PART 1

MANAGEMENT REPORT

INTERIM REPORT | Q1 2023

1

INTERIM REPORT | Q1 2023

1 HIGHLIGHTS

EBITDA IMPROVEMENT IN A CHALLENGING ENVIRONMENT (+12 MILLION EUROS).

INVESTMENT OF 148 MILLION EUROS IN THE QUARTER (61 IN FIXED ASSETS; 87 IN M&A)

  • The current political and economic context, marked by a slowdown in the economy, inflation, and the prolonged war in Ukraine, has resulted in a situation that is highly unpredictable and extremely volatile. The effectiveness of Europe's monetary and economic policies and the future developments in the geopolitical risk will play a determining role in clarifying the current uncertainties. The Semapa Group is managing these negative events with a strong commitment to increasing efficiency, boosting productivity, moderating the increase in variable costs by curbing specific consumption, with continued efforts to contain fixed costs.
  • In the first quarter of 2023 the Semapa Group recorded consolidated revenue of 675.2 million euros (vs. 641.8 million euros in the 1st quarter of 2022 and 809.7 million euros in the 4th quarter). In the period, 501.2 million euros were generated in Navigator (Pulp and Paper), 159.4 million euros in Secil (Cement), and 14.7 million euros in ETSA (Environment). Exports and foreign sales for the same period amounted to 489 million euros, accounting for 72.4% of revenue.
    Navigator's increase in revenue was driven by a 19% increase in pulp sales volumes and the favourable variation in tissue prices, year-on-year. At Secil, the revenue mostly reflects the positive change in the average sales prices in Portugal and Tunisia.
  • EBITDA in the 1st quarter of 2023 totalled 166.8 million euros (vs. 154.7 million euros in the 1st quarter of 2022 and 220.9 million euros in the 4th quarter). In the same period, 130.7 million euros were generated in Navigator, 32.2 million euros in Secil and 4.6 million euros in ETSA. The consolidated EBITDA margin of 24.7% was 0.6 p.p. over that in the same period of 2022.

The increase in EBITDA was driven by the Pulp and Paper segment, benefiting from the slowdown in costs, particularly in logistics, some raw materials and energy, which, in conjunction with the efforts to maintain prices and to enrich the product mix, partially compensated for the reduced sales volume of UWF paper. The EBITDA of the Cement segment grew by about 10%, reflecting the good performance of Portugal, in contrast to the difficulties of the other countries that were mainly caused by the increase in energy costs.

  • Net profit attributable to Semapa shareholders at the end of the 1st quarter of 2023 stood at 57.0 million euros (vs. 42.0 million euros in the 1st quarter of 2022 and 75.7 million euros in the 4th quarter). The increase in EBITDA (+12.1 million euros) was the main contributor to that rise in net profit.
  • The value of investments made in fixed assets in the first quarter of 2023 amounted to approximately 60.6 million euros, vs. 36.5 million euros over the same period of the previous year, with particular emphasis on Navigator amounting to 41.7 million euros (15.1 million of which are classified as environmental or sustainability investment). In the second quarter of 2023, Secil will conclude the Clean Cement Line investment project (CCL) in Outão, which represented an investment of 4.8 million euros in the first quarter of 2023.
  • In line with its strategy for diversification, on 31 March Navigator concluded its acquisition of Gomà-Camps Consumer in Spain, seeking to reinforce its presence in the At Home segment, for circa 85 million euros. The integration of this new plant will position Navigator as the second largest Iberian producer of Tissue.
  • The Q1 2023 activity of Semapa Next stands out for the follow-on investment made in Kencko, and also for carrying out a Discovery Check at Soveren, a company working in the area of cybersecurity.
  • At the end of Q1 2023, consolidated interest-bearingnet debt stood at 764.6 million euros, 29.6 million euros below that at the end of 2022. As at 31 March 2023, total consolidated cash and equivalents amounted to 562.7 million euros, in addition to committed and undrawn credit lines for the Group, thus ensuring a strong liquidity position.
  • Talent remained a pillar which was given strategic focus during Q1 of 2023, as the Leadership Development Programmes addressed for the Group Management continued in place.

2

LEADING BUSINESS INDICATORS

IFRS - accrued amounts (million euros)

Revenue

EBITDA

EBITDA margin (%)

Depreciation, amortisation and impairment losses Provisions

EBIT

EBIT margin (%)

Income from associates and joint ventures Net financial results

Net monetary position

Profit before taxes

Q1 2023

Q1 2022

Var.

Q4 2022

Var.

641.8

5.2%

-16.6%

675.2

809.7

154.7

7.8%

-24.5%

166.8

220.9

24.7%

24.1%

0.6 p.p.

