Annettee Luchene, CFO, Describes How Sappi North America Contributes to Global Group Success

Our journey continues

Sappi North America (SNA) takes a holistic stance on prosperity, understanding that a myriad of factors will define our financial success. This means always seeking answers—have we listened to our customers and made decisions in anticipation of their needs and expectations? Are all employees engaged and motivated to lead projects to execute their ideas? Do we understand how our operations impact our local communities and work with them to develop “win-win” strategies?

In 2018, much progress was made—starting with the rebuild of PM1—to meet customer demand for high quality, high bulk, and sustainable paperboard products. We also brought a state-ofthe-art woodyard online at Somerset that reduces waste and improves our efficiency, and gained a new PM12 headbox at Cloquet that can now produce higher quality printing papers and packaging grades.

Lean Six Sigma (LSS) projects have engaged over two hundred employees this year, using resources and good ideas to improve our operations. We’ve tackled everything from faster ways to innovate product design, to improving steam use in our mills and optimizing mode of transport to lower cost and our carbon footprint.

We’ve expanded our community outreach to local dairy farmers in Minnesota, offering to supply our pulping byproducts to improve soil quality and reduce our own waste volume. We also worked with a local water district to measure and improve water effluent to their treatment system.

At Sappi North America, we understand that the best way for us achieve our goals is to listen, act, and always remember that our success depends on earning the trust of customers, employees, and our communities as well as our shareholders.

2018 financial performance

In 2015, when launching Sappi’s 2020Vision, we flagged 2018 as the transition year for the Group. The financial results for the year, both at the Group and North America level, reflect the impact of the strategic capital investments made, including production downtime. Group EBITDA was $762 million, and SNA EBITDA was $126 million, both in line with prior year performance despite the lost production time. Notably, sales of packaging and specialty volumes exceeded 1 million tons for the group, and total Group net sales were up 10 percent to $5.8 billion. For SNA, packaging sales nearly doubled year over year, and excellent progress was made in qualifying the new paperboard grades. Overall financial performance was driven by tight graphic markets which lead to higher prices, as well as by higher prices for dissolving wood pulp (DWP), which offset the impact of higher input costs (particularly papergrade pulp) and the production downtime. For a complete report of financial performance for the Group and for SNA, please refer to the 2018 Annual Integrated Report at sappi-reports.co.za/ reports/sappi-iar-2018/index.php.

Looking ahead to 2019, we are poised to take advantage of the transformative investments made this past year. We are committed to identifying further opportunities in our new markets for packaging and specialty papers, dissolving wood pulp and biomaterials. We will continue to develop innovative service offerings to support our printing papers business. As we embrace these new market perspectives, our prospects for sustainable growth have never looked better. 

Read more from Sappi North America's 2018 Sustainability Report here: tiny.cc/SappiNA_SR18