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February 13th 2019
Q4/FY 2018
Results Presentation
1
<<
Executive Directors
Diogo da Silveira
António Redondo
Nuno Santos
João Paulo Oliveira
Investor Relations Joana Appleton
PARTICIPATION
Q4/FY 2018 RESULTS PRESENTATION
Outlook Market Main
Highlights Group
Performance
01 02 03 04
<<
2
3
FY 2018 /Q4 HIGHLIGHTS <<
2018: a record year for turnover, EBITDA and net profit Lower volumes of pulp and UWF paper due to production stoppages Average price for pulp, paper & tissue improved and offset production loss Total Capex of 216 M€ with conclusion of expansion projects Strong generation of FCF of € 211 million
In millions € YEAR 2018
YEAR 2017
%CHANGE 18/17
Turnover 1.692 1637 3.3%
EBITDA 455 403 12.7%
EBITDA/SALES 26.9% 24.7% 2.2 pp
ROCE 16.2% 13.6% 2.6 pp
CAPEX 216.5 114.7 101.8
Net Debt/EBITDA 1.50 1.72 -0.22
4
1.132 1.095
1.385
1.488 1.502 1.531 1.542 1.628
1.577 1.637
1.692
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
272
222
400 385 385
350 328
390 397 404
455
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
+49% +68%
Showing consistent and strong financial growth in the last 10 years, Navigator recorded in 2018 record values for turnover and EBITDA
Turnover in Million €. EBITDA in Million €.
FINANCIAL PERFORMANCE IN 2018: A RECORD YEAR
Outlook Market Main
Highlights Group
Performance
01 02 03 04
<<
5
Q4/FY 2018 RESULTS PRESENTATION
PIX Europe
6
<< PULP PRICES REMAIN AT A HIGH LEVEL
YoY 2018 average price increase in
BHKP:
+26% in USD
+21% in Euros
Pulp prices have been softening since the end of 2018, remaining at high levels
Week
400
500
600
700
800
900
1000
1100
400
500
600
700
800
900
1000
1100
1 11 21 31 41 51 9 19 29 39 49 7 17 27 37 47 4 14 24 34 44 2 12 22 32 42 52 10 20 30 40 50
USD/ton BHKP EUR/ton BHKP
USD/ton €/ton
Av. 2016: 626 €/ton
Av. 2017: 729 €/ton
Av. 2018: 880 €/ton
Av. 2016: 693 USD/ton
Av. 2017: 826 USD/ton
Av. 2018: 1038 USD/ton Last PIX
(W5/2019): 1000 USD/ton
Last PIX (W5/2019): 873 €/ton
7
Ch in e s e m a rk e t
Supply:
• During 2018, the increase in pulp supply came from the ramp-up of new capacity (built in previous years); there are currently no significant new pulp capacity planned for 2019 and 2020
• Supply was restricted by planned and unplanned production stoppages throughout the year
Demand:
• Demand was strong during most of 2018, namely for BHKP (+2.5% Est.), cooling down in Q4,
mainly driven by slow down in China (downtimes from paper and board producers and destocking effect from end-users)
• This led to lower pulp prices at the end of 2018
• Recently, actions from pulp producers such as production curtailments and domestic stock increases contributed to a re-balance of pulp prices; specifically, actions taken by the current world pulp production leader, Suzano, have contributed to improve market stability
Glo b a l M a rk e t S i tu a t io n
UPDATE ON THE PULP MARKET
Source: PPPC; The Navigator Company
Share UWF On P&W global demand (exc. NP)
50%
Source: PPPC; The Navigator Company
8
YoY %
-3,6%
-0,8%
-4,5%
-5,2% TOTAL UNCOATED
WOODFREECOATED
WOODFREEUNCOATED
MECHANICALCOATED
MECHANICAL(Inc. SuperCalendered)
-7,4%
(M tons) 81.4 40.5 20.1 10.2 10.6
PAPER DEMAND IN 2018 UWF REMAINS ONE OF THE BEST PERFORMING GRADE IN P&W PAPERS
9
UWF MARKET CONDITIONS
D E M A N D
P U L P P R I C E
UWF demand in 2018 was stronger in the US than in Europe; in the second half, demand rebounded in Europe namely in Cut-Size
