Sappi has reported a $20 million loss for the second quarter of 2025, citing major mill maintenance, rising costs, and weak global demand.
Sappi, a leader in the global paper and packaging industry, has announced a $20 million net loss for the second quarter of 2025, compared to a $29 million profit during the same period in 2024. The decline is primarily attributed to extended maintenance shutdowns at its South African operations, weak global demand, and rising operational costs.
Operational challenges:
Significant maintenance shutdowns at the Saiccor and Ngodwana Mills resulted in $13 million in costs, surpassing the initial forecast of $45 million. Additionally, operational disruptions related to the Somerset Mill PM2 conversion in North America accounted for an extra $20 million in expenditures.
Furthermore, Sappi’s adjusted EBITDA dropped to $107 million from $180 million in 2024, and the company incurred a forestry fair value loss adjustment of $16 million (R307 million), further impacting financial performance.
Performance observations:
Despite challenges, packaging and specialty paper volumes rose by 9%, indicating slight demand recovery in these sectors. Meanwhile, graphic paper sales held steady due to market share gains, despite the segment’s gradual decline.
Conversely, dissolving wood pulp (DWP), used in textile production, continues to face headwinds. Softer demand in China post-holiday and declining viscose staple fiber (VSF) prices by $70 per ton remain concerns, compounded by U.S.-China trade tensions.
Debt and expenditure:
Net debt climbed by $264 million to $1.67 billion, driven by cost escalations and delays in ongoing capital projects. However, Sappi plans to lower its debt levels after Q3, supported by peak project spending during the period. Despite the financial strain, the company’s liquidity remains stable with $156 million in cash and $612 million in credit facilities.
CEO Steve Binnie acknowledged the tough economic environment, citing global trade tensions and currency challenges as hurdles to profitability. In Europe, oversupply and economic pressures have compressed margins, further affecting the company’s returns.
For Q3, Sappi estimates flat earnings performance but emphasises its commitment to cost management, asset efficiency, and market expansion as it navigates a challenging global landscape.
Source: www.sustainabilitymea.com
