Navigator Company Sa · EURONEXT:NVG
Navigator Company Sa — The Navigator Company — Investor Presentation (November 2020)
55 slides from Navigator Company Sa's investor presentation, November 2020
Slide 1: Presentation to Investors November 2020
P r e s e n t a t i o n t o I n v e s t o r s N o v e m b e r 2 0 2 0
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: an integrated producer
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 108,000 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 Figueira da Foz Setúbal Mondi Theresienthal Kematen Ruzomberok ** Sykty
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 The Navigator Company operates world class state-of-the-art-assets with a global capacity of: 1.6 Mtons of UWF - 1.6 Mtons of BEKP – 130 ktons of Tissue Reels CACIA FIGUEIRA DA FOZ VILA VELHA DE RÓDÃO SETÚBAL • Pulp (Market) –
Slide 8: 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 5 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 9: 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) The Navigator Europe industry Mill Brand Sales eq
Slide 10: A strong positioning in UWF market
A STRONG POSITIONING IN UWF MARKET << The use of an excellent raw material such as the Eucaliptus 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 NVG market share in
Slide 11: 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 12: A very efficient cash cost structure
AND WITH A VERY EFFICIENT << CASH COST STRUCTURE Navigator’s mills are very well positioned in the cash cost curve €/ton 900 Changes in demand might accelerate closures 4Q 2019 UWF Cash costs, Europe, €/t from less efficient (and smaller) players and 850 conversions to other types of products 800 75
Slide 13: Producing one of the best performing grades in printing and writing: UWF
PRODUCING ONE OF THE BEST PERFORMING GRADES IN PRINTING AND WRITING: UWF In the last 10 years, UWF capacity has been adjusting to the reduction in consumption Evolution of UWF European Evolution of UWF USA apparent consumption apparent consumption 8.7 8.7 8.7 8.1 8.2 8.2 10.8 10.0 9.8 8.1 Million of
Slide 14: 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 15: 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 16: Pulp demand
PULP DEMAND << Market Pulp by main grade World China M tAD 2000 2019 M tAD 2000 2019 L5Y (Mt/y) SW 18.9 26.4 SW 1.4 9.1 0.5 BEK 6.6 25.5 BEK 0.3 10.3 0.9 M tAD Other 13.1 12.5 Other 0.7 4.5 0.3 30 Total 38.6 64.3 Total 2.4 24.0 1.6 35% China SW (% of World) 30% 25 21% 13% 41% 20 7% 30% 15 20% 10 12%
Slide 17: 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 18: UWF paper vs pulp: reduced volatility and more stable returns
UWF PAPER VS PULP: REDUCED VOLATILITY & MORE STABLE RETURNS 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 2015 2016 2017 2018 2019 2020 500 1 9 17 25 33 41 49 4 12 20 28 36 44 52 8 16 24
Slide 19: Focus on cost efficiency
FOCUS ON COST EFFICIENCY << Navigator has been permanently focus on optimizing its production processes and its cost reduction initiatives Cost optimization and operational efficiency plan implemented at the start of 2020: Bringing together the existing M2 and Corporate ZBB programs Launching a
Slide 20: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 19
Slide 21: 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 €152 M its business €129 M €158 M €115 M 129 15 Growth €131 M Cycle • In 2019, capex included mainly 127 93 72 m
Slide 22: Growth in the tissue business
GROWTH IN THE TISSUE BUSINESS << After entering the tissue business in 2015, Navigator doubled its capacity 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 Synergies with our Navi
Slide 23: Navigator - #3 player in tissue in Iberia
NAVIGATOR - #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 Total capacity in PRODUCTION CAPACITY IN IBERIAN PENINSULA Iberia: (KTON) 2020 1 330 ktons Portugal – 330 Ktons
Slide 24: Mozambique project
MOZAMBIQUE PROJECT << Strategic Rationale Project Phases Growth opportunity driven by increased demand in Asia and worldwide supply Phase 1: Phase 2: limitations Woodchip Mill Pulp Mill Attractive fundamentals of Mozambique: Investment: USD 260 M Investment: USD 2.5 B • High Forest productivity (USD
Slide 25: 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 26: Focused on building the future bio-economy
