Earnings call transcript: Navigator’s Q4 2025 results show strong growth

Navigator (ELI:NVGR) Company (NVG) has reported robust financial results for Q4 2025, highlighting a year-on-year increase in revenue and net profit. With a market capitalization of $2.71 billion and a notably low P/E ratio of 4.89, the company has expanded its international presence and made significant strides in sustainability investments. According to InvestingPro analysis, Navigator has maintained consistent profitability over the last twelve months. Despite the absence of specific earnings forecasts, Navigator’s financial performance and strategic initiatives have positioned it well for future growth.

Key Takeaways

• Navigator’s total turnover increased by 7% year-on-year, reaching 2.09 billion euros.
• Net profit rose by 4% compared to the previous year.
• Tissue paper sales surged by 55%, and packaging sales volume more than doubled.
• Navigator invested 141 million euros in CapEx, focusing heavily on sustainability.
• The company expanded its operations in the UK and Spain.

Company Performance

Navigator Company demonstrated strong performance in Q4 2025, with a 7% increase in total turnover, reaching 2.09 billion euros. The company’s net profit also saw a 4% rise, indicating effective cost management and strategic growth initiatives. Navigator’s expansion into new markets and its focus on sustainability have bolstered its competitive position, particularly in the premium paper and eucalyptus kraft market pulp segments.

Financial Highlights

• Total (EPA:TTEF) turnover: 2.09 billion euros (+7% year-on-year)
• EBITDA: 547 million euros (26.2% margin)
• Net profit: 287 million euros (+4% year-on-year)
• Net debt to EBITDA ratio: 1.13
• Proposed dividend distribution: 175 million euros

Outlook & Guidance

Navigator anticipates a stabilization of pulp prices and expects continued growth in paper demand. The company is considering investing in a new tissue mill and reconverting PM3 for flexible packaging. Navigator projects normalized CapEx to be around 120-140 million euros from 2026, reflecting its commitment to sustainable growth.

Executive Commentary

Antonio, an executive at Navigator, stated, "Navigator has once again proved to be in a unique competitive position in Europe." This highlights the company’s strong market presence and strategic advantages. Another executive, Nuno, emphasized, "We are always obsessed with performance and value-creative growth," underscoring Navigator’s focus on innovation and sustainability.

Risks and Challenges

• Potential increases in wood prices across Europe could impact production costs.
• Fluctuations in global pulp demand may affect revenue.
• Economic uncertainties in key markets could pose challenges to growth.
• Competition in the premium paper segment remains intense.
• Regulatory changes related to sustainability could require additional investments.

Navigator’s Q4 2025 performance reflects its strategic focus on innovation, sustainability, and international expansion. The company’s proactive approach to market trends and its competitive positioning are expected to support continued growth in the coming years.

Full transcript - Nuveen AMT Free Municipal Credit Income (NVG) Q4 2024:

Conference Moderator: Good afternoon. We welcome you to the Navigator Company Full Year Results twenty twenty four Presentation. During the presentation, all participants will be on a listen only mode. I’ll now hand the conference over to Anna Kania. Please go ahead.

Anna Kania, Presenter/Moderator, Navigator Company: Ladies and gentlemen, welcome to The Navigators Company conference call and webcast for the fourth quarter and full year results. Joining us today are the following directors, Antonio Frondu, Frondu, Fernando Rujos, Nun Stancus, Joao Lei, Soriba Almeida and Antonio Kirin Suraj. As usual, we will start with a short presentation followed by the Q and A session. You can access the presentation through the links on our website and you can also send your questions via the webcast platform. Antonio will begin by presenting the main highlights for the year.

I will now hand over to Antonio.

Antonio, Executive/Director, Navigator Company: Thank you for joining us today. I’m very pleased to be here once again and to share with you our fourth quarter and full year results. As you’ll see in today’s presentation, 2024 was rich in initiatives and achievements that reflect our commitment to growth and diversification. Navigator has once again proved to be in a unique competitive position in Europe in terms of the efficiency we reach it manages mix of business and within each business, its product, market and customer mix. Navigator has consistently shown flexibility in adapting to different market dynamics, focusing on value creation, growth and diversification as once again was the case this year.

I will start with Slide four for an overview of the year. Coal prices saw a sharp increase in H1 followed by severe correction in H2, contrasting with the stable paper price. Orders for improving free paper and packaging improved, especially in the first half and the end of the year. Tissue paper remained strong throughout the year. Navigator ended 2024 with a total turnover of around €2,090,000,000 up 7% year on year, the company’s second best results ever with the new business tissue and packaging already contributing 26%.

EBITDA totaled EUR $547,000,000 with an EBITDA margin of 26.2%. Again, the company’s second best result ever in both cases turnover and EBITDA even when not including the two recent acquisitions in the tissue segment in Spain and in The United Kingdom (TADAWUL:4280). Thanks to leading price increases, volume growth in most businesses and proactive management of mixes, product, brand, customer and geography, as well as a continuous focus on cash cost management. In fact, cash costs were again significantly reduced with 2024 presenting an accumulated year on year reduction of between 210% depending on the business segment. We continue to deliver our diversification plan following the successful integration of tissue here concluded last year, we acquired Accrol in UK during the second quarter.

We also continue to diversify the packaging business by doubling the volumes and expanding our customer base to existing and new applications, in particular in the flexible packaging segment. These new products for new final applications were launched during 2023 in an extensive program of customer presentations and trials, and are now generating more significant sales volumes. In the packaging segment, Navigator has also start up production at its new industrial unit for molded fiber packaging in Arvaro. This is not only the largest operation in Europe, but also the first in the world to produce this type of packaging in a vertically integrated unit using Acronitos fiber. A few days ago, we achieved another very relevant milestone.

