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.

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Our strategy and performance

Our strategy

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

Grow our business

What this means

  • Grow DP capacity, matching market demand
  • Continue to expand and grow packaging and speciality papers in all regions
  • Commence commercialisation of biomaterials opportunities
  • Optimise graphic papers segment ensuring we balance supply and demand.

How we performed in 2023

  • Continued successful ramp up of DP expansion project at Saiccor Mill
  • Packaging and speciality papers constitute 26% of group sales volume (excluding forestry)
  • Packaging and speciality papers contribute 29% of group EBITDA*
  • Initiated the expansion and conversion of Somerset PM2 from graphic paper to packaging and speciality paper
  • Initiated the process for the further reduction of graphic paper capacity in Europe by the closure of Stockstadt Mill and potential closure of Lanaken Mill
  • Strong growth in lignin sales and favourable advancement of other biomaterials opportunities.

Sustain our financial health

What this means

  • Target net debt at approximately US$1 billion and sustain net debt/EBITDA at 1.5x through the cycle
  • Optimise capital management
  • Maximise return on capital employed (ROCE)
  • Review pricing strategies to secure optimal value creation.

How we performed in 2023

  • Reduced net debt to US$1,085 million
  • Generated US$210 million cash
  • Focused capex on essential projects aligned to the strategy
  • Sustained our contributions on graphic paper notwithstanding weak demand
  • Declared a dividend of 15 US cents
  • Repurchased a portion of 2026 bond with a cash settlement of US$206 million thereby reducing interest cost
  • Signed the sale agreement to sell the Stockstadt Mill property.

Drive operational excellence

What this means

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

How we performed in 2023

  • Record safety performance
  • Group efficiency, procurement and continuous improvement savings > US$115 million
  • Maximised the benefits of OneSappi to achieve cost advantages
  • Challenging macroenvironment resulting in weak trading conditions in the paper business and thus significant machine downtime
  • Ramped up Saiccor Mill production.

Enhance trust

What this means

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

How we performed in 2023

  • Performance against our science-based carbon emission reduction target was severely impacted by production curtailments
  • Actively supported local communities through community forums
  • Improved 2023 Employee Engagement Survey compared to 2021
  • Expanded Supplier Code of Conduct compliance and EcoVadis supplier assessments
  • Sustained Level 1 BBBEE in South Africa
  • Actively promoting gender diversity.

* Earnings before interest, taxation, depreciation and amortisation (EBITDA).

Measuring our progress

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

 Please click on a strategy to view its performance:

ROCE (%)

ROCE (%)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

® Linked to executive remuneration

2024 objectives

  • Grow volumes in all segments and improve cost position. Optimise the packaging and speciality papers volumes in all regions. Further reduce our exposure to graphic papers.

EBITDA (US$ million)

EBITDA (US$ million)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

EBITDA measures how we performed operationally as a company.

® Linked to executive remuneration

2024 objectives

  • Grow volumes in all segments and sustain contributions. Manage costs to maximise profitability
  • Focus on maximising cash generation through disciplined capital allocation and working capital management.

EBITDA margin (%)

EBITDA margin (%)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

2024 objectives

  • Improve margins in all business segments
  • Focus on reducing fixed and variable costs. Reduce downtime and improve operating rates.

Sales (US$ million)

Sales (US$ million)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

While not the only determinant of financial success, sales is a key measure of demand, customer loyalty and a critical contributor to profit.

2024 objectives

  • Continue to grow and optimise the packaging and speciality papers segments to fully operate our paper machine assets
  • Consolidate graphic paper sales to improve margins
  • Maximise DP volumes to capacity with increased volumes from Saiccor Mill.

Net debt (US$ million)

Net debt (US$ million)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

Given the capital-intensive nature of our operations, we need to raise debt to complete significant projects that enable our long-term success. Net debt comprises current and non-current interest-bearing borrowings and bank overdrafts (net of cash, cash equivalents and short-term deposits).

2024 objectives

  • During 2024 we are targeting to spend an estimated US$500 million on capital projects which includes US$154 million of expansionary capex, resulting in increased net debt.

