Group overview

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Evolve

Evolution in the natural world is a slow process. But in the hyperconnected world in which we live and work, it’s
fast – and becoming faster all the time. As an example, twenty years ago, very few people had ever heard of the ‘Internet of Things’. Ten years ago, the term ‘Industry 4.0’ had not yet been coined. At the start of 2020, few people had paid attention to terms such as coronavirus, social distancing, lockdowns or infection waves. Yet today, these terms are part of our everyday vocabulary, showing just how fast the world around us is changing.

In response to our rapidly changing landscape, five years ago, we embarked on a strategy of intentional evolution, which involved diversifying our product portfolio in higher margin segments. By 2020, despite market challenges, we had essentially met and in many ways, exceeded this ambition.

Evolution is based on a series of events, processes and responses. Around the world, people are responding to natural resources constraints by seeking responsible alternatives to non-renewables and solutions that are truly sustainable from seed to final product.

We are responding to these needs by building on our success in intentional evolution to accelerate an enhanced journey of evolution aligned with our Thrive25 strategy. We are doing so from a foundation based on a coalition of diverse perspectives and expertise; as well as a history of seeking out and investing in breakthroughs that enable lasting outcomes for our partners and a lighter footprint on the world. We are building on these to ensure that every solution we create supports our goal of making everyday products more sustainable and that we accelerate meaningful change.

Creating value by responding strategically

2020 Sappi Annual
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Reimagine

Stars form when celestial clouds collapse, feeding a rotating disc of gas and dust into a dense, hot central core. Amongst other things, pulsating stars give off carbon, a key ingredient for life as we know it. From chaos, something beautiful – and essential – is created.

We can view this as a metaphor for the coronavirus pandemic that infected and affected people regardless of nationality, class or wealth, leaving intense disruption in its wake. However, it also ushered in a global drive to reimagine our way of being on the planet. A new agenda for change is emerging, gaining traction and raising questions that will not go away.

Questions like: How do we reimagine a collective future where changed behaviours will allow us to live more in balance with nature than before? How do we

maintain and even intensify the sense of connection, caring and community that was one of the unexpected, but welcome, impacts of the pandemic? How do we deal with the uncertainty on the horizon when future surges of Covid-19 occur?

At Sappi we are taking bold, decisive action to respond to these challenges by extracting the full potential of trees and woodfibre to develop practical innovations for everyday impact and innovate what we should, not just what we can. We’re also establishing and maintaining proactive dialogue with all our stakeholders as well as working with and supporting local communities.

In doing so, we can not only create a more sustainable future, but also unlock significant long-term value for all our stakeholders.

Our performance review

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Resilience

Rocks are the ultimate symbol of resilience. They are fused together over time from solid crystals of different minerals. These natural processes bind them all together, imparting strength and resilience. But even rocks are shaped and reshaped over time by natural forces like water, wind and sun.

They’re a reminder that none of us are impervious to the global forces shaping our world. Forces like climate change, urbanisation, social inequality and of course, the new reality brought about by the coronavirus pandemic and Covid-19.

We’ve proven our resilience to succeed in the ‘new normal’ and we will continue to do so as we work to accelerate our decarbonisation journey, meet the changing needs of rapidly urbanising populations while managing our environmental footprint and promoting a diverse, inclusive workforce.

At Sappi we operate across different geographies, meeting the needs of customers from New Zealand to New Mexico, but our common purpose makes us stronger and more resilient: Sappi exists to build a thriving world by unlocking the power of renewable resources to benefit people, communities, and the planet. This is our inspiration and our call to create a brighter future for the world and for our business.

Governance and compensation

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Emerge

Collectively, the world is drawing a deep breath as we slowly emerge from the coronavirus pandemic and impact of Covid-19.

During the crisis, the safety of our people was our top priority. After which, like many enterprises across the world, our underlying goal was economic survival. To achieve this, we focused on the preservation of liquidity, lowering costs by deferring non-critical capex projects and postponing some annual maintenance shuts. We also took commercial downtime across all segments as required, in order to match supply to demand and prevent the build-up of inventory.

The verb ‘emerge’ is derived from the classical Latin ēmergere, meaning ‘to rise out or up’. We are proud

to say that we are rising from the impact of Covid-19 with strong growth in sales and profitability for the packaging and speciality papers segment, quickly recovering dissolving pulp market and steady month-on-month improvement for graphic papers.

As OneSappi we are steely in our determination to emerge from survival mode back onto a growth curve. A curve based on our strategy of diversifying our product portfolio into higher margin and growing segments – a strategy fully justified during the events of the past year.

Doing so is challenging, but we believe we can realise our vision of a thriving world by collaborating with all our stakeholders to create solutions for our collective needs and emerge stronger than ever before.

Appendices

2020 Sappi Annual
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Momentum

Linear momentum is defined as the product of a system’s mass multiplied by its velocity. The greater an object’s mass or the greater its velocity, the greater its momentum. In other words, momentum is about both magnitude and direction.

It can be difficult to maintain momentum in times of profound change or crisis, but it’s important to do so. That’s because action creates movement which in turn can create unanticipated opportunities.