Hardwood pulp prices remained at high levels even after year-end softening; since the start of the year, pulp prices are showing signs of picking-up
North American producers continue to close capacity; recent announcement from GP will take out of the market 8% capacity in NA
Paper prices increase announced by all producers for beginning January in Europe and for March in the US
B A L A N C E S / D
P R I C E L E V E L
Order entry in the first month of January 2019 was 1.6% above 2018 O R D E R B O O K
Source: FOEX
EUROPEAN MARKET PAPER PRICE – A4 B-COPY
2014 2016 2015 2017 2018
10
<< UPWARD TREND IN PAPER PRICES IN 2017 AND 2018
600
650
700
750
800
850
900
1 5 9 13 17 21 25 29 33 37 41 45 49 1 5 9 13 17 21 25 29 33 37 41 45 49 53 4 8 12 16 20 24 28 32 36 40 44 48 52 4 8 12 16 20 24 28 32 36 40 44 48 52 4 8 12 16 20 24 28 32 36 40 44 48 52
€/ton
Week
Last PIX (W5 2019): 917 €/ton
Av. 2016: 823 €/ton (Var. W1-52: -3.5%)
Av. 2017: 815 €/ton (Var. W1-52: +4.1%)
Av. 2018: 873 €/ton (+9.0%)
YoY 2018 average price increase in
A4 B-COPY:
+7%
Oultook Market Main
Highlights Group
Performance
01 02 03 04
<<
11
Q4/FY 2018 RESULTS PRESENTATION
12
<< NAVIGATOR PAPER PERFORMANCE IN FY 2018
• UWF sales volume of 1.513 kton (-65 kton YoY) with product mix
improvement:
+ Premium products share up to 54% (+5 pp YoY; +47 kton)
+ Mill brands up to 69% (+7 pp YoY; +47 kton)
• Navigator led 4 paper price increases in Europe (January, March,
July & October) and implemented several increases in International
markets and in the US
• Average sales price increased 8.5% YoY in spite of FX negative impact
(USD impacted ~30% of paper sales); with constant exchange rate
price increase would have been around 10%
13
<< PULP TURNOVER IMPACTED BY REDUCTION IN VOLUME
• Pulp sales in volume of 253 kton, 58 kton less YoY due to decreased
availability of pulp:
+ Start of the year with no pulp stocks available
+ Extensive downtime for planned maintenance at Setúbal
pulp mill in Q1 and maintenance downtime and capacity
increase in Figueira da Foz in Q2, with the need to build up
inventory
+ Downtime due to Leslie hurricane in Figueira da Foz in Q4
• Navigator’s net price in 2018 increased +24% YoY
• Sales mix improvement: increase in the weight of Decor and Special paper
sales in Europe, high contribution segments, from 62% to 73% YOY
14
<< NON-INTEGRATED TISSUE BUSINESS IMPACTED BY PULP PRICE
• Overall tissue performance in 2018 impacted by the rise pulp prices (non-integrated capacity) and start-up of new tissue mill (which doubled the Group´s nominal tissue capacity)
• Global volume of tissue sold increased 14% YoY, while converted products grew by 27% already including converting sales from new mill
• Average sales price 7,5% higher YoY due to improvement in product mix (decreased weight of reels) and price increase; Sales increased 23% to € 91million (vs. € 74 million 2017)
39% Consumer
59% Away-from-Home
2% Parent Reels
51% Portugal
35% Spain
13% France & Others
Revenue by segment
(2018)
Revenue by geography
(2018)
Note
135,7
15
<<
2018 - RECORD LEVEL OF EBITDA
Positive impact of pulp and paper prices in EBITDA
Price effect includes 25 M€ negative impact of FX
Volume
403,8
R17 Price
-54,4
-27,2
Costs Pellets, Anti-Dumping
& Others*
455,2
R18
EBITDA
M €
-2,7
* Others include change in biological assets (namely Mozambique)
PERMANENTLY FOCUSED ON OPERATIONAL EXCELLENCE
through cost reduction and efficiency - M2 program
Global 5 year target for 2016-2020: €100 million,
of which €64 million already achieved in 2016, 2017 & 2018
M2 program estimated impact
on EBITDA of € 20.8 million YOY
