the navigator company q4/fy2017 results presentation · 2018. 2. 8. · 16 37 63 79 129 189 102 0 0...
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February 8th 2018
The Navigator Company
Q4/FY2017
Results Presentation
Diogo da Silveira – CEO
Fernando Araújo – CFO
António Redondo – CCO
Nuno Santos
João Paulo Oliveira
Joana Appleton – IR
Participation
1
• Main highlights
• Market outlook
• Group performance
• Update on new projects
Q4/FY2017 Results presentation
2
3
Significant turnover growth and diversification over the last years
FY 2017 – Key Highlights
3
P&P Market 2017
• Strong performance for pulp, with steep increase in prices
• Improvement in UWF demand and gradual price recovery
Volumes • Sales of UWF: 1 578 kton (-0.5%) • BEKP sales totalled 311 kton (+7%) • Tissue: improvement in sales (+9%) • Energy: +9% in volume sold
Cost reduction • M2 continues to deliver with total estimated impact at € 27 million
Operating margin
• EBITDA grows 2% to € 404 million • EBITDA/Sales of 25%
Financial costs and FX operations
• Financial costs reduced by 63% YoY • Hedging operations with positive results
offsetting negative impact of FX evolution
Capex • Projects evolving on time and on budget
Outlook • Positive momentum for prices should continue
16 37 63
79 129 189
102 0 0
106 130 156
150 187 66
171 184 222
255 140
0
27 53 80
Strong market for pulp prices in 2017
400
500
600
700
800
900
1000
1100
400
500
600
700
800
900
1000
1 11 21 31 41 51 9 19 29 39 49 7 17 27 37 47 4 14 24 34 44 2 12 22 32 42 52
BHKP (Usd/Ton) BHKP (Eur/Ton)
PIX Europe
Prices in 2017 : Week 1/Week 52
(Dec. 31)
+203 €/ton (+33%)
825 €
+330 USD/ton (+51%) 982 USD
2014 2016 2015 2017 2013
USD EUR
2017 BHKP in USD: +51% and BHKP in Euros: +33%
2017 YoY average BHKP in USD: +19% and BHKP in Euros: +16%
4
Pulp market in 2017
5
16 37 63
79 129 189
102 0 0
106 130 156
150 187 66
171 184 222
255 140
0
27 53 80
Source: FOEX
Upward trend in paper prices
Paper Benchmark has been gradually improving but the average price for the paper benchmark is still down 1% YoY
823 €/ton
815 €/ton Av. YTw 52
600
650
700
750
800
850
900
1 5 9 13172125293337414549 1 5 9 1317212529333741454953 4 8 1216202428323640444852 4 8 1216202428323640444852
A4 B-copy (Eur)
Av. YTw 52
2014 2016 2015 2017
European Market Paper Price – A4 B-copy
Last PIX Week 52: 835 €/ton
W1-52: +4.1%
EUR
6
Source: Risi; EMGE Euro-Graph; PPPC; The Navigator Company
Declining demand UWF: both in CS (-6.9%) and FL&RL (-5.2%) YTD Nov 2017 -5.9% UWF in 2017 (YoY Nov) Price increase in Oct-Nov and Jan-Feb 2018
Capacity decrease (700 kton, aligned with he expected decrease of the market in 2016-18): Neenah Paper: -20, Q1 17
Glatfelter: -52, Oct 17 Appleton C.: -64, Oct 17 Flambeau RP: -71, Q1 18 PCA/Boise: -65, Q2 18 GP: -215, Q2 18 IP: -215, 2018 Domtar: ?