We are now the first molded fiber producer in the world compliant with BFR 36 and EU Nineteen Thirty Five Thousand of board for food contact applications. All this while speaking to conservative financial quality. The net debt to EBITDA ratio stood at 1.13, further consolidating the financial strength displayed by the group. Turning to Slide five, we can clearly see the resilience of Navigator business model. In fact, Navigator has shown exceptional stability in delivering results even in a highly volatile market.

Navigator leverages its unrivaled side, cost efficiency and strategic focus on premium and new branded sales, which is strong and sustained results. Business diversification into high quality shoe papers and innovative packaging solutions together with investment across all mills in efficiency and environmental improvement ensure long term profitability. This robust positioning enables Navigator to consistently outperform its peers even in challenging market conditions, underscoring its resilience and competitiveness. Turning to Slide six, please. You can see a hallmark of Navigator’s strength that lies in its ability to generate substantial cash flows, driven by its vertical integrated model and leadership in pulp and enconton’s paper production.

These cash flows have been strategically reinvested to grow and diversify the business, while continuously paying shareholders a robust dividend. Navigator’s business results have been boosted by the recent international expansion and diversification of its asset portfolio. The new business percent of the turnover. This business diversification stems from Navigator’s growth. Navigator’s turnover and EBITDA continues to grow with a compound annual growth rate of approximately 3.54.4% respectively from 2017 to 2024.

Encore delivery turnover remains stable from 2017 to 02/1954. While we managed to significantly improve NQ2 three margins and in addition with less NQ2 three volumes, but better margins, we have added pulp sales that we didn’t integrate with benchmarking large margin levels for an European based hardwood producer. I will now hand over to Ron who will provide more details on responsibility there.

Ron, Director/Executive, Navigator Company: Thank you, Antonio. Turning to Slide seven please. As Antonio commented, responsible investment for climate and nature and for society with a positive impact on the profitability of our business, securing our long term growth while we build the sustainable future for everyone. Navigator’s decarbonization roadmap is ambitious and requires action in a huge number of locations and processes across the company involving around 23 initiatives of which 17 are supported by the recovery and resilience plan and run by the innovation fund, European Union Fund for Climate Policy, focused in particular on energy and manufacturing. We are also working on water efficiency with investment of more than million to cut water and use and promote water recirculation.

Since 2019, specific use of water in operations has fallen by around 13%, a significant step towards achieving the target of 33% reduction by

Nuno, Executive, Navigator Company: 02/1930.

Ron, Director/Executive, Navigator Company: Navigator is likewise committed to investing strategically in digital technology and cyber security ensuring its operations are resilient, efficient and innovative, evolving to face the challenges ahead in its business and with competitive advantage when promoting sustainable development. In the past two years, the Company has worked on more than 30 digital projects using artificial intelligence, machine learning and artificial vision in different business areas and segments bringing rewards in terms of lower production costs, optimization of processes, customer satisfaction and workforce productivity. Our commitment to health and safety remains firm. We continue focused on our Mission Zero strategy. This year we achieved the lowest ever accident rate down by 40% since 2020.

We see this as an historic milestone reflecting the progress we have made in the company’s stronger safety culture. Aware of the need to manage natural resources responsibly, Navigator has made remarkable strides in its contribution to management of Portugal’s forests, namely by setting up the Forestry Producers Club. Since November 2023, the club has grown to more than three eighty five members representing combined turnover of more than million and accounting for more than 3,100 direct jobs. This club is a pioneering and unique program for strengthening relations with our partners and making an important contribution to a significant increase in Portugal’s forestry yields and wood output by disseminating sustainable and active management practices in the country’s woodlands. We seek to reinforce our strategy and our ability to conduct our operations successfully and sustainably by building partnerships with different stakeholders and cooperating with organizations that share our values, creating a positive impact on society, the climate and nature.

Antonio will comment on financial highlights. Antonio, please? Turning to Slide eight. Moving on to the financial highlights. Net profit stood at €287,000,000 up 4%,

Antonio, Executive/Director, Navigator Company: also the second best ever result achieved. CapEx totaled €141,000,000 half of which is classified as value added sustainability investment, making strong contribution to reduce future costs. Net debt increased by 128,000,000 in relation to year end 2023 after significant outflows, namely the payment of million for Accords acquisition, the distribution of million and the strong level of CapEx, value added CapEx as Ron also mentioned, while maintaining a strong financial position with the net debt FTDA ratio nearly 1.1. Turning to Slide nine, we can take a closer look at the main impacts on EBITDA in a year on year comparison. Although still below last year’s level, market prices in M.

Potenti’s pre and tissue drove a net worth price comparing second half of twenty twenty four versus second half of twenty twenty three, reflecting price resilience. In terms of volumes sold, we saw an increased volume of printing and packaging paper sales, up 8%, thanks to the faster pace of new orders up to May and again at year end as I’ve mentioned before. Drop in volume of pulp sales down 16% due to increasing corporation in paper product was offset in part by higher price year on year at 13% and an increase in issue sales at 55% driven by growth in sales of finished product and by the additional capacity provided by our EHEA tissue mill as from second quarter of twenty twenty three and by The UK tissue operations as from May 1. As it was mentioned, there was again a significant reduction in cash costs between 210% in both paper segments, printing and writing, issues and packaging. Stock of costs ended up higher than in the same period last year due to the inclusion of both EMEA and UK unit and employee profit sharing as well as higher redundancy costs and the workforce visualization program and non recurring costs related to the Accol acquisition.

