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Sappi Limited (SPPJY)
OTHER OTC:SPPJY
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Sappi
(OTC:SPPJY)
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Rating:60Neutral
Price Target:
$1.50
▲(15.38% Upside)
Sappi's overall stock score reflects a challenging financial and operational environment. The most significant factors are the mixed financial performance and negative sentiment from the earnings call. While the valuation is attractive, technical indicators suggest bearish momentum, limiting immediate upside potential.
Positive Factors
CapEx Reduction
Reducing CapEx indicates a strategic shift towards cost management and financial discipline, potentially improving free cash flow and financial stability.
Increase in Graphic Paper Market Share
Gaining market share in key segments suggests competitive strength and potential for revenue growth, enhancing Sappi's market position and customer base.
Dissolving Pulp Price Recovery
Rising dissolving pulp prices can improve margins and profitability, supporting Sappi's financial performance in a core product area.
Negative Factors
Significant Decline in EBITDA
A sharp decline in EBITDA reflects operational challenges and pricing pressures, potentially impacting long-term profitability and financial health.
Increased Net Debt Levels
Rising debt levels can strain financial flexibility and increase risk, potentially affecting Sappi's ability to invest in growth opportunities.
Somerset PM2 Delays and Impact
Delays in strategic projects can lead to operational disruptions and financial setbacks, impacting Sappi's ability to execute its growth strategy effectively.
Sappi (SPPJY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$769.74M
Dividend Yield7.84%
Average Volume (3M)30.00
Price to Earnings (P/E)7.9
Beta (1Y)1.10
Revenue Growth-0.93%
EPS Growth-760.86%
CountryUS
Employees12,329
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)0.00
Shares Outstanding604,641,500
10 Day Avg. Volume0
30 Day Avg. Volume30
Financial Highlights & Ratios
PEG Ratio-0.57
Price to Book (P/B)0.63
Price to Sales (P/S)0.30
P/FCF Ratio-4.69
Enterprise Value/Market Cap3.85
Enterprise Value/Revenue0.54
Enterprise Value/Gross Profit4.66
Enterprise Value/Ebitda4.73
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Sappi Business Overview & Revenue Model
Company DescriptionSappi Limited provides materials made from woodfiber-based renewable resources in Europe, North America, and South Africa. The company offers dissolving pulp; graphic papers; packaging and specialty papers, including flexible packaging papers, label papers, functional paper packaging products, containerboards, paperboards, silicone base papers, dye sublimation papers, and inkjet papers; and casting and release papers. It also provides specialty chemicals and food ingredients; generates biomass energy, biogas, and hot water; offers fuel rods; and owns and manages forests. The company was formerly known as South African Pulp and Paper Industries Limited and changed its name to Sappi Limited in 1973. Sappi Limited was founded in 1936 and is headquartered in Johannesburg, South Africa.
How the Company Makes MoneySappi generates revenue primarily through the sale of its wood fiber-based products, which include dissolving wood pulp, paper, and paper products. The company has key revenue streams from its three main segments: Sappi Southern Africa, Sappi Europe, and Sappi North America. Each segment focuses on different markets and product types, allowing Sappi to diversify its income. Additionally, Sappi engages in partnerships and collaborations with various stakeholders in the value chain, enhancing its product offerings and market reach. The demand for sustainable and environmentally friendly products, along with Sappi's emphasis on innovation and efficiency in production, significantly contributes to its earnings.
Sappi Earnings Call Summary
Earnings Call Date:Nov 06, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Feb 11, 2026
Earnings Call Sentiment Neutral
The earnings call for Sappi highlighted several operational achievements, such as the completion of the Somerset PM2 conversion and volume growth in DWP and packaging. However, these were overshadowed by significant challenges including global economic weakness, excess supply in key markets, and financial pressures from lower selling prices and increased debt. Cost reduction initiatives are underway, but the company faces a difficult path ahead to improve profitability and market conditions.Q4-2025 Updates
Positive Updates
DWP and Packaging Volume Growth
Despite challenging market conditions, Sappi experienced year-on-year growth in dissolving wood pulp (DWP) and packaging volumes, and gained market share in the graphic paper space.