FOCUSED ON BUILDING THE RAIZ & Inpactus FUTURE BIO-ECONOMY project 1 ton Paper Examples of possible wood Pulp bioproducts from biorefinery Fibers Tissue Market pulp Essential oils Plantation trees Biorefinery Forestry residues Heat and electricity Sugars for bioethanol and bioplastics Chemicals & en
Slide 27: Creating innovative products and 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 28: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 27
Slide 29: Sustainability agenda
SUSTAINABILITY AGENDA << “It´s thinking about people, their quality of life and the future of the planet that inspires and motivates us. We want to share the wealth we create, but also our knowledge, our experience and our resources, all in the name of a better future. That is why we are committed t
Slide 30: Main sustainability goals for 2020-25
MAIN SUSTAINABILITY GOALS FOR 2020-25 << Forest Climate Industrial Community Talent Operations engagement • Develop H.Resources (Mozambique with skills needed to • ≥ 75% national • Carbon Neutral Mills certified wood by by 2035 Project) pursue Company • 87% of waste Strategy: 75% of 2025 recovery by
Slide 31: At the heart of what we do is the forest
AT THE HEART OF WHAT WE DO IS THE FOREST, a natural and renewable resource 5.3 Million t CO2 eq 740 Species Flora of 234 Species of Fauna 12 Million RAIZ Plants produced Forest and Paper at Portuguese Research Institute Nurseries Improve foresty management Increase eucalyptus Yields 108.269ha 3.3 Mi
Slide 32: Addressing climate change by becoming a carbon neutral company
ADDRESSING CLIMATE CHANGE BY BECOMING A CARBON NEUTRAL COMPANY GOAL 1 GOAL 2 The Navigator Company is 100% of electrical Reduce fossil fuel committed to achieve energy production from CO2 emissions with renewable sources implementation of Carbon Neutrality at its cleaner technologies industrial site
Slide 33: Roadmap to carbon neutrality by 2035
ROADMAP TO CARBON NEUTRALITY BY 2035 << 86% reduction of CO2 emissions, approximately 667 ktCO2/ from 2018 until 2035, with an investment of 154 million € CO2 Expected Emissions Ktons 86% 774 744 730 512 512 488 460 455 Reduction of 378 350 350 308 667 107 kton CO2 2018 2019 2020 2021 2022 2023 2024
Slide 34: New biomass boiler at Figueira da Foz
NEW BIOMASS BOILER AT F.FOZ << Biomass Boiler – Capex of € 55 million Steam generation capacity of 128 MWth, to supply paper machines 1 and 2 Project is being finalized and testing began at the end of Q3; ramp-up will last from Q4 2020 and Q2 2021 Reduction of CO2 emissions by 20% for Navigator as a
Slide 35: Energy - solar photovoltaic
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) RAIZ Institute (2019)
Slide 36: Industrial operations
INDUSTRIAL << OPERATIONS 80% 90% Fiber optimization Bioproducts and biofuels research of water intake Renewable is returned to raw materials the environment More than 80% Waste 64% of paper is sold with Recovery Rate FSC*, PEFC or Ecobel seals of approval 67% Solar power plant 3,1 GWh/year Primary e
Slide 37: Mozambique project social program impact
<< 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 24 new water boreholes 5300 km of Making potable water new roads and available to
Slide 38: Investing in people and talent management
INVESTING IN PEOPLE & TALENT << MANAGEMENT Average reduction of 6.5 years Headcount WORKFORCE 3280* Figueira da R E J U V E N AT I O N Distribution by age: Foz 11% < 30 years 1,008 (2013-2019) 56% between 30 – 50 years 33% > 50 years Setúbal 1,157 Training Hours: 182,740h TRAINING 59h/ Employee Avei
Slide 39: Engaging with stakeholders
ENGAGING WITH STAKEHOLDERS << Corporate initiatives to drive Sustainable Development Members and part of the WBCSD’s ExCo Forest Solutions Group – core members Engaging in projects to debate SDG implementation, the Future of Presidency of BCSD Portugal, an Work, Human Rights, Circular Bio- affiliate
Slide 40: Table of Contents
TABLE OF CONTENTS << 01 02 03 04 Solid & Performance, Resilient Expansion & Sustainability at Market Update Business Diversification the Core & Outlook Model 39
Slide 41: Financial indicators
FINANCIAL INDICATORS << 2015 2016 2017 2018 2019 Million euros Turnover 1,628 1,577 1,637 1,692 1,688 EBITDA 390 397 404 455 372 EBITDA/Sales (%) 24% 25% 25% 27% 22% CAPEX 148 139 115 216 158 Free Cash Flow 81 184 198 211 186 Net Debt 655 640 692 683 715 Net debt/EBITDA 1.68 1.61 1.72 1.50 1.92 ROCE
Slide 42: Main financial and operational highlights
