Paper and pulp giant Sappi has reported losses for two consecutive quarters, as ongoing global trade wars continue to hurt its profits. The company announced a $33 million loss for the third quarter ending in June, following a $20 million loss in the previous quarter.
For the first nine months of the year, Sappi’s adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) fell by 15% compared to the same period last year, totalling $390 million. Its year-to-date profit now stands at just $17 million, reflecting the challenging trading environment.
The company’s difficulties are largely due to trade tensions and uncertain policies, particularly affecting its key products. One of Sappi’s main offerings is dissolving wood pulp (DWP), used to make textiles like lyocell and viscose. DWP accounts for nearly 20% of its sales. China, one of Sappi’s biggest markets for DWP, has seen a slowdown in demand. This is partly due to US tariff policies and the country’s deflationary environment, which has led local producers to increase DWP output despite weak demand.
As Asian markets become more competitive and cautious, the price of DWP in China has dropped by $100 per tonne in the third quarter. Consequently, Sappi’s pulp sales declined 4% in the three months ending June. The textile industry, a key driver of DWP demand, remains highly sensitive to trade tensions and inflationary pressures.
Trade tensions have also negatively impacted Sappi’s packaging segment. The company reported profitability in this area was significantly below last year’s levels, as manufacturers—especially in Europe—cut back production amid economic uncertainty and cautious consumer spending.
Additionally, Sappi faced increased competition in Europe and experienced extended downtime at its Ngodwana mill during the second quarter. The company expects some recovery in profitability in the final quarter, aided by increased production at its Somerset Mill.
The company warned that escalating tariffs and trade tensions between the US and other major economies continue to create uncertainty globally. At the end of June, Sappi’s net debt had risen to $1.95 billion — a 45% increase from the previous nine months.
Due to weaker financial results and high debt levels, Sappi announced it would not pay a dividend for the 2025 financial year. The company said it remains focused on maintaining liquidity and improving cash flow, with a priority on reducing its net debt in the face of ongoing macroeconomic challenges.