Completion of Somerset PM2 Conversion
Sappi successfully completed the conversion and expansion of the Somerset PM2 machine, which is now performing well and is an important step in their strategic plan.
Cost Reduction Initiatives in Europe
Sappi has launched a $60 million cost reduction initiative in Europe, including closing two machines and optimizing production, with much of the cost savings expected to begin in fiscal quarter 2 of 2026.
Strong Performance in South Africa
South Africa had a strong quarter, particularly in the citrus market for containerboard, despite lower global containerboard prices affecting domestic selling prices.
Positive Employee Recognition
Sappi was ranked 144th in the world for top companies for women, and 289th globally as a best employer by Forbes, with specific recognition in South Africa.
Negative Updates
Challenging Global Market Conditions
The year was marked by ongoing global economic weakness, difficult market conditions across all segments, and downward pressure on selling prices, especially for dissolving pulp.
Excess Supply in Key Markets
There was excess supply globally in key paper market segments, particularly in Europe, which negatively impacted selling prices and profitability.
Lower Selling Prices and Profitability
Lower selling prices across all segments resulted in a $111 million impact year-on-year, dwarfing other financial variables.
Negative EBITDA in Europe
The European segment faced substantial challenges, including negative EBITDA for certain machines, driven by increased energy costs and excess capacity.
Debt and Exchange Rate Challenges
Sappi's debt, particularly denominated in euros, was negatively impacted by exchange rates, and higher CapEx investments at Somerset added to financial strain.
Company Guidance
During the Sappi Q4 2025 Results Call, CEO Steve Binnie provided guidance amidst challenging market conditions, with specific focus on various metrics. Despite global economic weakness and trade tensions leading to downward pressure on selling prices, especially in dissolving pulp and excess supply in paper segments, there were operational highlights, including year-on-year growth in DWP and packaging volumes and market share gains in graphic paper. The completion of the Somerset PM2 conversion and expansion was a significant strategic milestone. For Q4, sales volumes for pulp and packaging improved, and a lack of maintenance shuts provided additional benefits. However, Europe remains challenging with excess capacity, while North America and South Africa showed modest improvements. The company aims to reduce net debt to below $1 billion over the medium term, with significant cost-reduction initiatives, particularly in Europe, targeting $60 million in savings. CapEx is projected at $290 million for 2026, and below $300 million for 2027, with a strong focus on productivity, cost containment, and debt reduction. Adjusted EBITDA for Q1 2026 is expected to be below the first quarter of the current financial year, taking into account a scheduled maintenance shut at Somerset, anticipated to impact by about $20 million.Sappi Financial Statement Overview
Summary
Sappi's financial performance is mixed. The income statement shows a significant decline in revenue growth, but operational efficiency is maintained with a decent gross profit margin. The balance sheet is stable with moderate leverage, but cash flow issues are evident with negative free cash flow.Income Statement
Sappi's income statement shows mixed results. The TTM data indicates a decline in revenue growth rate by 88.4%, which is concerning. However, the company maintains a decent gross profit margin of 13.1% and an EBIT margin of 6.5%, reflecting operational efficiency. The net profit margin is low at 3.2%, indicating room for improvement in profitability.65
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.74, indicating moderate leverage. The return on equity is 7.3%, showing reasonable returns for shareholders. The equity ratio stands at 39.4%, suggesting a solid equity base relative to total assets.70
Positive
Cash Flow
