presentation to investors - the navigator...

S e p t e m b e r 2 0 1 9

Presentation to investors

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

1

T A B L E O F C O N T E N T S

Performance, Market Update

& Outlook

Solid & Resilient Business Model

Expansion & Diversification

01 02 03 04

2

Efficiency & Cost reduction

05Sustainability at

the Core

3

NAVIGATOR IN BRIEF

1. A solid business model, with significant resilience in adverse market conditions

2. Expansion and diversification of business portfolio into the growing tissue segment, with other

growth options available

3. Focused on efficiency and committed to additional cost reduction programs

4. Sustainability at the core – investing in people, aiming to be a leader in sustainability and delivering

sustainable returns

5. H1 Performance, Market update & Outlook

<<

NAVIGATOR IS THE LEADING MANUFACTURER of UWF paper in Europe

19%

16%

12%12%

10%

31%

Nº1 in European UWF fine paper by capacity, with the largest and most modern mills

European uncoated fine paper* Main players

Uncoated woodfree (UWF)European mills

Velsen-Noord

Stockstadt

Alizay

Hernani

Fabriano

Munkedals

Etival

Theresienthal

Kostrzyn

Nymolla

Figueira da Foz

Kymi

Others

Kostrzyn

Ruzomberok

Veitsiluoto

Setúbal

Nordland

Kwidzyn

Syktyvkar

0 200 400 600 800 1000 1200 1400 1600

SAPPI

Crown Van Gelder

Zicuñaga

Clairefontaine

Fedrigoni

Double A

Arctic Paper

UPM

International Paper

Stora Enso

Mondi

Capacity, 1000 ton/year

Saillat Svetogorsk

The Navigator Company

Mondi

IP

Stora Enso

UPM

Other

*Excluding value-added products (ex.: carbonless papers, termal papers,colorful papers, engineering papers, specialty papers, etc)

Integrated

Not Integrated

4

Others

BASED ON LARGE SCALE PRODUCTION MILLS with state-of-the-art technology

FIGUEIRA DA FOZ

• Pulp (Integrated) – 650,000 tAD

• Paper – 790,000 ton

The Navigator Company operates 4 industrial units on an international scale, using sophisticated technology

VILA VELHA DE RÓDÃO

• Tissue – 60,000 ton reels;65,000 ton converting

SETÚBAL

• Pulp (Integrated) – 550,000 tAD

• Paper – 775,000 ton

CACIA

• Pulp (Market) – 350,000 tAD

• Tissue – 70,000 ton reels; 55,000 ton converting*

5(*total nominal capacity including new tissue mill in Cacia)

0

200

400

600

800

1000

1200

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

E S T I M A T E D C A S H P R O D U C T I O N C O S T S , D E L I V E R E D T O G E R M A N Y ( € / T O N )

AND HAS VERY EFFICIENT COST STRUCTURE IN PAPER

One of Europe’s most efficient paper producers, with cash cost per ton on the left side of the industry cost curve.

An estimated 25% of the industry capacity is non-integrated – excluding specialties capacity.

Source: RISI; The Navigator Company

6

NVGATF

NVGFF

NVGSET

Partial/Non Integrated

PPI Reels Germany minuts 3% discount Mar. 2018 -810€/ton

Highly Pressured Mills

€/ton

CumulatedCap.

Specialties

Mondi East& IP East

Revenues by division FY

2018*

Revenues by geography FY 2018**

*Other sales include Pellets & forest ; all energy sales are in Portugal **Revenues by geography of pulp, paper and tissue

The Group exports around 91% of pulp, paper and tissue sales

74% Paper

10% Pulp stand alone

5% Tissue

10% Energy

1% Other

56% Rest of Europe

13% Africa

8% Middle East

9% North America

5% Rest of the World

9% Portugal

WITH GLOBAL SALES TO 130 DIFFERENT COUNTRIESMarket pulp and paper sales accounted for over 83% of the Group’s

revenues, which are distributed to a diversified customer base

7

WITH A PRODUCT DIFFERENTIATION STRATEGY based on the highest quality paper products and own brands

Product and brand differentiation strategy have skewed the Group’s product mix to the high end market, allowing up to 7% price premium advantage

The Navigator Company

Europe industry average*

Premium products 54% 14%

Mill Brands 69% 20%

Sheets 75% 69%

Operating rates 100% 90%

* Estimated industry average including Navigator

The Navigator Company market share in Western Europe

(amongst Europeans producers)

