Sappi reported adjusted EBITDA of US$52 million for the second quarter of fiscal 2026, as trade tensions, weak global market conditions and currency volatility continued to pressure profitability across its operations.
The group also recorded an adjusted loss of 8 US cents per share for the quarter ended March 31, 2026. While sales volumes increased year over year, selling prices declined across all regions.
Sappi said liquidity remained solid, with US$192 million in cash on hand and access to an additional US$632 million in undrawn revolving credit facilities in Europe and South Africa.
In North America, paperboard sales volumes rose 27% compared to the prior year, supported by the continued ramp-up of PM2 at the Somerset Mill. However, the company acknowledged that the increase has progressed more slowly than expected and continues to weigh on regional profitability.
In Europe, Sappi said market conditions remained difficult due to weak demand and persistent overcapacity in graphic paper markets. Sales volumes nevertheless increased 2% year over year, while fixed-cost reduction measures supported underlying profitability.
The company also continues work related to its proposed graphic papers joint venture with UPM-Kymmene in Europe. Sappi said discussions remain aligned with its target of signing definitive agreements during the first half of 2026, subject to regulatory approvals and customary closing conditions.
In South Africa, profitability was negatively affected by lower dissolving wood pulp prices and unfavorable exchange rate movements between the U.S. dollar and the South African rand.
Looking ahead, Sappi expects third-quarter adjusted EBITDA to fall below second-quarter levels, citing geopolitical tensions, trade conflicts, currency fluctuations and continued macroeconomic uncertainty. The company also noted that graphic paper markets continue to face long-term structural decline.
Sappi further reduced its capital expenditure forecast for fiscal 2026 by US$10 million. Capital spending is now expected to total approximately US$250 million and will focus primarily on essential maintenance and regulatory requirements.
Despite near-term market pressures, the group said it remains focused on its long-term transition toward bioeconomy-related businesses, woodfibre-based materials and packaging.
Sappi is a global producer of graphic papers, packaging papers, speciality papers, pulp and biomaterials manufactured from woodfibre sourced from sustainably managed forests. The company operates manufacturing facilities in Europe, North America and South Africa and sells products in more than 150 countries.
