ALTRI, S.G.P.S., S.A. informs on: 2023 Results

our value is made of fiber

Earnings announcement

2023

(unaudited information)

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Index
Highlights of 2023	3
Message from the CEO	4
Operating and Financial Performance	5
•	Pulp Market	5
•	The Altri Group	7
Sustainability	13
Perspectives	14
Annexes	15
•	Description of Altri Group	15
•	Pulp mill's Maintenance Downtime Schedule	15
•	Debt Maturity Profile	15
•	Ratings ESG	16
•	Income Statement (4Q23)	17
•	Income Statement (2023)	18
•	Balance Sheet (2023)	19
•	Glossary	20

This document is a translation of a document originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards adopted in European Union (IFRS-EU), some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

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Index of Tables and Graphs
Table 1 - Global Pulp Demand	5
Table 2 - Pulp Stocks	6
Table 3 - BHKP Average Pulp Price Evolution in Europe (2018 to 4Q23)	6
Table 4 - Global Dissolving Pulp Demand	7
Table 5 - Operating Indicators (Quarter)	8
Table 6 - Operating Indicators (2023)	8
Table 7 - Weight of Sales (Volume) by End Use	9
Table 8 - Weight of Sales (Volume) by Region	9
Table 9 - Income Statement Highlights of the 4Q23	10
Table 10 - Income Statement Highlights of 2023	11
Table 11 - Investment	11
Table 12 - Debt	12
Table 13 - Scheduled Downtime	15
Graph 1 - Debt Maturity Profile	16
Table 14 - Ratings ESG	16
Table 15 - Income Statement (4Q23)	17
Table 16 - Income Statement (2023)	18
Table 17 - Balance Sheet (2023)	19

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Highlights of 2023

Altri Group achieved total revenues of € 788.2 M in 2023, a decrease of 26.1% vs 2022. The slowdown in the growth of global pulp demand during 2023, which resulted from a relevant destocking process in the Pulp and Paper industry and the lower dynamism of economic activity,

led to a broad decline in pulp prices. In the 4Q23, total revenues decreased 28.1%, when compared to the same quarter of last year, but have already recorded a growth of 7.4% vs. 3Q23, a reflection of the improved market conditions in the last quarter of the year.

We have witnessed one of the most sudden cycle changes in more than a decade, during the year of 2023. As a result of the decrease in prices that has taken place, the Altri Group recorded an EBITDA of € 137.3 M in 2023, a decrease of 54.4% compared to 2022, which was a record year for the Altri Group. The Altri Group recorded an EBITDA margin of 17.4%, which compares with the 28.3% reported in the same quarter of last year. In the 4Q23, we have already seen an improvement in the operational performance of the Altri Group, with an EBITDA margin of 21.3%, which compares to 9.3% reported in the 3Q23. The Group managed to maintain a downward trend in costs during 4Q23, which, combined with a positive evolution in prices and demand, led to a notable improvement in profitability in the last quarter of the year.

Caima, one of the Altri Group's industrial units, became the first in the pulp and paper industry,

in the Iberian Peninsula, 100% free of fossil fuels. Additionally, the revamp of Celbi's ETARi (industrial wastewater treatment plant) was concluded, which will contribute to a lower level of water consumption, and to an improvement in the quality of the effluent. These projects are a source of great pride for the entire Group, which will continue to work to complete additional projects to maintain its focus on environmental improvement and energy efficiency.

The level of global pulp demand has improved since the second half of 2023, as a result of the strong recovery in the Asian market. This recovery has already led to successive increases in pulp prices (BHKP), initially in China, and then in Europe from September onwards. Considering the positive

evolution of prices during the first quarter of 2024, a positive impact is expected on improving the Group's profitability.

Regarding the Gama project, in Galicia, the Group continues to work to meet all the conditions for

making the final investment decision. The Gama project is designed as being a transformational project, implying the construction of a new industrial unit for the production of dissolving pulp and sustainable textile fibers, in Galicia.

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Message from the CEO

2023 was an atypical year for the cellulosic fiber market. We saw one of the most sudden cycle changes in more than a decade, with a slowdown in global demand growth because of the destocking process in Europe and North America, followed in the second half of the year by an improvement in prospects as a result of the strong recovery in the Asian market.

Faced with this challenging context, the Altri Group has managed to maintain a high level of production at its three plants in Portugal, Biotek, Caima and Celbi, overcoming the million tons of cellulosic fibers. Sales were similar to the previous year, but at lower prices, a consequence of the rapid negative trend in fiber prices.

During 2023 we managed to reduce the negative impact on profitability by implementing a strict cost containment policy, boosted by the commitment of our people. In addition, the normalization of electricity and natural gas prices, and the consequent reduction in the price of chemicals, led to a very significant decrease in costs.

Over the past year, we have strengthened our efforts to make our operations more efficient. We highlight the investment made in the new biomass boiler (including the new turbine) in Caima, which thus became the first industrial unit in the sector on the Iberian Peninsula to abandon fossil fuels from the production process, managing to ensure total energy autonomy from exclusively renewable sources. We have the ambition to continue growing, but we want to do so in a solid and sustainable way, to make our contribution to build a more renewable world.

