food industry, such as returnable glass and polyethylene bottles. Following successful technical validation with selected customers, the product is scheduled for full commercialisation in 2024. 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 in 2022 to produce barrier papers at the speciality paper mill, Alfeld, in Germany. In 2023 we made good progress on collaborations with key customers to qualify our new functional papers which support the shift away from fossil-based materials towards renewable, paper-based packaging solutions that also provide exceptional product protection.

In South Africa, the upgrade of the containerboard machine at Ngodwana Mill was completed at the end of 2022. The start up after the upgrade was challenging, which negatively impacted production volumes in the early part of 2023 but operations stabilised in the second half of the year. The investment has allowed us to extend our product range to the lightweight grades which allowed us to optimise our portfolio to better meet the needs of our customers.

Containerboard demand in South Africa is projected to grow, driven by robust growth in the fruit export markets which represents a strategic growth opportunity in the future. The PrimePak Unbleached kraft bag product produced at Ngodwana Mill has begun to generate pleasing results. Launched towards the end of FY2020, sales growth and market penetration have been impressive, and in FY2024 it will represent more than 25% of the capacity of the newsprint machine. The product has been particularly successful in the South African quick service restaurant (QSR) segment and retail bag applications have also begun to yield some successes as the migration away from plastics continues. In February 2023 we commissioned two machines for the production of bagasse-based compostable thermo-moulded food-grade bowls and plates at Stanger Mill. Commercial sales in South Africa are progressing well and we will soon be expanding the portfolio to fast food containers and exploring opportunities in international markets.

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. In 2023 we made further progress in the application of Valida (fibrillated cellulose) in our own paper products where it is used to enhance the functionality and performance of our Sappi paper and tissue products. Our manufacturing capacity has been significantly increased and now covers multiple sites in Europe and South Africa. Late in 2022, we commissioned our furfural pilot plant at Saiccor Mill. The pilot plant has successfully demonstrated that Sappi’s furfural technology produces high-quality furfural from hemicellulose sugars present in the spent sulphite cooking liquor. The furfural produced in our pilot plant has been tested by the market and meets even the most stringent requirements. We have initiated a class 10 engineering design and costing project for a potential commercial furfural plant which would position Sappi as one of the largest producers of furfural globally. The value of our lignin business continued to grow from the strong performance of last year and we have accelerated the development and commercialisation of higher value lignin-based solutions. We progressed development of Viscowell, our lignosulphonate-based product used in oil-well drilling for mud thinning, fluid loss and as a retarder for well cementing.

Sustain our financial health

Despite the challenging operating environment, we continued to generate cash and reduced net debt to US$1,085 million (FY2022 US$1,163 million). This was after taking into account a negative currency translation effect on our Euro-denominated debt being converted at a higher rate, which increased net debt by US$76 million for the year, and the US$107 million returned to shareholders through the dividend and share buyback programmes. The closing net debt level is the lowest since the early 1990s when the company embarked on its global merger and acquisition strategy.

Net finance costs for the year were significantly lower than the prior year due predominantly to lower debt levels. We repurchased US$206 million of the aggregate principal amount of the 2026 bonds in a tender offer in the first quarter, which yielded a capital gain of US$15 million (reflected in net finance costs) and reduced interest payments by US$6 million. We also settled the South African SSA07 bond for US$60 million in the third quarter. There are no significant maturities due before 2026 and we remain comfortable with the maturity profile of our debt.

Our capital investment programme is focused on operational efficiencies, enhancing our product offerings, improving our environmental footprint and growing our packaging business. Capital expenditure in FY2023 of US$382 million included US$100 million for the conversion and expansion of Somerset PM2 to packaging grades. Capital expenditure for FY2024 is estimated to be in the region of US$500 million including approximately US$154 million for the Somerset PM2 project.

The stronger balance sheet with a significantly reduced debt profile and healthy cash reserves provides us with the flexibility to navigate the headwinds of cyclical downturns and positions the business well to deliver on our Thrive strategy to reduce exposure to graphic paper markets while investing for growth in our target markets.

Drive operational excellence

Operational excellence is of paramount importance to Sappi, as it serves as a foundational pillar for our success and long-term sustainability and is the key to meeting the evolving needs of customers while maintaining a competitive edge in a dynamic market. By optimising operational processes, we can enhance efficiency, reduce costs and minimise environmental impacts, reinforcing our commitment to sustainability. Moreover, operational excellence enables us to consistently deliver high-quality products and services to our customers, enhancing trust. This focus on excellence also contributes to a safe and motivated workforce, further reinforcing Sappi’s reputation as a responsible corporate citizen. In a rapidly changing world, operational excellence equips Sappi to adapt, innovate and stay ahead in the industry, ultimately driving growth and delivering value to both its shareholders and society at large.