However, when the new acquisitions are excluded, fixed costs not including personal costs rose by well under the rate of inflation for the year. A comment from the fourth quarter The results were brought down by the longer than planned annual maintenance shutdown at one of the mills and by a series of one off events in our energy asset. Namely problems identified in the course of a planned shutdown of our largest power generation turbine, a breakdown in the pile oil supply transformer interrupting our supply to the national grid and end planned shutdowns of two biomass coils. This sequence of events relating to situations which have since been solved, result in a significant transaction in power sparrow and increased purchases of natural gas and electricity during a period close to peak prices for this commodity. In addition, the drop in pulp price together with higher price for chemicals also energy related had as well a relevant impact on results for the year.

Turning to Slide 10, we can look to our financial position and specifically our debt maturity profile. Over the year, Navigator repaid debt of nearly €100,000,000,000 and at the same time, took on a significant volume of new long term financing of more than €330,000,000 As a result, Navigator continues to enjoy ample liquidity above €500,000,000 An appropriate level of average debt liquidity with rational risk aggregate repayment and approximately 60 of the total debt tied to sustainability versus 40% of our total debt issued on a fixed rate basis in a request to maintain low financing costs. It should be noted that despite the new facilities contracted incorporating higher market interest rates, our average cost of financing by the end of the year remained low at approximately 2.4%. I will now hand over to my colleagues for a brief commentary on each of the business segments, starting with Guirino with a comment on the price. Guirino, please?

Thank you, Antonio. Moving please to Slide 12, We have the evolution of pulp and paper products. After the first half of twenty twenty four, marked by the strength of the benchmark index for hardwood pulp price in Europe in Polish, which rose to record levels in early July to $14.40 dollars per tonne. The second half brought a severe correction in prices in China, and in the year in China at $545 per tonne. This slump in prices confirm the 2024 downward cycle as the fastest and sharpest the risk in recent years.

As a consequence, prices also adjusted downwards in Europe in the second half year, most markedly in the fourth quarter, ending the year at $1,000 per tonne. This volatility in the pulp price contrasted markedly with the resilience in benchmark prices for printing and writing paper, which were very stable during the year as Antonio mentioned in the beginning. The benchmark index for office paper in Europe stood at at the December, slightly from its level at the start of the year, which was October, pointing again to the resilience of pipe price in Europe. We noted that the index was the year of 2024 at an average price of per ton, representing an increase of 31% over pre pandemic levels, which was per ton between 2015 and 2021. If we move now to Slide 13, we have summarized the nine developments in the novel.

Apparent global demand for printing and writing paper grew by 0.5% across all segments with demand for uncotable free papers up to 0.3%, coated papers growing by 0.5%, whilst mechanical papers experienced growth in demand of 1.2%. In Europe, apparel demand for uncoated printing and writing papers grew by 8% year on year with the strongest growth in paper for printing industry 10% followed by office paper 8% and reels for the paper processing industry growing by 5%. In The United States, demand dipped by just 0.2%, whilst in China, we recorded a growth of 2% up until November 2024. Significantly, the NCCOG3 has remained the most resilient segment for years, especially due to its versatile end users. Unlike other grades, where demand has slowed slumped since 2020, and Kotoku three has been practically flat, declining 0.58% a year as compared to a drop of 4.1% in coated wood free and 6.9% in papers made from mechanical posts.

All of these during the period of 2020 to 2024. To be noted that in challenging markets, own brands and high value segments provide extra protection for Navigator’s results. In fact, premium product sales increased their share business this year, while mill brand products kept their record high share. In fact, premium products boost margins by up to 80% more in relation to economic growth. Now I’ll hand over to Nuno who will give you some market context on both.

Nuno, Executive, Navigator Company: Thank you, Quirino. Turning to Slide 14, as Quirino just mentioned, the second half of ’twenty four brought a strong price correction in China and in Europe. On the demand side in Europe, pulp consumers performed well this year, especially in printing and writing and packaging paper industries. We then quote up 8% year on year, as we suggested and Isshu up 7% year on year. On the supply side, new capacity in Chile and Uruguay which started in 2023 and the startup of new production capacity in ’twenty four in Latin America and China both led to a gradual increase in supply, especially over this period, putting downwards pressure on prices.

Global demand fell by 2% for bleached chemical pulp. World demand for hardwood pulp fell 1% with eucalyptus pulp growing by 1%. It is worth noting that worldwide eucalyptus pulp represents almost half of all pulp in the market and nearly 8% of hardwood pulp. Eucalyptus kraft market pulp was an innovation used by the Navigator company in the 50s that became a world standard in hardwood pulp. Looking at tissue performance on Slide 15, demand for tissue paper remains strong, up 5.4% in Western Europe boosted essentially by the recovery of the Away From Home segment and growing household spending power.

Navigator’s tissue sales were up by 55% year on year, driven by the additional capacity provided by Navigator tissue HEIA from the second quarter of ’twenty three And by Navigator, this UK from one May of ’twenty four. Sales outside Portugal in our tissue business accounted for 79. Sales grew down into 97% finished products and 3% reals, representing an improvement in the mix of three percentage points year on year. In terms of client segments at home or consumer or retail, it has grown currently accounting for around 80% of our sales while away from home and wholesalers account for the remaining 20%. Navigator also differentiates itself through high quality tissue papers and cutting edge innovation.

Our tissue papers have received awards and market recognition. The five stars award for the fourth year running, AMOS has won the five star award in the Melt Pop in the Napkins category with its per four d product in the naturally soft range. This award shows that Portuguese consumers are interested in a more sustainable high quality solution featuring softness indicated in napkins provided by our natural soft fiber technology. The naturally soft range is made up of dermatological tested products made from 100% virgin fiber, free of chemical bleaching agents making more efficient use of certain resources such as wood, energy and water. Consumer Choice 25, number one in toilet paper for the first time the Ammos brand also won the title number one brand in 2025 consumers choice in the toilet paper category.

