Navigator Company Sa · EURONEXT:NVG
Navigator Company Sa — The Navigator Company — FY2018 Earnings Presentation
34 slides from Navigator Company Sa's earnings presentation, Feb 13, 2019
Slide 1: Q4/FY 2018 Results Presentation
Q4/FY 2018 Results Presentation February 13th 2019
Slide 2: Participation
PARTICIPATION << Diogo da Silveira Executive Directors António Redondo Nuno Santos João Paulo Oliveira Investor Relations Joana Appleton 1
Slide 3: Q4/FY 2018 Results Presentation
Q4/FY 2018 RESULTS << PRESENTATION 01 02 03 04 Main Group Market Outlook Highlights Performance 2
Slide 4: FY 2018 / Q4 Highlights
FY 2018 /Q4 HIGHLIGHTS << 2018: a record year for turnover, In millions € YEAR YEAR %CHANGE EBITDA and net profit 2018 2017 18/17 Lower volumes of pulp and UWF Turnover 1.692 1637 3.3% paper due to production stoppages EBITDA 455 403 12.7% Average price for pulp, paper & tissue improved and offset E
Slide 5: Financial Performance in 2018: A Record Year
FINANCIAL PERFORMANCE IN 2018: A RECORD YEAR Showing consistent and 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 2
Slide 6: Market Outlook
Q4/FY 2018 RESULTS << PRESENTATION 01 02 03 04 Main Group Market Outlook Highlights Performance 5
Slide 7: Pulp Prices Remain at a High Level
PULP PRICES REMAIN AT A HIGH LEVEL << Pulp prices have been softening since the end of 2018, remaining at high levels PIX Europe USD/ton €/ton Av. 2018: 1100 1038 USD/ton 1100 Last PIX 1000 Av. 2017: 1000 (W5/2019): 826 USD/ton 1000 USD/ton 900 900 Last PIX (W5/2019): 873 €/ton 800 Av. 2016: Av. 201
Slide 8: Update on the Pulp Market
UPDATE ON THE PULP MARKET Global Market Situation 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 produc
Slide 9: Paper Demand in 2018
PAPER DEMAND IN 2018 UWF REMAINS ONE OF THE BEST PERFORMING GRADE IN P&W PAPERS (M tons) 81.4 40.5 20.1 10.2 10.6 -0,8% 50% Share UWF On P&W global demand (exc. NP) -3,6% -4,5% -7,4% -5,2% TOTAL UNCOATED COATED UNCOATED COATED YoY % WOODFREE WOODFREE MECHANICAL MECHANICAL (Inc. SuperCalendered) Sour
Slide 10: UWF Market Conditions
UWF MARKET CONDITIONS PULP Hardwood pulp prices remained at high levels even after year-end softening; since PRICE the start of the year, pulp prices are showing signs of picking-up DEMAND UWF demand in 2018 was stronger in the US than in Europe; in the second half, demand rebounded in Europe namely
Slide 11: Upward Trend in Paper Prices in 2017 and 2018
UPWARD TREND IN PAPER PRICES << IN 2017 AND 2018 EUROPEAN MARKET PAPER PRICE – A4 B-COPY Last PIX (W5 2019): 917 €/ton €/ton 900 850 Av. 2018: 873 €/ton 800 (+9.0%) YoY 2018 average Av. 2016: Av. 2017: price increase in 750 823 €/ton 815 €/ton A4 B-COPY: (Var. W1-52: -3.5%) (Var. W1-52: +4.1%) +7% 7
Slide 12: Group Performance
Q4/FY 2018 RESULTS << PRESENTATION 01 02 03 04 Main Group Market Oultook Highlights Performance 11
Slide 13: Navigator Paper Performance in FY 2018
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 & Oct
Slide 14: Pulp Turnover Impacted by Reduction in Volume
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
Slide 15: Non-Integrated Tissue Business Impacted by Pulp Price
NON-INTEGRATED TISSUE BUSINESS << IMPACTED BY PULP PRICE 59% Away-from-Home 51% Portugal Revenue by Revenue by segment geography 39% Consumer 35% Spain (2018) (2018) 2% Parent Reels 13% France & Others • Overall tissue performance in 2018 impacted by the rise pulp prices (non-integrated capacity) an
Slide 16: 2018 - Record Level of EBITDA
<< 2018 - RECORD LEVEL OF EBITDA Positive impact of pulp and paper prices in EBITDA Price effect includes 25 M€ negative impact of FX EBITDA 135,7 -54,4 M€ Note -27,2 -2,7 455,2 403,8 R17 Price Volume Costs Pellets, R18 Anti-Dumping & Others* * Others include change in biological assets (namely Moza
Slide 17: Permanently Focused on Operational Excellence
PERMANENTLY FOCUSED ON << OPERATIONAL EXCELLENCE through cost reduction and efficiency - M2 program M2 program estimated impact on EBITDA of € 20.8 million YOY Global 5 year target for 2016-2020: €100 million, of which €64 million already achieved in 2016, 2017 & 2018 99 new initiatives of cost redu
Slide 18: Free Cash Flow at €211 Million
FREE CASH FLOW AT € 211 MILLION << Free Cash Flow negatively impacted by high Capex, but positively impacted by cash from pellets sale Free Cash Flow M€ 377,2 -216,5 134,5 211,1 -33,8 -50,4 Operating Cash CAPEX Inventories Clients Suppliers & Free Cash Flow Flow others 17
