Navigator Company Sa · EURONEXT:NVG
Navigator Company Sa — The Navigator Company — FY2016 Earnings Presentation
27 slides from Navigator Company Sa's earnings presentation, Feb 9, 2017
Slide 1: The Navigator Company FY 2016 Results Presentation
The Navigator Company FY 2016 Results Presentation 9 February 2017
Slide 2: Speakers
Speakers Diogo da Silveira – CEO Fernando Araújo– CFO Joana Appleton - IR 1
Slide 3: FY 2016 – Main highlights
Significant turnover growth and diversification over the last years FY 2016 – Main highlights • Improvement in sales volume sustained by good operating performance in paper and capacity increase in BEKP and tissue: + UWF Paper + 2% + BEKP+ 15% + Tissue + 30% • Strong contribution from cost reduction
Slide 4: Main figures for 2016 (vs 2015)
Main figures for 2016 (vs 2015) Total Sales: 1577.4 M€ -3% EBITDA/Sales: 25.2% +1.2 pp EBITDA: 397.4 M€ +2% ROCE: 12.3% -3.4 pp EBIT: 230.4 M€ -19% ROE: 17.8% +3.0 pp Net Profit: 217.5 M€ +11% Net Debt/EBITDA: 1.6 X - 0.1 FCF: 183.8 M€ +127% Net Debt: 636.4M€ -2% 3
Slide 5: Market conditions: improvement during Q4 2016
Market conditions: improvement during Q4 2016 • After weak market conditions during Q3, demand picked-up in the last 2 months of 2016. Still, estimated apparent consumption for UWF declined 3.8% YTD Jan-Dec 2016 • Imports into Europe increased 18% during the year, essentially in office papers (+25%)
Slide 6: Benchmark price evolution for pulp and paper
Benchmark price evolution for pulp and paper • The industry benchmark for paper was almost flat YoY (823€ vs 822 €/ton), but declined 3.5% since the beginning of the year. • Average prices for BHKP declined approximately 13.2% in USD and 12.9% in Euro, falling 16% in USD and 13% in Euros YTD 2016 US
Slide 7: Paper performance in 2016
Paper performance in 2016 • Highest paper volume sold : 1 587 thousand tons of UWF (+2% YoY) • Increase of UWF market share in Europe to 20% (+2pp) and to 24% in cut-size (+5pp) • Sales to over 136 geographies, with record sales to international markets (+1.4%) • Increase in cut-size sales (+2.3%) a
Slide 8: Pulp and tissue business performance
Pulp and tissue business performance Pulp • Pulp sales increased 15% in volume (to 291 thousand tons) • 97% of pulp sales directed to Europe, and 61% for Décor and Special papers segments; • Average sales price decreased 15% YoY • Year-end inventories in line with 2015 Tissue • Volume of Tissue sold
Slide 9: 2016 EBITDA in-line with previous year
2016 EBITDA in-line with previous year (Mais info nos anexos) Excluding the positive impact of some non-recurring items (such as revaluation of biological assets), higher volume and lower costs have compensated for the reduction in prices, yielding a recurrent EBITDA in line with EBITDA in 2015 * No
Slide 10: Q4 EBITDA lower than Q3 but in line with Q4 2015
Q4 EBITDA EBITDA of 390 M€ : and highest EBITDA/Sales EBITDA in the last 5 years lower than Q3 but in line with Q4 2015 EBITDA in Q4 2016 decreased 9.7% versus Q3 2016, but evolved in line with Q4 2015: higher volume and lower prices, but also due to additional costs recorded in Q4 120 30% 28% 100 2
Slide 11: Free Cash Flow grows to € 184 mln
Good operating performance but limited free cash flow Free Cash Flow grows to € 184 mln FCF evolved favorably during 2016, namely due to an improvement in working capital in the second half, with reduction in inventories and decrease in receivables 358 - 139 Maintenance 38 M€ Development Values in m
Slide 12: YoY Net debt reduced
YoY Net debt reduced by € 14 million Net debt decreased € 14 million YoY, despite of dividend payment and capex plan, while Net Debt / Ebitda improved to 1.6 Net Debt Net Debt / Ebitda 3,1 800 3,2 687 654 641 Values in million Euros 700 2,8 600 700 2,4 500 463 2,0 400 364 1,6 1,7 307 274 1,7 300 1,6
Slide 13: 2016 - Significant improvement in financial results
New credit facilities and extension of maturity reduce cost of debt 2016 - Significant improvement in financial results Improved financial results mainly due 1 2 to a significant reduction in interest 2015 2016 costs following debt restructuring: €-20.8 repayment of the € 350 mln Portucel mln Senior
Slide 14: New credit facilities and extension of maturity reduce cost of debt
