Navigator : S.A. informs about 1st Quarter Results 2023

CONTENTS

1. PERFORMANCE 1st QUARTER 2023
2. LEADING INDICATORS
3. ANALYSIS OF RESULTS
4. OUTLOOK
5. FINANCIAL STATEMENTS

1. PERFORMANCE 1st QUARTER 2023

In 2022, the sector experienced unique conditions, with several factors contributing simultaneously to a shortage of paper in Europe, especially in the first half of the year. The inevitable correction of this abnormal conjuncture has strongly conditioned the situation of the sector in the first quarter of this year.

After a year of market shortages, leading to an abnormal level of orders, the first quarter of 2023 saw a high volume of stocks throughout the supply chain, significantly constraining demand in all paper segments, except in tissue. The destocking which has been in progress since the second half of 2022 is taking longer than anticipated, and the return to normal levels will depend on supply chains normalizing, on the greater or lesser extent of the economic downturn and market perceptions in relation to the evolution of prices.

In this context, Navigator, an integrated Forestry, Pulp, Paper, Tissue, Packaging and Energy producer, succeeded in adjusting to market conditions, protecting its margins, and presenting its best ever first quarter results, as well as pressing ahead with its strategy of investment, growth and business diversification.

1st Quarter Analysis (vs Q4 2022 and vs Q1 2022)

• Navigator recorded turnover of € 501 million (down 22% on the 4th quarter of 2022; up 2% on the 1st quarter of 2022);
• EBITDA stood at € 131 million (down 29% on the 4th quarter; up 8% on the 1st quarter of 2022), reflected in an EBITDA margin of 26% (down 2.6 pp on the previous quarter; up 1.4 pp on the 1st quarter of 2022);
• Net income of € 72 million (down 41% on the 4th quarter; up 42% on the 1st quarter of 2022);
• The volume of paper sales was down by 16% on the same period in 2022, in an environment featuring a persistently high level of stocks throughout the supply chain and a sharp economic downturn. Even so, prices remain at historically high levels which, combined with a richer product mix, made it possible to offset the reduction in volumes, in relation to the same period last year;
• The Packaging segment was where the sudden downturn in demand was felt most keenly. Nonetheless, despite the unfavorable environment, the new segment continues to score successes, such as the recognition of the quality of our products, and consequently of the GKraft brand, already counting with a client base of more than 230 active clients keen to contribute to the global movement to de-plastify the world economy (+45% YoY);
• Sales volumes for pulp were up by 75% on the previous quarter and 19% on the 4th quarter of 2022. A reduction in incorporation of pulp into paper in the quarter increased the availability of pulp for sale. There was also strong performance in production, with the Aveiro and Figueira da Foz complexes recording high levels of output;
• In the Tissue segment, demand for finished products proved resilient, allowing sales to perform well. Driven by rising prices, sales presented growth of 27% year-on-year, and a drop of 2.4% in relation to the final quarter;
• In line with our strategy of diversification, the acquisition of Gomà-Camps Consumer in Spain was concluded on March, 31 with the aim of increasing our presence in the At Home segment, as previously announced; The integration of this new mill will enable Navigator to position itself as Iberia's second largest tissue manufacturer;
• Attention is drawn to our Health and Safety Strategy, Mission Zero. This is an ambitious plan that promotes (and incentivizes) a Company-wide commitment, from top management down to sector managers, supervisors and operatives. With Mission Zero, Navigator has been achieving increasingly

positive results, in line with best practices. March was a month with no accidents leading to sick leave, as well as the lowest Frequency Rate since records have been kept of this indicator.

2. LEADING INDICATORS

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 = Annualized operating income / Average Capital invested (N+(N-1))/2
5. ROE = Annualized net income / Average Shareholders' Funds (N+(N-1))/2
6. (Interest-bearingliabilities - liquid assets) / EBITDA corresponding to last 12 months
7. Impact of IFRS 16: Net Debt / EBITDA (2023) of 0.56; Net Debt / EBITDA (2022) of 1.41;
8. Variation in figures not rounded up/down

4. ANALYSIS OF RESULTS

The good results recorded in the quarter benefited from the slowdown in cash costs in the first quarter (currently at levels close to, or below, those recorded in the third quarter of 2022), along with continued high prices internationally for paper and tissue, still at historically high levels, despite some downward adjustment from the peaks recorded in 2022.

The printing and writing papers industry

The financial year of 2022 was divided into two very different periods. The first half was characterized by a shortfall in UWF supply, logistical restrictions, low stocks along the chain and the high level of manufacturers' order books. In contrast, the second half saw an increase in imports from Asia, due to the normalization of logistics and high prices in Europe, and mounting stocks along the supply chain, causing new orders to manufacturers to fall off. In Europe, in particular, demand in the 4th quarter was sluggish, comparable to the worst months of the pandemic (2nd quarter of 2020), and stocks rose to high levels along the chain.

In early 2023, the effects were still felt of this build-up of stocks along the supply chain, which has been slow in working itself through the system, due essentially to the economic downturn. As a result, new orders to manufacturers have continued to decline. Europe in particular experienced a first quarter in which new orders stood at historically low levels.

As a result, capacity utilization rates in the industry fell sharply, although Navigator's utilization rate (84%) was well above the industry average (69%).

Global demand for printing and writing papers

Mt, YtD

Kt, YoY

%, YoY

Source: PPPC (March)

In a context of a sharp decline in apparent demand (down 10.5%), UWF remains the most resilient, with a decrease of 5.2%, as compared to CWF papers for which apparent demand dropped by 17.2%. Paper produced from mechanical pulp also saw demand plummet, by 21.5% (uncoated) and 17.8% (coated).

In Europe in particular, apparent demand for UWF paper in the first half dropped by 20%, although still proving the most resilient of all paper grades. Other printing paper grades experienced a more severe decline in demand in the period (YoY): CWF -42%, Uncoated Mechanical -30%, Coated Mechanical -29%, Supercalendered -27% and Newsprint -22%(Euro-Graph).

In the United States, demand dropped by 8%, falling most sharply for folio formats and reels (down 11%), whilst demand for cut-size fell by 4% (RISI).

Apparent UWF consumption in other world regions was down by 2.4%, comparing with the same period last year.