Aware of our mission, but also of the one we could have, in the sustainability of other industries, particularly textiles, we continue to advance on several fronts of the Gama Project, in Galicia, to have the necessary conditions for a final investment decision. Beyond Gama, we believe it is important to point out that the Group continues to develop various diversification projects in its various production units.

José Soares de Pina

Altri's CEO

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Operating and Financial Performance

Pulp Market

Global demand for pulp during 2023 recorded an increase of 4.4% vs the same period of the previous year, while the evolution of demand for Hardwood pulp was even more positive, with an 8.7% increase over the same period, according to the PPPC (World Chemical Market Pulp Global 100 Report - December 2023).

In regional terms, and focusing essentially on the Hardwood pulp market, which is more relevant for the Altri Group, we positively highlight China (+28.7%) and the rest of Asia/Africa (+10.4%). The European market presented a double-digit decrease during the year 2023, -15.8% in Western Europe and -7.3% in Eastern Europe. North America, despite performing better than Europe, ended 2023 with a negative annual evolution of 0.2%. Regional trends remained unchanged throughout 2023, with the slowdown in demand leading to a greater than expected destocking process in Europe and North America. In China, the very positive demand figures for 2023 are a consequence of the restocking process and greater dynamism following the (post-Covid) opening up of the economy since the end of 2022.

Table 1 - Global Pulp Demand

Thousand Tons	Jan-Dec '23	Jan-Dec '22	Var. %
Bleached Hardwood Suphate	40,989	37,724	8.7%
Bleached Softwood Sulphate	24,673	24,487	0.8%
Unbleached Sulphate	2,471	3,031	-18.5%
Sulphite	107	110	-3.5%
Global Pulp Demand	68,239	65,351	4.4%
Bleached Hardwood Suphate per region
North America	3,348	3,354	-0.2%
Western Europe	7,151	8,490	-15.8%
Eastern Europe	1,342	1,448	-7.3%
Latin America	2,933	2,814	4.2%
Japan	969	1,083	-10.5%
China	18,614	14,458	28.7%
Rest of Asia/Africa	6,450	5,842	10.4%
Oceania	181	234	-22.5%
Total	40,989	37,724	8.7%
Source: PPPC (World Chemical Market Pulp Global 100 Report- December 2023).

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One of the relevant factors to assess the balance of demand and supply of pulp in the European market is the level of stocks in European ports. Given the global destocking trend in the pulp and paper industry value chain since the end of 2022, and during a great part of 2023, the level of stocks at European ports rose to levels above historical averages, reaching a peak at the end of 2Q23. Although the destocking situation still existed for part of the second half of 2023, the trend in stocks reversed as several Latin American producers redirected volumes to Asia, with 2023 ending below the average historical values.

		Table 2 - Pulp Stocks
Thousand Tons	2020	2021	2022			2023
				1Q	2Q	3Q	Oct	Nov	Dec
Stocks (EU Ports)	1,542	1,198	1,157 1,637	1,808	1,525	1,245	1,216	1,184

Note: Monthly end-of-period stocks. Monthly average for quarterly and annual values.

Source: Europulp (Federation of the National Associations of Pulp Sellers in Europe)

During the 4Q23, and after reaching a low in August, the price of the PIX pulp index (BHKP) in Europe reversed its downward trend, ending the last quarter of 2023 at US$ 1,001/ton. In average terms, the price of the European PIX pulp index (BHKP) in 4Q23 was up 9% vs. 3Q23 in US$, with an increase of +11% in Euros. Compared to 4Q22, the decrease is -34% in US$ and -38% in Euros. Looking to 2023, the average value of the pulp PIX index (BHKP) was 1,044 US$/ton, 19% lower than the 2022 value in US$ and -21% in Euros.

The year 2023 was highly volatile in terms of pulp price trends. After a sharp drop in prices in Europe during the first eight months of 2023, we began to see a recovery from September onwards, which continued until the end of the year. Having seen a start to the year in the process of normalizing value chains and absorbing the impact of new capacity in the global pulp market, strong demand from the Chinese market ended up partially absorbing these effects, leading to a recovery in the price level.

Table 3 - BHKP Average Pulp Price Evolution in Europe (2018 to 4Q23)

US$/ton	2018	2019	2020	2021	2022		2023
						1Q	2Q	3Q	4Q
Average Pulp Price (BHKP)	1,037	858	680	1,014	1,286	1,337	1,097	835	908
		Source: FOEX.

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Global demand for Dissolving Pulp (DP) has registered a 6.5% increase during 2023, according to Numera Analytics (Global DP Demand Report - December 2023). This positive variation is due to the sustained recovery of demand in the textile sector, after the slowdown experienced in the second half of 2022. We recall that DP is targeted for textile and used mainly in Asia, the region that absorbs around 85% of the demand. In geographical terms, China registered an increase of 15.4%, with Asia growing at around 10.3%. After a slight drop in the middle of the year, DP ended 2023 with prices just below US$900/ton, a similar price level to the start of the year.

