Sappi Q2’24 HEPS plunges 58%

Sappi, a global leader in the paper and pulp industry, has faced a challenging year with a 58% plunge in headline earnings per share (HEPS) in the second quarter of 2024. Despite the setbacks, CEO Stephen Binnie remains optimistic about the company's future prospects. In a recent interview with CNBC Africa, Binnie addressed concerns about pricing, volume growth, cost management, and the outlook for the company's operations in different regions. Binnie acknowledged the difficult macroeconomic environment and the impact of consumer pressure on some of Sappi's product segments. However, he highlighted a gradual improvement in selling prices and volume recovery across several segments, indicating a positive trend moving forward. Binnie emphasized the importance of the dissolving pulp segment, which has seen rising prices and tight supply, driving profitability. While the paper segments experienced some price drops, Binnie expressed confidence in future price increases to maintain margins. To navigate the challenging market conditions, Sappi has focused on cost management and operational efficiency. Binnie discussed the company's strategic decisions to close mills in Europe, shift production to more profitable regions like South Africa and the US, and reduce fixed costs by 9% year on year. These initiatives have helped Sappi maintain control over costs and improve margins. Binnie ruled out further plant closures at this stage, citing a positive outlook for the US and South African operations. Regarding the South African market, Binnie acknowledged infrastructure challenges but noted a recent improvement in the business environment. He highlighted the country's role as a major exporter for Sappi, bringing in significant foreign currency despite the challenges. Binnie expressed optimism about the future of Sappi's South African operations and the potential for continued growth. While challenges persist, Binnie remains confident in the company's resilience and ability to overcome obstacles. The interview concluded with a hopeful note for future improvements and growth after the elections, signaling a positive outlook for Sappi under Binnie's leadership.