Navigator Company Sa · EURONEXT:NVG
Navigator Company Sa — The Navigator Company — Roadshow BPI 2021
57 slides from Navigator Company Sa's conference presentation, June 2021
Slide 1: Presentation to Investors - Roadshow BPI 2021
P r e s e n t a t i o n t o I n v e s t o r s R O A D S H O W B P I 2 0 2 1
Slide 2: Disclaimer
DISCLAIMER 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 T
Slide 3: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 2
Slide 4: Navigator in Brief
NAVIGATOR IN BRIEF << A solid business model, with significant resilience in adverse market conditions Expansion and diversification of business portfolio into the growing tissue segment, with other growth options available Focused on efficiency and committed to additional cost reduction programs Su
Slide 5: The Navigator Company
THE NAVIGATOR COMPANY << an integrated producer TISSUE R&D 130,000 ton Reels; Leader in Eucalyptus 120,000 ton Converting* globulus cloning PAPER FOREST 1.6 M ton 107,370 ha of forest of UWF paper (under management) ENERGY PULP 2.5 TWh 1.6 M ton of BEKP pulp of electricity (0.350 M market pulp) (*to
Slide 6: Navigator is the leading manufacturer of UWF paper in Europe
NAVIGATOR IS THE LEADING MANUFACTURER << OF UWF PAPER IN EUROPE Nº1 in European UWF fine paper by capacity, with the largest and most modern mills Uncoated woodfree (UWF) European uncoated fine paper * European mills Main players Mt % Figueira da Foz Setúbal Theresienthal 1 NVG (PT) 1.6 15 Mondi Ruz
Slide 7: Based on large scale production mills with state-of-the-art technology
BASED ON LARGE SCALE PRODUCTION MILLS << WITH STATE-OF-THE-ART TECHNOLOGY With global capacity of: 1.6 Mtons of UWF – 1.6 Mtons of BEKP – 130 ktons of Tissue Reels – 374 MW of Energy AVEIRO FIGUEIRA DA FOZ VILA VELHA DE RÓDÃO SETÚBAL • Pulp (Market) – 350,000 tAD • Pulp (Integrated) – 650,000 tAD •
Slide 8: With a total installed capacity of 374 MW
WITH A TOTAL INSTALLED CAPACITY OF 374 MW << The Navigator Company is responsible for 4% of the total electricity generation in Portugal Cogeneration Solar Biomass (Biomass+Natural Gas) 25 MW Photovoltaic 344 MW 5 MW 6 high efficiency cogeneration 2 biomass power plants 2 large solar photovolt
Slide 9: With a more diversified business and global sales to 130 countries
WITH A MORE DIVERSIFIED BUSINESS AND << GLOBAL SALES TO 130 DIFFERENT COUNTRIES Revenue diversification over the last 6 years with the entry into the tissue business and pulp debottlenecking, with a diversified customer base selling across 130 different countries Revenue by business area Revenue by
Slide 10: With a differentiation strategy
WITH A 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 (in Europe) NVG market share The Navigator Europe industry in
Slide 11: Producing a resilient paper grade: uncoated woodfree
PRODUCING A RESILIENT PAPER << GRADE: UNCOATED WOODFREE Among Printing and Writing papers, Uncoated Woodfree (UWF) is the most resilient grade. UWF Demand for YTD May 2021 performing better than other grades 27.6 15.1 6.6 3.1 2.8 Mt, YTD Kt, YoY 700 631 600 500 400 305 YTD May 2021 300 Global Demand
Slide 12: UWF is less exposed to digitalization
UWF IS LESS EXPOSED TO << DIGITALIZATION There are different grades to different uses and UWF is less dependent on media and advertising Woodfree Mechanical Uncoated Coated Uncoated Coated High-end magazines & Communication materials Trade books, directories Magazines & communication materials UWF r
Slide 13: UWF market demand drivers
