Semapa : FIRST 9 MONTHS OF 2020 RESULTS

Presentation of Results of the First 9 Months of 2020

PERFORMANCE IN THE FIRST 9 MONTHS OF 2020

As the markets reopened and the economy gradually picked up again the performance improved in all of Semapa's business segments in the third quarter, vis-à-vis the previous one. The diversification of businesses and geographies at the level of the subsidiary companies and the Group, alongside a strong focus on cost and cash flow management, demonstrated the Group's resilience to the current situation. From the second to the third quarter, it should be highlighted the growth in revenue (+20.9%), EBITDA (+45.8%), Net Profit (+29.4 million euros) and cash generation that reached a cumulative total of 264 million euros vs. 139 million euros in the same period of 2019. This result allowed for interest-bearingnet debt to decrease in all business segments, and in consolidated terms down to 1,239 million euros, 232 million euros less than at the end of 2019. Although the third quarter was marked by the positive developments mentioned above, we are still in a context of great uncertainty and Semapa intends to continue to optimise its financial structure as a Group.

HIGHLIGHTS

• Concerning Health and Safety, the group continued to take proactive and broad measures in the third quarter to address the Covid crisis, at the holding level and all its subsidiary companies. No severe cases have been reported in the Group until now.
• The Semapa Group recorded a consolidated revenue in the first 9 months of 2020 of 1,447 million euros (-14.0% year-on-year),1,044 million euros generated in Pulp and Paper (Navigator), 380 million euros in Cement (Secil), and 23 million euros in Environment (ETSA). It should be noted that revenue in the 3rd quarter of 2020 amounted to 505.2 million euros, up by 20.9% vs. the 2nd quarter of 2020 and down by 10.4% vs. the 3rd quarter of 2019. Exports and foreign sales amounted to 1,023.7 million euros in the first nine months of 2020, accounting for 70.8% of revenue.
• It must be highlighted that in the 3rd quarter the Pulp and Paper segment resumed the pace of production. Paper sales stood at 336 thousand tonnes (+45% compared to the 2nd quarter and -7%compared to the same quarter in 2019); pulp sales totalled 104 thousand tonnes, an increase of 15% compared to the 3rd quarter in 2019 and a reduction of 5% compared to the maximum recorded in the 2nd quarter, when there was less need for pulp to be integrated into paper. Tissue sales increased steadily to 27 thousand tonnes, 5% above the previous quarter and 2% above the third quarter of 2019. The first nine months of the year were marked by falling sales prices compared to 2019 and the 2nd quarter of 2020: the BHKP pulp (in euros) and A4 paper indices fell by 25% and 7% respectively, compared to the YTD of 2019 and 6% and 2% compared to the 2nd quarter of 2020.
• The impact of the pandemic on the Cement and Other Construction Materials business was felt differently in the various geographical regions of the Group's operations, highlighting the growth in revenue in the domestic market in Portugal (+4.2% compared to the same period in 2019) and in Brazil (+16.3%, in local currency, compared to the same period in 2019). On the contrary, Lebanon is experiencing a serious economic, financial and social crisis,

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Presentation of Results of the First 9 Months of 2020

so the outbreak of the Covid-19 pandemic and the explosion in August in the Beirut harbour only made matters worse. Operations were resumed in Tunisia, but the construction sector, namely public works, have been hit hard.

• EBITDA in the first nine months of 2020 amounted to 326.1 million euros (vs. 392.0 million euros year on year), 210.5 million euros derived from Pulp and Paper, 107.4 million euros from Cement and 7.8 million euros from Environment. In the 3rd quarter of 2020, EBITDA was 122.8 million euros (+45.8% vs. the 2nd quarter of 2020 and -3.7%vs. the 3rd quarter of 2019). In comparison with the same period in 2019, the positive developments in the Cement segments (+24.2%), especially in Portugal and Environment (+47.4%), should be noted. Since the beginning of the pandemic, all business segments have made an extra effort to optimize costs with very relevant results, particularly in the Pulp and Paper segment (reduction of around 30 million euros in fixed costs), resulting in a consolidated EBITDA margin of 22.5%, only -0.8 p.p. below that recorded in the same period of 2019.
• Net profit attributable to Semapa shareholders until September 2020 stood at 72.8 million euros (vs. 112.1 million euros year on year in 2019), impacted by both the reduction in EBITDA, and negative exchange rate effects in Secil (Brazilian real) reflected in the financial income and positively influenced by tax. In the 3rd quarter of 2020, net profit attributable to shareholders amounted to 42.5 million euros vs. 13.1 million euros in the 2nd quarter of 2020 and 38.6 million euros in the 3rd quarter of 2019.
• The gross value of the investments made in the first nine months of 2020 amounted to approximately 96.7 million euros, with particular emphasis on the Pulp and Paper segment with 69.7 million euros, of which 21.1 million euros in environmental projects. The new biomass boiler in Figueira da Foz, with a total investment of 55 million euros over 2019 and 2020, started tests in September 2020. The investment will allow for an 81% reduction in CO2 emissions at this unit and around 20% reduction in the Navigator universe (a decrease of approximately 155 thousand tonnes of CO2/year). As a result, the mill will be 100% powered by renewables.
• In the context of the Covid-19 crisis, the Group was still very focused on optimising cash flow, with particular emphasis on actively reducing costs, managing the working capital and Capex, which generated Free Cash Flow of 264 million euros (vs. 139 million euros year on year).
• Consequently, during the first nine months of the year, net debt decreased in all business segments, and consolidated interest-bearing net debt totalled 1,239.1 million euros, 231.5 million euros and 106.6 million euros less compared to the end of 2019 and the end of Q2 2020, respectively.

4TH QUARTER OUTLOOK

The third quarter was marked by economic recovery, but there is still a climate of strong uncertainty and great volatility in the face of the risk of a second wave of the pandemic. Semapa will continue to work hard to minimize the impacts of this pandemic in its different activities, with emphasis, above all, on the health and safety of its employees and other stakeholders.

− In the Pulp and Paper segment, some positive signs (namely a greater dynamics of incoming orders from the

European market in recent weeks) suggest that the recovery of the paper market will continue in the fourth quarter, Page 3

Presentation of Results of the First 9 Months of 2020

although the risk of a second wave of the pandemic situation persists, with an extent of the impact that is still difficult to estimate. On the pulp side, the cooling of demand for tissue and packaging products in the 3rd quarter caused some slow down to the business in the months of July and August. Prices are at minimum levels (in some cases below marginal cost), both in Europe and China, there are several maintenance stoppages planned by producers, and the difference between the price of long fibre and short fibre is at maximum values. These factors combined may help to improve price in the 4th quarter. In the tissue business, after a positive performance in the first nine months, there is some concern about a possible contraction in demand, especially in the Away from Home segment. In the fourth quarter, the tissue plant in Aveiro will be brought to a halt for maintenance.

• In the Cement and Other Building Materials segment, particularly in Portugal and Brazil, where the anti-Covid measures have had less impact, this situation is expected to uphold, despite the framework of ongoing uncertainty that may be reversed in the 4th quarter. We expect a dynamics of recovery in Tunisia and strong challenges lingering in Lebanon given the overall situation in the country.
• In the Environment segment, the information available suggests that the food market where ETSA operates will continue to be less affected by the health crisis than other activities. However, some effects for the sector may arise from, either lower purchase power of the Portuguese population, or expected lower oil prices.

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