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 significant cost inflation in our raw materials experienced in FY2022 receded slowly during the year but variable costs still remain elevated compared to historical levels. We set ourselves a target of a US$61 million reduction in third-party expenditure compared to 2022 through efficiency and raw material usage improvements and delivering savings through various procurement initiatives. We are pleased to report that savings of US$115 million were realised, which helped offset the significant increase in purchased pulp, chemicals and energy costs. In 2024 we are targeting approximately US$60 million in variable cost savings.

Globally, to ensure and enhance operational efficiency, we track the overall machine efficiency of every single paper machine in all three regions and compare this against ‘best own practice’ and ‘best realisable’. In FY2023, of our 28 paper/packaging assets, 13 improved performances year-on-year. This is remarkable within the context of the low capacity utilisation, stop/starts and reduced operating rates (speed) in North America and Europe. We continue to monitor performance to enhance understanding of grade changes, quality issues, sheet-breaks and mix impacts to ensure continuous improvement.

Our decarbonisation programme aligned with our science-based targets continued in 2023. Kirkniemi Mill took a big leap forward in 2023 completely exiting coal and instead became powered by renewable bioenergy. The modernisation of the Gratkorn Mill power plant boiler in 2022 enabled the shift from coal to a combined approach of biomass and natural gas. In 2023, the mill embarked on the next step, enhancing its infrastructure and therefore capacity to handle the delivery, sorting and processing of increased biomass levels. The improved biomass handling system at the mill as well as decentralised intermediate storage terminals within the surrounding regions will enable the boiler to transition completely to renewable biomass over time.

We completed a modernisation project on Gratkorn Paper Machine 11 (PM11), which included extensive modernisation of automation and electrical equipment including drives, control systems, quality control and inspection systems as well as upgrades to the coating profile and other areas. Gratkorn PM11 is the largest coated woodfree paper machine in Europe and maintaining its competitive cost position is critical to our graphic papers strategy. Our investment ensures that we can continue to serve the commercial print market profitably.

We have several information technology (IT) projects which are critical for addressing both the risks and opportunities offered by Industry 4.0 in progress. We anticipate piloting a new manufacturing execution system (MES) in 2024 which will enhance operational excellence and will support the various advanced analytics projects 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. Our commitment to conducting business with the utmost integrity and responsibility is underpinned by a strong ethical framework. 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 and extends to every aspect of our operations, from environmental stewardship and responsible sourcing of raw materials to creating a diverse and inclusive workforce and engaging with customers and local communities. Our ethics training initiatives incorporate relevant and practical examples and have been implemented to inculcate the correct ethical behaviour and responses while avoiding a tick-box approach to ethics.

Sappi aims to strengthen trust with our stakeholders through a comprehensive approach that prioritises transparency and active engagement. Through open communication of our operating performance and sustainability initiatives, we demonstrate our commitment to transparency, fostering trust among investors, customers and the wider community. Simultaneously, our people strategy places a strong emphasis on leadership development and the cultivation of a unifying culture that embodies the spirit of ‘OneSappi’. We seek to enhance our organisational capabilities to meet both present and future needs and enhance overall employee engagement, thus reinforcing our commitment to excellence and sustainable growth.

In 2023 we conducted our biennial employee engagement survey. More than 85% of the actions that were raised in the previous survey in 2021 were closed out ahead of the current survey. We are very pleased to report that both employee participation and employee engagement improved compared to 2021. Our participation rate of 94% was noted by our service provider as the highest they have seen to date and gives us confidence that our employee feedback is both comprehensive and representative. The wealth of data obtained through the process will allow us to craft employee solutions specific to regions, workplaces and levels. We made good progress in our objective to increase gender equality and continue to actively nurture emerging talent and create inclusive growth opportunities.

Recognising that we are part of the communities beyond our fence lines and that their prosperity and wellbeing are linked to our own, we strive to make a purpose-driven, meaningful contribution towards the wellbeing and development of our neighbouring communities. We work to create positive social impact by jointly identifying and leveraging opportunities, aligning with and supporting business priorities and needs, considering feedback from our stakeholders. The underlying goals of our social impact programme are to create a stronger social licence to operate; enhance customer loyalty, attract talent and advance our priority UN SDGs (seven globally and two in South Africa). Our Sappi Khulisa tree-farming scheme in South Africa is a good example of positive social impact and shared value and in 2023 we celebrated 40 years of success. The programme is an integral part of our woodfibre supply chain, enhancing the security of fibre supply, while uplifting rural communities by equipping them to become sustainable participants in the forestry value chain.

