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    NVG   PTPTI0AM0006

THE NAVIGATOR COMPANY

(NVG)
  Report
Real-time Euronext Lisbonne  -  07:29 2022-12-08 am EST
3.682 EUR   +0.99%
12/08THE NAVIGATOR COMPANY : Ex-dividend day for interim dividend
FA
12/02Navigator : Presentation to Investors
PU
12/02Navigator : Apresentação aos Investidores
PU
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SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

Navigator S A : informs on results for the first half of 2022

07/22/2022 | 06:14am EST

CONTENTS

  1. PERFORMANCE IN 2ND QUARTER / 1ST HALF 2022
  2. LEADING INDICATORS
  3. ANALYSIS OF RESULTS
  4. OPERATING DATA
  5. NAVIGATOR AND P2X EUROPE HAVE SIGNED A MEMORANDUM OF UNDERSTANDING TO CREATE A UNIQUE JOINT VENTURE
  6. OUTLOOK
  7. FINANCIAL STATEMENTS

1 | 15

1. PERFORMANCE IN 2nd QUARTER 2022 AND 1st HALF 2022

The first half of 2022 was marked by Russia's invasion of Ukraine. The rapid change in Europe's macroeconomic and geopolitical environment has added to uncertainty and insecurity worldwide. Already at historically high levels at the start of the year, energy, logistical and commodity costs have risen across the world.

Under this environment, Navigator acted swiftly to boost the productivity of its industrial assets and to achieve even greater efficiency in its consumption of raw and subsidiary materials. At the same time, the Company held down increases in variable costs by containing specific consumptions, namely in pulp segment, and pressed ahead with efforts to contain fixed costs, which slightly increased. The strength of the dollar over this period impacted imports, but was also reflected in average prices, with a positive impact on the Company's results.

To note that all Navigator's teams succeeded in reacting quickly and deploying their business expertise to anticipate the sharp increase in costs, implementing a responsible pricing policy and an effective differentiation strategy, based on premium products, prestigious own brands and an international reputation. All this crucially compensated the sudden upturn in costs.

These differentiation factors enabled Navigator to record strong performance in this environment of great market uncertainty.

Analysis: 2nd Quarter 2022 vs. 1st Quarter 2022 and vs. 2nd Quarter 2021

  • Paper market dynamics over the second quarter were impacted by the continued war in Europe and the consequent growth of uncertainty and fears of disruption in the various supply chains upstream and downstream of our business;
  • At the same time, the 2nd quarter felt the effects of a prolonged strike over the first four months of the year in Northern Europe, with an impact on all printing and writing papers, as well as limiting the supply of market pulp. Additionally, dating back more than a year, logistical constraints remained, as did large-scale closures and conversion of capacity in our Scandinavian competitors. These factors significantly limited the volume of supply in Europe and helped to push up international prices;
  • The 2nd quarter saw strong growth in pulp prices, with the benchmark index rising 22% in USD and 38% in Euros in relation to average prices in the 2nd quarter of 2021, and up 9% in USD and 15% in Euros in relation to the 1st quarter of 2022;
  • Pressured by the pulp price index, higher costs for energy, logistics and commodities, and also a mismatch between supply and demand, the index for paper prices in Europe also strongly rose in the 2nd quarter of 2022, in comparison both with the 2nd quarter of 2021 (up 46%), and also the previous quarter (up 15%);
  • The volume of paper sales for the quarter stood at 407 thousand tons, up by close to 25% in relation to the 1st quarter and 12% in relation to the 2nd quarter of 2021. It should be noted that the 1st quarter sales volume was held down by the need to replenish stocks and logistical difficulties;
  • The volume of pulp sales totalled 72 thousand tons, down by 7% on the 1st quarter, and 2% lower than in the 2nd quarter of 2021, again due to the need of pulp stocks replenishment and increased incorporation into paper;
  • The Tissue sales volume stood close to 25 thousand tons, down by 4% in relation to the previous quarter and by 1% YoY;

2 | 15

  • Production volumes grew in relation to the same period in 2021, with an increase of 7% in the pulp segment, 10% in the paper segment, and 3% in the energy segment. This growth allowed for increased efficiency in the use of some raw materials;
  • New emission on sustainable finance, with a value of € 150 million, maturing in 2028, under the Sustainability-Linked Bonds Framework. At the same time, Navigator proceeded with early repayment of borrowing of the same amount, maturing in 2023. The terms of the new issue are indexed to three ESG indicators envisaged in the Company's Sustainability Agenda, and also aligned with the United Nations Sustainable Development Goals;
  • The Navigator and Hamburg-based developer P2X Europe have signed a Memorandum of Understanding to create a unique and powerful joint venture, P2X Portugal, to develop a world-class production facility for industrial-scale production of non-fossil jet fuels or e-SAFs(e-Sustainable Aviation Fuels) - carbon-neutral synthetic kerosene, based on green hydrogen and biogenic CO2.

