Q3 2024 Sappi Ltd Earnings Call Transcript
Key Points
- EBITDA increased by 40% year-on-year, indicating strong financial recovery.
- Strong market conditions and good demand in the pulp segment, with favorable pricing trends.
- Successful sale of the Stockstadt Mill, generating proceeds of USD 49 million.
- Positive net cash generation of $32 million for the quarter.
- Continued reduction in exposure to the graphics segment, with a target to reduce it below 30% by 2027.
- Muted recovery in the paper segment, with some negative pricing and mix impacts in packaging.
- Increased variable costs by 2% quarter-on-quarter, with pulp prices remaining high.
- Challenges in the European market, with mixed economic conditions and subdued performance.
- Negative fair value adjustment in Q4 due to recent reduction in wood prices in South Africa.
- Production issues and extended shutdowns at Somerset impacting packaging volumes and margins.
Thank you. Good day, everybody. Thanks for joining us for the results call. As always, I'll go through the investor presentation, which has been made available to you. I will call out the page numbers as I move through it.
I'm going to start on page 3, which has got some of the highlights for the quarter. All in all, a satisfactory quarter, in line with the expectations, in line with the guidance that we provided. I think we're making good progress year-on-year, EBITDA up 40%. So obviously, we've continued the recovery from the lows of last year. And in terms of the segments themselves -- and we will go into a little bit more detail.
But on the pulp side, strong market conditions, good demand and further upward movement in pricing. Paper side muted recovery. packaging volumes continue to increase, and we would expect to see more of that as we move forward. Graphics seems to be leveling off now at a new level. Obviously, post the declines that we've seen in the last couple of
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