Navigator : 1st Quarter Report 2021

INDEX

1.	1st QUARTER 2020 PERFORMANCE	2
2.	SUMMARY OF LEADING INDICATORS	3
3.	ANALYSIS OF RESULTS	4
4.	OUTLOOK	9
5.	CONSOLIDATED FINANCIAL STATEMENTS AND NOTES	11

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1. PERFORMANCE FOR THE 1st QUARTER 2021

The first quarter was marked by further surges in Covid-19 case rates and periods of lockdown in most of the Group's key markets, while the pace of paper demand remained at appreciably the same level as in the fourth quarter of 2020. List prices for pulp also recovered strongly over the period and successive price increases were implemented; a number of price increments for paper were also announced.

QoQ Analysis (1st Quarter 2021 vs 4th Quarter 2020)

• Market conditions proved to be similar to those in the final quarter of 2020 and sale prices for pulp recovered significantly, thereby sustaining a degree of improvement in paper prices;
• In relation to output, Navigator scheduled its annual maintenance shutdowns for both the pulp mill and the paper machines in Figueira da Foz in the first quarter, with an impact of 11 days;
• The volume of paper sales totalled 335 thousand tons (down 2%), pulp sales stood at 79 thousand tons (down 19%) and tissue sales at 27 thousand tons (up 1%);
• Turnover was in line with the fourth quarter, at a total of € 341 million; the recovery in sales price made it possible to offset the reduction in sales volume;
• The Company achieved EBITDA of € 71 million and a sales margin of 21% (vs. € 75 million and a margin of 22% in Q4 2020), benefiting from an improvement in sales prices and positive evolution in fixed costs;
• Net earnings totalled € 23.5 million, comparing with €34 million in Q4 2020 (-31%);
• Free Cash Flow stood at € 56 million vs € 63 million in Q4 2020.

YoY Analysis (1st Quarter 2021 vs 1st Quarter 2020)

• Difficult YoY analysis as performance in 2021 was marked by further surges in Covid-19 and the subsequent impact of lockdown measures, in contrast to the first quarter of 2020, when the economic impact of the pandemic only started to be felt towards the end of the period;
• Paper sales were 8% down on the first quarter of 2020, pulp sales fell by 6%, but tissue sales were up by 4%;
• Although pulp price rallied strongly over the period (with the benchmark index up 15% in USD and 5.5% in Euros), paper index price was still 6.4% lower than in the first quarter of 2020;
• Turnover of € 341 million represented a reduction of 16%, under pressure from smaller volumes of pulp and paper sales due essentially to the planned shutdowns, and to lower paper prices;
• Teams across the Company have worked to cut fixed and variable costs, with results that were visible in the quarter and partially offset the reduction in turnover, leading to EBITDA of € 71 million (down 20%), corresponding to a margin of 21% (down 1pp);
• Navigator's Free Cash Flow remained strong , at € 56 million, comparing with € 15 million in the first quarter of 2020, and net debt dropped to € 625 million (vs. € 800 million), keeping the Net Debt / EBITDA ratio at 2.33 X;
• Net earnings totalled € 23.5 million, comparing with €31 million in Q1 2020 (-23%);
• The first quarter also saw the start-up of the new solar power facility at Figueira da Foz, with annual capacity of 2.6 MW, which will avoid annual emissions of 1,296 tCO2.

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2. Leading Indicators(unaudited figures)

	Q1	Q1	Change (8)	Q4	Change (8)
Million euros	2021	2020	Q1 21/Q1 20	2020	Q1 21/Q4 20
Total Sales	340.8	405.8	-16.0%	341.4	-0.2%
EBITDA (1)	70.6	88.4	-20.2%	75.1	-6.0%
Operating Profits (EBIT)	40.1	48.3	-17.1%	40.8	-1.9%
Financial Results	- 9.7	- 6.2	57.8%	- 5.6	73.0%
Net Earnings	23.5	30.6	-23.2%	34.0	-30.8%
Cash Flow	54.0	70.7	- 16.7	68.2	- 14.2
Free Cash Flow (2)	56.4	14.9	41.5	63.1	- 6.7
Capex	20.1	22.7	- 2.6	10.9	9.2
Net Debt (3)	623.6	799.5	- 175.9	680.0	- 56.4
EBITDA/Sales	20.7%	21.8%	-1.1 pp	22.0%	-1.3 pp
ROS	6.9%	7.5%	-0.6 pp	9.9%	-3.0 pp
ROCE (4)	9.5%	10.8%	-1.3 pp	9.5%	0.0 pp
ROE (5)	9.1%	11.8%	-2.8 pp	13.2%	-4.2 pp
Equity Ratio	39.9%	38.9%	1.0 pp	40.2%	-0.3 pp
Net Debt/EBITDA (6)(7)	2.33	2.25	0.08	2.38	-0.05

1. Operating profits + depreciation + provisions;
2. Variation net debt + dividends + purchase of own shares
3. Interest-bearingliabilities - liquid assets (not including effect of IFRS 16)
4. ROCE = Annualised operating income / Average Capital employed (N+(N-1))/2
5. ROE = Annualised net income / Average Shareholders' Funds (N+(N-1))/2
6. (Interest-bearingliabilities - liquid assets) / EBITDA corresponding to last 12 months
7. Impact of IFRS 16: Net Debt / EBITDA in 2020 of 2.53; restated 30/12/2020 Net Debt / EBITDA of 2.57
8. Variation in figures not rounded up/down

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3. ANALYSIS OF RESULTS

1st Quarter 2021 vs 1st Quarter 2020

In the first quarter of 2021, The Navigator Company recorded turnover of € 341 million, with paper sales accounting for around 70% of turnover (vs. 72%), pulp sales 10% (vs. 9%), tissue sales 10% (vs. 9%) and energy sales 9% (vs. 10%). The start of the year was marked by further surges in Covid-19 case rates and periods of lockdown in most of the Group's key markets, while the pace of paper demand remained at the same level as in the fourth quarter of 2020. List prices for pulp also recovered strongly over the period and successive price increases were implemented; a number of price increments for paper were also announced.

Demand for UWF paper showed a recovery in April, after a first quarter marked by lockdowns

Global demand for printing & writing papers fell by around 8% YTD March, with UWF paper showing a reduction of 5%, more favourable than for coated papers (down 8%), and mechanical papers (uncoated down 12% and coated down 18%). In Europe, demand for UWF paper during the first quarter evolved along similar lines (down 9%), improving in April to YTD -4%, with apparent demand up 16% in April.

In the United States, demand for UWF dropped by approximately 14% in the first three months of the year. The demand evolution and a capacity reduction of around 15% allowed for a recovery in the capacity utilisation rate, up from 83% in January to 88% in March.

It is important to note the difficult comparison with the performance in 2020, as this quarter was impacted by new surges in Covid-19 infections and the subsequent lockdowns, as well as the concentration of maintenance shutdowns, versus a period in 2020 where the economic impact of the pandemic was only felt towards the end of the first quarter.

Navigator therefore decided to bring forward to the first quarter the annual maintenance shutdowns for the pulp mill and for paper machines at Figueira da Foz. Paper sales totalled 335 thousand tons in the first period, down by 8.4% in relation to the same period in the previous year.

In this context, Navigator maintained a fairly robust order book over the period, and ended March with an order book of 49 days. This level represents an improvement of approximately 60% over the period, which started with an order book of around 30 days, and compares favourably with the level of 30 days experienced by the Company's competitors and also with the level of around 40 days recorded in the same period last year. Navigator registered decreasing levels of paper inventories over the quarter, ending the period with around 13 days' stocks, as compared to an average of 31 days at its competitors and down on the figure in December 2020, thanks to careful management of working capital and a good start of the year in terms of demand.

The benchmark index for A4 in Europe showed a downward adjustment of 6.4% YoY, to an average price of € 809/ton, as compared to € 864 /ton in the first quarter of 2020. The value of UWF sales was accordingly affected by the global decline in paper prices. Navigator's average sale price was also highly penalised by the evolution of exchange rates on the international markets, and its products and markets mix reflected the pandemic situation in Europe and the strong recovery in demand and prices in Overseas markets, where sales were up in comparison with the same period in 2020.

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