Navigator Company Sa · EURONEXT:NVG
Navigator Company Sa — The Navigator Company — Investor Presentation (November 2019)
44 slides from Navigator Company Sa's investor presentation, November 2019
Slide 1: Presentation to investors
Presentation to investors N o v e m b e r 2 0 1 9
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 05 Solid & Performance, Resilient Expansion & Efficiency & Cost Sustainability at the Core Market Update Business Diversification reduction & Outlook Model 2
Slide 4: Navigator in Brief
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 pr
Slide 5: 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 Figueira da Foz Setúbal Mondi Theresienthal Others Ruzomberok Syktyvkar 19
Slide 6: Based on large scale production mills with state-of-the-art technology
BASED ON LARGE SCALE PRODUCTION MILLS with state-of-the-art technology The Navigator Company operates 4 industrial units on an international scale, using sophisticated technology CACIA FIGUEIRA DA FOZ VILA VELHA DE RÓDÃO SETÚBAL • Pulp (Market) – 350,000 tAD • Pulp (Integrated) – 650,000 tAD • Tissu
Slide 7: And has very efficient cost structure
ESTIMATED CASH PRODUCTION COSTS, DELIVERED TO GERMANY (€/TON) €/ton AND HAS VERY 1200 EFFICIENT COST STRUCTURE 1000 Specialties IN PAPER PPI Reels Germany minus 3% discount Mar. 2018 -834€/ton 800 Highly Pressured Mills NVG SET 600 NVG NVG ATF FF One of Europe’s most efficient paper producers, with
Slide 8: With global sales to 130 different countries
WITH GLOBAL SALES TO 130 DIFFERENT COUNTRIES Market pulp and paper sales accounted for over 83% of the Group’s revenues, which are distributed to a diversified customer base 56% Rest of Europe 74% Paper 13% Africa 10% Pulp stand alone Revenues by Revenues by 8% Middle East division FY 5% Tissue geog
Slide 9: With a product differentiation strategy
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 market share The Navigator Europe
Slide 10: Producing UWF - one of the best performing grades in printing & writing paper
PRODUCING UWF - ONE OF THE BEST Evolution of UWF European PERFORMING GRADES IN PRINTING apparent consumption & WRITING PAPER 8,7 8,5 8,5 8,0 8,1 8,1 8,2 7,7 7,5 7,5 UWF capacity has been decreasing at a faster pace than consumption Millions of tonnes 7,6 7,2 7,3 7,0 7,0 7,0 6,9 6,7 6,6 6,4 CAGR for
Slide 11: UWF paper vs pulp: reduced volatility & stable returns
UWF PAPER VS PULP: REDUCED VOLATILITY & STABLE RETURNS Index FOEX PIX (Europe) – Gross Prices 1000 A4 B-copy BHKP 900 800 Eur/Ton 700 600 500 2014 2015 2016 2017 2018 2019 400 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 Week A4 – B Co
Slide 12: Table of Contents
TABLE OF CONTENTS 01 02 03 04 05 Solid & Performance, Resilient Expansion & Efficiency & Cost Sustainability at the Core Market Update Business Diversification reduction & Outlook Model 11
Slide 13: Organic development and diversification in the last growth cycle
ORGANIC DEVELOPMENT AND DIVERSIFICATION IN THE LAST GROWTH CYCLE 300 Capex (M€) €216 M 250 €152 M 200 €138 M €115 M 150 € 132 M 100 €131 M €120 M € 84 M 50 € 84 M € 21 M € 18 M € 31 M 0 2015 2016 2017 2018 Current Business New Cycle New cycle includes: Tissue expansion, Pellets, Pulp expansion, Heav
Slide 14: Tissue: strong strategic rationale to double-down the business
TISSUE strong strategic rationale to double-down the business Diversification of The Synergies with our Navigator Company’s core business portfolio (potential to grow up to 15- (raw material Eucalyptus 20% of the Navigator’s sales globulus) in 2020-2025) Ability to develop a State-of-the-art competi
Slide 15: Navigator #3 player in Iberian Peninsula
NAVIGATOR #3 PA LF ATYEERRE IXNP ATNI SS SI OUNE PI NR OI JBEECRTI A Estimated converting production capacity in Iberian Peninsula (kton) 2018 300 Finished product production (converting) 250 250 200 150 120 120 105 100 100 60 50 50 48 40 50 36 35 29 20 10 10 7 0 0 TOTAL CONVERTING CAPACITY 2018 14
Slide 16: Aveiro (Cacia) tissue project recap
AVEIRO (CACIA) TISSUE PROJECT RECAP << Successful book-building of new clients in Portugal, Spain, France and UK Start-up of reels production in September 2018 – currently in MAIN ramp-up phase Capex of 120 M€ 4 converting lines: two Domestics, Industrial and Napkins HIGHLIGHTS Navigator becomes the
Slide 17: Mozambique project