Source: Euro-Graph; EMGE

8

19%

22%

21%

12%

~50%

Total

Cut-size

Folio

Reels

Premium

Source: Euro-Graph; EMGE; RISI

UWF capacity has been decreasing at a faster pace than consumption

CAGR for UWF consumption

from 2009-2017:

CAGR forUWF capacity

from 2009-2017:

9

8,7 8,5 8,58,0 8,1 8,1 8,2 7,7 7,5 7,5

7,2 7,6 7,3 7,0 7,0 7,0 6,9 6,7 6,6 6,4

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mill

ions

of

tonn

es

Capacity Apparent Consumption

Evolution of UWF Europeanapparent consumption

PRODUCING UWF - ONE OF THE BEST PERFORMING GRADES IN PRINTING & WRITING PAPER

UWF PAPER VS PULP: REDUCED VOLATILITY & STABLE RETURNS Index FOEX PIX (Europe) – Gross Prices

20162015 2018 20192012 20142013

A4 – B Copy: index for uncotaed woodfree paper (80 g/m2)

BHKP: index for bleached harwood kraft pulp (eucalyptus or birch) –Gross Price 10

2017

500

550

600

650

700

750

800

850

900

950

1000

1 9 17 25 33 41 49 5 13 21 29 37 45 1 9 17 25 33 41 49 5 13 21 29 37 45 53 8 16 24 32 40 48 4 12 20 28 36 44 52 8 16 24 32 40 48 4 12 20 28 36 44 52

Eur

/Ton

A4 B-copy BHKP



& OutlookExpansion &

Diversification

01 02 03 04

11


05Sustainability at

the Core Solid & Resilient Business Model

ORGANIC DEVELOPMENT AND DIVERSIFICATION IN THE LAST GROWTH CYCLE

New cycle includes: Tissue expansion, Pellets, Pulp expansion, Heavyweights paper

12

€ 21 M € 18 M € 31 M

€ 84 M

€ 84 M

€ 132 M

0

50

100

150

200

250

300

2015 2016 2017 2018

Capex (M€)

Current Business New Cycle

€120 M€131 M

€152 M€138 M

€115 M

€216 M

- Tissue: 200 M€ (80 M€ in 2015 for AMS+ capacity and 120 M€ in 2018 Cacia)- Pellets: 115 M€ (32M€ in 2015 and 83M€ in 2018) - Pulp expansion: 120 M€- Heavyweights: 12 M€

Diversification of The Navigator Company’s

portfolio

(potential to grow up to 15-20% of the Navigator’s sales

in 2020-2025)

Synergies with our core business

(raw material Eucalyptus globulus)

Ability to develop a competitive advantage with pulp integration

(cost and quality advantage)

State-of-the-art technological

solution

(The Navigator Company’s DNA)

strong strategic rationale to double-down the business

13

TISSUE

NVG’s key markets expected to grow 2-3% p.a. Commentary

Others

Source: Euromonitor; RISI; Bain analysis

In Western-Europe, tissue market has reached a mature stage and long-term market growth is estimated at 2.5-3.0% per year in 2017-2027E

NVG’s core markets (PT, ES, FR, GB) forecasted to experience long-term growth of ~2.5% during the next 10 years

Based on data sources used, volume and price impact on the market growth rates varies but in general total growth rates are in lineVolume growth expected to be 0.5 – 2.0% p.a., while price growth 2.0 – 0.5% in NVG’s core markets

Forecast

TISSUE MARKET EXPECTED TO EXPERIENCE GROWTH FOR THE NEXT DECADE

E U R O M O N I T O R D A T A

THE NEXT GENERATION OF TISSUE IN AVEIRO - CACIA

Configuration

15

Benefits Uniqueness

Capacity > 55 kton/y

2 Layer Headbox (2LH)

Shoe-press (SP)

Pulp Integrated

Only 28% of all tissue machines inEurope have a capacity > 55 ktons p.a.

