Q3 2026 Sappi Ltd Earnings Call Transcript

Aug 6, 2026 / 01:00 PM GMT

Release Date Price: $0.93 (+30.03%)

Transcript

Key Points

Positve

Sappi Ltd (SPPJY) is gaining market share in North American packaging (SBS) with record volumes in Q3 2026, and the Somerset PM2 machine is ramping up well, with operating rates expected to increase from 75% to 85% in Q4.
Dissolving pulp (DWP) prices are showing positive momentum, rising by $53 in the quarter, with further benefits expected to flow through in Q4 due to a lag effect, supported by strong VSF operating rates and low inventories.
The company has successfully implemented price increases in the US SBS market, with a second round announced, and is seeing positive pricing trends in the US graphic paper market following its conversion.
Sappi Ltd (SPPJY) has proactively taken $120 million of costs out of the business (half fixed, half variable), including significant fixed cost reductions in Europe, which are already reflected in the base.
The proposed joint venture with UPM received 98.5% shareholder approval, and the company is confident it will deliver substantial synergies, with the process on track for completion by the end of 2026.
Q4 2026 guidance is for EBITDA to be 'materially above' Q3, driven by the absence of major maintenance shuts, higher DWP prices, and improved North American volumes.

Negative

Sappi Ltd (SPPJY) continues to face challenging market conditions with volatile macro factors, including lower year-on-year selling prices across most product categories and the negative impact of a strong Rand against the US dollar.
The company is experiencing significant cost headwinds, particularly from sulfur prices (which have jumped from below $200/ton to nearly $1,200/ton, a $350 million year-on-year impact) and higher logistics/delivery costs ($106 million impact) linked to the Middle East conflict.
The European graphic paper market remains difficult due to excess capacity, and the second round of price increases in Europe was less successful than the first, limiting margin recovery.
Net debt to EBITDA leverage has increased due to lower profitability, and while the covenant is suspended until March 2027, the company needs to reach approximately $500 million of EBITDA to begin meaningfully paying down debt.
The Ingadwana maintenance shut negatively impacted Q3 results by $22 million, and the company anticipates a slight working capital outflow in Q4 due to operational ramp-up and price increases.
Paper pulp prices remain relatively low, which could cap the upside for DWP prices in the short term, and the company is not anticipating further DWP price increases in the immediate near term due to seasonal slowdown.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

SAPJ.J - Sappi Ltd
Q3 2026 Sappi Ltd Earnings Call
Aug 06, 2026 / 01:00PM GMT

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Presentation
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Unidentified_1 [1]
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Good day and thank you for standing by. Welcome to the SAPI Q3 2026 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear. An automated message advising your hand is raised.

Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, CEO Steve Binney. Please go ahead.

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Unidentified_2 [2]
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Thank

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