Finally, Product of the Year awards in The UK. In 2024, we launched a multipurpose kitchen roll range in The United Kingdom under the iconic Flash cleaning brand made from paper which is 100% FSC certified. Flash kitchen roll combines strength and absorption providing consistent and reliable cleaning power. In ’25, Flash Kitchen Roll was voted Product of the Year in the domestic papers category of the Product of the Year Awards, the largest consumer survey in The United Kingdom and on product innovation. Our tissue paper provides a higher profit margin than our competitors.

Dori Val will now comment on main development in packaging.

Dori Val, Executive, Navigator Company: Thank you, Nuno. Now turning to Slide 16. After a strong spot of correction during 2023, craft paper markets posted a growth in Europe in 2024, reaching the peak volumes of 2022. Navigator sales volume more than doubled year on year as Antonio mentioned. With 70% of our sales in Europe made in Iberia, France, Italy and Germany and the remaining 30% in overseas markets where Turkey and North Africa are our leading market.

This performance has been supported by investment in innovation and market trials into several new applications, above all in the flexible packaging segment. These products were launched during 2023. Indeed, looking at the breakdown of sales by segment since 2023, we have successfully reduced the segment’s dependence on bags, strategically increasing sales in the flexible packaging and box, rigid packaging segments. This change has enabled us to diversify our portfolio and position ourselves more strongly on the growing flexible packaging market. Avogator has therefore continued to grow its customer base, which already numbers close to 300 clients in a sales operation 100% basis on its own brand, G Craft.

Let’s turn to Slide 17 to move on to the molded pulp project. Last year, the new industrial unit in Avedo for molded fiber packaging started at production. The first line was commissioned in Q4 ’twenty four and the remain three lines in Q1 ’twenty five. With seven products for single use applications in the food sector, which are fully recyclable and or compostable, tableware such as plates, bowls and cups takeaways such as takeaway packaging for the food retail and Vareca channel and food packaging such as laminated pouch for meat and red meals, boxes for fruit and vegetables. These products offer production flexibility and scalability for exploiting the various opportunities opening up for replacing single use plastics and aluminum.

Alongside this, work has proceeded on developing new molded products in partnership with national and international clients and on researching and developing new sustainable barrier property solutions as well as drive soft commercial products. In an important breakthrough already this year, geographic bio shoot loaded fiber products achieved compliance certification for food contact under not only European regulation, but also with BFR 36 recommendation, Youshay Ziga. Graft BioShoe is the first loaded fiber product globally compliant with these recommendations. This certification enable us to market products for the food segment for contact with fatty, moist and dry foods applying to our entire tableware and takeaway. This new avenue for growth falls within our responsible business strategy through which we are seeking to compete to a more recognized society.

We are seeing the crucial role of well managed planted for us in the transition from a linear fossil model with no future to a circular by economy model, which is carbon neutral and eco friendly. I now hand over to Antonio for our part of the full

Antonio, Executive/Director, Navigator Company: year results. Thank you, Donipao. Let’s turn to Slide 18. 20 20 four reported once again strong performance. By focusing on efficiency and cost management, we achieved a decent reduction in cash costs across all both and sector segments, trending and writing, issues and packaging by 10% to 10% year on year and by 10% to 14% from the peak levels of late twenty twenty two, although they perceive higher than pre pandemic.

We continue focused on the core business as well as on business transformation and innovation. That can be seen in our accelerated CapEx that reached 141,000,000 units. One of Navigator’s key strengths is its capacity to produce CDs in cash flows. Thanks to its virtual integrated model and its leadership in both and then control preferred products. These cash flows have been strategically reinvested in Ziaras by the region, particularly in this segment, where navigator also the same shape itself to high quality issued papers and cash engaged innovation.

This year, we successfully went ahead with the acquisition and integration of navigator tissue repay. Additionally, the cash flows supported investment in the new and innovative packaging business and our packaging segment continues to move in new development on paper products. Sales volume more than doubled, boosted by 23 flexible packaging launch. And we started up an innovative unit for integrated production of molded fiber packs, designed to replace introduced plastic packaging and aluminum into food service and food packaging, as well as investing in operational and environmental efficiency group and the decarbonization of all our industrial business. These investments in efficiency and environmental improvement aim to ensure the longevity and continued exceptional margin generation of our world class state of the art paper and tissue notes.

This transition reflects a commitment to leveraging our core expertise while expanding into adjacent markets with high growth Navigating workforce today is stronger and more diverse with nearly 4,000 employees, 40 different nationalities, 10 transaction clients in Switzerland, Portugal, Spain and UK and the Forest Project in Mozambique. Let’s move on to Slide 20 with a few words. After two years, originally surpassed initial expectations, twenty twenty five gains presented challenges anticipated in Us, driven by ongoing conflicts, economic volatility and shifting global trade growth. In the pulp sector, prices in China and Europe are anticipated to repulse, a trend that has already begun. On the supply side, the ramp up projects in 2024 and 2025 will increase the availability of pulp to market and so with first market power.

However, on the demand side, levels of pulp consumption in China and in Europe should increase year on year. March earnings are forecasting 3.2% to 6.1% growth. We remain positive for million barrels with a value limited number of coal projects set to start in 2026 and 2027. In parallel with new cost inflation in many jobs and the very clear scarcity anticipated in Asia in the coming years. In the paper segment, the pace of new orders is expected to accelerate as it’s already been installed.