27.3%

-2.6 p.p.

(49.6)

0.8%

37.7%

(49.2)

(79.0)

(0.8)

0.2

-578.1%

(4.2)

81.7%

105.3

11.0%

-15.2%

116.8

137.7

17.3%

16.4%

0.9 p.p.

17.0%

0.3 p.p.

0.4

176.0%

-65.2%

1.2

3.5

(12.9)

(10.6)

-22.0%

(3.8)

-242.8%

-

-

-

1.0

-100.0%

95.1

10.5%

-24.0%

105.1

138.4

Income taxes

(27.6)

(37.7)

26.9%

(27.1)

-1.6%

Net profit for the period

57.4

35.1%

-30.3%

77.6

111.3

Attributable to Semapa shareholders

57.0

42.0

35.7%

75.7

-24.7%

Attributable to non-controlling interests (NCI)

20.6

15.4

33.5%

35.6

-42.2%

Cash flow

106.9

19.4%

-34.4%

127.6

194.5

Free Cash Flow

67.2

-52.9%

-230.3%

31.7

146.9

31/03/2023

31/12/2022

Mar23

vs. Dec22

Equity (before NCI)

1 379.9

1 323.4

4.3%

Interest-bearing net debt

764.6

794.2

-3.7%

Lease liabilities (IFRS 16)

104.1

101.2

2.9%

Total

868.7

895.4

-3.0%

INTERIM REPORT | Q1 2023

3

2 PERFORMANCE OF THE SEMAPA GROUP BUSINESS UNITS

2.1. BREAKDOWN BY BUSINESS SEGMENTS

IFRS - accrued amounts

Pulp and Paper

Cement

Environment

Holdings

Consoli

(million euros)

Navigator

Secil

ETSA

dated

Q1 2023

23/22

Q1 2023

23/22

Q1 2023

23/22

Q1 2023

23/22

Q1 2023

Revenue

501.2

1.8%

159.4

16.3%

14.7

16.6%

(0.0)

59.7%

675.2

EBITDA

130.7

7.5%

32.2

10.5%

4.6

17.2%

(0.7)

<-1000%

166.8

EBITDA margin (%)

26.1%

1.4 p.p.

20.2%

-1.1 p.p.

31.7%

0.2 p.p.

-

-

24.7%

Depreciation, amortisation and

(35.3)

2.0%

(13.0)

-2.0%

(0.9)

-10.3%

(0.1)

-20.7%

(49.2)

impairment losses

Provisions

-

-

(0.8)

-578.1%

-

-

-

-

(0.8)

EBIT

95.4

11.5%

18.4

11.3%

3.8

19.0%

(0.8)

<-1000%

116.8

EBIT margin (%)

19.0%

1.7 p.p.

11.5%

-0.5 p.p.

25.6%

0.5 p.p.

-

-

17.3%

Income from associates and joint

-

-

(0.0)

96.8%

-

-

1.2

85.2%

1.2

ventures

Net financial results

(2.7)

43.1%

(9.7)

-136.5%

(0.0)

15.2%

(0.5)

70.3%

(12.9)

Profit before taxes

92.8

14.7%

8.7

-28.7%

3.7

19.4%

(0.1)

95.4%

105.1

Income taxes

(23.8)

27.8%

(2.8)

25.0%

(0.6)

19.8%

(0.3)

-61.7%

(27.6)

Net profit for the period

68.9

44.1%

5.9

-30.3%

3.1

31.8%

(0.4)

69.7%

77.6

Attributable to Semapa

48.2

44.1%

6.1

-18.4%

3.1

30.8%

(0.4)

69.7%

57.0

shareholders

Attributable to non-

20.7

44.1%

(0.2)

-116.4%

0.0

176.4%

-

-

20.6

controlling interests (NCI)

Cash flow

104.2

24.3%

19.7

-6.6%

4.0

26.4%

(0.3)

73.3%

127.6

Free Cash Flow

30.8

-59.9%

1.7

117.9%

(1.4)

-151.9%

0.5

118.0%

31.7

Interest-bearing net debt

351.4

306.6

(11.2)

117.9

764.6

Lease liabilities (IFRS 16)

63.9

38.5

1.3

0.4

104.1

Total

415.3

345.1

(9.9)

118.2

868.7

Note: Figures for business segment indicators may differ from those presented individually by each Group, as a result of consolidation adjustments.

INTERIM REPORT | Q1 2023

4

Attachments

Disclaimer

Semapa - Sociedade de Investimento e Gestão SGPS SA published this content on 06 June 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 June 2023 17:35:01 UTC.