UWF MARKET DEMAND DRIVERS << UWF is Universal (everywhere to everybody) and Versatile (addressing multiple applications) Education External Science Production Communications Industrial Activity Letter & Agreements Emp. in Services (esp. Knowledge sector) Reading habits Direct Mail Population growth
Slide 14: A strong positioning in UWF market
A STRONG POSITIONING IN UWF MARKET << The use of an excellent raw material such as Eucalyptus globulus fiber, modern and efficient plants and an experienced workforce – allows the production of high quality paper and the emphasis on premium products World Market (e) Navigator Premium 10-15% 50-60% S
Slide 15: Leading market player in UWF segment
LEADING MARKET PLAYER IN UWF SEGMENT << Paper Sales Distribution 5% For every 3 office paper 8% reams exported from Europe Europe 11% Africa Middle East North America 16% 60% Latin America 2 are made by Navigator NVG Market Share* Share of European Exports* (exc.RU) 52% 57% 50% 55% 17% 5% Western Ea
Slide 16: With a very efficient cash cost structure
WITH A VERY EFFICIENT CASH COST STRUCTURE << Low prices and high costs pulling UWF capacity out from the market. Navigator is well equipped with efficient assets and strong products and brands to continue to be the global UWF benchmark 1000 European UWF Cash Cost Curve for Q3 2020 and Q1 2021 adapte
Slide 17: UWF demand evolution: mature markets vs developing world
UWF DEMAND EVOLUTION << MATURE MARKETS vs. DEVELOPING WORLD Mt World 47 47 52 50 52 51 51 46 37.3 37.5 38.7 35.8 33.9 37% China share of 38% 37% 31.7 38% 41% RoW 1% CAGR L3Y 34% 26.7 Demand Outlook* through 2030 24.8 Rest of 32% Financial Crisis NA -3%/y 31% the World ~40 to 50% of XXI cent. demand
Slide 18: UWF demand evolution: Western Europe
UWF DEMAND EVOLUTION << Capacity in WE has been adjusting to the reduction in Demand: from Western European Focus 2013 until 2019 UWF demand diminished by 2.4 Mt with supply also reducing Demand decline, capacity follows 2.4 Mtons Demand in Europe is estimated to decline around 0.6 Mtons from 2019 u
Slide 19: UWF paper vs pulp prices
UWF PAPER VS PULP: Significant recovery of gross pulp prices in 2021 Index FOEX PIX (Europe) – Gross Prices EUROPEAN MARKET PAPER PRICE – A4 B-COPY AND BHKP (IN €) 1000 A4 B-copy BHKP 950 900 850 800 Eur/Ton 750 700 650 600 550 YTD 2015 2016 2017 2018 2019 2020 2021 500 1 9 17 25 33 41 49 4 12 20 28
Slide 20: Pulp demand
PULP DEMAND << M AMRaKr E k Te tP PUuL lPp BbYy MmAaIiNn GgRr aAdDeE World China M tAD 2000 2020 M tAD 2000 2020 L5Y (Mt/y) SW 18.9 25.9 SW 1.4 9.0 0.3 M tAD BEK 6.6 27.4 BEK 0.3 11.4 1.0 BEKP, +1.2 Mt / y (L5Y) 30.0 Other 13.1 12.9 Other 0.7 5.5 0.4 83% in China Total 38.6 66.3 42% Total 2.4 25.8 1
Slide 21: Pulp: Navigator positioning
PULP NAVIGATOR POSITIONING << European leader in BEKP production Pulp Sales Focus on Value Added Segments in Europe 300 - 400 Decor & Specialities allows for a 5-6% price premium over other segments: ktons 73 6.1% MS in Europe Decor & Specialities 32 % Of total demand in Europe* In NVG mix** % 73% M
Slide 22: Focus on cost efficiency
FOCUS ON COST EFFICIENCY << Navigator has been permanently focus on optimizing its production processes and on cost reduction initiatives Cost optimization and operational efficiency plan implemented at the start of 2020 and reinforced with the Covid-19 pandemic Targets for cost reduction 2020 fully
Slide 23: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 22
Slide 24: Organic development and diversification in the last growth cycle