Only 19% of all machines in Europehave a “Two Layer Headbox” (2LH)

In Europe, only 13 machines (5%)have a “Shoe Press” (SP)

Only 3 mills are fully integrated inEurope (one of them is our VVR mill)

Pulp Integrated + 2LH + SP + Capacity > 55 kton/y: Next generation Cacia formula

World-class state-of-the-art technology: better product at a lower cost

Cost competitiveness

Softness and higher % ofhardwood pulp

Bulk and energy savings

Cost competitiveness and better quality/softness

0

50

100

150

200

250

300

NAVIGATORP LAY E R I N T I S S U E I N I B E R I A A F T E R E X PA N S I O N P R O J E C T#3

Estimated converting production capacity in Iberian Peninsula (kton) 2018

TOTAL CONVERTING CAPACITY 2018

16

Fini

shed

pro

duct

pro

duct

ion

(con

vert

ing)

250

120 120105 100

6050 50

71010202935364048

0

AVEIRO (CACIA) TISSUE PROJECT RECAP

Capex of 120 M€

17

MAIN

HIGHLIGHTS

Successful book-building of new clients in Portugal, Spain, Franceand UK

Start-up of reels production in September 2018 – currently inramp-up phase

4 converting lines: two Domestics, Industrial and Napkins

Navigator becomes the 3rd largest producer in Iberia withproduction capacity of 130 kton reels and 120 ktonconverting

<<

Growth opportunity driven by increased demand in Asia and worldwide supply limitations

Attractive fundamentals of Mozambique:• High Forest productivity • Proximity to Asia• Very low cost of land

Geographic diversification within a core business of The Navigator Company

18

MOZAMBIQUE PROJECT

P h a s e 1 :W o o d c h i p M i l l

Project Phases Strategic RationaleP h a s e 2 :P u l p M i l l

Investment: USD 260 M(USD 100 M already invested)

Start-up in 2023

40 000 ha planted area

Investment: USD 2,5 B

Start-up in 2030

8000 new job opportunities

FOCUSED ON BUILDING THE FUTURE BIO-ECONOMY

RAIZ & Inpactusproject

Plantation trees Forestry residues

Biorefinery

Biomass deconstruction & separation

processes

1 tonnewood Pulp

Fibers

Chemicals & energy recovery

(combustion)Pulping By-products

Biomass components

Paper

Tissue

Market pulp

Heat and electricity

BiochemicalsBioproductsBiomaterials

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

19

CREATING INNOVATIVE PRODUCTS & TECHNOLOGIES

A co-promotion R&D project between industry and academia.A step forward to a green, global, sustainable and competitive bioeconomic environment in Portugal, based on eucalyptus pulp and paper industry!

RAIZ & Inpactus project

180Researchers/Technicians

50Research grants

2Invited chairs

15.3M€Total budget

20




Diversification

01 02 03 04

21


05Sustainability at


PERMANENTLY FOCUSED ON OPERATIONAL EXCELLENCEthrough cost reduction and efficiency - M2 program

22

Global 5 year target for 2016-2020: €100 million,

of which €64 million already achieved in 2016, 2017 & 2018

83 new initiatives of cost reduction since the beginning of the

year, with the following examples impacting EBITDA:

M2 program estimated impact on EBITDA in H1

2019 of € 8.1 million

• Increase PM1 speed (Figueira da Foz)

• Optimization of paper and wood logistics

• Global negotiation on the acquisition of chemical products

23

Zero Based Budget project launched in April:

• With the objective of defining and implementing a set of fixed costreduction initiatives focused on:‒ SG&A;‒ Non-industrial personnel;

• Reinforcing a culture of cost control and efficiency

• Project expected to be concluded in Q3 2019, with the objective toincorporate cost reduction initiatives in 2020 budget.

COMMITTED TO ADDITIONAL COST REDUCTIONS




Diversification

01 02 03 04

24


05Sustainability at


INVESTING IN PEOPLE & TALENT MANAGEMENT

25

G E N D E R D I V E R S I TY

G E N D E R D I V E R S I TY

3282Employees in 2018

R E J U V E N AT I O N( 2 0 1 3 - 2 0 1 8 )

R E J U V E N AT I O N( 2 0 1 3 - 2 0 1 8 )

T R A I N I N GT R A I N I N G

Middle and Senior management

72% - Male 28% - Female

Nº of Training sessions: 567

Nº Participants: 14 035

Average number of hours per employee: 65 Hours

Reduction on average 6,5 years

Distribution by age:12% < 30 years

56% between 30 – 50 years32% > 50 years

Navigator’s ambition is to be a global leader in sustainability

F O R E S T S

5.2 Million t CO2 eq

12 MillionPlants produced at Portuguese

Nurseries

110.000ha

Forest under management in Portugal

Million3.3 Investment in protection

against forest fires

RAIZForest and Paper Research Institute

Improve foresty management

Increase eucalyptus Yields

26

79%Waste

Recovery Rate

90%Renewable

raw materials

Solar power plant 3,1 GWh/year

Saving1.140 t CO2 /year

21.2M3/t

Products*

64%of paper Is sold with FSC*, PEFC or Ecobel

seals of approval

More than

68%Primary energy used

from renewable sources (biomass)

