SAPPI Limited - RATING REPORT
RATING RATIONALE
We are affirming our credit corporate rating on Sappi Limited at BB while changing our outlook to Positive from Stable. The move reflects the additional progress on the diversification strategy and the resulting operational improvements. Sappi has further shifted away from the structurally declining paper market, and into the faster-growing, profitable dissolving wood pulp (‘DWP’) market, 49% of EBITDA in 2017 from 46% in 2016 and 32% in 2010, and to a lesser extent into specialty paper grades (15% from 13%). The higher-end mix gave FY16/17 EBITDA a boost to $785m (+6% yoy), representing a record-high margin of 14.8% (vs. 14.4% last year).
Spread Research is France's first Rating Agency, registered by ESMA (European Securities and Markets Authority) and a leading European Independent Credit Research firm, founded in 2004 and based in Lyon, France. Our experienced team offer key research services using a wide range of investment strategies and research methodologies for the High Yield, Emerging Markets, Convertibles and Loan Markets.
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