On the slide side, there is potential for further reduction in capacity. Already in Q1 ’twenty five, close to 7% of renewable energy capacity has been taken off to market. And in U. S, approximately 107,000 tons per year of tank capacity grows to 6.6% of oil capacity has been taken off the market due to curtailment for IP’s Georgetown River. These changes combined with the level of cash costs to higher than $15,000,000 will continue to stand slightly above both levels.

In China, new capacity is expected that given the low capacity utilization rates in the Chinese industry and rising low prices, the possibility of further streamlining of supplies cannot be ruled out. In the Tissue segment, demand continues at very certain level. In this segment navigator continues to leverage synergies driven by business growth, particularly the acquisition of the Gea last year and with the new acquisition of EK plus BRL. Business diversification through Cision packages, operational sector utilities in paper and both and within different types of paper, the dynamic management of different fleet within each segment, production adjustment and integration commercial strategy combined with rigorous problems to control costs as well as the company’s strong financial position have enabled us to deliver consistently strong and stable reserves in challenging market conditions. It’s worth pointing out that we are now a quite different company from what we were.

We boost Europe’s stock and productivity business, which has continuously shown very distinct demand dynamics from other trading and right industries. We have proven we could sell our growth at lower discounts with solid margins. Our risk weighted tissue business model outperforms competitors with much stronger market experience and we are building a diversified, innovative and growing packaging. By combining deep industrial expertise with the forward looking approach, Navigator continues to pioneer sustainable practice that aligns with global trends and consumer demand. These diversified portfolio grew in a position of excellence and innovation, positions the Navigator countries as low reserve with sustainability driven growth and value creation.

Let’s move to Slide ’21 with a few words on this. Proceeding Navigating’s performance in 2024, the Board of Directors is proposing the general listing of shareholders distribution of dividends of €175,000,000 corresponding to per share or 34.669. The fourth of that equity will also compose employee profit sharing on the period of up to 90,000,000. The proposed distribution of dividend does result in an initial dividend of €75,000,000 after €100,000,000 distributed in advance on the 01/14/2021. A proposal of paying for a profit sharing of €8,000,000 to €16,000,000 after the €3,000,000 distributed in advance in December.

Thank you.

Anna Kania, Presenter/Moderator, Navigator Company: Thank you, Antonio. This ends our presentation. We are now open for the Q and A session.

Conference Moderator: Thank you. Ladies and gentlemen, we will now begin the Q and A session. And our first question comes from the line of Alberto Speracin from JB Capital. Please go ahead.

Alberto Speracin, Analyst, JB Capital: Hi, good afternoon and thank you for taking my questions. I have three, if I might. First is on office paper. How do you see demand after that small recovery you guide to in the first quarter? And how should we think of office paper prices throughout the year 2025?

The second one would be on EBITDA margins, considering that fourth quarter was impacted by some one offs related mainly to energy assets. But also taking into account lower prices year over year. What are your current expectations for margins in the full year 2025?

Antonio, Executive/Director, Navigator Company: And the last one would be

Alberto Speracin, Analyst, JB Capital: on capital allocation. So we still expect CapEx in 2025 close to €200,000,000 and are you still considering inorganic growth opportunities in tissue and packaging? If you could please elaborate on this, it would be great. Thank you.

Antonio, Executive/Director, Navigator Company: Okay. Just for sake of clarity, I will try to repeat the questions you have raised. The first question is about office sector demand and how do we see demand going forward, so a reflection of demand during 2024 and how do we see it going forward in 2025. The second question is about guidance, EBITDA margin for 2025. The third question is about CapEx 2025 and what the expectations we have for CapEx.

And the last question is about new opportunities on each. Is this right?

Antonio, Analyst, AS Independent (LON:IOG) Research: Exactly. Thank you.

Antonio, Executive/Director, Navigator Company: I’m going to give some elements of response in each question, except the second because we don’t give guidance on the projected EBITDA margin and my colleague, Luc Fonzo. Regarding office paper, actually the demand in 2024 was quite impressive. And as we said in previous calls, office paper has not been raised with the lowest performance within the disciplined facilities, graphics papers, graphics papers in column sizes and growth. Having said that, it’s extremely difficult under the present volatility to give very precise indications on where demand is going to stay. The best we can tell you is what we see in the beginning of the year in this rather far.

I’ll ask Quirell to fill in with some more details. Yes, fully agree, Antonio. So last year, as I mentioned, the profits paper grew 8%. It was actually, let’s say, around the average of the graphical industry portfolio side has increased a little bit more than this. In Europe, 10 Percent and then yields, a little bit less, but still a little bit of a 5%.

We saw a little bit of a decline in Q4 of last year, but the beginning of this year has been particularly better in terms of harvest intake and particularly in cut size. So we see beginning of the year more robust in terms of demand, particularly in cut size. Great. Moving to the second question. As I said before, we don’t give guidance for future EBITDA margin.

We can speak about it far. In the last fourteen years, our EBITDA margin has been 25% with a minimum of 21% and maximum of 30% and a standard deviation of about 3%. So this is a good indication of the range in which countries typically. Moving to third question about CapEx 2025. CapEx 2025 will be ballpark similar to 2024 slightly below 2024.

I would like to remember that during the 2023, ’20 ’20 ’4 and 2025, we have a significant increase in our CapEx in several areas of business, but mainly on decarbonization and also on packaging, taking advantage of the resilient plan of Europe, so the unit generation plan. And following what we have shared in previous conference calls, we have a meeting project that could be not far from for those projects. And out of this million, we expect to receive rent of around 40%, so around million.