ORGANIC DEVELOPMENT AND << DIVERSIFICATION IN THE LAST GROWTH CYCLE • From 2015 until 2018, Capex Capex (M€) included essentially growth projects €216 M that have allowed NVG to diversify its business €152 M €158 M €129 M €115 M 129 15 Growth • In 2019, capex included mainly €131 M Cycle 127 mainten
Slide 25: Growth in the tissue business
GROWTH IN THE TISSUE BUSINESS << After entering the tissue business in 2015, Navigator doubled its capacity first in 2015 and then in 2018, with the construction of a new 70 Ktons integrated machine in Aveiro. The growth in the tissue business has a strong strategic rational: Diversification of The
Slide 26: Navigator - #3 player in tissue in Iberia
N A V I G A T O R - #3 P L A Y E R I N T I S S U E I N I B E R I A << In 5 years, Navigator developed a business platform that represents 10% of Iberian Capacity and 40% of Portuguese capacity 280 PRODUCTION CAPACITY IN IBERIAN PENINSULA Total capacity in (KTON) 2020 Iberia: 1 330 ktons Portugal – 3
Slide 27: Tissue world trends
TISSUE WORLD TRENDS << The tissue industry has been on a strong growth track for the past 20 years, growing 3.7% p.a. from 1996 until 2016; from 2017 until 2020, CAGR has been 2.3% and during 2020 growth accelerated to 4.5%. China has been a driving force for global tissue market growth, accounting
Slide 28: Mozambique project
MOZAMBIQUE PROJECT << Strategic Rationale Phase 1: Phase 2: Growth opportunity driven by increased Woodchip Mill Pulp Mill demand in Asia and worldwide supply limitations Investment: USD 280 M Investment: USD 2.5 B (USD 100 M already invested) 1.5 Mtons/year BEKP Attractive fundamentals of Mozambiqu
Slide 29: Mozambique project update
MOZAMBIQUE PROJECT UPDATE << • Navigator has been working with the Mozambique Government under the terms of the MoU signed in 2018, in particular on infrastructures and logistics and land and development issues. • This has included the first Outgrower Support program in Mozambique, a government init
Slide 30: Focused on building the future bio-economy
FOCUSED ON BUILDING THE RAIZ & Inpactus FUTURE BIO-ECONOMY project Examples of possible bioproducts from biorefinery 1 ton Paper wood Pulp Essential oils Fibers Tissue Sugars for bioethanol and bioplastics Market pulp Thermoplastic bio composites Plantation trees Biorefinery Forestry residues Lignin
Slide 31: Creating innovative products & technologies
CREATING Researchers/Technicians 180 INNOVATIVE PRODUCTS & TECHNOLOGIES Research grants 50 RAIZ & Inpactus project A co-promotion R&D project between industry and academia. Invited chairs 2 A step forward to a green, global, sustainable and competitive bioeconomic environment in Portugal, based on e
Slide 32: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 31
Slide 33: New 2030 sustainability agenda
NEW 2030 SUSTAINABILITY AGENDA << A RESPONSIBLE BUSINESS AGENDA ALIGNED WITH NAVIGATOR´S PURPOSE: People, their quality of life, and the planet's future are what inspire and move us. We want to share with society not only our outcomes, but also our knowledge, experience and resources in the search f
Slide 34: 2030 sustainability agenda main goals
2030 SUSTAINABILITY AGENDA << MAIN GOALS FOR NATURE FOR CLIMATE FOR SOCIETY Preserve and value the natural Invest in low carbon solutions Develop our people, involve communities and share capital: towards carbon neutrality: value with society in a fair and inclusive way: Reduction of 33% specific
Slide 35: Performance in 2020
PERFORMANCE IN 2020 << 90% raw materials from renewable 84% sources of water +7 000 returned to the families environment supported in For Mozambique NATURE For 74 % SOCIETY of total certified wood* 3 232 1.7 M€ invested in the 87% employees comunity of waste recovered 123 707 training hours For CLIM