Analysis: 1st Half 2022 vs. 1st Half 2021

  • Turnover totalled € 1,142 million, driven by the upward course of prices, up by 60% over the same period in 2021; to note that 94% of UWF sales were on foreign markets; nevertheless, sales on the domestic market increased circa 13% in response to the paper shortage felt in the country along the semester;
  • The Company achieved an EBITDA of € 345 million and a margin over sales of 30% (up 9 p.p. on the same period in 2021), benefiting from improved efforts on efficiency and consumption, as well as the highly favourably evolution of sales prices established on international markets;
  • Net income for the first half totalled € 161.9 million, as compared to €64.4 million in the
    1st half of 2021;
  • Net debt has decreased significantly in relation to year-end 2021 to € 521 million, despite the payment of € 100 million in dividends in June, improving the Net Debt / EBITDA ratio to 0.95x;

2. LEADING INDICATORS

H1

H1

Change (8)

Million euros

2022

2021

H1 22/ H1 21

Total Sales

1,142.1

714.7

59.8%

EBITDA (1)

344.6

150.5

129.0%

Operating Profits (EBIT)

272.9

90.7

201.0%

Financial Results

-45.1

-10.1

345.1%

Net Earnings

161.9

64.4

151.3%

Cash Flow

233.5

124.2

109.3

Free Cash Flow (2)

174.2

121.5

52.7

Capex

34.3

32.8

1.5

Net Debt (3)

520.6

658.1

- 137.4

0.0

EBITDA/Sales

30.2%

21.1%

9.1 pp

ROS

14.2%

9.0%

5.2 pp

ROCE (4)

32.1%

10.8%

21.3 pp

ROE (5)

28.3%

12.8%

15.6 pp

Equity Ratio

44.2%

40.9%

3.3 pp

Net Debt/EBITDA (6)(7)

0.95

2.22

-1.28

3 | 15

Q2

Q1

Change (8)

Q2

Change (8)

Million euros

2022

2022

Q2 22/Q1 22

2021 Q2 22/ Q2 21

Total sales

649.8

492.2

32.0%

373.9

73.8%

EBITDA (1)

223.0

121.6

83.4%

79.9

179.1%

Operating profits

183.6

89.4

105.4%

50.6

262.7%

Financial results

- 40.4

- 4.7

758.3%

- 0.4

10135.5%

Net earnings

111.3

50.6

119.9%

40.9

172.0%

Cash flow

150.7

82.8

67.9

70.2

80.5

Free Cash Flow (2)

97.3

77.0

20.3

65.1

32.2

Capex

19.6

14.7

4.9

12.7

6.9

Net Debt (3)

520.6

517.9

2.7

658.1

- 137.4

0.0

EBITDA/Sales (%)

34.3%

24.7%

9.6 pp

21.4%

12.9 pp

ROS

17.1%

10.3%

6.8 pp

10.9%

6.2 pp

ROCE (4)

43.2%

22.1%

21.1 pp

12.1%

31.1 pp

ROE (5)

39.0%

19.1%

19.9 pp

16.2%

22.8 pp

Equity ratio

44.2%

40.6%

3.5 pp

40.9%

3.3 pp

Net Debt/EBITDA (6)(7)

0.95

1.28

-0.33

2.22

-1.28

  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 last -1 months
  6. (Interest-bearingliabilities - liquid assets) / EBITDA corresponding to last 12 months
  7. Impact of IFRS 16: Net Debt / EBITDA at 30/06/2022 of 1.44; Net Debt / EBITDA restated at
    30/06/2021: 2.40;
  8. Variation in figures not rounded up/down

3. ANALYSIS OF RESULTS

In the first half of 2022, The Navigator Company recorded a turnover of € 1,142 million, with paper sales accounting around 71% of turnover (vs. 70%), pulp sales 10% (vs. 11%), tissue sales 8% (vs. 10%) and energy sales 11% (vs. 9%).

Pulp prices at historically high levels

The benchmark index for hardwood pulp in Europe - PIX BHKP in euros - was up by 25% by the end of June in relation to the start of the year, to 1,260 €/ton, with an increase of approximately 47% in average prices in the first half of 2022 vs. the first half of 2021. It may also be noted that that the increase in the pulp price was more significant in euros than in dollars in view of the dollar appreciation against the euro over the first half. The benchmark index in China for hardwood pulp rose by 46% from the start of the year to the end of June, to 842 USD/ton, an all-time high, in line with the peak levels recorded in 2010.

The Pulp sector is enjoying unprecedented buoyancy with prices reaching historically high levels worldwide. Albeit temporary, the acute imbalance between supply and demand in the Pulp market continues to drive prices upwards.

Several factors are contributing to the current imbalance: in Northern Europe, the prolonged strike over the first four months of the year removed more than half a million tons from the pulp market, with an ongoing impact throughout the 2nd quarter; the concentration of annual maintenance shutdowns around the world in the 1st half; delays on the start of new

4 | 15

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

The Navigator Company SA published this content on 22 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 July 2022 10:13:02 UTC.


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Antˇnio JosÚ Pereira Redondo Chief Executive Officer & Executive Director
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