Dori Val, Executive, Navigator Company: So we will

Antonio, Executive/Director, Navigator Company: conclude large majority of those projects during the 02/1955. So 2025 will not deviate much from 02/1974 and 2023. From 02/1956 onwards, we plan to go to more normalized levels and I do like to remember that normalized levels are typically they would typically for the previous perimeter around 120,000,000 units. Units, new and large perimeter, so most likely will be back in the boat, we will not mitigate much from this boat partnership. Regarding your last question of new opportunities, I will be very likely comment I will ask to you to further develop ideas.

As we said before, the acquisition that we had in UK is a converter, a converter that buys rules in the market, both Europe and outside of Europe. The capacity of the installation that we have been paid is more or less equal to the capacity of two tissue mills to double rib tissue mill. So our I would say more of the next move that we are of course already studying and preparing is a decision to install a tissue machine to feed half of the needs of our UK operation. Nevertheless, I would like also to point out that our capacity in Spain, we have also more opportunity capacities and paper capacity, so we have the capability to integrate more. Of course, we will look to all opportunities that make sense to us, but the priority is very clear is the integration of UK into our existing business and the developing of a new business.

Nuno, Executive, Navigator Company: We are always very much set with performance improvement and with growth. So, but also only value creative growth. We don’t set actually target for specific growth movements. We only make them when we are very comfortable with value creation that is associated with that growth movement. And I think as Antonio mentioned, currently we want to grow our current operations and possibly grow our cremation production operations as well.

We’re always obsessed with the performance of Google (NASDAQ:GOOGL), value creative growth. That’s the story so far over the last ten

Conference Moderator: years. The next question comes from the line of Bruno Vesa from CasaBank. Please go ahead.

Bruno Vesa, Analyst, CasaBank: Yes, good afternoon. So thank you for taking my questions. The first one, just looking to the numbers released, we see a relevant increase in terms of depreciation, amortization and impairment losses in nonfinancial assets, more than million year on year. Just trying to understand here if this is all explained by the change in the perimeter of the company or if there is any kind of one off here and whether this figure of around 165,000,000 or 170,000,000 could be a good reference for 2025. So this will be the first question.

The second question, related with the one off costs that you saw in the energy business. So if you could try to if you could quantify those one off costs and give some color on that will be very useful. And the third question on the evolution of paper prices since December and particularly during the month of January, the relevant decline that we are seeing at a time when the shutdown of capacities is already or should at least already have started to have an impact in the industry. I’m trying to understand your view on why paper prices have been going down this fast. Is there any kind of lack of discipline in the market, something that we were not used to see over the recent years?

So trying to have a bit more color from you on the recent paper price evolution. Thank you very much.

Antonio, Executive/Director, Navigator Company: Okay. Thank you for your question, Bruno. Let me see if I can rephrase them to make sure we understand. The first one you’d like to have some insight about the increased depreciation you saw on our 2024 accounts. The second one is about if you are able to quantify our we’re not talked before last year on the energy asset.

And your last question is about the evolution of paper prices, shutdown of capacity and discipline on the market.

Bruno Vesa, Analyst, CasaBank: That’s correct. Thank you very much.

Ron, Director/Executive, Navigator Company: Okay.

Antonio, Executive/Director, Navigator Company: I will start by question number two, which is probably the discipline. Yes, of course, we tend to quantify the one off costs that we have, but we are not going to share that translation by all. Regarding depreciation of assets, the depreciation of assets is all practically all justified by the new and large perimeter. Let’s not forget that the perimeter has not only new equipment on the existing mills as well as the new companies that we’ve acquired, one with one site in Spain and the other one with five different sites in Spain. Regarding the evolution of paper price, I will make an introductory comment and I’ll ask Lille to complement.

I think, unfortunately, the rule of this market of a dish packaging is lack of discipline. What we have in the last few years was clear leadership in EcoBlue three from navigator to try to increase market speed. And I think in a very large extent and you can see that from our room prices, we have managed to implement that. Not every party has followed and we saw, I would say, a couple of events. One, the fact that some non integrated producers took advantage of the reduction of both price to try to gain temporarily some market share and they drop their selling prices.

And secondly, much to our surprise, I should say, a significant increase of imports, of cheap imports from overseas. So they had an effect and I believe that will be felt in the beginning of this year. Let’s not forget as well that sometimes we mix up the prices because of mix effect. So if one company sells more or if one company sells more low end cut size portfolio of oil ships, this has a direct impact on average sector prices even if prices of premium and standard grades are kept at higher level. Damian, can you feed in some more information please?

Yes. This is very much the case in Europe. So the comments so far, I think the question is more around Europe. We did increase prices twice in the last year, in April and then again in July. Mostly, our reading is that we were not followed by, so we were applying the price increase, but the market the rest of the market did not move.

And so we witnessed some softening towards the end of the year. And as Antonio highlighted, we also see that most likely during Q1, this impact will be felt still and it’s available in the indexes, which declined a little bit during beginning of Q1 this year. But now over the last few weeks more stable. Indeed, the absolute price level is very interesting in Europe. So it is attracting imports, although logistics is not easy from, let’s say, the main regions of import, which is Asia nowadays.

So I guess this is the study for Europe. In The U. S, it’s a bit different. We see already moves to increase prices over there. So there is a move in the market to increase prices in the beginning of the year.

So it’s a different situation over there. Just to conclude, having said all that, we anticipate that prices will keep significantly higher than the pre pandemic levels. We should not forget that the cost base of the industry has significantly increased. If you look to wood price across the world, particularly across Europe from Iberia to Central Europe and Scandinavia. Wood prices are significantly more expensive now than the world recently in the year ago.

Energy is more expensive, Chemicals are more expensive. And in spite of what I said about discipline, the market is still and I believe cannot be humble here. I believe much because of the work of navigator, there is still a higher discipline than we have. So we expect prices even if we see like the index through slight degradation, we expect prices to be significantly above the pandemic.