99 new initiatives of cost reduction since the beginning of the
year, with the following examples impacting EBITDA:
Reduction of softwood consumption (F.Foz): € 2.5 million
New pile chips management system (F.Foz): € 2 million
Overall logistics optimization (shipping/inland transportation): € 2.2 million
16
<<
17
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FREE CASH FLOW AT € 211 MILLION
Free Cash Flow negatively impacted by high Capex, but positively impacted by cash from pellets sale
377,2
211,1
-216,5
-33,8
-50,4
134,5
Operating CashFlow
CAPEX Inventories Clients Suppliers &others
Free Cash Flow
M €
Free Cash Flow
18
<<
NET DEBT AT € 683 MILLION
Net debt evolving positively in Q4, decreasing € 49 million Q4/Q3 and € 10 million YoY after € 216 million Capex
641 617
738 742 693
559
740 732 683
1,6 1,6 1,8 1,9
1,7
1,3
1,7 1,6 1,5
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Net debt Net debt/EBITDA
M €
Current Average Cost of Debt
(December 2018):
1.60%
Debt maturity profile
Total debt: € 765 million Average maturity: 2.6 years
19
112
187
226
10
210
10 10
2019 2020 2021 2022 2023 2024 2025-2028
<<
DEBT PROFILE
Debt Rate Profile
(December 2018):
Fixed Variable
68% 32%
20
<<
2018 – FINANCIAL RESULTS
-7,7
-22,5
2017 2018
Negative impact of € 14,8 million,
resulting from:
• € 10 million change in currency hedging
costs compared with 2017
• € 3.3 million change in market value of
Cash investments
• € 1.5 million related to the difference
between the nominal and present value
of the outstanding amount regarding the
sale of the pellet business
M €
216,5
6,5
128,8
81
CAPEX Expansion/DevelopmentCapex*
Maintenance & recurringcapex
Regulatory Capex
21
<<
CAPEX OF € 216 MILLION ( V S . € 115 M I L L I O N )
M €
CAPEX
* Includes Po3 + Tissue Cacia + Heavy Weights
<<
START-UP OF PULP EXPANSION AT F. FOZ
Optimization Project 3
Ecoefficiency:
Total CAPEX of € 82 million
MAIN
GOALS
22
Increase the annual pulp production from 580,000 to 650,000 tAD
Increase the efficiency of pulp process
Reduce wood and chemicals specific consumption
Implementation of BAT (ex: O2 delign)
Environmental advantage for flue gas and liquid effluent emissions
Collection and burning of diluted odorous gases
Conversion of PM3
Conversion of PM3 in Setúbal
Paper Mill
HeavyWeights
Production of Heavy Weights paper
(135g to 300g/m2)
Total estimated CAPEX
12 M€
GOAL
35kton in cruse year
exploring new business opportunities
23
HEAVYWEIGHTS
<< CONCLUSION OF NEW AVEIRO TISSUE MILL
Successful book-building of new clients in Portugal, Spain, France and UK
24
RECAP
Total Capex:
€126
Converting line started in May
Start-up of reels production in September 2018 – currently in ramp-up phase
4 converting lines: two Domestics, Industrial and Napkins
Navigator becomes the 3rd largest producer in Iberia with production capacity of 130 kton reels and 120 kton converting
MoU signed with the Government of Mozambique to study precedent conditions for phase 1 “Best endeavours” commitment to achieve project readiness by December 31st unreached Recording in 2018 accounts of impairment related to biological assets of € 6.7 million recorded + € 12 million provision
25
MOZAMBIQUE PROJECT- UPDATE 2018
P h a s e 1 : W o o d c h i p M i l l
Investment: USD 260 M
Start-up in 2023
40 000 ha planted area
Outlook Market Main
Highlights Group
Performance
01 02 03 04
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26
Q4/FY 2018 RESULTS PRESENTATION
Outlook for 2019
PULP PAPER
Stable outlook for UWF prices in 2019:
