Altri : SGPS, S.A. announces 1Q2017 results

ALTRI, SGPS, S.A.

Public Company

Head Office: Rua do General Norton de Matos, 68, r/c - Porto Fiscal number 507 172 086

Share Capital: 25,641,459 Euro

Financial Information - 1st Quarter of 2017 (Unaudited)

This document is a translation of a document originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards and with accordance with the International Accounting Standard 34 - Interim Financial Reporting, 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.

The financial information was prepared in accordance with the International Financial Reporting Standards (IFRS).

Income Statement - 1Q 2017

thousand Euro	1Q 2017	1Q 2016	1Q17/1Q16 Var%	4Q 2016	1Q17/4Q16 Var%
Total Revenues	159,836	161,706	-1.2%	159,092	0.5%
Costs os sales	69,261	60,240	15.0%	67,153	3.1%
External supplies and services	41,783	40,325	3.6%	42,869	-2.5%
Payroll expenses	7,719	7,789	-0.9%	9,547	-19.1%
Others expenses	950	1,254	-24.2%	291	226.8%
Provisions and impairment losses	0	8	ss	413	ss
Total Expenses (a)	119,714	109,616	9.2%	120,272	-0.5%
EBITDA (b)	40,122	52,090	-23.0%	38,820	3.4%
Margin	25.1%	32.2%	-7,1 pp	24.4%	+0,7 pp
Amortisation and depreciation	13,915	13,263	4.9%	11,387	22.2%
EBIT (c)	26,207	38,827	-32.5%	27,433	-4.5%
Margin	16.4%	24.0%	-7,6 pp	17.2%	-0,8 pp
Gains/Losses in associated companies	495	258	91.9%	1,118	-55.7%
Financial costs	-5,082	-6,569	-22.6%	-8,618	-41.0%
Financial gains	448	1,466	-69.4%	2,668	-83.2%
Financial results	-4,138	-4,845	-14.6%	-4,832	-14.4%
Profit Before Income Tax	22,069	33,982	-35.1%	22,601	-2.4%
Income tax	-4,945	-8,865	ss	-2,667	ss
Profit for the period attributable to parent company's shareholders	17,124	25,117	-31.8%	19,935	-14.1%

1. Operating costs excluding amortisation, financial expenses and income tax

2. EBITDA = Earnings before interests, taxes, depreciation and amortisation

3. EBIT = Earnings before interest and taxes

   The first quarter of 2017 was marked by three facts:

4. The beginning of a rise trend in the price of pulp, which amounted to 640.5 Euro/ton, which corresponds to an appreciation of around 6% (Euro) compared to the last quarter of the previous year. However, the average price recorded in the first quarter of 2016 was 693.1 Euro/ton, which means that the market price in the quarter under review was 7.6% lower than the price registered in the same period of 2016;

5. The continuation of the investment project in the Celtejo industrial unit, with interventions in the recovery boiler, steam reduction and industrial waste water treatment installation, implying a limitation of the factory's operational potential, in terms of production capacity and efficiency of production costs. This investment is expected to be completed by the end of the first half of 2018;

6. The suggested adjustment of Legal Regime of Afforestation and Reforestation (RJAR - Regime Jurídico de Arborizações e Rearborizações), which limits the planting of eucalyptus trees, is harmful for 400 thousand forestry producers and could damage competitiveness of the Pulp and Paper Industry, which, nowadays, makes annual wood imports of about 200 million Euro.

Cumulative total production of about 541 thousand tons in the last 2 quarters

Total revenues in the first quarter of 2017 amounted to 159.8 million Euro, a decline of around 1% over the same period of last year and a growth of about 0.5% over the fourth quarter of 2016.

During the period under analysis, approximately 264.4 thousand tons of pulp were produced (+ 5.4% in relation to the first quarter of 2016), of which approximately 26.6 thousand tons of dissolving pulp (+ 15% compared to the same quarter of 2016).

In terms of sales, around 274.3 thousand tons of pulp were sold in the first three months of 2017 (+ 8.2% over the same quarter of 2016), of which approximately 26.6 thousand tons of dissolving pulp (+ 3% compared to the same quarter of the previous year).

It should be noted that cumulatively in the fourth quarter of 2016 and the first quarter of 2017, approximately 540.7 thousand tons of eucalyptus pulp were produced.

In terms of exports, during the first three months of 2017, Altri exported around 250.5 thousand tons of pulp, corresponding to a growth of around 8% over the same period of the previous year.

Total pulp sales amounted to 134.9 million Euro, which corresponds to a decrease of around 3% over the same period of the previous year and a growth of around 1.2% over the fourth quarter of 2016.

Quarterly EBITDA reaches 40 million Euro

Operating costs increased by 9.2% year-on-year, slightly above the 8.2% increase in pulp sales (+ 8.2%), mainly due to the investments in progress in Celtejo that limit the mill's potential in terms of production and operational efficiency. Thus, total costs, excluding depreciation, financial costs and taxes, in the first quarter of 2017 amounted to approximately 119.7 million Euro, which corresponds to a 0.5% reduction compared to the fourth quarter of 2016.

EBITDA for the first quarter of 2017 was approximately 40.1 million Euro, a decrease of about 23% compared to the EBITDA recorded in the same period of 2016. In relation to the fourth quarter of 2016, EBITDA increased by 3.4%.

The financial result was a net expense of 4.1 million Euro, which corresponds to a decrease of about 14% compared to the net financial expense incurred in the fourth quarter of 2016. The average cost of total financial debt is less than 3%.

Altri's consolidated net profit reached approximately 17 million Euro.