Sappi reports weaker Q2 2026 results amid challenging global market conditions
Sappi reported results for the financial quarter ended 31 March 2026, highlighting resilient operational performance despite continued pressure from global market uncertainty, pricing challenges and currency volatility. The company recorded adjusted EBITDA of USD 52 million during the quarter, while adjusted earnings per share showed a loss of 8 US cents per share.
Liquidity remained stable, with cash on hand of USD 192 million and access to an additional USD 632 million in committed undrawn revolving credit facilities across Europe and South Africa. Although sales volumes increased year-on-year, selling prices declined across all regions, negatively impacting profitability.
North America supported by Somerset PM2 ramp-up
In North America, paperboard sales volumes increased by 27% year-on-year, reflecting continued progress in the ramp-up of the Somerset Mill PM2 project. However, regional profitability remained significantly below the previous year, mainly due to lower paperboard pricing and slower-than-expected sales development during the early stages of the project ramp-up. According to Sappi, the Somerset investment is expected to deliver long-term strategic benefits as volumes continue to improve.
Europe affected by oversupply and weak macroeconomic conditions
European operations continued to face difficult market conditions driven by macroeconomic weakness and structural oversupply in paper markets. Despite this environment, sales volumes in Europe increased by 2% compared with the previous year. Profitability in the region benefited from solid volumes and ongoing fixed-cost reduction initiatives.
Sappi also confirmed that work continues on the proposed joint venture with UPM. The company stated that negotiations are progressing according to schedule, with definitive agreements expected during the first half of 2026 and potential completion anticipated by the end of the year, subject to regulatory approvals and customary conditions.
South Africa impacted by exchange rates and pulp prices
In South Africa, profitability was significantly affected by lower dissolving wood pulp (DWP) prices and unfavourable exchange rate movements between the US dollar and the South African rand. Containerboard volumes remained broadly stable, supported by demand from the agricultural sector and positive forecasts for the 2026 citrus season. However, pricing remained under pressure due to weak global containerboard markets and increased competition from imported products.
Cautious outlook amid geopolitical uncertainty
Looking ahead, Sappi expects continued uncertainty linked to trade tensions, geopolitical conflicts, input cost inflation and currency fluctuations.
“Against a backdrop of continued market uncertainty arising from ongoing trade tensions, escalating geopolitical conflicts, and their broader indirect effects on global macroeconomic conditions, input costs and currency movements, we are adopting a cautious outlook,” said Steve Binnie, CEO of Sappi. He added that adjusted EBITDA for the third quarter of fiscal 2026 is expected to be below the level reported in the second quarter.
Focus on bioeconomy and long-term strategy
Sappi reiterated its strategic focus on the bioeconomy and the transformation of its business portfolio, particularly through investments in North America and sustainable fiber-based products. “As Sappi enters its 90th year of being listed on the JSE, our strategic focus remains fixed on the structural shift toward the global bioeconomy,” Binnie stated. He emphasised that sustainability, innovation and operational flexibility remain central to the company’s long-term competitiveness and resilience across global markets.