	Table 4 - Global Dissolving Pulp Demand
Thousand Tons	Jan-Dec '23	Jan-Dec '22	Var.%
North America	463	473	-2.2%
Western Europe	487	606	-19.7%
Asia	6,151	5,578	10.3%
China	4,445	3,851	15.4%
Japan	185	177	4.7%
Taiwan	28	52	-46.8%
Thailand	226	200	13.1%
Rest of Asia	1,267	1,298	-2.4%
Other	53	56	-6.1%
Total	7,153	6,713	6.5%
	Source: Numera Analytics (Global DP Demand Report - December 2023).

The Altri Group

• Operating Performance

Total volume of pulp produced in the 4Q23 reached 279.7 thousand tons, a decrease of -3.7% vs the same quarter in the previous year, but an increase of +6.9% when compared to the previous quarter. In annual terms, the volume of pulp production reached 1,061 thousand tons, a decrease of -7.1% when compared to 2022. This reduction is a consequence of the lower level of demand for pulp in Europe and an optimization of the Group's inventory level.

The volume of pulp sales in the last quarter was 270.6 thousand tons, a decrease of 5.0% vs. 3Q23 and an increase of 10.6% when compared to 4Q22. The level of production and sales in the fourth quarter of the year is a level that the Altri Group considers more normalized.

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Despite the context in the European market, the main market in which the Group operates, the total volume of pulp sales in 2023 was 1,081 thousand tons, a decrease of only 2.4% when compared to the previous year, reduction substantially lower than the market's behavior.

	Table 5 - Operating Indicators (Quarter)
Thousand Tons	4Q23	4Q22	4Q23/4Q22	3Q23	4Q23/3Q23
Pulp Production BHKP	255.0	269.2	-5.3%			235.8	8.1%
Pulp Production DWP	24.7	21.3	16.3%			25.8	-4.1%
Total Production	279.7	290.4	-3.7%			261.6	6.9%
Pulp Sales BHKP	249.4	228.3	9.2%			257.0	-2.9%
Pulp Sales DWP	21.2	16.3	29.5%			27.9	-24.1%
Total Sales	270.6	244.6	10.6%			284.8	-5.0%

Table 6 - Operating Indicators (2023)
Thousand Tons	2023	2022	Var.%
Pulp Production BHKP	961.0	1,046.8	-8.2%
Pulp Production DWP	100.0	95.7	4.4%
Total Production	1,061.0	1,142.6	-7.1%
Pulp Sales BHKP	984.0	1,010.9	-2.7%
Pulp Sales DWP	97.0	96.7	0.3%
Total Sales	1,081.0	1,107.6	-2.4%

In terms of end use, Tissue presented solid demand levels during the year, with a weight of 50% in 2023. The P&W (Printing and Writing) segment, despite losing weight compared to 2022, remains the second most important, with 19% of the volume sold. Despite some recovery near the end of the year, the P&W volumes have declined during 2023, given the relevant destocking effect and apparent decline in final demand occurring in this segment. In regional terms, Europe (including Portugal) accounts for 61% of sales, followed by the Middle East and North Africa with 25%, Turkey and Israel being the main destinations in the Middle East. To be able to seek destinations with higher levels of demand, the Altri Group increased its exposure to Asia and the Middle East and North Africa during the year of 2023.

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	Table 7 - Weight of Sales (Volume) by End Use
		2023	2022	2021
Tissue	51%	53%	50%
P&W	19%	24%	19%
Dissolving	9%	8%	8%
Décor	4%	5%	7%
Specialties	3%	5%	6%
Packaging	2%	2%	2%
Other	12%	3%	8%
	Table 8 - Weight of Sales (Volume) by Region
		2023	2022	2021
	Europe (excl. Portugal)	50%	61%	61%
	Middle East & North Africa	25%	17%	17%
	Asia	14%	7%	8%
	Portugal	11%	15%	14%

• Economic and Financial Performance

During the 4Q23, total revenues of Altri Group amounted to € 187.3 M, a 28.1% decrease vs 4Q22 and an increase of +7.4% vs. 3Q23. The evolution of revenues compared to 4Q22 is essentially explained by the unfavorable evolution of pulp prices, while the more favorable evolution of prices compared to 3Q23 led to an improvement in the level of revenues generated by the pulp business, and there was also an increase in the contribution of other revenues.

Since the beginning of 2023, the Group has further strengthened its focus on cost management, with very positive results in the main inputs. In addition to the efficiency gains achieved, we should also mention the normalization of electricity and natural gas prices and the consequent reduction in the price of chemicals. The downward trend in variable costs continued during 4Q23, especially in wood and energy costs. The favorable evolution in costs, combined with some recovery in pulp prices, led to a positive evolution in the EBITDA margin compared to the previous quarter, despite a decrease compared to the same quarter of the previous year.

In the 4Q23, EBITDA reached € 39.8 M, a decrease of 49.0% vs. 4Q22 with an EBITDA margin of 21.3%, a decrease of 8.7 p.p. when compared to the same period in the previous year, but an improvement of +12.0 p.p. when compared to 3Q23.

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