Slide 36: Achievements in 2020
ACHIEVEMENTS IN 2020 << Leader in Sustainability Score of 17.2 ESG Risk Rating 2020 Among the only 5% companies 5th among 79 global evaluated worldwide that achieved Paper&Forestry companies an “A” rating Other Innitiatives Member and part of the WBCSD’s ExCo Forest Solutions Group – core members. P
Slide 37: Forest is at the heart of what we do
For NATURE FOREST IS AT THE HEART OF WHAT WE DO << a natural and renewable resource 6.1 Million t CO eq 800 Species 2 Flora of 241 Species of Fauna 12 Million RAIZ Plants produced Forest and Paper at Portuguese Research Institute Nurseries Improve foresty management Increase eucalyptus Yields Main f
Slide 38: Addressing climate change by becoming a carbon neutral company
For CLIMATE << ADDRESSING CLIMATE CHANGE BY BECOMING A CARBON NEUTRAL COMPANY The Navigator Company is GOAL 1 GOAL 2 committed to achieve Carbon 100% of electrical Reduce fossil fuel Neutrality at its industrial sites energy production from CO2 emissions with by 2035, 15 years ahead of EU renewable
Slide 39: Energy - solar photovoltaic
For CLIMATE ENERGY – SOLAR PHOTOVOLTAIC << The energy generation through renewable energy sources constitutes one of the company’s strategic axis. This is shown through relevant investments in solar plants in self consumption regime. Navigator Paper Setúbal (2016) Herdade de Espirra (2018) 8 800 sol
Slide 40: Investing in people & talent management
For For SOCIETY SOCIETY INVESTING IN PEOPLE & TALENT << MANAGEMENT Headcount Average impact of 6.5 years* 3232* WORKFORCE Figueira da Distribution by age: REJUVENATION Foz 10% < 30 years (2013-2020) 1,003 60% between 30 – 50 years 30% > 50 years Setúbal 1,137 Training Hours: TRAINING 135 787 h** Ave
Slide 41: Impact of social program in Mozambique
For SOCIETY IMPACT OF SOCIAL PROGRAM * << $6 Million 250 employees Securing invested 90% Mozambicans families In the Community 30% women welfare Development Delivering food Program security and generating income to 7.000 families 850 improved craft stoves 53 new water Distributed in Zambézia, boreho
Slide 42: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 41
Slide 43: Financial indicators
FINANCIAL INDICATORS << 2016 2017 2018 2019 2020 Million euros Turnover 1,577 1,637 1,692 1,688 1,385 EBITDA 397 404 455 372 286 EBITDA/Sales (%) 25% 25% 27% 22% 21% CAPEX 139 115 216 158 81 Free Cash Flow 184 198 211 186 234 Net Debt 640 692 683 715 680 Net debt/EBITDA 1.61 1.72 1.50 1.92 2.38 ROCE
Slide 44: Main financial and operational highlights
MAIN FINANCIAL AND << OPERATIONAL HIGHLIGHTS Turnover (M€) EBITDA (M€) Operational Cash Flow (M€) 1.628 1.577 1.637 1.692 1.688 455 1.385 390 397 404 372 385 357 377 286 304 307 254 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 Paper Sales (ktons) Pulp Sal
Slide 45: Very favourable comparison with peers
VERY FAVOURABLE << COMPARISON WITH PEERS EBITDA Margin - Paper Peers (2016-2020) Average for 2016-2020*: 15% 27% 25% 25% 22% 21% 20% 17% 18% 18% 17% 17% 16% 17% 17% 16% 16% 16% 16% 15% 15% 15% 15% 15% 14% 13% 13% 12% 11% 10% 7% The Navigator Competitor 1 Competitor 2 Competitor 3 Competitor 4 Compet
Slide 46: Historical dividend payment and share price evolution
HISTORICAL DIVIDEND PAYMENT << AND SHARE PRICE EVOLUTION 6,0 €€/share 5,0 € 4,0 € 3,0 € 2,0 € 1,0 € Year Ajusted Total amount paid Dividend per share (payment) dividend yield (million euros) (€) 2015 8.0% 440.5 0.614 2016 8.8% 170.0 0.237 Jan 2015– June 2021: 2017 6.6% 250.0 0.349 TSR: 68% 2018 4.8%