Good Macroeconomic Outlook for 2018
World paper market during 2017
USA EUR
Growing demand UWF: in CS (+0.8%) and FL (+2.4%) and falling in RL (-2.8%) 2017e (imports Nov&Dec estimated)
+0.1% 2017e (YoY )
January price increase (+4 to 12%)
Paper Machines in Sweden and Italy restarted in January
Pulp prices pressuring especially non-integrated mills
Good Macroeconomic Outlook for 2018
Asia/ China
Growing demand UWF:
+2.6% 2017e
Major players (APP and APRIL) announced in the last months aggregated worldwide price increases of more than +200 USD/ton
Capacity increase end 2017 and 2018:
In China: +0.7 to 1.4 M ton
In UAE: +300 kton
Tight environmental policies pressuring “old China” closures (little details available)
Ongoing energy restriction policies near Shangai and Beijing (not affecting significant UWF volumes for now)
Good Macroeconomic Outlook for 2018
Global demand for paper increased 0.2% (YTD Nov)
7
YoY
EBITDA Performance in 2017
* Costs include reduction in wood costs and energy * Non recurring items include insurance indemnities, biological assets and negative EBITDA from Pellets
8
Positive performance in EBITDA due to price effect and cost reduction
16 37 63
79 129 189
102 0 0
106 130 156
150 187 66
171 184 222
255 140
0
27 53 80
9
Solid paper performance in 2017
• Sales of 1 578 kton of UWF (-8.6 kton; -0.5%)
• Navigator led 4 price increases in Europe and International markets in 2017, but average sales price remained almost in line with 2016 (-0.3% YoY) due to:
+ FX impact (USD and GBP)
+ Geographic market mix
• Prices in Europe and Overseas markets recovered throughout 2017, but came down in the US, mainly in Euros
• Back to product mix improvement: premium products share up to 49% (+57 kton YoY) and Mill Brands up to 62% (+45 kton YoY)
• Strong order book at year end of 35 days
Sales to over 122 countries with 84 new clients
1 578 kton
FY 2017 Sales 976
kton Europe 62%
123 kton USA 8%
Source: The Navigator Company
226 kton Africa 14%
187 kton
Middle East 12%
59 kton Latin
America 4%
8 kton Asia/
Oceania 0.5%
10
16 37 63
79 129 189
102 0 0
106 130 156
150 187 66
171 184 222
255 140
0
27 53 80
11
Strong contribution from pulp
• Pulp sales up 7% in volume to 311 thousand ton
• Navigator’s price increased on average 12% YoY, but gained 35% from December 2016 to December 2017
• 8% Growth YoY in Decor and Special papers segments, high contribution segments (representing 61% of total sales)
• Increased sales to overseas markets: +9 kton (YoY)
• End of December inventories at very low level (7 days) when compared to year end 2016 and well below industry’s average (39 days at the end of November)
• Lower volume in Q4 due to annual maintenance shutdown and need to replenish stocks
16 37 63
79 129 189
102 0 0
106 130 156
150 187 66
171 184 222
255 140
0
27 53 80
12
Tissue business continues to increase
• Volume of tissue sold in converted products increases 9% YoY
• Sales increased 10% to € 74 million (vs. € 67 million)
• Average sales price in FY2017 1.4% higher YoY due to improvement in product mix
• Operating margin impacted by pulp price increase
AFH 53% (48% in
2016)
AH 26% (27% in 2016)
C&C 11% (12% in 2016)
Reels 9%
(12% in 2016)
Tissue Sales by segment
Portugal 65%
(66% in 2016)
Spain 33%
(33% in 2016)
Other 2%
(1% in 2016)
Tissue Sales by market
Increase efficiency and cost reduction iniciatives
Industrial performance - Highlights
13
• Positive evolution of safety indexes
• Record pulp production in Cacia, with 354 ktAD (+13 ktAD vs. 2016)
• Record pulp production in Figueira da Foz, with 593 ktAD (+7 ktAD vs. 2016)
• Record paper production at ATF, with 610 kton (+10 kton vs. 2016)
• Record production of tissue paper in V. V. Ródão, with 56 kton (+10 kton vs. 2016)
• Positive energy balance against 2016 (+ € 12.8 million)
M2 program achieves excellent results
14
• M2 cost reduction and efficiency programme continues with estimated impact on EBITDA in FY2017 of € 27 million
• Of a total of 126 projects with successful initiatives, the following stand-out:
+ Wood: € 5.5 million
+ Chemicals: € 3.8 million