MAIN FINANCIAL AND << OPERATIONAL HIGHLIGHTS Turnover (M €) EBITDA (M €) Operational Cash Flow (M €) 455 1,692 1,688 390 397 404 385 372 357 377 1,637 328 307 1,628 292 304 1,577 1,542 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Paper sales (ktons) Pulp
Slide 43: Very favourable comparison with peers
VERY FAVOURABLE COMPARISON WITH PEERS << EBITDA Margin - Paper Peers (2015-2019) Average for 2015-2019*: 15% 27% 24,7% 25% 24% 22% 20% 17,4% 18% 18% 18% 18% 17% 17% 16% 16% 16% 16% 16% 15% 15% 15% 15% 14% 13% 14% 13% 13% 12% 11% 10% The Navigator Competitor 1 Competitor 2 Competitor 3 Competitor 4 C
Slide 44: Historical dividend payment and share price evolution
HISTORICAL DIVIDEND PAYMENT AND << €/share SHARE PRICE EVOLUTION 7.0 € 6.0 € 5.0 € 4.0 € 3.0 € 2.0 € 1.0 € 0.0 € Year (payment) Ajusted dividend yield Total amount paid (million euros) Jan 2014 – Aug 2020: 2014 12.3% 200.8 2015 14% 440.5 TSR: 48.5% 2016 11.6% 170.0 TSR annualized: 6.1 % 2017 10.7% 2
Slide 45: Management priorities
MANAGEMENT PRIORITIES << Financial Goal: Preserve company’s value, operating under the norms of shareholder’s remuneration. 5 1 2 3 4 Consolidate Align the Protect the Reinforce the Continue to and clarify company’s core business focus on invest on our the options external efficiency and people as a
Slide 46: Q3 2020 performance overview
<< Q3 2020 PERFORMANCE OVERVIEW • Gradual reopening of economies and progressive recovery of paper demand during Q3 • Navigator registered significant improvement in paper volumes, with all its paper machines working at full capacity since July • Strong operating performance in pulp and tissue conti
Slide 47: 9M 2020 financial highlights
9M 2020 Financial Highlights << Performance in 2020 was negatively impacted by a severe decline in consumption of UWF In millions € 9M 9M Change Q3 Q2 Change across the world due to the Covid-19 pandemic 2020 2019 Q1-Q3 2020 2020 QoQ and the general lockdowns of economies 19/20 Turnover in the first
Slide 48: Pulp and paper prices in 9M 2020
PULP & PAPER PRICES IN 9M 2020 << With market discounts increasing, net pulp prices are currently at the lowest level since the begining of 2000 (and 2009); the recent devaluation of the USD vs the Euro impacted significantly European pulp producers margins. Paper prices reflect current market condi
Slide 49: Navigator paper and pulp performance 9M 2020
NAVIGATOR PAPER & PULP PERFORMANCE << 9M 2020 PAPER PERFORMANCE • UWF sales volume increased 45% QoQ to 366 ktons, with strong performance in Europe; YTD Sep. volumes declined 13.8% YoY to 933 ktons; • Average selling price in Europe for Cut-Size evolved in line with the PIX Index, but average selli
Slide 50: Record performance in tissue
RECORD PERFORMANCE IN TISSUE << Increased weight of Consumer Products 42% Portugal 40% Away-from-Home +C&C (vs. 37%) (vs.40% 9M2019) Revenue by Revenue by segment 44% Consumer (At-Home) geography 34% Spain (vs.28%) (9M 2020) (vs 35% 9M2019) (9M 2020) 16% Parent Reels 24% Extra-Iberia (vs.25% 9M2019)
Slide 51: Continuing to generate strong free cash flow
CONTINUING TO GENERATE STRONG FREE << CASH FLOW Strong generation of Free Cash Flow was maintained throughout Q3 (+56 M€) totaling € 170 million YTD September, comparing favorably with FCF of € 125.4 million in 9M2019; efficient management of working capital, with both strong cash conversion of clie
Slide 52: Conservative debt profile
Conservative Debt Profile << Short term liquidity increased to 345 M€ at the end of September During Q3, NVG has already refinanced 80% of its long-term financial debt maturing in 2021 Debt maturity profile Total debt: € 1,225 million Average maturity: 2.9 years Current Average Cost of Debt 430 292
Slide 53: Responsive measures taken to secure business well being
Responsive Positive results measures << from measures taken to secure undertaken in response to Covid-19 business well being Efficiency and cost reduction programmes Capex Strong commitment to Significant capital reduce costs: Liquidity expenditure revision: Increase immediate cash Capex for 2020
Slide 54: Outlook for Q4 2020
OUTLOOK FOR Q4 2020 << Recovery of UWF business in Q4 expected to continue, albeit depending on the evolution of the pandemic situation and any further measures restricting economic activity Navigator will continue with its strong commercial effort, cost efficiency programs and effective management
Slide 55: Presentation to Investors November 2020
P r e s e n t a t i o n t o I n v e s t o r s N o v e m b e r 2 0 2 0
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