Navigator : Report for the First 9 Months 2020

INDEX

1.	HIGHLIGHTS 3RD QUARTER AND YTD SEPTEMBER 2020	3
2.	LEADING INDICATORS	5
3.	ANALYSIS OF RESULTS	6
4.	QUARTERLY OPERATIONAL DATA	11
5.	CAPEX IN THE FIRST NINE MONTHS OF 2020	11
6.	OUTLOOK	12
7.	CONSOLIDATED FINANCIAL STATEMENTS AND NOTES	14

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1. HIGHLIGHTS 3RD QUARTER AND YTD SEPTEMBER 2020

With the reopening of economies and a gradual recovery in demand for paper, Navigator experienced a significant improvement in its business during the third quarter. By quickly adapting to market changes and consequently stepping up its sales efforts, which were further supported by strong operational performance in pulp and tissue business and robust action to control costs, the Group recorded a significant improvement in results over the previous quarter with a strong generation of Free Cash Flow.

3rd Quarter Analysis (vs. Q2 2020 vs. Q3 2019) - Turnover up 20% and Ebitda grows 36% to € 70 million

• Paper and pulp production returned to their normal pace in the third quarter. All the Group's UWF machines have been working at full capacity since early July, and demand has gradually recovered from the situation recorded in the second quarter;
• Paper sales stood at 336 ktons (up 45% on the second quarter and down by 7% in relation to the same quarter last year); pulp sales totalled 104 thousand tons, growing by 14% in relation to the 3rd quarter of 2019 and down by 5% from the record level achieved in the 2nd quarter, when less pulp was needed for paper production. Tissue sales continued to grow, to 27 thousand tons, 5% up on the previous quarter and up by 2% on the same quarter last year;
• Turnover totalled € 348 million, growing 20% vs. Q2 2020 and down 17% vs. Q3 2019 and
  Ebitda stood at € 70 million (up 36% vs. Q2 2020 and down 25% vs Q3 2019); the
  EBITDA / Sales margin was 20.2% (vs. 17.8% and 22.2%);
• Free Cash Flow Generation in the quarter of € 56 million (vs. €99 million in Q2 2020 and €
  25 million in Q3 2019);
• Net profits stood at € 31 million, up by 133% from the previous quarter (down 41% vs. Q3
  2019)

YoY analysis (YTD Sep.2020 vs. YTD Sep.2019) - Navigator highly resilient to the impact of lockdown on UWF business thanks to pulp and tissue sales, combined with cost reductions

• UWF business felt the direct impact of lockdown, resulting in total UWF sales of 934 thousand tons, down by 14% on the same period in 2019; this was offset by growth of 39% in pulp sales to 297 thousand tons and tissue sales up 7% to 79 thousand tons;
• The first nine months of the year saw sales prices fall in comparison with 2019: the BHKP pulp index (in euros) fell by 26% and the A4 paper index dropped by 7%;
• Turnover stood at € 1 044 million (down 18%) and Ebitda at € 210 million (down 30%);
• A substantial reduction in variable production costs and firm containment of fixed costs cushioned the effect of falling sales prices and resulted in an EBITDA / Sales margin of over 20% (down 3,4 pp);
• Financial results improved to € -9 million (vs. € -11 million) and income tax totalled €- 15 million (vs. €- 41 million), resulting in net income of € 75 million (vs. € 147 million);
• The Group continued to demonstrate excellent capacity to generate free cash flow, which totalled € 170 million (vs. €125 million), with capex of approximately € 70 million (vs. €
  119 million);

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• Net debt dropped substantially, down by € 132 million to € 644 million, whilst the Net Debt
  / Ebitda ratio stayed at a comfortable level of 2.28 X; the Group also increased its liquidity in cash and cash equivalents to € 345 million.
• Project for the new biomass boiler in Figueira da Foz at its final stage, with tests starting in September. This investment, 50% funded by EIB (European Investment Bank), will enable the plant in Figueira da Foz to reduce its CO2 emissions by 81%, and will allow for significant cost savings.

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