Altri : SGPS, S.A. announces 3Q2017 results

ALTRI, SGPS, S.A.

Public Company

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

Share Capital: 25,641,459 Euro

Financial Information - 3rd 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 in 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 presented was prepared in accordance with the International Financial Reporting Standards (IFRS).

Income Statement - 3Q 2017

thousand Euro	3Q 2017	3Q 2016	3Q17/3Q16 Var%	2Q 2017	3Q17/2Q17 Var%
Total Revenues	165,539	149,542	10.7%	165,417	0.1%
Cost of Sales	62,233	59,803	4.1%	68,700	-9.4%
External supplies and services	39,832	39,752	0.2%	40,049	-0.5%
Payroll expenses	8,649	8,135	6.3%	8,461	2.2%
Other costs	1,089	1,605	-32.2%	826	31.9%
Provisions and impairment losses	0	0	ss	0	ss
Total Costs (a)	111,802	109,295	2.3%	118,036	-5.3%
EBITDA (b)	53,737	40,247	33.5%	47,381	13.4%
Margin	32.5%	26.9%	+5.5 pp	28.6%	+3.8 pp
Depreciations and Amortizations	13,729	13,249	3.6%	13,918	-1.4%
EBIT (c)	40,008	26,998	48.2%	33,463	19.6%
Margin	24.2%	18.1%	+6.1 pp	20.2%	+3.9 pp
Gains/Losses in associated companies	937	1,179	-20.5%	925	1.3%
Financial Costs	-6,164	-5,463	12.8%	-5,451	13.1%
Net exchange gains/losses	-1,135	254	-1,661
Financial gains	1,276	774	64.8%	1,250	2.1%
Financial Results	-5,087	-3,256	56.2%	-4,937	3.0%
Profit Before Income Tax	34,922	23,742	47.1%	28,526	22.4%
Income Tax	-8,489	-6,920	22.7%	-4,098	107.2%
Consolidated Net Profit	26,433	16,823	57.1%	24,428	8.2%

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

2. EBITDA = earnings before interests, taxes, depreciation and amortization

3. EBIT = earrnigs before interests and taxes

During the third quarter of 2017 the price of BHKP pulp maintained the upward trend, by rising around 12% in USD (from 783 USD in the previous quarter to 873 USD in the current quarter), while in EUR this increase was around 5%.

On the other hand, the investment projects in Celbi and Celtejo's industrial units remain on course, being highlighted the latter, with interventions in the recovery boiler, steam reduction and industrial waste water treatment installations, implying a limitation of the mill 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.

In respect to the investment in Celtejo, there was a short programmed maintenance stoppage in September (three days) in this industrial unit.

EBITDA of 54 million Euro and margin of 32.5%

Total revenues in the third quarter of 2017 achieved 165.5 million Euro, an increase of 11% over the same period of last year and in line with the revenues from the previous quarter.

During the period under analysis, approximately 270 thousand tons of pulp were produced (268 thousand in the third quarter of 2016), of which approximately 28.2 thousand tons of dissolving pulp (26.9 thousand tons in the same quarter of 2016).

In terms of sales, in the third quarter, were sold approximately 255 thousand tons of pulp, of which 27 thousand tons were dissolving pulp. The difference between produced tons and sold tons is related with the need to accumulate stocks to offset the lower estimated production for the fourth quarter of 2017, as a consequence of the programmed maintenance stoppage at Celbi's industrial unit.

In terms of exports, during the period under analysis, Altri exported around 228.6 thousand tons of pulp, corresponding to approximately 126 million Euro, corresponding to approximately 90% of its pulp sales.

Total pulp sales amounted to 139.7 million Euro, which corresponds to a decrease of approximately 1.6% over the previous quarter of 2017, in result of the reduction of the volume sold and an increase of 13% in relation to the same period of the previous year.

Operating costs recorded an increase of 2.3% over the same period of 2016, higher than the variation in the volume sold (-1.3%), which is explained by the normal inefficiencies that arise during investment periods and the above-mentioned stoppage at Celtejo's industrial unit. Total costs, excluding amortisations, financial costs and taxes, in this quarter, amounted to approximately 111.8 million Euro, which corresponds to a reduction of 5.3% over the previous quarter of 2017.

Regarding the forest fires that happened in the country until the 30th of September 2017, the effect over the Group's consolidated financial statements is fully recorded and is immaterial. Considering the forests fires that occurred after the closing of the quarter, the Company is currently evaluating their impact. However, it is not expected that these events will be materially relevant, neither jeopardize the wood supply to the plants in the short-term.

EBITDA for the third quarter of 2017 was around 53.7 million Euro, an increase of 34% compared to EBITDA recorded in the same period of 2016. In relation to the second quarter of 2017, EBITDA increased 13%.

The financial result was a net loss of 5 million Euro. The variation of the financial result is due to exchange rate differences, a consequence of the devaluation of USD against EUR that occurred during the period under analysis. The average cost of total financial debt is below 3%.

Altri's consolidated net profit reached approximately 26.4 million Euro, an increase of 8% over the second quarter of 2017 and an increase of 57% over the same quarter of the previous year.