+ Energy purchases: € 3 million
+ Product packaging: € 2.7 million
• Global 5 year target for 2016-2029: € 100 million, of which € 43 million already achieved
15
With operating cash flow in line with FY2016, free cash flow gained € 14 million YoY, positively impacted by lower capex (- € 24 million) and evolution of working capital (mainly reduction in inventories)
Strong Free Cash Flow at € 198 million
* Other includes Bio Assets, Antidumping, Other Suppliers Assets/Liabilities and State & Public entities which include € 43 million related to advance on tax payments
198
357
Free Cash Flow
Suppliers and Other*
-74
Change in Accounts
Receivables
+9
Change in Inventories
+20
CAPEX
-115
Operating Cash Flow
FREE CASH FLOW
M €
16
Financial results improve by € 13 million
• Financial results improve by € 13 million sustained by lower borrowing costs and positive FX hedging
• Interest paid were down € 4.9 million YoY
• FX effects resulting from hedging operations of € 6 million
M €
17
Interest expense significantly improved
Debt restructuring achieved over the last 2 years allowed to reduce interest expense, even in a scenario of higher gross debt
706
799 796
661
769 787
2.7% 3.5%
4.1% 4.1%
2.1% 1.7%
0%
2%
4%
6%
8%
10%
12%
14%
0
100
200
300
400
500
600
700
800
900
2012 2013 2014 2015 2016 2017
Avera
ge C
ost
of
Debt
(%)
Avera
ge d
ebt
(M €
)
Average Gross Debt Average Cost of Debt
Capex of € 115 million (vs. € 139 million)
18
M €
Outlook for 2016
Pulp – new increase in prices have been announced, continuing pulp momentum; pulp market should remain balanced throughout the year even with slower demand
Tissue - high competition and pressure on margins due to rise in pulp price expected to continue
Paper – positive year expected with higher prices for UWF; exchange rate remains main cause for concern
Positive outlook for 2018
Significant challenges for 2018 as new pulp capacity at Figueira da Foz starts-up in April and new tissue line at Cacia
starts producing first reels in August
19
Increase efficiency and cost reduction iniciatives
Pellet business - Sale agreement to divest
20
• Commercial start-up of the 500 kton mill in a difficult environment, with sales volume of 120 kton and turnover of € 15 million in 2017
• EBITDA for pellets remained negative throughout the year
• Navigator was presented with an attractive opportunity to divest and signed an agreement to sell its pellets business for USD 135 million
• Sale is subject to certain conditions and expected to be concluded during the first half of 2018
Increase efficiency and cost reduction iniciatives
Mozambique project – Current status
• Scale down rhythm of investment and operations in 2017
• Company remains engaged and is negotiating necessary conditions to proceed with the project
• Plans to build the Moatize-Macuse railway line and the port of Macuse, due for completion in 2021-22 increase attractiveness of the project
21
Increase efficiency and cost reduction iniciatives
Update on New Projects - Cacia Tissue
• Integrated tissue mill with capacity to produce 70 kton of reels and converting products with estimated capex of 120 million
• Main equipment suppliers have been selected and 92% of capex already committed
• 60% of civil works executed; mechanical assemblies and piping started, with 360 workers currently involved
• Project on time and on budget: paper machine to start up in Q3 2018
22
Update on New Projects – Pulp F. Foz
• Capex of € 85 million (50% commissioned)
• Project on time and on budget: new capacity planned to come online in April 2018
23
Main Goals: Increase the annual pulp production from 580.000 to 650.000 tAD
Increase the efficiency of Pulp process
Reduce wood and chemicals specific consumption
Implementation of BAT (ex: O2 delign.)
Environmental advantage for flue gas and liquid effluent emissions
Collection and burning of diluted odorous gases (DNCG’s)
Main Goals:
Increase the annual pulp production from 580.000 to 650.000 tAD
Increase the efficiency of Pulp process
Reduce wood and chemicals specific consumption
Implementation of BAT (ex: O2 delign.)
