The Navigator Company Q Results Presentation

Transcription

1 The Navigator Company Q Results Presentation May 10 th 2018

2 Participation Diogo da Silveira CEO Fernando Araújo CFO António Redondo CCO Nuno Santos João Paulo Oliveira Joana Appleton IR 1

3 Q results presentation Main highlights Market outlook Group performance Update on new projects 2

4 Significant turnover growth and diversification over the last years Q Key Highlights P&P Market Pulp market continued strong with additional increase in prices Improvement in UWF prices Volumes Overall decrease in volumes due to production stoppages, mainly in pulp Divestment Conclusion of sale of Pellets business in the US EBITDA Positive impact of sale of pellets business EBITDA without pellets improved 8% with EBITDA/Sales of 26.4% Cost reduction M2 program continues with total estimated impact at 3.8 million YoY Net Debt Strong reduction in net debt with EBITDA/Net Debt of 1.3 Outlook Positive momentum for prices should continue Navigator announced another price increase in UWF for July shipments 3 3

5 2018: Upward trend in pulp prices continues YTD 2018 price increase in BHKP in USD: +3.8% and in Euros: +1.0% YoY average price increase in BHKP in USD: +48% and in Euros: +28% USD/ton PIX Europe /ton USD/ton BHKP EUR/ton BHKP Av. : 817 USD/ton (Var. W1-52: +51%) Av. YTw 13: 1013 USD/ton (+3.8% YTD) Av. 2016: 717 USD/ton (Var. W1-52: -16%) Av. YTw 13: 824 /ton (+1.0% YTD) Av. 2016: 673 /ton (Var. W1-52: -13%) Av. : 723 /ton (Var. W1-52: +33%) Week

6 Market balance estimated for 2018 depends on China effect Conserv. Optim. 5

7 UWF continues one of the best performing grade in P&W papers Feb M ton YoY kton % +0.1% % % 2.5% % Share UWF On world P&W paper demand (exc. Newsprint) Total Uncoated Woodfree Coated Woodfree Uncoated Mechanical Inc. SuperCalendered Coated Mechanical 6 Sources: PPPC; The Navigator Company

8 World paper market in Q USA EUR Asia/ China Declining demand UWF: both in CS (-4.8%) and FL&RL (-0.7%) inq YoY -2.5% UWF in Q YoY Price increase in Jan-Feb 2018 (+40 USD/ton) and May 2018 ( USD/ton) PPP Copy 20-lb increases +20 USD/ton (+1.9%) in Q (YoY) OR 92% (+2 pp) Capacity decrease (-640 kton in Q4-2018, aligned with expected market in , -575 kton) Contracting demand UWF: incs(- 5.5%), FL (-1.4%) and RL (-3.3%) in Q YoY -4.1% UWF in Q YoY PIX Copy-B increases +42 /ton (+5.2%) in Q YoY Destocking effect since Nov (CS, EMGE index); Some supply restrictions OR 94% (-4 pp) Apart from the period Mar-Jul, Mar 2018 order book is the best since 2010 (34d) Major players announced in the last months aggregated worldwide price increases of more than +250 USD/ton Capacity increase in 2018: In China: +1.2 M ton In UAE: +300 kton China: tight environmental policies pressuring old China closures (little details available) Ongoing energy restriction policies near Shangai and Beijing Source: Risi; EMGE Euro-Graph; The Navigator Company 7

9 European papermakers margin at minimum level /ton Index FOEX PIX (Europe) A4 B Copy BHKP A4 B Copy: index for uncotaed woodfree paper (80 g/m 2 ) BHKP: index for bleached harwood kraft pulp (eucalyptus or birch) 8

10 Improvement in paper price benchmark in 2018 Average price in Q1 improved +5.2% YoY (+2.2% YTD) European Market Paper Price A4 B-copy /ton 900 A4 B-copy Av. YTw 13: 845 /ton (+2.2% YTD) Last PIX (W18): 860 /ton 750 Av. 2016: 822 /ton (Var. W1-52: -3.5%) Av. : 819 /ton (Var. W1-52: +4.1%) Week Source: FOEX 9

11 Navigator paper performance in Q UWF sales volume of 361 kton (-10.3 kton YoY) and product mix improvement: + Premium products share up to 55% (+5.8 pp YoY; +16 kton YoY) + Mill brands up to 68% (+8.3 pp YoY; +9 kton YoY) In Q Navigator led 2 pulp price increases in Europe (January and March) and in International markets and in the US (January and April) Average price increased +3.1% YoY in spite of FX negative impact (USD impacted ~30% of paper sales) 10

12 Pulp turnover impacted by reduction in volume Pulp sales in volume of 53 kton, 37 kton less YoY due to decreased availability of pulp: + Maintenance stoppage at Setúbal pulp mill + Stock build up at Figueira da Foz (for planned maintenance + pulp capacity increase project) Navigator s net price in Q increased +28% YoY Improvement in the weight of Decor and Special paper sales in Europe, high contribution segments, from 64% to 84% YoY 11