MOZAMBIQUE PROJECT Strategic Rationale Project Phases Growth opportunity driven by increased Phase 1: Phase 2: demand in Asia and worldwide supply Woodchip Mill Pulp Mill limitations Investment: USD 260 M Investment: USD 2,5 B Attractive fundamentals of Mozambique: (USD 100 M already invested) • Hig
Slide 18: Focused on building the future bio-economy
FOCUSED ON BUILDING THE RAIZ & Inpactus FUTURE BIO-ECONOMY project 1 ton Paper Examples of bioproducts wood Pulp from biorefinery Fibers Tissue Market pulp Essential oils Plantation trees Biorefinery Forestry residues Heat and electricity Sugars for bioethanol and bioplastics Chemicals & energy reco
Slide 19: 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 20: Table of Contents
TABLE OF CONTENTS 01 02 03 04 05 Solid & Performance, Resilient Expansion & Efficiency & Cost Sustainability at the Core Market Update Business Diversification reduction & Outlook Model 19
Slide 21: Continuous focus on cost efficiency
CONTINUOUS FOCUS ON COST EFICIENCY << Global 5 year target for 2016-2020: €100 million, of which €64 million already achieved in 2016, 2017 & 2018 M2 program estimated impact on 9M 2019 EBITDA of 14 M€ 100 new initiatives of cost reduction since the beginning of the year, with the following examples
Slide 22: Table of Contents
TABLE OF CONTENTS 01 02 03 04 05 Solid & Performance, Resilient Expansion & Efficiency & Cost Sustainability at the Core Market Update Business Diversification reduction & Outlook Model 21
Slide 23: Investing in people & talent management
INVESTING IN PEOPLE & TALENT MANAGEMENT Reduction on average 6,5 years R E J U V E N AT I O N Distribution by age: (2013-2018) 12% < 30 years 56% between 30 – 50 years 32% > 50 years Nº of Training sessions: 567 TRAINING Nº Participants: 14 035 3282 Average number of hours per Employees in 2018 empl
Slide 24: Navigator's ambition to be a global leader in sustainability: Forests
FORESTS Navigator’s ambition is to 5.2 Million t CO2 eq be a global leader in 12 Million RAIZ sustainability Plants produced at Portuguese Nurseries Forest and Paper Research Institute Improve foresty management Increase eucalyptus Yields 110.000ha 3.3 Million Forest under Investment in protection m
Slide 25: Navigator's ambition to be a global leader in sustainability: Industrial operations
INDUSTRIAL OPERATIONS Navigator’s ambition is to 21.2 M3/t Fiber optimization Bioproducts and 90% be a global biofuels research Products* Renewable raw materials leader in More than sustainability 64% of paper Is sold with 79% Waste FSC*, PEFC or Ecobel Recovery Rate seals of approval 68% Solar powe
Slide 26: Roadmap to a carbon neutral company
ROADMAP TO A CARBON NEUTRAL COMPANY << 2035 1st Company in Portugal 158 M € in planned committed to achieve investment towards Carbon Neutrality 15 offseting carbon years ahead of schedule emissions Forests managed by Main investments: Navigator represent a carbon stock equivalent • New Biomass boil
Slide 27: Consistent sustainable performance
CONSISTENT SUSTAINABLE PERFORMANCE Strong financial growth in the last 10 years - Navigator recorded in 2018 record values for turnover and EBITDA +49% +68% 455 1.692 1.628 1.637 400 397 404 1.577 385 385 390 1.531 1.542 1.488 1.502 350 1.385 328 272 1.132 1.095 222 2008 2009 2010 2011 2012 2013 201
Slide 28: Comparing very favourably with peers
COMPARING VERY FAVOURABLY WITH PEERS EBITDA Margin - Paper Peers (2015-2018) Average for 2015-2018*: 17% 26,9% 25,2% 24,7% 24,0% 19,8% 18,0% 17,9% 17,6% 17,4% 17,1% 16,5% 16,0% 16,3% 15,9% 15,8% 15,3% 14,7% 13,5% 13,5% 13,5% 13,3% 13,1% 11,8% 11,0% The Navigator Competitor 1 Competitor 2 Competitor
Slide 29: Historical dividend payment and share price evolution
HISTORICAL DIVIDEND PAYMENT AND 7 €/Share SHARE PRICE EVOLUTION 6 5 4 3 2 1 0 Year (payment) Ajusted dividend yield Total amount paid (million euros) 2014 12.3% 200.8 Jan 2014 – Nov 2019: 2015 14% 440.5 TSR: 126% 2016 11.6% 170.0 TSR annualized: 16% 2017 10.7% 250.0 2018 6.6% 200.0 2019 7.0% 200.0 2
Slide 30: Table of Contents
TABLE OF CONTENTS 01 02 03 04 05 Solid & Performance, Resilient Expansion & Efficiency & Cost Sustainability at the Core Market Update Business Diversification reduction & Outlook Model 29
Slide 31: 9M 2019 Highlights
