Sappi Q4 FY25 Outlook Hints at Recovery – JSE: SAP Share Price Turning Point?
After years of steady decline, Sappi’s share price has shown its first signs of strength, but a confirmed trend reversal remains uncertain.
Quick overview
- Sappi's share price has shown signs of strength after years of decline, but a confirmed trend reversal is still uncertain.
- The company's Q2 FY25 earnings report revealed a loss of 4 cents per share, driven by weaker sales and higher costs.
- Despite challenges, CEO Steve Binnie forecasts stronger EBITDA for Q4 FY25, contributing to cautious optimism among investors.
- Sappi's current P/S ratio is significantly lower than many of its peers, indicating potential undervaluation or deeper market concerns.
After years of steady decline, Sappi’s share price has shown its first signs of strength, but a confirmed trend reversal remains uncertain.
Share Price Movement and Technical Outlook
Sappi Limited (JSE:SAP) has been on a downward trajectory since 2018, a slide that deepened in 2025 when its stock halved from roughly R50 to R25. In the days leading up to its Q3 earnings release, the share price staged a 14% rebound over two sessions, offering a glimmer of hope after a prolonged slump. However, a true trend reversal would require a sustained break above the daily chart moving averages, which have repeatedly acted as resistance throughout the year.
SAPJ Chart Daily – Can Buyers Push the Price Above MAs?
Financial Performance and Challenges
The Q2 FY25 earnings report was soft, with the company posting a loss of 4 cents per share. Despite this, a positive forward outlook for Q3 helped lift investor sentiment. CEO Steve Binnie’s forecast for stronger EBITDA in Q4 FY25 added to the cautious optimism.
The earnings dip was driven largely by weaker regional sales volumes, higher variable costs, and a steep decline in dissolving wood pulp (DWP) selling prices. Although profitability in the South African region improved from the prior quarter, it remained below last year’s levels. A forestry fair value price adjustment resulted in a ZAR179 million loss for the quarter.
Sappi Q3 FY25 Financial Results
Quarterly Performance Overview
- Adjusted EBITDA: US$80 million, down from US$148 million in Q3 FY24.
- Loss for the Period: US$33 million, compared to a profit of US$51 million in Q3 FY24.
- Net Debt: US$1,947 million, up from US$1,340 million in Q3 FY24.
- Adjusted EPS (Excluding Special Items): Loss of 4 cents, versus a 9-cent profit in Q3 FY24.
Management Commentary
- CEO Steve Binnie stated that Adjusted EBITDA for Q4 FY25 is expected to exceed Q3 levels, suggesting a potential improvement in performance going forward.
Market Conditions and Segment Trends
Demand for DWP held steady, with sales volumes matching last year’s figures despite ongoing market volatility. However, margins were squeezed by rising costs and selling prices in ZAR that were 5% lower year-on-year. Containerboard demand remained strong, supported by bullish local sentiment and citrus export forecasts projecting 9% growth compared to last year.
Inventory constraints, stemming from an extended maintenance shutdown at Ngodwana Mill in the previous quarter, limited sales volumes. Meanwhile, the JSE’s current P/S ratio for Sappi stands at 0.2x — far below the 0.9x-plus levels seen in over half of South Africa’s forestry companies, and even more distant from those exceeding 3x. This low valuation could be a market signal, though further analysis is required to confirm whether it represents undervaluation or deeper concerns.
Outlook: While the recent rebound in Sappi’s share price is encouraging, the stock’s long-term downtrend remains intact for now. The next week will be critical: a sustained move above key resistance levels could indicate a real shift in market sentiment, whereas failure to break out may suggest the bounce was short-lived.
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