Sappi reports Q1 FY2026 financial update amid challenging market conditions
Sappi released its financial results for the quarter ended 31 December 2025, reporting Adjusted EBITDA of USD 90 million for the period. Commenting on the performance, Group Chief Executive Officer Steve Binnie noted that market conditions remained challenging throughout the quarter, citing continued macroeconomic pressures, subdued consumer confidence and persistent overcapacity, which drove pricing declines across all product segments.
“The results were impacted by Rand appreciation against the US Dollar, a combination of scheduled and unscheduled maintenance work as well as lower dissolving wood pulp prices,” Binnie said. “These adverse impacts were partially offset by ongoing group-wide strategic cost-saving initiatives and annual energy refunds in Europe.”
In response to the headwinds facing the group, Sappi continued to implement cost-saving measures aimed at offsetting lower selling prices and the significant weakening of the US dollar against the South African Rand and the euro. As part of its proactive balance sheet management, the group further reduced its capital expenditure for FY2026 to approximately USD 260 million, with the objective of preserving cash and strengthening liquidity. Sappi also reported that liquidity improved further after the quarter-end, following an increase in its international revolving credit facility and the addition of a new term loan.
Binnie added that the group remained focused on executing the “Back to Basics” phase of its Thrive strategy, closely monitoring external developments while prioritising cost discipline and targeted operational efficiency improvements to maintain financial flexibility during a period of market weakness.
Update on proposed joint venture with UPM
Sappi also provided an update on the proposed formation of a 50/50 joint venture with UPM-Kymmene Corporation in the graphic papers segment. The planned transaction would combine Sappi’s European graphic paper operations with UPM’s Communications Paper business across Europe, the United Kingdom and the United States.
The parties indicated that they intend to sign definitive agreements during the first half of 2026, with completion targeted by the end of 2026, subject to the fulfilment of customary conditions precedent.
Outlook
Against the backdrop of a rapidly evolving global trade environment, Sappi’s management adopted a cautious outlook. Binnie highlighted that ongoing geopolitical and trade tensions continued to disrupt market stability and suppress consumer demand, weighing on industry performance.
Taking into account the challenging macroeconomic conditions, currency headwinds and depressed dissolving wood pulp pricing, Sappi anticipated that Adjusted EBITDA for the second quarter of FY2026 would be lower than in the first quarter.