Conference Moderator: The next question comes from the line of Antonio Soladas from AS Independent Research. Please go ahead.

Antonio, Analyst, AS Independent Research: Good afternoon. Thank you for the presentation. Thank you for taking my questions. So I have two or three questions. First one is on gross margin that performed quite well.

So you can comment on wood chips prices and wood prices. So you already mentioned that prices now are higher than pre pandemic, but regarding the recent part, how wood prices are? The second question is related, you mentioned that you are not going to say what were the levels of extraordinary costs related with energy. But should we expect for the coming quarters that external supplies and service remain around 120,000,000, 1 hundred and 20 5 million or not? I don’t know if you want to comment on this.

And last question. So I understood that the Tissue decision about mill, the new mill, which you write, should be taken over the coming year, over this year. So just to confirm it. Thank you very much.

Antonio, Executive/Director, Navigator Company: Okay. Antonio, thank you for your questions. I’m going to repeat them. I’m not sure if I fully understood the second one. But your first question, in fact, I understand correctly, is if you’d like to have a little bit more light regarding wood costs, wood price.

Antonio, Analyst, AS Independent Research: Yes.

Antonio, Executive/Director, Navigator Company: Your second question, I think I didn’t got it completely, is about the evolution of cost of external service supplies.

Antonio, Analyst, AS Independent Research: Exactly. So it’s a fit should expect the same kind of figure that we had before this quarter.

Antonio, Executive/Director, Navigator Company: Okay. And your last question is, is the decision about the new tissue mill, we can expect it this year or not?

Antonio, Analyst, AS Independent Research: Got it. Thank you very much.

Antonio, Executive/Director, Navigator Company: I’m going to give a few elements on the different answers and I’ll ask my colleagues to compliment. Regarding wood price, we saw an inflation of wood price across all Europe from Portugal to Scandinavia, both hardwood and softwood, coating by memory in Portugal, the cost increase from 16% the figures I have in mind are from 16% to 20%, twenty four %. They are not far from 40%, thirty plus percent. But in Central Europe and Scandinavia, the increase are even above that. So I would like to Ron to comment in more detail.

Ron, Director/Executive, Navigator Company: Yes, I confirm that those price rises that we’ve been assisting in most recent years. In terms of the main markets, European markets in Finland, Sweden and as Poland for hardwoods and also for softwoods, we’ve been assisting to price raises that since 2016 up to now are over or reaching 50% increase and in Portugal close to 30%. That’s a fact that this is not only a price the dose price are not rising only in Portugal. We believe and we know that this is also happening in South America mainly because of the higher land prices and the cost of the operations. And this is what we’ve been seeing so far.

And for the time to come, we don’t expect to watch higher price increases. We believe this will be more or less stable for the coming year.

Antonio, Executive/Director, Navigator Company: Sorry, please go on.

Nuno, Executive, Navigator Company: Thank you very

Antonio, Executive/Director, Navigator Company: much. So just repeating what we said during the call. And as Juan rightly saw mentioned South America, but we also believe that in Asia, this scarcity of wood is going to be even worse. There are significant number of projects that are now either under development or on paper that we have doubts if those projects will have enough wood or wood at the price that they can operate. Regarding your second question about the thermal supplies of services, I will do not comment specific figures, but I probably can share the following and I will ask Boris Hout help me out and give further insight.

And you know that we pay our direct employees average salary that are significantly above the Portuguese average value. Significant number of external supplies are based on if not minimum wage, close to minimum wage. As minimum wage is increasing faster than average rates, we can expect to have some pressure on some of these external supplies. At the same time, materials, which is the second big part on external supplies are significantly more expensive now than they were a couple of years ago. So what we are doing, and I think we have also mentioned that during the conference that our maintenance and functioning costs are increasing at the level that is lower than inflation.

Gerrit Bauch?

Dori Val, Executive, Navigator Company: Yes. Thank you, Antonio. The main impact is as Antonio mentioned in our maintenance cost and other services in the mills as well. And we are managing to mitigate this impact and we are doing well. But it has been tough to control everything and to keep our costs according to our budgets and targets.

Antonio, Executive/Director, Navigator Company: Regarding your last question about the new mill, actually I have two comments and I will ask you to comment on this one. We have already decided to commission the pre engineering phase. So we have already started the pre engineering phase. This will take us large number of months, probably somewhere four plus six months maximum. So after the change in price, we will be in a position to take a final investment decision somewhere around summer.

Probably, you can give a little more light on it.

Nuno, Executive, Navigator Company: Okay. So yes, we have done the first step of the project, which is basically the feasibility, the business case. We’re now moving, as Antonio mentioned, to the reengineering with the kickoff happening over the next few days. We hope to get the decision by summer, as Antonio mentioned. Up until now, we are moving well.

We are moving to the pre engineering people first. Let’s say, numbers on the business case seems to make sense, But it’s obviously too early to we don’t even have an ad hoc in the Brazil now. But I mean, let’s see if we confirm the numbers and get more corporate the decision that we’ve said should ideally happen by summer.

Antonio, Executive/Director, Navigator Company: At the same time, we saw what we said in previous calls, we have submitted to the Portuguese authority by step a process project concept to see what kind of support ISTEP is prepared to give and we keep our discussions both in Spain with the local authorities and in UK with the local authorities because there is not yet a decision final decision where the mill will be installed. Although it was not your question, I think we can also add that we have also commissioned recently as study to reconvert PM3 of Subdugo. So the largest of the two smaller mills in Subdugo, we have mentioned already that PM1 is already fully dedicated to packaging and we have commissioned a study on PM3 to analyze the possibility to make a further investment on this machine to specialize the machine on low basis rates for flexible packaging. And we are also looking to final investment decision somewhere in the first half of this year to take a decision if we move or not the M3 into dedicated to flexible packaging. Having said that, with the same concept we did before, we have TM3 as a flexible machine without jeopardizing the possibility to still do some uncotable free.