0.245 t CO2 / t products*

I N D U S T R I A L O P E R A T I O N S

Fiber optimization

Bioproducts and biofuels research

*pulp and paper

27

Navigator’s ambition is to be a global leader in sustainability

AIMING TO BECOME ACARBON NEUTRAL COMPANY

Under the Paris Protocoland the National Roadmapfor Carbon Neutrality,The Navigator Company undertakes, until 2035,to implement changesin its production processesin order to minimizethe use of fossil fuels

GOAL 1100% of electrical energy production from renewable sources

GOAL 2Reduce fossil fuelCO2 emissionswith replacementof technologies

GOAL 3Reduce 15% of specificenergy consumption until 2025, with 2015 as reference year

GOAL 4Carbon offsettingfor unavoidablecarbon emissions

28

29

1.132 1.095

1.3851.488 1.502 1.531 1.542

1.6281.577

1.6371.692

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

272

222

400 385 385350

328

390 397 404

455

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

+49% +68%

Strong financial growth in the last 10 years - Navigator recorded in 2018 record values for turnover and EBITDA

Turnover in Million €. EBITDA in Million €.

CONSISTENT SUSTAINABLE PERFORMANCE

24,0

%

13,5

% 17,6

%

13,3

%

13,5

%

16,0

%

25,2

%

11,8

% 15,3

%

15,9

%

13,5

%

14,7

%

24,7

%

11,0

%

17,1

%

16,3

%

15,8

%

16,5

%

26,9

%

13,1

% 18,0

%

17,4

%

17,9

%

19,8

%

The NavigatorCompany

Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5

2015 2016 2017 2018

COMPARING VERY FAVOURABLY WITH PEERS

Source:Euro-Graph; EMGE* Average includes Navigator

EBITDA Margin - Paper Peers (2015-2018) Average for 2015-2018*: 17%

30

HISTORICAL DIVIDEND PAYMENT AND SHARE PRICE EVOLUTION

Year (payment) Ajusted dividend yield Total amount paid (million euros)

2014 12.3% 200.8

2015 14% 440.5

2016 11.6% 170.0

2017 10.7% 250.0

2018 6.6% 200.0

2019 7.0% 200.0

31

Jan 2013 – Set 2019:

TSR: 131%

TSR annualized: 13%

0

1

2

3

4

5

6

7

jan-

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mar

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mai

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€/

Sh

are




Diversification

01 02 03 04

32


05Sustainability at


33

H1 2019 HIGHLIGHTS <<

Increase in turnover (+4.6%) due to higher paper prices and higher volumes of pulp and tissue sold.

Recurrent EBITDA declined 2.8% YoY pressured by higher production costs

Strong free cash flow of € 100.8 million

Total Capex of € 68.2 million, mainly recurring & environment

Dividend payment of € 200 million in April and acquisition of owns shares totalling € 14.2 million

In millions € H12019

H12018

%CHANGE 19/18

Turnover 854.1 816.9 4.6%

EBITDA(withoutPellets)

207.0 213.0 -2.8%

EBITDA withoutPellets /Sales

24.2% 26.1% -1.8 pp

CAPEX 68.2 77.2 -9.0

Adjusted Free Cash Flow

100.8 85.1 +15.7

RemuneratedNetDebt/EBITDA

1.83 1.73 +0.10

Current Average Cost of Debt (June 2019):

1.60%

34

Debt Rate Profile(June 2019):

Fixed Variable

78% 22%

EXTENSION OF DEBT MATURITYDuring H1 2019, Navigator renegotiated all debt maturing in 2020, extending average

tenure above 4 years at the same average cost of debt

Debt maturity profileTotal debt: € 915 million

Average maturity: 4.1 years

36,6 13,2

226,5

50,6

293,3

93,3

202

2019 2020 2021 2022 2023 2024 2025-2028

35

<<H1 2019 Recurring EBITDA

Positive impact of paper prices in EBITDA offsets increase in costs (Energy, Wood and Fibres)

(include bio assets andland sales)

33

Adj. R18 VolumePrice

-4-29

Costs

-6

Other

207

R19

213

-6,0(-3%)

A CB

A B CStrong positive contributionfrom paper price and FX

Positive volumes for pulp and tissuewere not enough to offsett negative impact of paper volumes

