Q2 2024 Sappi Ltd Earnings Call Transcript
Key Points
- Sappi Ltd (JSE:SAP) generated EBITDA of $183 million, a 10% increase from the prior year.
- The company saw improved profitability in the pulp segment and a modest recovery in global paper markets.
- A substantial reduction in fixed costs by 9% year-on-year contributed to profitability.
- Successful closure of two mills in Europe, aiding in cost reduction.
- Positive cash flow from operations and free cash flow, with expectations to be cash positive for the rest of the year.
- The global paper market recovery is slow, and some curtailment was necessary.
- Cost inflation in categories like wood and pulp is expected to continue rising.
- European market remains challenging due to economic conditions.
- The company anticipates a negative fair value adjustment in Q3 due to higher fuel costs and discount rates.
- Operating rates in the European speciality business are currently in the mid-70s, indicating underutilization.
Thank you and good day to everyone, and thanks for joining us on the call. As always, I'll move to the investor presentation deck calling out the page numbers as I move along. I'm going to start on page 3 with just some of the key highlights for the quarter. We generated EBITDA of $183 million, which included as a small fair value adjustment, $3 million.
I'm pleased to say obviously that the divisions were 10% up on the prior year and also a progressive improvement on the last quarter, ahead of expectations that we had given three months ago. So pleased with that result. Contributors to the success, firstly, on the pulp segment, improved profitability there, and I'll talk a little bit more about that. We saw a modest recovery in global paper markets, obviously.
It's a little bit slow and we did take some curtailment, but it is progressively improving and I once again, we do have slides on that. The other contributor to profitability improvement was a substantial reduction in
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