9M 2019 HIGHLIGHTS << In millions € 9M 9M %CHANGE Increase in turnover (+1.8%) due to 2019 2018 19/18 higher paper prices and higher volumes of pulp and tissue sold. Turnover 1274.2 1252.3 1.8% Recurrent EBITDA declined 11.2% YoY Recurring EBITDA 300.2 338.1 -11.2% pressured by lower pulp prices, lo
Slide 32: 9M 2019 Recurring EBITDA
9M 2019 Recurring EBITDA << Increase in volumes is offset by increase in costs (Energy, Wood and Chemicals) -38 (-11%) 338 -1 2 -34 300 A -6 B C UWF UWF Electricity unit cost: Pulp Pulp Natural gas unit cost Tissue Tissue OBA – DAS price EUR/USD Fixed costs External fibers Rec. R18 Price Volume Cost
Slide 33: Navigator Paper & Pulp Performance
NAVIGATOR PAPER & PULP PERFORMANCE << PAPER PERFOMANCE • UWF sales volume decreased 5% 9M 2019 vs 9M 2018, and 1% from Q2 to Q3. • Several events impacted UWF production (slower ramp-up of heavyweights production and strikes at PM4 in Setúbal) but production was also managed by Navigator to match cu
Slide 34: Navigator Tissue Performance
NAVIGATOR TISSUE PERFORMANCE << 40% Away-from-Home 37% Portugal Revenue by +C&C Revenue by segment geography 35% Consumer 28% Spain (2019) (2019) 25% Parent Reels 35% Extra-Iberia • Global volume of tissue sold increased to 74 kton (64% YoY), sustained by new capacity in Aveiro; sales volume was 14%
Slide 35: Significant correction in pulp prices since end 2018
SIGNIFICANT CORRECTION IN PULP << PRICES SINCE END 2018 PIX Europe USD/ton BHKP EUR/ton BHKP 1100 1000 Last PIX (W45/2019): 688 USD/ton (-32%) YTD 1000 900 2019 Last PIX (W45/2019): 900 800 620 €/ton (-30%) YTD 2019 800 700 Average Pulp price in USD / Ton YTD 2019: Eur / Ton 700 600 - 882 $/ton 2019
Slide 36: Recap on the pulp market
RECAP ON THE PULP MARKET << • During Q4 2018, market pulp demand experienced a significant decrease, falling 1.7 million tons YoY. China accounted for 90% of this reduction and Europe followed 2/3 months later. With Chinese buyers reducing pulp purchases, prices began to fall and producers stock sta
Slide 37: Update on paper market
UPDATE ON PAPER MARKET << Global paper demand impacted by economics and destocking Global Printing & Writing Demand Total UWF CWF UME CME YTD August 2019 -6.3% -2.6% -8.9% -11.2% -10.5% Avg L5Y -2.3% -0.3% -3.1% -4.0% -5.8% • Recent decline of P&W demand well above trend, indicating not only the eff
Slide 38: Paper prices in stable trend
PAPER PRICES IN STABLE TREND << Average price in 2019 above average price in the last 10 years EUROPEAN MARKET PAPER PRICE – A4 B-COPY 950 950 Last PIX (W45 2019): 883 €/ton (-2,4% YTD) 900 900 850 850 Av. YTD 2019: Eur/Ton Eur/Ton 800 907 €/ton Average A4 B-COPY 800 Av. 2018: 873 €/ton (Var. W1-45:
Slide 39: UWF market conditions
UWF MARKET CONDITIONS << PULP Hardwood pulp prices continue to fall in Europe but seem to have stabilized in China PRICE Paper demand falling above trend in 2019, facing a pipeline destocking; UWF continues to DEMAND show the highest resilience among the major graphic papers; BALANCE Several produce
Slide 40: Growth in the tissue business
GROWTH IN THE TISSUE BUSINESS << Portugal Spain +3.3% +3.7% • In tissue business, Demand continues to present interesting growth rates: 3.3% in Portugal and 3.7% in Spain (between 2017 – 2019e), even in a context of new production starting in the Iberian Peninsula to come to the markets: • Spain: SO
Slide 41: Capex of €88 million (vs €148 million)
<< CAPEX OF € 88 MILLION (VS 148 € MILLION) CAPEX M€ 88 59 17 12 CAPEX Maintenance & recurring Environment & Expansion/Development capex Regulatory Capex* * Includes Po3 + Tissue Cacia + Heavy Weights 40
Slide 42: Conservative debt profile
CONSERVATIVE DEBT PROFILE Taking advantage of favorable market conditions, Navigator is renegotiating debt, seeking to diversify sources of funds and to extend average tenure. Debt maturity profile Current Average Cost of Debt Total debt: € 850.6 million (September 2019): Average maturity: 3.7 years
Slide 43: Outlook & Challenges for Q4 2019
After a record 2018, 2019 has proven to be a Outlook & challenging year Challenges for Adverse market conditions and inflation in some key production cost factors have pressured Q4 2019 results Focus on cost efficiency measures intensified, with new fixed cost measures for 2020 PULP PAPER i TISSUE •
Slide 44: Presentation to investors
Presentation to investors N o v e m b e r 2 0 1 9
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