Negative impact of variable costs: energy, wood, chemicals and fixedcosts

36

EXTERNAL COST FACTORS

• Electricity unit cost + 15%

• Natural Gas unit cost + 23%

• CO2 Licenses: H1 2018: 12€/ton vs H1 2019: 24€/ton

• Chemicals:

• OBA (Optical Brightness Agent) – DAS price increase + 300%

• Extra Iberian wood: ∆%YoY +18%

• External Fiber - NBSK (€/ton): ∆%YoY +5%

• EUR/USD: H1 2018: 1.21 vs H1 2019: 1.12

37

<<NAVIGATOR PAPER & PULP PERFORMANCE

PAPER PERFOMANCE

• UWF sales volume decreased 5% H1 2019 vs H1 2018, but increased to 4% in Q2 vs Q1.

• UWF production impacted by price / volume trade-off as well as slower ramp-up of heavyweights production and thestrike at PM4 in Setúbal.

• Average price for H1 2019 was 6.4% above H1 2018 and average Q2 price remain in line with Q1 2019

• Navigator paper sales turnover increased 1.2% YTD Jun 2019 vs 2018 to € 611 million and 4% to 311 million in Q2 vsQ1 2019 .

• Growth in the weight of mill brands to 70% (+2pp YoY)

PULP PERFOMANCE

• Pulp production up 2.4% despite impact of maintenance stoppages in Cacia and Setúbal.

• Market pulp sales in volume increased 8.4% YTD Jun 2019 vs June 2018 and pulp turnover increased 6.8% YoY

• Additional 15 k tons of pulp were integrated into tissue production

38

<<GROWTH IN THE TISSUE BUSINESS

• Global volume of tissue sold increased to 47.2 kton (66% YoY), sustained by new capacity in Aveiro; sales volumewas flat Q2 vs Q1 2019;

• Sales turnover increased to € 66 million, with significant growth in converted products and also in parent reels

• Even tough price improved YoY for both converted and reels, the higher percentage of reels in global sales due toramp-up impacted negatively average price for the period

38% Consumer

45% Away-from-Home+C&C

17% Parent Reels

41% Portugal

29% Spain

30% Extra-Iberia

Revenue by segment

(2019)

Revenue by geography

(2019)

39

UPDATE ON THE PULP MARKET• PPPC statistics for July 2019 show an improvement in the overall chemical pulp shipments with hardwood

shipments up +1% y/y. Significant improvement in shipments to China (28% global, with 9% y/y increase inhardwood and 65% increase y/y in softwood), and inventories for both hardwood and softwood showed signs ofa slight destocking on a sequential basis.

• Still, on a YTD basis, hardwood shipments are down 6% y/y to both China and Europe. Producer shipments’ decline may be explained by the transfer of stock ownership from the end user to the producer, with end users refraining from buying; also, although inventories have been reducing, they remain at high levels, namely at Chinese ports. However there is very low visibility on how much stocks have declined at the Chinese end users.

• Pulp market summer low season fostered some pulp price adjustments; still an improvement is expected by year-end 2019 and beginning 2020, depending on Chinese (and RoW) economic activity pick-up and big pulp producers production discipline to balance stock levels:

− Brazilian producers already announced 1 to 1.5 Mt market pulp production cut in 2019 to normalizeinventories;

− In H2/2019, Asian producers will take 400 kt of HW pulp out of the market to produce Dissolving Pulp;

<<

Medium Term fundamentals remain sound as there is no new Hardwood capacity until H2/2021. On the demandside, market pulp will be driven by Tissue investments (and demand growth). Industry consultants forecastincrease in tissue capacity of 3.7 Mt in 2018, 1.7 Mt in 2019 and 1.1 Mt in 2020, half of which occurring in China

300

400

500

600

700

800

900

1000

400

500

600

700

800

900

1000

1100

1 11 21 31 41 51 9 19 29 39 49 6 16 26 36 46 4 14 24 34 44 2 12 22 32 42 52 10 20 30 40 50

Eur

/ To

n

USD

/ To

n

Week

PIX Europe

40

<<PULP PRICES CORRECTED BUT REMAIN AT A HIGH LEVEL

Pulp prices have been decreasing since the end of 2018, but remain above 2017 and 2016 levels

Last PIX (W34/2019):800 USD/ton (-21%) YTD 2019

Last PIX (W34/2019):722 €/ton (-19%) YTD 2019

USD/ton BHKP EUR/ton BHKP

201620152014 2017 2018 2019

Average Pulp price in YTD 2019:

- 931 $/ton 2019

- 826 €/ton 2019

Average Pulp price in last 5 years :

- 813 $/ton (2013-18)

- 683 €/ton (2013-18)

41

<<PULP MARKET IN THE LAST 18 MONTHS

30

35

40

45

50

55

60

65

70

‐800

‐600

‐400

‐200

0

200

400

600

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5

2018 2019

YoY Hardwood Pulp Shipments | Producer Stocks

China Global Producer Stocks

Trade Warstarts Trade War

intensifies

CN buyersstock up

CN refrain buying and force prices down

Producer stocks sky‐rocket

Demand & stocks

getting backto normal

YoY days

Source: PPPC; FOEX

Source: PPPC; The Navigator Company

Source: PPPC; The Navigator Company

42

UPDATE ON PAPER MARKET <<

YTD July

UWF CWF UME CME

-0.7% -10% -9.5% -10.1%

Avg L5Y -0.3% -3.1% -4.0% -5.6%

• Recent decline of P&W demand well above trend, indicating not only the effects of economic cooldown but also an overall destocking across the entire supply chain.

• UWF remains the best performing grade, with demand rising 1% YoY July and slightly down year-to-date

Global paper demand impacted by economics and destocking

-5.4%

Total

-2.3%

600

650

700

750

800

850

900

950

1 8 15 22 29 36 43 50 5 12 19 26 33 40 47 1 8 15 22 29 36 43 50 5 12 19 26 33 40 47 2 9 16 23 30 37 44 51 6 13 20 27 34

EUR

/ To

n

Week

Source: FOEX

EUROPEAN MARKET PAPER PRICE – A4 B-COPY

43

PAPER PRICES IN STABLE TREND

2014 20162015 2017 2018 2019

Last PIX (W34 2019):899 €/ton

Average A4 B-COPY price in YTD 2019:

- 911€/ton 2019 (-0.7% YTD)

Average A4 B-COPY price in last 5 years:

- 835€/ton (2013-18)

Av. 2016:823 €/ton(Var. W1-52: -3.5%)

Av. 2017:815 €/ton(Var. W1-52: +4.1%)

Av. 2018:873 €/ton(+9.0%)

<<

Av. YTD 2019:911 €/ton(+5,8%)

A v e r a g e p r i c e i n 2 0 1 9 a b o v e a v e r a g e p r i c e i n t h e l a s t 1 0 y e a r s

44

UWF MARKET CONDITIONS

D E M A N D

P U L P P R I C E

UWF continues to show the highest resilience among the major graphic papers, with global demand slightly down year-to-date

Hardwood pulp prices remained at high levels even after recent price correction; Positive price outlook towards the end of 2019 and in 2020

Several producers announced conversion / shutdowns of UWF in 2019 in Europe (-280 kton), US (-607 kton), Asia (-627 kton) and Latin America (-180 kton), more than offsetting new capacities entering the market; estimated balance of -1 million tons until end in 2020.

Avg. 2019 YTD price 911€ (+6.9% YoY).

B A L A N C ES / D

P R I C EL E V E L

<<

45

<<

GROWTH IN THE TISSUE MARKET

• In tissue business, demand continues to present interesting growth rates: 3.3% in Portugal and3.7% in Spain (between 2017 – 2019e), leading to new production capacity in the Iberian Peninsula

• UK largest net importer in Europe.

679 704

2017 2019e

Spain

151

156

2017 2019e

Portugal

Kton Kton

iPULP PAPER• Announced production

curtailments and conversions should allow a more balanced market;

• Pulp prices in China seem to have bottomed;

• Pulp demand expected to pick-up moderately in Q4 2019, subject to improvement in economic growth (namely in China).

TISSUE• Demand continues to

present interesting growth rates, even in a context of new capacity additions

• Group will further consolidate its new operations and increase in global sales as the industrial operations matures.

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Geopolitical instability and trade tensions, hampering economic growth remain a concern; exogenous costs factors also remain a concern

Focus on cost efficiency measures – M2 continues and launch of New ZBB, focused on fixed costs to be implemented in 2020

• Several production shutdowns and conversions announced for 2019 should improve global demand/supply balance;

• UWF prices under pressure but remain resilient;

• Evolution of EUR/USD will be key

Outlook & Challenges for H2 2019

S e p t e m b e r 2 0 1 9

Presentation to investors

presentation to investors - the navigator...

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