SOUTH AFRICA · PAPER AND PULP
Key Facts
- The loss Sappi lost US$747 million in the year to September 2026, against US$177 million a year earlier.
- The earnings Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 41% to US$294 million.
- The debt Net debt rose to US$2.05 billion, and lenders extended the suspension of debt-limit testing to June 2027.
- The outlook Sappi expects first-quarter 2027 adjusted EBITDA to come in below the US$99 million of the last quarter.
- The date Sappi published the results on Friday 6 November 2026 on the Johannesburg Stock Exchange.
The Sappi annual loss widened to US$747 million in the year to September 2026, the South African paper maker said on Friday 6 November. A year earlier the loss was US$177 million.
Sappi blamed a stronger South African rand, weak demand for paper, higher fuel and chemical costs, and US$405 million of one-off charges. Revenue slipped 3% to US$5.28 billion.
How the Sappi Annual Loss Grew
Adjusted EBITDA, a measure of operating earnings before interest, tax and write-downs, fell 41% to US$294 million from US$501 million. One-off items cut earnings by US$405 million, mostly impairments of US$319 million, which are write-downs of assets that are worth less than their books say.
Falling timber values added a further US$269 million loss on the group’s forests. The last three months were better than the year as a whole.
Adjusted EBITDA for the quarter to September was US$99 million, and the quarterly loss was US$116 million.
Why a Stronger Rand and Weak Demand Hurt
Sappi earns its money in US dollars but pays many costs in rand, so a stronger rand squeezes its South African mills. Cheap imports, helped by the same strong rand, also pressed down prices for local newsprint and office paper.
Higher fuel, transport and chemical costs linked to the conflict in the Middle East added to the pressure. About 38,000 tons of dissolving wood pulp, a fibre used to make clothing, missed the quarter because of congestion at the port of Durban.
Demand for dissolving wood pulp stayed strong, and prices ended the quarter at US$920 per ton, up US$22 in three months. In North America, a new paperboard machine at the Somerset mill ramped up more slowly than planned but improved in the second half.
Debt Limits and the Planned UPM Merger
Net debt rose to US$2.05 billion from US$1.92 billion because the business used cash. Sappi held US$707 million of liquidity at year-end, made up of US$165 million in cash and US$542 million of unused credit lines.
Lenders agreed to extend the suspension of debt-limit tests, called covenants, from March to June 2027. They also set looser limits that tighten gradually and give Sappi room until December 2027.
In Plain English, Who Is Who
Sappi is a South African company that makes pulp, paper and packaging at mills in Africa, Europe and North America. Steve Binnie is its chief executive.
UPM is a Finnish forestry group, and the European Commission is the European Union’s competition regulator. Sappi and UPM filed remedy proposals on Wednesday 4 November 2026 for a planned European graphic papers joint venture.
What It Means for You
For US readers, Sappi matters because it runs paperboard and pulp mills in North America and reports in US dollars. For the trade backdrop, see Rio Times reports on South Africa’s newsprint tariff and on South Africa’s US trade access.
Sappi expects adjusted EBITDA in the first quarter of its 2027 year to fall short of the latest quarter’s US$99 million. It cites planned maintenance that it expects to cost about US$41 million.
What Is Not Known
The European Commission has not yet ruled on the UPM joint venture, and Sappi expects a decision early in January 2027. The outcome will show whether the merger can go ahead as planned.
Sappi has not said how it will cover debt limits after December 2027. Its chief executive and board can answer that when they report first-quarter results in early 2027.
More: Africa news in English, every day from The Rio Times.
Frequently Asked Questions
How big was the Sappi annual loss?
Sappi lost US$747 million in the year to September 2026, against US$177 million a year earlier. Special charges of US$405 million and a US$269 million forestry loss drove most of the increase.
Why did Sappi lose money?
A stronger rand, weak paper demand and higher fuel and chemical costs cut profit. Sappi also wrote down assets by US$319 million.
Is Sappi in danger of breaking its debt limits?
Lenders extended the suspension of debt-limit tests to June 2027 and agreed looser limits that run to December 2027. Sappi says this gives it enough room for now.
What does Sappi expect next?
Sappi expects adjusted EBITDA in the first quarter of its 2027 year to be below the US$99 million of the latest quarter. It says dissolving pulp and North American packaging demand keep improving.
Sources: Sappi Limited, JSE announcement, Results for the fourth quarter and year ended September 2026, 6 November 2026; Sappi investor centre, accessed 6 November 2026; Previous Rio Times coverage: South Africa Newsprint Tariff Starts at 5%, 21 October 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief