Navigator : S.A. informs on results for Q4 2021

CONTENT

1. PERFORMANCE IN 4th QUARTER 2021 FULL-YEAR 2021
2. LEADING INDICATORS
3. ANALYSIS OF RESULTS
4. QUARTELY OPERATING FIGURES
5. MOZAMBIQUE PROJECT
6. COMMITMENT TO SUSTAINABILITY
7. OUTLOOK
8. PROPOSED ALLOCATION OF PROFITS
9. FINANCIAL STATEMENTS

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1. PERFORMANCE 4TH QUARTER AND FULL-YEAR 2021

The recovery on paper consumption boosted by the economic upturn, allied with the improvement between the supply and demand in the United States, Europe and MENA region, following the capacity closures and conversions already announced, allowed for a good performance both of the industry and Navigator in particular in 2021. After a financial year in 2020 severely marked by the impact of the pandemic on demand and by sharply falling prices, the Group's order book registered a robust health in 2021, with orders climbing to record levels in the 3rd quarter and again in the 4th quarter. At the same time, with increased UWF volumes and price rises across its products, Navigator succeeded in offsetting the sharp increase in raw material and logistical costs, mainly felt in the second half of the year, once again demonstrating its leadership capacity, resilience and flexibility of its business model.

4th Quarter Analysis (vs Q3 2021 and vs Q4 2020)

• Turnover stood at € 476 million, up by 18% from the 3rd quarter of 2021 and by 40% from 2020, driven by growing paper volumes and higher prices;
• Paper sales volumes were up by 4% on the 3rd quarter of 2021 and 15% higher than in the 4th quarter of 2020;
• Pulp volumes grew by 56% in relation to the 3rd quarter, when volumes were considerably low, though evolving distinctly compared to the same period in 2020 (-12%), due to less market pulp than in the previous year, via higher paper integration;
• Tissue volumes were up by 6% in relation to the previous quarter, and up by 3% vs the same period in 2020;
• Pulp prices strong growth (with the European benchmark index stable at 1,140 USD as from Q3 2021, and up by 68% on Q4 2020); the paper price index in Europe recorded a positive change in the fourth quarter of 2021, both in comparison with the average price in the fourth quarter of 2020 (up 12%), and in relation to the previous quarter (up 7%), pointing a growth of 21% over the course of 2021;
• EBITDA for the quarter totalled € 109 million (up 14% in relation to the 3rd quarter and up 45% from Q4 2020), reflecting an EBITDA margin of 22.8% (down 0.8 pp from Q3 2021 and up 0.8 pp on Q4 2020);
• Net income in the fourth quarter of 2021 stood at € 57 million, as compared to € 50 million in Q3 2021 (up 15%) and € 34 million in Q4 2020 (up 68%);
• Free Cash Flow was strong at € 52 million (as compared to € 61 million in the previous quarter and € 63 million in the 4th quarter of 2020).

2021 vs. 2020

• Turnover grew by 15% to € 1 596 million;
• The volume of paper sales totalled 1 474 thousand tons (up 16%), pulp sales stood at 292 thousand tons (down 26%) and tissue sales at 105 thousand tons (down 1%);
• Navigator achieved EBITDA of € 355 million and an EBITDA/sales margin of 22.2% (vs. €
  286 million and a margin of 20.6% in 2020), benefiting from growth in paper volumes and higher prices for paper, pulp and tissue;

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• Net annual income improved by 56% over 2020, to € 171 million;
• The Group displayed strong Free Cash Flow generation of € 235 million, in line with the 2020 figure of € 234 million;
• Capital expenditure in 2021 totalled € 80 million (vs. € 81 million in 2020), mainly including investments at modernising equipment, optimising production capacity, maintenance and environmental. To note that the Capex execution plan over 2021 was hampered by the pandemic, not only causing delays to start-up but also to deliveries by most suppliers, pushing back to 2022 most of the Capex originally scheduled in 2021;
• Net financial income stood at - € 18 million (vs. - € 15 million), representing an increased loss of € 3 million, due essentially to a reduction in financial gains which had been very strong in 2020;
• Sustainable finance debt issued through Sustainability-Linked Bonds in an amount of € 100 million. The terms of the loan are indexed to two ESG indicators envisaged in the Company's Sustainability Agenda, and also aligned with the United Nations Sustainable Development Goals
• Net debt was down by € 85 million to € 595 million, after Navigator distributed dividends of € 100 million in the first half, and then an interim dividend (relating to 2021) of € 50 million in December, keeping the Net Debt / EBITDA ratio at a comfortable level of 1.68x;
• In line with its goal of creating sustainable value and contributing to reduced use of plastics through materials that offer sustainable alternatives, Navigator took another significant step towards its diversification strategy in 2021 by moving into a new business area and developing a series of products in the packaging segment. In 2021, Navigator achieved sales above € 40 million;
• Following the commitment made in its 2030 Agenda, Navigator has signed up to the Science Based Targets initiative (SBTi) and, underlining this commitment, as opposed to what the majority of peers from the sector have been doing, the Company immediately submitted for validation its targets for cutting greenhouse gas (GHG) emissions on the basis of the latest climate science, therefore dismissing the 2-year period that companies dispose and typically use it to do so, taking another important stride in its positioning to fight against climate change;
• To highlight the annual assessment by the Sustainalytics rating agency, published in late January, which again puts Navigator at the lowest risk level, as well as improving its previous rating to 14.3. Navigator was ranked third out of a total of 81 global companies in the Paper & Forestry industry cluster, and third in a subset of 60 global companies in the Paper & Pulp cluster. Navigator's rating and great ranking are important facts that reflect its ongoing efforts to integrate sustainability as a priority in its business model, demonstrating its capacity to anticipate and manage ESG risks in the conduct of its operations.

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2. Leading Indicators

				FY	FY		Change (7)
	Million euros		2021	2020		2021 / 2020
	Total Sales		1 595,9	1 385,4		15,2%
	EBITDA (1)		354,7	285,5		24,2%
	Operating Profits (EBIT)	229,6	140,4		63,5%
	Financial Results		- 17,8	- 14,7		21,1%
	Net Earnings		171,4	109,2		57,0%
	Cash Flow		296,6	254,3		42,3
	Free Cash Flow (2)		234,7	233,5		1,2
	Capex (8)		80,1	80,6		- 0,5
	Net Debt (3)		594,8	680,0		- 85,2
	EBITDA/Sales		22,2%	20,6%		1,6 pp
	ROS		10,7%	7,9%		2,9 pp
	ROCE (4)		13,7%	8,1%		5,6 pp
	ROE (5)		16,4%	10,6%		5,8 pp
	Equity Ratio		41,2%	40,2%		1,0 pp
	Net Debt/EBITDA (6)(7)	1,68	2,38		-0,70
			Q4	Q3	Change (7)	Q4		Change (7)
in million euros		2021	2021	Q4 21/Q3 21	2020	Q4 21/ Q4 20
Total sales	476,2	404,9	17,6%		341,4		39,5%
EBITDA (1)	108,7	95,5	13,8%		75,1		44,8%
Operating profits	72,8	66,1	10,1%		40,8		78,3%
Financial results	- 5,0	- 2,6	92,4%		- 5,6		-10,4%
Net earnings	57,2	49,8	14,7%		34,0		68,3%
Cash flow	93,1	79,3	13,8		68,2		24,9
Free Cash Flow (2)	52,1	61,2	- 9,1		63,1		- 11,0
Capex (8)	28,3	19,0	9,3		10,9		17,4
Net debt (3)	594,8	596,9	- 2,1		680,0		- 85,2
EBITDA/Sales (%)	22,8%	23,6%	-0,8 pp	22,0%		0,8 pp
ROS	12,0%	12,3%	-0,3 pp	9,9%		2,1 pp
ROCE (4)	17,4%	12,1%	5,3 pp	9,5%		7,9 pp
ROE (5)	22,1%	19,3%	2,8 pp	13,2%		8,8 pp
Equity ratio	40,9%	42,0%	-1,0 pp	40,2%		0,7 pp
Net Debt/EBITDA (6)(7)	1,68	1,86	-0,18		2,38		-0,70

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 invested (N+(N-1))/2
5. ROE = Annualised net income / Average Shareholders' Funds last -1 months
6. (Interest-bearingliabilities - liquid assets) / EBITDA corresponding to last 12 months Impact of IFRS 16: Net Debt / EBITDA in 2021 of 1.83; Net Debt / EBITDA in 2020 of 2.58
7. Variation in figures not rounded up/down

3. ANALYSIS OF RESULTS

4th Quarter 2021 vs. 3rd Quarter 2021 vs. 4th Quarter 2020

The fourth quarter maintained the positive trend observed in the third quarter of 2021, and also in relation to the same period in 2020, when the Group's business was hit particularly hard by the pandemic. Turnover stood at € 476 million, up 18% on the 3rd quarter and 40% on 2020, thanks essentially to the increase in paper volumes and improved average prices level which offset the sharp hike in costs.

Paper sales volumes grew by 4% in relation to the 3rd quarter of 2021, to 394 thousand tons, recovering by 15% in relation to the 4th quarter of 2020. The PIX A4-Copy B paper price index climbed by 7% from the 3rd to the 4th quarter, and by 12% in relation to average prices in the

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