No foreseeable change in market conditions for pulp and paper in the near future and main concerns remain consequences of increasing trade tensions and impact on exchange rates
Prices should remain stable at a high level
Navigator implemented another price increase in European markets in January and announced another one in the US for March
Order book remains solid
2019 challenges: increase volumes available for sale; higher costs for energy and wood
TISSUE
Navigator successfully implemented a price increase announced for end 2018
OUTLOOK
27
<<
Ramp-up of integrated tissue mill will bring additional volumes
AIMING TO BECOME A CARBON NEUTRAL COMPANY
After ATF (largest photovoltaic solar plant in an industrial setting in Portugal) NVG installed a new solar plant in Espirra
Installed capacity: (ATF + Espirra) 2.2 MW + 113kW
Solar Photovoltaic Panels: 8800 + 352
Electricity cost avoidance (Year):
264,000 € + 20,000€
CO2 avoidance (Year): (ATF)
1140 tons of cO2 avoided year
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FOCUSED ON BUILDING THE FUTURE BIO-ECONOMY
RAIZ & Inpactus project
Plantation trees Forestry residues
Biorefinery
Biomass deconstruction & separation processes
1 tonne wood Pulp
Fibers
Chemicals & energy recovery
(combustion) Pulping By-products
Biomass components
Paper
Tissue
Market pulp
Heat and electricity
Biochemicals Bioproducts Biomaterials
Examples of bioproducts from biorefinery
Essential oils
Sugars for bioethanol and bioplastics
Thermoplastic bio composites
Lignin-based foams for thermo insulation
Bacterial cellulose for biomedical applications
Nanocellulose for paper coating and food additives
29
EUCALYPTUS ESSENTIAL OILS PROJECT
Expected conclusion: 2019 CAPEX: € 5 million
Eucalyptus’ leaves
Biorefinery
Oils extraction
Distribution and Sales
547 M€ Market
8.7% CAGR Forest
& Extraction Company
30
Bacj
<<
31
FY 2018 RESULTS PRESENTATION
Annex
32
<<
QUARTERLY FIGURES – YOY EVOLUTION
427 385
432 435 439
Q42017
Q12018
Q22018
Q32018
Q42018
Turnover (M €)
104 111 115 115 115
Q42017
Q12018
Q22018
Q32018
Q42018
EBITDA (M €)
62 53
66 52 53
Q42017
Q12018
Q22018
Q32018
Q42018
Net Earnings (M €)
25% 29% 27% 26% 26%
Q42017
Q12018
Q22018
Q32018
Q42018
EBITDA/Sales (%)
15% 17% 18% 19%
13%
Q42017
Q12018
Q22018
Q32018
Q42018
ROCE (%)
21% 18%
23% 18% 18%
Q42017
Q12018
Q22018
Q32018
Q42018
ROE (%)
This presentation is intended to provide a general overview of The Navigator Company S.A.’s business and does not purport to deal with all aspects and details regarding The Navigator Company S.A.. Accordingly, no representation, undertaking or warranty, expressed or implied, is given by The Navigator Company S.A. or any of its subsidiaries’ undertakings, affiliates, directors, officers, employees or advisors or any other person as to the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation or of the views given or implied or any other material discussion in connection with this presentation. This presentation has been prepared by The Navigator Company S.A. for information purposes only. The Navigator Company S.A. or any of its affiliates, directors, officers, employees or advisers or any other person shall not have any liability whatsoever (including in case of omission, negligence or otherwise) for any losses, errors or omissions howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith or with respect to their reliance upon the completeness and accuracy of any such information, as well as any damages resulting hereof.
DISCLAIMER
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