Slide 19: Net Debt at €683 Million
<< NET DEBT AT € 683 MILLION Net debt evolving positively in Q4, decreasing € 49 million Q4/Q3 and € 10 million YoY after € 216 million Capex M€ 738 742 740 732 693 683 641 617 559 1,8 1,9 1,7 1,7 1,6 1,6 1,6 1,5 1,3 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Net debt Ne
Slide 20: Debt Profile
<< DEBT PROFILE Debt maturity profile Current Average Cost of Debt Total debt: € 765 million (December 2018): Average maturity: 2.6 years 1.60% 226 210 187 Debt Rate Profile 112 (December 2018): 10 10 10 Fixed Variable 2019 2020 2021 2022 2023 2024 2025-2028 68% 32% 19
Slide 21: 2018 – Financial Results
<< 2018 – FINANCIAL RESULTS Negative impact of € 14,8 million, M€ 2017 2018 resulting from: • € 10 million change in currency hedging costs compared with 2017 -7,7 • € 3.3 million change in market value of Cash investments • € 1.5 million related to the difference between the nominal and present val
Slide 22: Capex of €216 Million (vs. €115 Million)
<< CAPEX OF € 216 MILLION (VS. € 115 MILLION) CAPEX M€ 216,5 128,8 81 6,5 CAPEX Expansion/Development Maintenance & recurring Regulatory Capex Capex* capex * Includes Po3 + Tissue Cacia + Heavy Weights 21
Slide 23: Start-up of Pulp Expansion at F. Foz
<< START-UP OF PULP EXPANSION AT F. FOZ Increase the annual pulp production from 580,000 to 650,000 tAD Optimization Project 3 Increase the efficiency of pulp process Ecoefficiency: MAIN Reduce wood and chemicals specific consumption Total CAPEX of € 82 million GOALS Implementation of BAT (ex: O2 de
Slide 24: HeavyWeights: Exploring New Business Opportunities
HEAVYWEIGHTS exploring new business opportunities Conversion of PM3 HeavyWeights Production of Heavy Weights Conversion of PM3 in Setúbal paper Paper Mill (135g to 300g/m2) Total estimated GOAL CAPEX 12 M€ 35kton in cruse year 23
Slide 25: Conclusion of New Aveiro Tissue Mill
CONCLUSION OF NEW AVEIRO << TISSUE MILL Converting line started in May RECAP Start-up of reels production in September 2018 – currently in ramp- Successful book-building of up phase new clients in Portugal, Spain, Total Capex: France and UK 4 converting lines: two Domestics, Industrial and Napkins €
Slide 26: Mozambique Project - Update 2018
M O Z A M B I Q U E P R O J E C T - UPDATE 2018 MoU signed with the Government of Mozambique to study Phase 1: precedent conditions for phase 1 Woodchip Mill “Best endeavours” commitment to achieve project readiness by Investment: USD 260 M December 31st unreached Recording in 2018 accounts of impai
Slide 27: Outlook
Q4/FY 2018 RESULTS << PRESENTATION 01 02 03 04 Main Group Market Outlook Highlights Performance 26
Slide 28: Outlook for 2019
Outlook for 2019 PULP PAPER OUTLOOK Prices should remain stable at a Stable outlook for No foreseeable change in market high level UWF prices in 2019: conditions for pulp and paper in the near future and main concerns remain consequences of increasing trade Navigator implemented another price tensio
Slide 29: Aiming to Become a Carbon Neutral Company
AIMING TO BECOME A CARBON NEUTRAL COMPANY After ATF (largest Installed capacity: (ATF + Espirra) photovoltaic solar 2.2 MW + 113kW Solar Photovoltaic Panels: plant in an industrial 8800 + 352 setting in Portugal) Electricity cost avoidance (Year): NVG installed a new 264,000 € + 20,000€ solar plant
Slide 30: Focused on Building the Future Bio-Economy
FOCUSED ON BUILDING THE RAIZ & Inpactus FUTURE BIO-ECONOMY project 1 tonne 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 re
Slide 31: Eucalyptus Essential Oils Project
EUCALYPTUS ESSENTIAL OILS Expected conclusion: 2019 PROJECT CAPEX: € 5 million & Extraction Company 547 M€ Market Forest Eucalyptus’ Distribution and leaves Sales 8.7% CAGR Biorefinery Oils extraction 30
Slide 32: Annex
FY 2018 RESULTS PRESENTATION << Bacj Annex 31
Slide 33: Quarterly Figures – YoY Evolution
<< QUARTERLY FIGURES – YOY EVOLUTION Turnover (M €) EBITDA (M €) Net Earnings (M €) 111 115 115 115 432 435 439 104 66 427 62 385 53 52 53 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2017 2018 2018 2018 2018 2017 2018 2018 2018 2018 2017 2018 2018 2018 2018 EBITDA/Sales (%) ROCE (%) ROE (%) 17% 18%
Slide 34: 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