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 2023 we made further progress towards our supplier engagement target with 81% of suppliers in compliance and thus we are well-positioned to exceed our 2025 target of 80%. Our partnership with EcoVadis continued to gain momentum in 2023 with 796 suppliers sharing their EcoVadis scorecards with us and another 400 in progress to disclose on the platform. The EcoVadis methodology allows us to assess the sustainability performance of our suppliers and identify risks within our supply chain.


Sappi recognises the impact of its operations on the environment and communities. By prioritising sustainability, we not only mitigate our environmental footprint but also ensure the long-term viability of our business. Sappi’s commitment to responsible resource management, reduced carbon emissions and ethical practices solidifies our position as a forward-thinking and socially responsible industry leader. As we navigate the challenges of decarbonising our value chain, we recognise that collaboration is a critical element of our journey. We actively participated in the work of the World Business Council for Sustainable Development (WBCSD) Forest Solutions Group (FSG), progressing Net Zero and Nature Positive roadmaps that are appropriate for the Forest sector. In addition, we were active participants in the development process for the new Green House Gas Protocol: Land sector and removals guidance.

In 2023 our operational efficiency was severely hampered by production curtailments that were implemented in response to the challenging market conditions. The result is that we regrettably significantly exceeded our carbon emission and waste intensity targets. Despite this poor performance, we remain confident that our climate strategy and capital investment programme are on track to deliver our 2025 and 2030 commitments.

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

Looking forward

Looking to the future, we are committed to consistently generate lasting value for our stakeholders through our unwavering focus on execution of our Thrive strategy with delivery against clear actions and targets continuing beyond 2025. Against the backdrop of an unpredictable macroeconomic and geopolitical landscape, our proactive risk management places risk appetite and tolerance at the heart of our decision-making processes. This approach guarantees that both our management and board possess a well-rounded perspective on risks and opportunities, enabling them to make informed strategic decisions and ultimately deliver sustainable value to our stakeholders.

We recognise that persistent global macroeconomic challenges and generally subdued consumer sentiment continue to impact the demand for many of our products.

DP markets appear more positive as VSF operating rates continue to be strong and the differential between cotton and VSF pricing remains supportive. Hardwood DP market pricing has increased in recent weeks to US$900 per ton. Additionally, paper pulp pricing has also moved into an upward trajectory, which will benefit our high-yield pulp (HYP) sales. DP sales volumes in the first quarter will, however, be lower than the prior quarter due to scheduled maintenance shuts at all three of our DP mills.

It has become apparent that demand for graphic papers has experienced a permanent structural decline. Sappi remains committed to our stated strategy to reduce exposure to graphic paper markets and will proactively manage overcapacity through conversion and expansion of the Somerset PM2 graphic paper asset to solid bleached sulphate paperboard in the US in 2025 and rationalisation of the European capacity through closure of the Stockstadt Mill and potential closure of the Lanaken Mill. It is anticipated that strategic action in the European region will significantly improve the capacity utilisation of the graphic paper assets and improve the fixed cost position of the business in the second half of the year.

The long-term favourable outlook for our sustainably produced packaging and speciality paper products remains unchanged, however, in the short term challenges persist. The destocking process in the segment is taking longer than expected and the macroeconomic landscape remains unpredictable, which is likely to continue to weigh on consumer sentiment. We therefore do not expect any meaningful recovery in the first quarter of the financial year. Sappi is well positioned to benefit from the turn in the cycle.

Variable costs have reduced from the peak in the first half of the 2023 financial year but remain high relative to historical levels. Global pulp prices have started rising in recent weeks and wood costs remain elevated. Additionally, recent heightened geopolitical issues may cause additional volatility in energy markets. Cost inflation is therefore a risk in the coming quarters. We continue to proactively implement cost containment initiatives to mitigate the risk of higher costs. In the first quarter, the Ngodwana, Saiccor and Cloquet Mills will take scheduled maintenance shuts, which will have an estimated US$40 million impact on group profitability.

Capital expenditure for FY2024 is estimated to be in the region of US$500 million including approximately US$154 million for the Somerset PM2 project.

Deleveraging of our balance sheet has been material and combined with substantial cash reserves we are well-positioned to navigate any market challenges in the coming year. We remain encouraged by the increasing resilience of our business and opportunities for growth in our packaging and pulp segments. Through our Thrive strategy we are committed to strengthening our competitive position and delivering sustained shareholder value.

Notwithstanding the gradual recovery in pulp and paper markets and taking into consideration the impact of the scheduled maintenance shuts, we anticipate that the EBITDA for the first quarter of FY2024 will be below that of the fourth quarter in FY2023.


Sappi expresses deep gratitude to its diverse stakeholders, recognising their valuable contributions and support in guiding the company’s actions and decisions. This includes customers with whom Sappi collaborates to provide sustainable biobased products, employees whose wellbeing and dedication are pivotal to the company’s success and a wide range of stakeholders whose ideas and feedback enrich Sappi’s role as a responsible corporate citizen. Sappi values these relationships and appreciates the role each stakeholder plays in its development and performance.

