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Sappi Limited (SPPJY)
OTHER OTC:SPPJY
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Sappi
(OTC:SPPJY)
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Rating:52Neutral
Price Target:
$1.50
▲(5.63% Upside)
Sappi's overall stock score reflects significant financial challenges, with declining revenue and profitability being the most impactful factors. While technical analysis shows some short-term bullish signals, the valuation is hampered by a negative P/E ratio. The earnings call provided some operational positives, but these are outweighed by broader market and financial pressures.
Positive Factors
Market Share Gains
The growth in DWP and packaging volumes and market share gains in graphic paper indicate Sappi's competitive positioning and ability to capture demand, which can drive long-term revenue growth and strengthen its market presence.
Strategic Expansion
The successful conversion and expansion of Somerset PM2 enhances Sappi's production capabilities, supporting future growth and operational efficiency, which are crucial for maintaining competitive advantages and meeting market demand.
Cost Reduction Initiatives
The cost reduction initiative in Europe aims to improve profitability by optimizing production and reducing expenses, which is essential for sustaining margins and enhancing financial health over the long term.
Negative Factors
Declining Profitability
Declining profitability, as indicated by negative margins, reflects operational challenges and cost pressures, which can hinder Sappi's ability to invest in growth and maintain competitive positioning.
Excess Supply Issues
Excess supply in key markets pressures selling prices and profitability, posing a structural challenge that can impact Sappi's revenue and market dynamics if not addressed effectively.
Cash Flow Challenges
Negative cash flow growth indicates difficulties in generating sufficient cash, which can limit Sappi's ability to fund operations, invest in growth, and manage debt, affecting long-term financial stability.
Sappi (SPPJY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$961.67M
Dividend Yield6.78%
Average Volume (3M)30.00
Price to Earnings (P/E)―
Beta (1Y)1.18
Revenue Growth-1.40%
EPS Growth-786.45%
CountryUS
Employees12,329
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-0.19
Shares Outstanding607,141,500
10 Day Avg. Volume0
30 Day Avg. Volume30
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.37
Price to Sales (P/S)0.16
P/FCF Ratio-2.63
Enterprise Value/Market Cap2.88
Enterprise Value/Revenue0.51
Enterprise Value/Gross Profit5.18
Enterprise Value/Ebitda8.64
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
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 paper, pulp, and packaging products. The company has a diversified revenue model that includes the production of specialty papers, graphic papers, and dissolving wood pulp, which are sold to various industries such as packaging, printing, and textiles. Key revenue streams are derived from both domestic and international markets, reflecting Sappi's global reach. Additionally, the company benefits from strategic partnerships with customers and suppliers to enhance its product offerings and supply chain efficiency. Factors contributing to Sappi's earnings include market demand for sustainable products, operational efficiencies, and ongoing investment in innovation and technology to improve product quality and reduce costs.
Sappi Earnings Call Summary
Earnings Call Date:Nov 06, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Feb 04, 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 under pressure with declining revenue and profitability. The income statement shows a negative net profit margin and weakened EBIT and EBITDA margins. The balance sheet indicates manageable leverage but poor profitability with a negative ROE. Cash flow challenges are evident with negative free cash flow growth and limited cash generation relative to earnings.Income Statement
Sappi's income statement shows a declining trend in revenue and profitability. The company experienced a revenue decline of 1.66% in the most recent year, and net profit margin turned negative at -3.27%. Gross profit margin also decreased to 9.89%, indicating pressure on cost management. EBIT and EBITDA margins have weakened, reflecting operational challenges. Overall, the income statement suggests financial strain and declining performance.Balance Sheet
The balance sheet reveals a moderate financial position with a debt-to-equity ratio of 0.93, indicating manageable leverage. However, the return on equity is negative at -7.65%, reflecting poor profitability. The equity ratio stands at 38.01%, suggesting a reasonable level of equity financing. While the company maintains a stable asset base, the negative ROE highlights profitability issues.Cash Flow
Sappi's cash flow statement indicates challenges in generating free cash flow, with a negative free cash flow growth rate of -32.06%. The operating cash flow to net income ratio is 0.12, showing limited cash generation relative to earnings. The free cash flow to net income ratio is negative, highlighting cash flow difficulties. Overall, the cash flow position is weak, with significant room for improvement.| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.40B | 5.40B | 5.46B | 5.81B | 7.30B | 5.26B |
| Gross Profit | 534.42M | 534.42M | 776.00M | 907.00M | 1.37B | 549.00M |
| EBITDA | 320.14M | 320.05M | 497.00M | 731.00M | 1.08B | 444.00M |
| Net Income | -176.66M | -176.48M | 33.00M | 259.00M | 536.00M | 13.00M |
Balance Sheet | ||||||
| Total Assets | 6.07B | 6.07B | 6.21B | 5.80B | 6.23B | 6.19B |
| Cash, Cash Equivalents and Short-Term Investments | 218.99M | 218.99M | 317.00M | 601.00M | 780.00M | 366.00M |
| Total Debt | 2.14B | 2.14B | 1.74B | 1.69B | 1.94B | 2.31B |
| Total Liabilities | 3.76B | 3.76B | 3.63B | 3.35B | 3.87B | 4.22B |
| Stockholders Equity | 2.31B | 2.31B | 2.58B | 2.44B | 2.36B | 1.97B |
Cash Flow | ||||||
| Free Cash Flow | -494.22M | -322.05M | -349.00M | 223.00M | 514.00M | 33.00M |
| Operating Cash Flow | 3.11M | 172.49M | 124.00M | 605.00M | 882.00M | 407.00M |
| Investing Cash Flow | -458.19M | -455.65M | -430.00M | -395.00M | -376.00M | -378.00M |
| Financing Cash Flow | 348.59M | 177.47M | -80.00M | -501.00M | -43.00M | 33.00M |
Sappi Technical Analysis
Positive
1.42
Price Trends
1.37
Positive
1.40
Positive
1.58
Negative
Market Momentum
0.04
Negative
61.52
Neutral
91.83
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPPJY, the sentiment is Positive. The current price of 1.42 is below the 20-day moving average (MA) of 1.44, above the 50-day MA of 1.37, and below the 200-day MA of 1.58, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 61.52 is Neutral, neither overbought nor oversold. The STOCH value of 91.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 | $1.91B | 11.60 | 18.81% | 3.51% | -8.92% | -32.30% | |
68 Neutral | $5.88B | 29.69 | 12.75% | 1.37% | -3.26% | -46.80% | |
62 Neutral | $11.88B | 10.08 | 14.56% | 1.96% | 6.65% | 47.88% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
52 Neutral | $961.67M | -4.95 | 3.97% | 6.78% | -1.40% | -786.45% | |
48 Neutral | $162.10M | -0.94 | -39.37% | 10.77% | -5.85% | 9.13% | |
46 Neutral | $310.34M | -1.94 | -10.47% | ― | -21.76% | -1214.73% |
* Basic Materials Sector Average
SPPJY
Sappi
1.45
-1.12
-43.56%
CLW
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LPX
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84.48
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MERC
Mercer International
2.42
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-60.90%
SUZ
Suzano Papel e Celulose SA
9.27
-0.70
-7.02%
SLVM
Sylvamo Corp
48.33
-26.73
-35.61%
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.