Environmental advantage for flue gas and liquid effluent emissions
Collection and burning of diluted odorous gases (DNCG’s)
Main Goals:
Increase the annual pulp production from 580.000 to 650.000 tAD
Increase the efficiency of Pulp process
Reduce wood and chemicals specific consumption
Implementation of BAT (ex: O2 delign.)
Environmental advantage for flue gas and liquid effluent emissions
Collection and burning of diluted odorous gases (DNCG’s)
Optimization Project 3 –Ecoefficiency Main Goals: • Increase the annual pulp production
from 580,000 to 650,000 tAD • Increase the efficiency of Pulp process • Reduce wood and chemicals specific
consumption • Implementation of BAT (ex: O2
delign) • Environmental advantage for flue gas
and liquid effluent emissions • Collection and burning of diluted
odorous gases (DNCG’s)
Navigator sustainability path
24
• “Inpactus”, the new R&D project to create innovative products and technologies from Eucalyptus
• Navigator participated for the 1st time in the CDP rating obtained score A- Leadership in the CDP – Climate Change 2017
• Navigator as “The Web Summit Carbon Offsetting Partner”
Back-up slides - Financials
25
26
Quarterly Financials 2015
422 393
420 397 427
Q42016
Q12017
Q22017
Q32017
Q42017
Turnover (M €)
96 90 108 102 104
Q42016
Q12017
Q22017
Q32017
Q42017
EBITDA (M €)
83
36
61 50
62
Q42016
Q12017
Q22017
Q32017
Q42017
Net Earnings (M €)
23% 23% 26% 26% 25%
Q42016
Q12017
Q22017
Q32017
Q42017
EBITDA/Sales (%)
11% 11% 15%
13% 15%
Q42016
Q12017
Q22017
Q32017
Q42017
ROCE (%)
28%
11%
21% 17%
21%
Q42016
Q12017
Q22017
Q32017
Q42017
ROE (%)
Quarterly figures – YoY evolution
27
Group financial performance – quarterly figures
38
14 21
41
60
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
CAPEX (M €)
641 617
738 742 693
1,61 1,56 1,84 1,87 1,72
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
Net debt (M €)
Net debt/EBITDA
28
Historical dividend payment
In 2017, Navigator made 2 dividend payments on 6th June and 5th July, amounted to 250 million euros (gross value of 0.24 €/share)
Year Dividend per share
Share price (year end)
Total amount paid (million euros)
2013 0.1600 0.1200
2.280 159.2
2014 0.2800 2.910 201.4
2015 0.4330 0.0418 0.1395
3.085 440.5
2016 0.1590 0.0781
3.596 170.0
2017 0.2371 0.1116
3.265 250.0 0
0,1
0,2
0,3
0,4
0,5
0
50
100
150
200
250
300
350
400
450
2013 2014 2015 2016 2017
Div
idend/s
hare
(€)
Div
idend p
aym
ent
(M €
)
Disclaimer
This presentation does not constitute or form part of and should not be construed as any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in any jurisdiction nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the securities analysed herein. No action has been made that would permit a public offering of any securities mentioned in this presentation in any jurisdiction. No offers, sales, re-sales or delivery of any securities mentioned I this presentation or distribution of any offering material relating to any such securities may be made in or from any jurisdiction. Any decision to subscribe for or purchase ordinary shares in any offering should be made solely on the basis of information contained in any offer document that may be published by the relevant issuer in final form in relation to such offering and securities. This presentation is intended to provide a general overview of Portucel, S.A. business and does not purport to deal with all aspects and details regarding Portucel. Accordingly, no representation, undertaking or warranty, express or implied, is given by Portucel or any of its subsidiary undertakings, affiliates, directors, officers, employees or advisors or any other person as to the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation or of the views given or implied or any other material discussion in connection with this presentation. This presentation has been prepared by Portucel solely for information purposes. Portucel any of its affiliates, directors, officers, employees or advisers or any other person shall not have any liability whatsoever (in negligence or otherwise) for any loss, errors or omissions howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith.
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