Sappi Southern Africa Limited

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Sappi Southern Africa Limited
  • Sappi Southern Africa Limited
  • Year : Jul 2021
3 Tokens
USD 300.00
Summary

GCR considers Sappi Southern Africa Limited an essential operating entity of Sappi Limited. This reflects Sappi’s 100% ownership of the company, operational integration, and SSA’s history of strong cash generation. SSA’s ratings are underpinned by Sappi’s entrenched global competitive position, its solid access to capital, and robust liquidity. Counterbalancing these strengths are Sappi’s cyclical cash flows and the deterioration in credit metrics due to earnings pressure in the wake of the COVID-19 pandemic. Contributing to the negative earnings assessment, was the 20% contraction in in group revenue to USD4.6bn at FY20 (FY19: USD5.7bn), and the larger 45% decline in EBITDA to USD378m (FY19: USD687m).

Additional Information

The Stable Outlook reflects GCR’s expectations that the group’s robust liquidity profile will provide sufficient resilience to withstand pressures on pricing and demand. It also factors in an expected recovery in earnings through FY21. Negative rating action could arise should there be a deterioration in the credit risk profile of the group as a result of 1) renewed pricing or demand shocks that result in reductions in margins and earnings; and 2) net debt to EBITDA remaining between 5x-6x post FY21.

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