Sappi acknowledges and highly values the efforts and contributions of its board. The company recognises the crucial role played by the board in guiding its strategic decisions and overall governance. Sappi expresses deep appreciation for the dedication, expertise and leadership provided by its board members in steering the company toward success and sustainable growth.

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 07 February 2024.

Changes to the board

Sir Nigel Rudd will retire as independent Chairman of the board and from all other board positions including his role as Chairman of the Nomination and Governance Committee at the AGM on 07 February 2024. Sir Nigel was appointed to the board in April 2006 and served as the Lead Independent Director before being appointed Chairman on 01 March 2016. The board extends their sincere appreciation to Sir Nigel for his leadership which has enabled Sappi to drive its growth strategy through expanded packaging and speciality papers capacity and increased share of earnings while reducing exposure to declining graphic paper markets alongside a period of significant debt reduction which enabled Sappi to weather the storms of Covid-19, high inflation and interest rates, as well as macroeconomic disruptions.

Mr Nkateko (Peter) Mageza will retire as an Independent Non-executive Director (NED) of the board and Chairman of the Audit and Risk Committee (ARC) at the AGM on 07 February 2024. Mr Mageza was appointed to the board in January 2010 and was appointed to the ARC in February 2010, serving as Chairman since February 2018. The board extends their gratitude to Mr Mageza for his significant contribution and support to the company.

Further to these retirements, the board has appointed Mr Nkululeko Sowazi, who joined the board as Independent NED with effect from 03 October 2022, as independent Chairman of the company with effect from 08 February 2024. Mr Sowazi will resign as a member of the ARC. In addition, Ms Zola Malinga is appointed as Chairperson of the ARC as of 08 February 2024, subject to the approval by shareholders of Ms Malinga’s re-appointment to the board and the ARC. Ms Malinga joined the Sappi board in October 2018 and has been a member of the ARC since then.

Mr Mohammed (Valli) Moosa, a longstanding member of the board currently serving as Lead Independent Director, Chairman of the SETS Committee and member of the Nomination and Governance Committee has indicated that he would like to retire. The board and Mr Moosa have agreed that he should continue in his role until his retirement at the AGM in February 2025 to ensure a smooth transition to his successor.

A personal message from the Chairman, Sir Nigel Rudd

Reflecting on my tenure of seventeen years with the Sappi board, the last seven as Chairman, I am struck by the number of significant internal and external challenges that we navigated during this period. I have been blessed to serve alongside exceptional board members and wish to thank all of them, past and present, for their support. I have also had the privilege during my tenure of visiting almost all of Sappi’s facilities and meeting the many people who make Sappi the excellent company that it is. I wish to thank them for the commitment, loyalty and hard work. South Africa is a country I have come to love over these past 20 years and I am so pleased to have been able to play a small part in establishing Sappi’s bright future as a global company with roots sunk deep in the African soil. Very many projects have been undertaken during the past 17 years across all three operating regions, but I would be remiss in not mentioned the largest ever expansion and upgrade investment project in South Africa – the ‘Vulindlela project’ at our Saiccor Mill in KwaZulu-Natal, South Africa. I was able to spend some quality time with President Cyril Ramaphosa discussing the strategic importance to South Africa of Sappi and the forest products industry and hosted him at the ribbon cutting podium and plaque unveiling ceremonies in September 2022. Equally, I feel a great sense of satisfaction that management, with the guidance and support of the board has been able to change the strategic direction of the company in response to fundamental changes in market demands and consumer preferences. I retire from a diversified woodfibre company rather than the narrow graphic paper focused company I joined in 2006. The demand and preference for natural, sustainable and renewable resource-based products shows no sign of ending with Sappi continuing to invest to secure an ever-larger share across a wide variety of market segments, both paper (such as flexible packaging and paperboard) and non-paper (such as Verve DP and lignosulphonates). Any such change leads to disruption as capacity in declining product segments is either converted to growth segments or closed down, with the unavoidable but regrettable impact on loyal and competent employees. At the same time capital requirements increase which elevate debt levels and the investment case is sometimes not clear to external stakeholders over the short term. On each of these challenges I am satisfied that I leave a company in very good health. We have demonstrated how the diversification strategy can deliver real enterprise value as is evident through the transformation of the North American business. Strategic investments and acquisitions have helped position the company for growth, while astute financial management has reduced debt to record low levels and enabled the company to resume dividend payments, all bolstering the long-term investment case for Sappi through sustainable shareholder returns. I wish the board and the entire Sappi family well on their journey to a thriving world.