Recognising this, at Sappi we responded to the coronavirus pandemic and Covid-19 in order to keep our forward momentum. We swiftly implemented a comprehensive Covid-19 action plan that ensured the health and safety of our employees and enabled us to operate in a safe, uninterrupted manner where demand permitted. Working closely with our

customers and suppliers we systematically increased activity and output in response to improved market demand. Our support for local communities helped mitigate the impact of the pandemic and the ensuing socio-economic consequences on them.

Looking ahead, we are confident that we can accelerate our momentum to navigate forward: We have the mass in the form of wide-ranging expertise, extensive infrastructure, strong foundation of research and development, together with our range of sustainable solutions produced from renewable woodfibre. And we have the velocity in the form of our ambitious but achievable Thrive25 strategy, which allows us to take advantage of the changing dynamics between the environment, consumers and the products they require. Above all, our passionate, committed people provide the impetus to power us forward.

Where we operate

Europe

North America

South Africa


Sappi Trading

Sappi Trading operates a network for the sale and distribution of our products outside our core operating regions of North America, Europe and South Africa. Sappi Trading also coordinates our shipping and logistical functions for exports from these regions

Sales offices

Hong Kong, Bogotá, Johannesburg, México City
Nairobi, São Paulo, Shanghai, Sydney, Vienna

Logistics offices

Durban

Europe

Europe

  • paper mills 5
  • speciality paper mills 3
  • paper and speciality paper mill 1
  • other operation 1
  • sales offices 15
Employees 5,600
    Capacity(1) (’000)
Mills Products produced Paper Pulp
Alfeld Mill Bleached chemical pulp for own consumption   120
Speciality paper; flexible packaging paper, paperboard, containerboard, release liner, label paper, functional papers 275  
Carmignano Mill Speciality paper; dye sublimation paper, flexible packaging paper, inkjet paper and label paper 100  
Condino Mill Speciality paper; dye sublimation paper, flexible packaging paper, inkjet paper and silicone base paper 60  
Ehingen Mill Bleached chemical pulp for own consumption and market pulp   140
Coated woodfree paper and containerboard 280  
Gratkorn Mill Bleached chemical pulp for own consumption   250
Coated woodfree paper 980  
Kirkniemi Mill Bleached mechanical pulp for own consumption   300
Coated mechanical paper 750  
Lanaken Mill Bleached chemi-thermo mechanical pulp for own consumption   165
Coated mechanical (CM) paper and coated woodfree paper 530  
Maastricht Mill Coated woodfree paper and paperboard 280  
Stockstadt Mill Bleached chemical pulp for own consumption and market pulp   145
Coated woodfree (CWF) paper and uncoated woodfree paper 445  
Total Sappi Europe 3,700 1,120
Other operation   Capacity(1) (million m2)
Rockwell Solutions Coated barrier film and paper 100
(1) Capacity at maximum continuous run rate per annum.

North America

North America

  • paper mill 1
  • speciality paper mill 1
  • paper and dissolving pulp mill 1
  • pulp mill 1
  • sales offices 6
Employees 2,100
    Capacity(1) (’000)
Mills Products produced Paper Pulp
Cloquet Mill Dissolving pulp, kraft pulp for own consumption and market pulp*   370
Coated woodfree paper 340  
Matane Mill High yield hardwood pulp for own consumption and market pulp   270
Somerset Mill Bleached chemical pulp for own consumption and market pulp   525
Coated woodfree and packaging paper 970  
Westbrook Mill Speciality paper; casting and release paper 23  
Total Sappi North America 1,333 1,165
* Approximately 135,000 hectares of our land is set aside and maintained by Sappi Forests to conserve the natural habitat and biodiversity found there.

South Africa

South Africa

  • paper mills 2
  • dissolving pulp mill 1
  • paper and dissolving pulp mill 1
  • sawmill 1
  • sales offices 6
Employees 4,800
    Capacity(1) (’000)
Plantations* Products produced Hectares Standing
Tons
KwaZulu-Natal Plantations (pulpwood and sawlogs)** 263 10,671
Mpumalanga Plantations (pulpwood and sawlogs)** 271 17,067
Total Sappi Forests
(owned and leased
supply)		 Of which 140,000 ha is contracted supply 534 27,738
(1) Capacity at maximum continuous run rate per annum.
* Approximately 135,000 hectares of our land is set aside and maintained by Sappi Forests to conserve the natural habitat and biodiversity found there.
** Plantations include owned and leased areas as well as projects.
    Capacity (m3) Capacity (’000 tons)
Plantations* Products produced Timber Hectares Standing
Tons
Lomati Sawmill Sawn timber (m3) 102    
Ngodwana Mill Unbleached chemical pulp for own consumption     210
Mechanical pulp for own consumption     110
Kraft linerboard   240  
Newsprint   140  
Stanger Mill Bleached bagasse pulp for own consumption     60
Office paper and tissue paper   110  
Tugela Mill Neutral Sulfite Semi Chemical pulp for own consumption     150
Corrugating medium   200  
Sappi ReFibre*** Waste paper collection and recycling for own consumption     103
Total Sappi Paper and Paper Packaging 102 690 633
Ngodwana Mill Dissolving pulp     255
Saiccor Mill Dissolving pulp     800
Total Dissolving pulp     1,055
Total Sappi Southern Africa 102 690 1,688
* Approximately 135,000 hectares of our land is set aside and maintained by Sappi Forests to conserve the natural habitat and biodiversity found there.
*** Sappi ReFibre collects waste paper in the South African market which is used to produce packaging paper.