Net debt:EBITDA (ratio)

Net debt:EBITDA (ratio)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

The net debt to EBITDA ratio measures our ability to pay off our debt should net debt and EBITDA remain consistent. EBITDA focuses on the operating decisions of a business as it looks at profitability from core operations before the impact of capital structure.

® Linked to executive remuneration

2024 objectives

  • With significantly reduced net debt targeting to sustain this ratio at 1.5x through the cycle.

Lost-time injury frequency rate (LTIFR) (per million work hours)1

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

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

LTIFR is an important measure of our business’ safety. We target zero harm and aim to improve LTIFR by at least 10% year-on-year.

® Linked to executive remuneration

△ Identified sustainability goal1

2024 objectives

  • Continue to reduce LTIFR and zero fatalities.

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report for more information

Gender diversity (%)

Gender diversity (%)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

We view diversity as a key driver that enhances our competitiveness and viability as a business and contributes to a thriving world. We aim to appoint more women in senior positions.

△ Identified sustainability goal1

2024 objectives

  • Stay on track to reach 23% of women in senior positions – HRL19 and upwards by 2025.

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

Supplier Code of Conduct (%)

Supplier Code of Conduct (%)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

△ Identified sustainability goal1

2024 objectives

  • Maintain 80% procurement spend with declared compliance with Supplier Code of Conduct.

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

Sustainable engagement (%)

Sustainable engagement (%)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

We rely on a productive and engaged workforce. Employee engagement has been linked to higher safety performance, lower staff turnover, improved productivity and efficiency.

△ Identified sustainability goal1

2024 objectives

  • No survey will be done in 2024, but we will implement learnings to continue to improve our 2025 engagement score.

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

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

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

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

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

® Linked to executive remuneration

△ Identified sustainability goal2

2024 objectives

  • Stay on track to decrease specific greenhouse gas (GHG) emissions (Scope 1 and 2) by 18% by 2025 against base year 2019 (893.3 kg CO2e/adt)
  • Stay on track to decrease specific GHG emissions (Scope 1 and 2) by 41.5% by 2030 against a base year of 2019.

2 For this indicator, we have clear targets for 2025 and 2030 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

Share of renewable and clean energy (%)

Share of renewable and clean energy (%)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

△ Identified sustainability goal1

2024 objectives

  • Stay on track to increase share of renewable and clean energy by 8% by 2025 against base year 2019 (53.5%).

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

Energy intensity (GJ/adt)

Energy intensity (GJ/adt)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

Energy intensity is a measure of how efficiently we are operating. By continually improving this metric, we manage costs and lower our environmental impact.

△ Identified sustainability goal1

2024 objectives

  • Stay on track to reduce energy intensity by 5% by 2025 against base year 2019 (22.1 GJ/adt).

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report for more information

Specific process water usage (m3/adt)3

Specific process water usage (m3/adt)3

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

△ Identified sustainability goal1

2024 objectives

  • Stay on track to reduce specific process water use by 23% by 2025 against base year 2019 (44.5m3/adt).

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

3 This indicator applies to mills in South Africa, as they are at risk of experiencing operational water challenges.

Specific landfilled solid waste (kg/adt)

Specific landfilled solid waste (kg/adt)

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

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

△ Identified sustainability goal1

2024 objectives

  • Stay on track to reduce specific landfilled solid waste by 15% by 2025 against base year 2019 (65.1kg/adt).

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

Certified fibre4

Certified fibre4

Our strategic performance indicators

Self-assessment of 2023 performance

Link to Thrive strategy objectives

Link to 3Ps and SDGs

Why is this important?

We are committed to sourcing woodfibre from forests and timber plantations in a manner that promotes their health and supports community wellbeing.

△ Identified sustainability goal1

2024 objectives

  • Maintain or improve percentage certified fibre above 75%.

1 For this indicator, we have clear targets for 2025 that we are working towards. See our 2023 Sappi Group Sustainability Report: www.sappi.com/2023GSDR for more information

4 The quantity of the total certified chips procured by Matane for Q4 is incomplete. Subsequently, the certified fibre procurement percentage is lower and is expected to increase as all suppliers confirm their deliveries.