Cash flow analysis reveals challenges, with a negative free cash flow and a free cash flow to net income ratio of -1.46, indicating cash flow issues. However, the operating cash flow to net income ratio of 0.20 suggests some ability to generate cash from operations.55
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.50B | 5.46B | 5.81B | 7.30B | 5.26B | 4.61B |
| Gross Profit | 635.00M | 776.00M | 907.00M | 1.37B | 549.00M | 399.00M |
| EBITDA | 626.00M | 497.00M | 731.00M | 1.08B | 444.00M | 283.00M |
| Net Income | 96.00M | 33.00M | 259.00M | 536.00M | 13.00M | -135.00M |
Balance Sheet | ||||||
| Total Assets | 6.23B | 6.21B | 5.80B | 6.23B | 6.19B | 5.46B |
| Cash, Cash Equivalents and Short-Term Investments | 203.00M | 317.00M | 601.00M | 780.00M | 366.00M | 279.00M |
| Total Debt | 2.15B | 1.74B | 1.69B | 1.94B | 2.31B | 2.24B |
| Total Liabilities | 3.78B | 3.63B | 3.35B | 3.87B | 4.22B | 3.82B |
| Stockholders Equity | 2.45B | 2.58B | 2.44B | 2.36B | 1.97B | 1.63B |
Cash Flow | ||||||
| Free Cash Flow | -474.00M | -349.00M | 223.00M | 514.00M | 33.00M | -91.00M |
| Operating Cash Flow | 148.00M | 124.00M | 605.00M | 882.00M | 407.00M | 260.00M |
| Investing Cash Flow | -588.00M | -430.00M | -395.00M | -376.00M | -378.00M | -517.00M |
| Financing Cash Flow | 258.00M | -80.00M | -501.00M | -43.00M | 33.00M | 138.00M |
Sappi Technical Analysis
Neutral
1.30
Price Trends
1.30
Negative
1.45
Negative
1.70
Negative
Market Momentum
>-0.01
Negative
49.30
Neutral
70.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPPJY, the sentiment is Neutral. The current price of 1.3 is above the 20-day moving average (MA) of 1.30, below the 50-day MA of 1.30, and below the 200-day MA of 1.70, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 49.30 is Neutral, neither overbought nor oversold. The STOCH value of 70.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPPJY.
Sappi Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $1.87B | 10.87 | 18.81% | 3.80% | -8.92% | -32.30% | |
65 Neutral | $5.71B | 26.45 | 12.75% | 1.37% | -3.26% | -46.80% | |
62 Neutral | $11.16B | 9.44 | 14.56% | 3.69% | 6.65% | 47.88% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
60 Neutral | $769.74M | 7.93 | 3.97% | 7.84% | -0.93% | -760.86% | |
48 Neutral | $291.74M | ― | -10.47% | ― | -21.76% | -1214.73% | |
45 Neutral | $121.24M | ― | -39.37% | 12.43% | -5.85% | 9.13% |
* Basic Materials Sector Average
SPPJY
Sappi
1.30
-1.37
-51.31%
CLW
Clearwater Paper
18.19
-8.97
-33.03%
LPX
Louisiana-Pacific
82.01
-33.89
-29.24%
MERC
Mercer International
1.81
-3.99
-68.79%
SUZ
Suzano Papel e Celulose SA
8.95
-1.02
-10.23%
SLVM
Sylvamo Corp
47.37
-42.81
-47.47%
Sappi Corporate Events
Sappi Limited’s Earnings Call: Mixed Outlook with Strategic Initiatives
Aug 12, 2025
The latest earnings call from Sappi Limited presented a mixed sentiment, reflecting both challenges and opportunities. The company is grappling with lower profitability and difficulties in the European market, yet strategic initiatives like the Somerset PM2 ramp-up and debt reduction plans offer a promising long-term outlook. Positive signs include a recovery in dissolving pulp prices and market share gains in graphic papers, which are encouraging indicators for the company’s future.
Sappi Limited Reports Challenging Q3 2025 Results
Aug 8, 2025
Sappi Limited is a global leader in the production of woodfibre-based products, including packaging papers, graphic papers, pulp, and biomaterials, with a focus on sustainable and innovative practices. In its latest earnings report for the third quarter of 2025, Sappi faced significant challenges due to global economic weaknesses and trade tensions, resulting in a loss of $33 million compared to a profit of $51 million in the same period last year. Key financial metrics showed a decline, with revenue slightly down to $1,321 million and adjusted EBITDA falling to $80 million from $148 million in the previous year. The company’s net debt increased to $1,947 million, reflecting higher operational costs and currency translation effects.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.