Navigator witnessed the best performance ever in the first quarter amid unprecedented contraction in demand

The Navigator Company witnessed in the first quarter of 2023 its highest-ever turnover (€501 million), EBITDA (€130.7 million) and net results (€71.7 million) in a single first quarter, against a backdrop of strong global contraction in demand in virtually all pulp and paper segments.
Paper sales accounted for about 64% of turnover (vs.67%), pulp sales 13% (vs. 11%), tissue sales 10% (vs. 9%), energy sales 10% (vs. 13%) and packaging 3%.
After a year of strong supply shortages in the market, which has led to an unusual order volume in this industry, the first quarter of 2023 was marked by the accumulation of a high stock volume in the whole distribution chain, thus significantly affecting demand in all paper and packaging segments, except the tissue segment. The destocking process of the long distribution chain has been ongoing since last summer, and there is no clear indication as to when the company may start restocking.
Under these circumstances, The Navigator Company, an integrated producer of Forest, Pulp, Paper, Tissue, Packaging and Energy was able to successfully adapt to market conditions, protect margins and pursue its investment, growth and business diversification strategy. 
Pulp recovers after witnessing historical highs and printing and writing papers show a strong resilience
The first quarter of 2023 witnessed a significant reduction in pulp prices coming from historical highs.
The benchmark index for short fibre pulp (hardwood) in Europe – PIX BHKP in dollars – reached historical highs in 2022 (1,380 USD/ton) – and figures did readjust in the first quarter, standing at the end of March at 1,280 USD/ton, a 7% drop compared to the beginning of the year, dropping further since then (1.101 USD/ton on May 9).
The benchmark index in China for hardwood pulp also fell by 12% compared to the beginning of the year, standing at the end of the quarter at 709 USD/ton and falling further since then (500 USD/ton on May 9).
This evolution was sustained by: (i) the fall in global demand; (ii) the increase in the level of stocks along the supply chain during the end of 2022 and beginning of 2023; (iii) the easing of the logistical constraints felt during 2022; and (iv) the increase in supply as a result of a more capacity and fewer maintenance stops than in the same period in 2022.
Printing and writing paper, in turn, and in light of the drop in demand (-9%) remain the most resilient. Within the printing and writing paper, the segment witnessing by far the best performance in Europe and the USA is the office paper segment. Packaging also saw a decline in demand above 10% in Europe. In any of these segments, and despite the macroeconomic environment, the drop in demand felt by producers does not seem to translate into a reduction of final consumption but rather a very strong adjustment in supply chains, which were overstocked since last summer and which, in light of recent price developments and delivery times reduction, did not feel an urgent need to restore stock levels.

Tissue and packaging strengthen its customer base

Tissue demand in the first quarter of 2023 proved to be extraordinarily resilient globally, thus ensuring a good performance as regards the sale of finished products amidst a scenario of favourable prices, and witnessed a 27% growth year-on-year.

On March 31, the acquisition of the Gomà-Camps Group “Consumer” business in Spain was completed. The integration of this new plant should allow Navigator to position itself as the second largest Iberian producer of Tissue, adding 35,000 tons of Tissue paper production capacity, reaching a total of 165,000 tons, and increasing the converting capacity by 60,000 tons to 180,000 tons.

The resulting company now bearing the name Navigator Tissue Ejea closed the quarter with a turnover in excess of €32 million. These results are not consolidated yet in this segment’s results for this quarter, as the company is registered as a financial holding.

As for the new packaging segment, and despite the unfavourable macroeconomic context, it keeps showing positive aspects, such as the acknowledgement of the quality of Navigator’s globulus eucalyptus fibre-based products and, so therefore, of the gKraft brand, serving brands with major exposure, in different sectors from fashion to food retail, e-commerce, industry or agriculture, resulting in an increasingly larger and more diverse client base willing to help deplastification of the word economy. 

The client base has been steadily increasing, now exceeding 230 active customers (+ 45% year-on-year).

Navigator with ambitious diversification and investment plan
Despite the current fairly unpredictable political-economic context, marked by the slowdown in economies, inflation and the continuation of the war in Ukraine,
the Group maintains its ambitious diversification and product development plan, in the tissue and packaging segments in particular.
In this context, Navigator invested €42 million in the first quarter (vs. €15 million in the same period last year), of which about €15.1 million is classified as investment in the environment or investment of a sustainable nature, accounting for 36% of the total investment. 

Among the various ongoing development projects, Navigator took moved forward in the first quarter with the development of packaging products for the food, construction and consumer goods industries.

The Company is further involved in the ongoing development of its investment project for the construction of the moulded cellulose container production plant to replace single-use plastic at points of sale in the food packaging and food service segments. Among the many operations underway, it is worth highlighting the construction works of the factory, the acquisition of production technology, and product development, with the strong involvement of RAIZ – Instituto de Investigação da Floresta e Papel, an R&D Laboratory of The Navigator Company, the recruitment of specialized resources and market research.

A bio-industry on the right side of the future

Navigator is one of the most sustainable companies in the world. It was awarded the top rating (“A”) for world leadership in combating climate change. This prize was awarded by CDP – Disclosure Insight Action, a non-profit organization managing the largest and most complete independent global system of dissemination of environmental information to companies, regions, cities and states.

The Company also participates in CDP Forest, focused on forest management and was acknowledged, right in the second year, for its performance in this category, with a rating of (“A-“), and has a leading position in this field.

And it is also worth mentioning the annual assessment by the rating agency Sustainalytics, published at the end of January, which again classified Navigator as a low-risk company for investors, and acknowledged its work as an ESG Industry Top-Rated company. Navigator’s rating and good positioning in this ranking are relevant facts that reflect the continuous work carried out by the Company as regards integrating sustainability as a priority in its business model, proving its ability to anticipate and manage ESG risks in its operations.

With a Corporate Object and a 2030 Responsible Management Agenda aligned with the United Nations Sustainable Development Goals, Navigator’s strategy is based on a strong investment to develop sustainable bioproducts, using raw materials from forests with certified management or controlled origin, reducing dependence on fossil resources and promoting the decarbonization of the economy.