Chief executive Steve Binnie said the group had seen a significant improvement in market conditions “in the majority of our trading regions” during the quarter ended 30 June.
“As Covid-19 lockdown restrictions continue to ease, we are seeing a steady improvement in global economic activity. This had a positive impact on graphic paper demand in the quarter and the outlook for this segment is expected to improve further with the normalisation of activities in the travel and entertainment sectors. Our focus in this segment is to recover margins through stringent cost management and price increase realisation,” Binnie stated.
Sappi has announced numerous price increases this year.
In Europe, Sappi’s biggest market accounting for 46% of sales, sales volumes in the graphics segment increased quarter-on-quarter with coated woodfree and coated mechanical sales reaching 94% and 79% of pre-Covid 2019 levels respectively.
“A steady growth in order intake was observed as the quarter progressed as a result of improved customer activity and market share gains due to industry capacity closures. The improved demand enabled selling price increases to gain traction at quarter-end, but these were insufficient to offset rapidly escalating purchased pulp input costs and consequently profit margins deteriorated compared to the second quarter.”
Sales in Q3 were $1.39bn (£999m), up from $907m in the same period last year. EBITDA excluding special items jumped to $145m from $26m, while the profit for the period was $18m compared with a $73m loss in 2020.
The group was impacted by the civil unrest in South Africa last month, which caused “major disruptions to raw material supplies” and forced the temporary closure of three Sappi mills in KwaZulu-Natal.
“In the aftermath of the unrest, we worked closely with government and business forums to restore disrupted supply chains and provided immediate assistance to employees, local communities and the South African National Defense Force,” Binnie said.
He said the lost production will result in a Q4 hit to EBITDA of approximately $16m.
In the UK, Sappi has appointed an experienced paper industry professional as its new managing director. Jonathan Hunt took up the role in June. He previously worked at Antalis for nearly 17 years, most recently as director of its publishing and print channel.
Hunt: joining Sappi felt like a homecoming
He said the opportunity was too good to miss “because of the culture, the people and the shared values" and Sappi’s position in the market: "It's now the largest producer of woodfree coated in Europe and is a good, strong company,” Hunt said.
Hunt said he had been dealing with Sappi for around 20 years, after first coming across the manufacturer when he was a paper buyer at Chantry Web.
“I've been involved with them ever since, pretty much everywhere I've been they have been a true supplier. There are people at Sappi that I have known as long as I have been married, so it felt a little like a homecoming."
Hunt replaces John Clinton, who has taken up a new role as part of a number of senior management changes at Sappi Europe.
Flavio Froehli has become vice president of marketing and sales for Sappi Europe, reporting to CEO Marco Eikelenboom.
Clinton is now part of the seasoned management team of sales directors supporting Froehli, and has taken on the role of sales director for commercial print for the region, with responsibility for Sappi’s WFC and WFU portfolio.
The rest of the team comprises Antti Makkonen, sales director for publishing and export, responsible for the Kirkniemi product portfolio and all product sales outside of Europe, while Michael Bethge has taken on the same role for speciality papers, with Luis Mata in the equivalent position for packaging and digital solutions.
Froehli was previously director, business strategy and development, and has worked at Sappi since it took over M-real Graphics in 2008.