New credit facilities and extension of maturity reduce cost of debt 2016: New debt issued • € 25 mln line from EIB with final maturity in 2028 • Additional € 215 mln financing, with 5 year maturity and all-in costs between 1.50% and 1.65%, through two new bond issues of € 100 mln and € 45 mln, and a
Slide 15: Continuing cost reducing measures – M2 and Lean System
Continuing cost reducing measures – M2 and Lean System M2 Project - Enlarged scope and increased estimated impact 100 projects under development, with an impact on EBITDA in 2016 of approximately € 16 million; projects under way include: + Improve efficiency in paper machines in Setubal and Figueira
Slide 16: M2 results – 2016
M2 results – 2016 M2 results # MEASURES HIGHLIGHTS • Sea and railroad transportation RFQs 16 M€ ,YoY 100 (2.9 M€) • PMs Efficiency gains in Setúbal (2 M€) K€ 2015 2016 Impact # Impact Area ∆ k€ ∆% Measures R15 R16 Forestry 1.387 10 965 Industry 4.119 70 7.679 Sales 8.196 21 7.012 Shared Services 165
Slide 17: Share price 2015 & 2016
Share price 2015 & 2016 Shares lost 9% during 2016, negatively pressured by Portuguese market performance and sector sentiment; improvement in average liquidity and sustainable dividend yield of 9% Shares Preço médio Average price e Volume and volumedeofTransacções da Navigator Navigator Shares in 2
Slide 18: Capex of € 139 million (vs. € 149 million)
Capex of € 139 million (vs.€ 149 million) • Turbogenerators repair Pulp, paper Current and tissue: • Photovoltaic Central (Setubal paper business 38 M€ mill) • Recurrent capex Mozambique: • Plantations & Social development 9 M€ plan (+ € 9 million in biological assets) Future business Pellets • Cons
Slide 19: Start-up of Pellets Plant in the USA
Increase efficiency and cost reduction iniciatives Start-up of Pellets Plant in the USA • Colombo Energy Inc project in Greenwood, South Carolina, concluded and continuous operations started; first shipload to Europe carried out • Initial tests point to a premium product with high calorific value •
Slide 20: Update on Mozambique project
Increase efficiency and cost reduction iniciatives Update on Mozambique project • Scale down rhythm of investment due to political and economic situation, which remains unstable • Planting work continued during 2016: around 5.3 thousand ha planted in Zambézia, using sapplings supplied by the Forestr
Slide 21: Update on Tissue Project
Increase efficiency and cost reduction iniciatives Update on Tissue Project • Group decided to go ahead with Cacia´s project to build new line for tissue paper (reels) and converting capacity (once incentives are contracted), with 70 thousand tons per year: − Financial and tax incentives granted − C
Slide 22: Tissue Project in Cacia – Opportunity to Grow
Increase efficiency and cost reduction iniciatives Tissue Project in Cacia – Opportunity to Grow With this greenfield project, which will integrate part of the pulp production from Cacia Mill, the Navigator Company has the possibility to become one of the most competitive tissue producers in Europe:
Slide 23: Other growth projects
Increase efficiency and cost reduction iniciatives Other growth projects Pulp Capacity in Figueira da Foz • Increase in pulp capacity at Figueira da Foz, with total investment estimated at € 82 million: − Start of construction during Q1 2017 − Goal to increase annual capacity by 70 thousand tons, to
Slide 24: Outlook for 2017
Outlook for 2016 Outlook for 2017 • Pulp market experienced a recovery in sales as demand picked up from Chines buyers. But there is still significant new capacity coming to the market at the end of 2017. • Market conditions for UWF improved since the beginning of 2017 in Europe and other markets (e
Slide 25: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in any jurisdiction nor shall it or any part of it nor the fact of its distribution
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Slide 27: Quarterly figures – YoY evolution
Quarterly Financials 2015 Quarterly figures – YoY evolution Turnover (Mln€) EBITDA (Mln€) Net Earnings (Mln€) 83 102 106 424 422 96 94 96 385 394 377 55 49 45 41 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2015 2016 2016 2016 2016 2015 2016 2016 2016 2016 2015 2016 2016 2016 2016 EBITDA / Sales (%)