Slide 47: Management priorities
MANAGEMENT PRIORITIES << Financial Goal: Preserve company’s value, operating under the norms of shareholder’s remuneration. 1 2 3 4 5 Protect the Consolidate Reinforce Continue to Commitement core business and clarify the focus on invest on our to create the options efficiency and people as a value
Slide 48: Q1 2021 in line with Q4 2020 stable performance
Q1 2021 IN LINE WITH Q4 2020 << STABLE PERFORMANCE • With the new lockdowns implemented in Q1, paper demand evolved in line with Q4 2020; market pulp conditions improved significantly with prices in China increasing 46% (+35% in Europe in Euros); • Navigator concentrated larger maintenance stoppages
Slide 49: 3M 2021 financial highlights
3M 2021 FINANCIAL HIGHLIGHTS << Q1 Q4 Change Q1 Change In millions € 2021 2020 QoQ 2020 YoY Turnover of € 341 million stood in line with Q4 2020, as a recovery in selling prices offset Turnover 341 341 -0.2% 406 -16% the reduction in pulp and paper sales volumes EBITDA 71 75 -6% 88 -20% EBITDA total
Slide 50: Navigator paper & pulp performance
NAVIGATOR PAPER & PULP PERFORMANCE << PAPER PERFORMANCE in Q1 • UWF sales volume decreased 2% in Q1, comparing with previous quarter, to 335 ktons; • Average selling price impacted by product and market mixes and heavily penalised by the evolution of exchange rates in international markets; • Paper
Slide 51: Solid performance in tissue business
SOLID PERFORMANCE IN << TISSUE BUSINESS In spite of lockdowns and travel restrictions imposed at the beginning of the year, particularly impacting the Away-from-Home segment , NVG´s tissue performance remained solid 44% Portugal 83% Finish Product Revenue by Revenue by 62% Consumer (At-Home) Revenue
Slide 52: Capex of €20 million in 2021
CAPEX OF € 20 MILLION IN 2021 << (VS € 11 Million in Q4 2020) CAPEX during Q1 mainly directed at maintenance, including the new woodchip pile in Aveiro, and environment, including the biomass boiler and the solar plants in Figueira da Foz (completed) and Setúbal (under construction) 20 14 Capex over
Slide 53: Strong FCF generation in Q1
STRONG FCF GENERATION IN Q1 << Great cash flow generation of € 56.4 million in Q1 favourably comparing with € 15 million in Q1 2020; effective cost management of working capital together with a careful policy of supplier management positively impacted this result M€ -2.4 (+4%) 56.4 30.2 0.3 54.0 12.
Slide 54: Debt profile
DEBT PROFILE << Q1 impacted by the reimbursement of € 40 million and issuing of € 42.5 million. Significant restructuring occurring in April, in a global amount of € 240 million The Group was able to increase debt maturity to 3.5 years and reduce medium and long-term cost of debt Debt maturity profi
Slide 55: Outlook for 2021
OUTLOOK FOR 2021 << With the economy recovering and the vaccination plan being implemented, pulp, paper and tissue market conditions are expected to remain globally positive. PULP PAPER TISSUE • After sharp price increases since • Capacity exits and conversions in the US and • Increase in raw materi
Slide 56: Solid perspectives for the industry
SOLID PERSPECTIVES FOR << THE INDUSTRY Fundamentals for pulp, paper and tissue remain solid: • In pulp, producer inventories remain low and demand strong; new capacity arriving over the next few years should be absorbed by demand growth, as end uses for pulp (tissue, packaging, specialties) continue
Slide 57: Presentation to Investors - Roadshow BPI 2021
P r e s e n t a t i o n t o I n v e s t o r s R O A D S H O W B P I 2 0 2 1