So most likely, by this year, we will have two decisions in one in the tissue area and another one in the packaging area.

Conference Moderator: And our next question comes from the line of Luis de Toledo from ODDO.

Luis de Toledo, Analyst, ODDO: I have a few questions for my side. The first one referring to the soft selling volumes of paper in the last quarter. I don’t know if you attribute all mainly to external factors or there are also reasons behind the maintenance shutdown that you announced? Or are there production disruptions in the energy business? I would like to know also if the considering your integration and so on, if the production levels that you achieved two years ago in paper are something that you could expect in the future?

Are you are they relevant those statistics for the future considering your penetration in higher added value segments? And the last question would be referring to trade valuables. I believe there’s been an increase in the fourth quarter. And I don’t know if it’s something that you attribute to something specific, your new perimeter with after the acquisition or something to monitor for the future? Thanks.

Antonio, Executive/Director, Navigator Company: Luis, thank you for your questions. I’m so sorry, but the last one, I think I understood more or less the first two. The last one, I give it a call. Are you so kind to repeat it? Sorry for

Luis de Toledo, Analyst, ODDO: that. It refers to trade payables that appear to be to have increased in the fourth quarter. I don’t know

Alberto Speracin, Analyst, JB Capital: if there’s any reason behind that.

Antonio, Executive/Director, Navigator Company: I’m sorry, you can take this very seriously. I’m sorry, Luis, but the correction is not right.

Luis de Toledo, Analyst, ODDO: Okay. Sorry. In the balance sheet, I witnessed that the accounts payable are significantly higher than those reported historically and those, for example, in the nine months. It can be any reason, but I mean, it’s just that it’s something that struck my attention when I saw it. But I assume there’s nothing relevant behind it.

Antonio, Executive/Director, Navigator Company: Okay. Let me see. So the first question is about the impact of our energy issues in Q4 and you are linking that to softness of volumes, if I understand correctly. The second question is about what we could expect as paper volumes going forward. And the last question is about the accounts payable.

You notice a higher accounts payable on the balance sheet.

Luis de Toledo, Analyst, ODDO: Correct.

Antonio, Executive/Director, Navigator Company: Did I got them right? Absolutely. Okay. So first one, and I’ll ask my colleagues to comment individually on the different business. The big impact of Q4 was energy and energy related, not particularly volumes of pulp well, let’s leave pulp in the end of unpotransitive paper, packaging or tissue, because pulp is the result, okay?

We had a slightly longer shutdown in one of our mills and this of course affects more the pulp availability. But the main impact was on energy. So I will ask Kirim to comment briefly volumes of paper and packaging in P4 and Nuluk both and tissue in Q4. Yes, packaging volumes quite stable and coated with free papers volumes as well quite stable. So it was not a key factor in Q4.

Nuno, Executive, Navigator Company: Okay. In Energy, basically what happened in ’twenty four, we have reduced sales mostly because our distributable natural gas cogeneration went into self construction. I think as you know, most of our energy producing unit have seen in tariffs, While those feed in tariffs exist and are above our market prices, it’s worth selling of course into the market when we actually do or they end life’s dividend tariffs, we tend to have moved the operation into self consumption because of course we don’t want to sell and then buy at the same price plus paying read access tariffs. So at the end of the day when an affiliate tariff lifecycle ends, we tend to turn our operating unit to be subsequent in mode. And this is basically what happened in Haiti before with our two goal natural gas co generation.

So that’s why we have seen some reduction in the power, okay? In terms of the pulp, basically, let me look for the numbers exactly. But basically, what we’ve seen is a result of higher integration into our paper operations. We have reduced the market slightly.

Antonio, Executive/Director, Navigator Company: Regarding your second question about what we expect as volumes for paper production going forward. You know that we have capacity the paper capacity on five paper machines that is about good wind of tonnage is about 1,600,000 tons. Of course, when you do converted products, you don’t have the same capacity because you lose when you do converting products and the mix, if you do more flow, you lose more than in capsize. If you do reals, you can lose more or less depending on the type of year. That is 1,600,000 tonnes is for an average grammage of around 80 grams.

So now that we are moving to flexible packaging, the average grammage of flexible packaging is significantly lower than 80 grams, almost half, not quite half but almost half average. So what we expect going forward is that in Encore ’20 ’3 to have very close again good winder tonnage to 1,400,000 tons of capacity utilization and about 100,000 plus tons of flexible packaging. If you look 100,000 tons of flexible packaging plus and you deduct the grammage, it means that we expect to be in the next two years not very far from capacity. Regarding your last question, I will ask Linou Neto, our finance director to give you a brief

Antonio, Analyst, AS Independent Research: sign up. Okay. There are two main issues that justify this evolution in interest payable. The Percivalence is the million dividend that we declared at the end of the year, which was outstanding in December and that has been paid in January. And the other one pertains to the fact that we are under every investment phase.

And as a consequence, we have higher trading balances with our suppliers for those CapEx items, but all within the regular paying terms.

Conference Moderator: There are no further questions from the conference call at this time. So I hand the conference back to the management team. Thank you.

Anna Kania, Presenter/Moderator, Navigator Company: This is our session. Thank you all for your time. As always, we are available for any additional verification or usual contact. Have a great evening.

Conference Moderator: You may disconnect.

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