13 Tissue business impacted by pulp price Volume of tissue sold in converted products increased 13% YoY Sales increased 4% to 19 million (vs. 18 million) Average sales price 9% higher YoY due to improvement in product mix (decreased weight of reels) Operating margin impacted by pulp price increase Tissue Sales by market Tissue Sales by segment Other 6% (+4% YoY) Reels 5% Spain 36% (+0% YoY) Portugal 58% (-3% YoY) AH 31% AFH 64% 12

14 EBITDA Performance in Q1 Positive performance in EBITDA due to price effect and pellets sale M EBITDA R17 Volume Effect Price Effect Costs Pellets & Other EBITDA R18 Delta Pellets: million of capital gain million of pellets losses in + Other 13

15 M2 cost reduction and efficiency programme continues Estimated impact YoY on EBITDA in Q of 3.8 million, mainly due to: + Fibre consumption: 1.3 million + Chemicals: 0.8 million Savings in energy contracts renegotiation estimated at 7.3 million 14

16 Free Cash Flow at 134 million Free Cash Flow positively reimbursement impacted by cash from pellets sale and VAT Free Cash Flow M Operating Cash Flow CAPEX Change in Inventories Change in Accounts Receivables Suppliers and Others* Free Cash Flow *Others includes: Cash from pellets business sale ( 68 million) VAT reimbursement ( 51 million) 15

17 Significant reduction in net debt Net debt & Net debt/ebitda M ,6 1,6 1,8 1,9 1,7 1,3 Q Q1 Q2 Q3 Q4 Q Net debt Net debt/ebitda 16

18 New credit facilities and extension of maturity reduce cost of debt Q Financial results Q1 Q Financial results decreased from to million: -3,9-5,5 Negative impact of 3.3 million, related to advance recognition of the difference between the nominal and current value of the deferred amount for disposal of the pellets business (USD 45 million). Interest expense was reduced by 0.2 million Financial results negatively impacted by one off item Positive impact of currency hedging and exchange rate of 3.0 million 17

19 CAPEX of 29 million (vs. 14 million) M CAPEX 11,4 28,6 Main Projects YoB 11,0 1,9 4,2 Pulp Figueira Tissue Cacia Tissue Rodão Pulp, Paper and Others CAPEX 18

20 Outlook for 2016 Outlook for 2018 Pulp: Tissue: Paper: positive momentum should continue as demand as been absorbing new capacities high pressure on margins; rise in pulp price needs to be offset by an increase in tissue price order book remains strong and new price increases are being announced in Europe and the rest of the world Noforeseeablechangeinmarketconditionsforpulpandpaperinthenear future and main concerns remain exchange rate and cost of chemicals Operating performance in Q will be impacted by production stoppage at Figueira da Foz pulp mill. 19

21 Update on New Projects Pulp F. Foz Optimization Project 3 Ecoefficiency: Total CAPEX of 81.5 million Main Goals: Increase the annual pulp production from 580,000 to 650,000 tad Increase the efficiency of pulp process Reduce wood and chemicals specific consumption Implementation of BAT (ex: O 2 delign) Environmental advantage for flue gas and liquid effluent emissions Collection and burning of diluted odorous gases Project completed in April and ramping-up 20

22 Update on Cacia tissue project Integrated tissue mill with capacity to produce 70 kton of reels and converted products Project on time and on budget: - paper machine to start up in Q converting lines starting in May - Estimated capex kept at 121 million Book-building of new clients in progress in Portugal, Spain, France and UK 21

23 Current view of Cacia tissue project 22

24 Cacia tissue project: first converting line to start 3 rd week of May 23

25 Cacia tissue project: first converting line to start 3 rd week of May 24

26 Cacia tissue project: first toilet paper and pallet produced (current week) 25

27 Navigator #2 player in tissue in Iberia after expansion project Estimated tissue production capacity in Iberian Peninsula (kton) Paper production Others Finished product production (converting) Finished product production (converting) Paper production 26

28 2018 Dividend proposal Dividend proposal - AGM to be held on May 23 th 2018: + Navigator Board of Directors proposes dividend of 170 million to be paid in June ( /share) + Main Shareholder proposes distribution of reserves of 30 million to be paid in July ( /share) + Implicit dividend yield of 6%* *Reference price share on May 8 th of 4,936 /share 27

29 Back-up slides Financials 28

30 Quarterly Financials 2015 Quarterly figures YoY evolution Turnover (M ) EBITDA (M ) Net Earnings (M ) Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q EBITDA/Sales (%) ROCE (%) ROE (%) 23% 26% 26% 25% 29% 11% 15% 13% 15% 17% 11% 21% 17% 21% 18% Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q

31 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 The Navigator Company S.A. or any of its subsidiaries undertakings, affiliates, directors, officers, employees or advisors or any other person as to the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation or of the views given or implied or any other material discussion in connection with this presentation. This presentation has been prepared by The Navigator Company S.A. for information purposes only. The Navigator Company S.A. or any of its affiliates, directors, officers, employees or advisers or any other person shall not have any liability whatsoever (including in case of omission, negligence or otherwise) for any losses, errors or omissions howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith or with respect to their reliance upon the completeness and accuracy of any such information, as well as any damages resulting hereof. 30

32