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  • EBITDA improvement sustained by favourable S/D conditions: This allowed successful price increases across all businesses outweighing rising costs (raw materials, energy, and logistics). Revenue +44% y/y & +3% q/q; EBITDA +72% y/y & +12% q/q, which meant the EBITDA margin expanded by 399bps y/y & +188bps q/q to 24.7%. Net declined by 17% y/y & -13% q/q, with net debt/EBITDA reaching 1.3x, its lowest level in the past ten years.
  • Their UWF order book remains strong (>80 days) and NVG has increased market share amongst European peers (UWF 67% of revenue): 93% of UWF sales were exported during the quarter. Sales volumes declined by 3% y/y and by 17% q/q (vs. output: +5% y/y). This was on the back of the need to replenish stocks and logistical constraints. These were exacerbated by the problems in road freight caused by the strike in Spain towards the end of the quarter, and the consequent migration of sales volume from road to maritime freight in Europe.
  • Paper market dynamics have been strongly affected by reduction in capacity in Europe and the US, coupled with limited supply in Middle East and African markets: In Europe, apparent demand for UWF paper fell by 6.8% over the quarter. This drop in apparent demand results from the calculation model (based on deliveries by producers), which was highly influenced by the constraints on supply observed in Europe. Without these affects, the apparent demand for UWF paper in Europe would have follow a positive evolution. In the US, demand for UWF paper held steady in Q1 (-0.1% y/y).
  • Pulp benefitted from tight market dynamics, which included negative supply side shocks withdrawing >1mt of short fibre pulp from the market: Sale volumes declined by 1% y/y & -9% q/q (vs. output: +12% y/y) due to the need to restock and from increased integration of pulp into paper. Europe pulp prices benefitted from growing demand for pulp from the paper industry (mainly specialities, P&W, and packaging) and to several negative shocks on the supply side in the pulp market. These included the UPM strike, which removed >0.5mt of pulp from the market; annual maintenance shutdowns which were concentrated in Q1 (c.50% of annual maintenance shutdowns on short fibre took place) and the embargo on wood imports from Russia drastically reduced supplies of imported birch in Northern Europe (c.1mtpa of output of this type of pulp).
  • Packaging sales (EUR 21mn) were c.50% of packaging turnover achieved in FY 21A: From Fossil to Forest, investment in sustainability and innovation through packaging. Navigator has launched a logo for its gKraft brand, using the hashtag #From Fossil to Forest. It will be used by all producers using gKraft paper as a raw material. Their PM1 and PM3 machines at the Setúbal mill can now swing between paper and packaging. PM1 is now fully dedicated to packaging products (white and brown), although still able to produce UWF paper whenever needed.
  • NVG’s packaging appears to have big advantages vs. some peers: Their product model, based on Eucalyptus globulus fibre, guarantees the production of seven times more area of packaging (m²) per hectare of forest (in comparison with Scandinavian pine, for example), features half the specific consumption of wood (in comparison with North American pine), and allows savings of up to 14% in grammage for the same strength when compared with rival fibres.  
  • Positive, yet cautious outlook given macro uncertainty: Q2 has started with strong prices across all businesses. Good commercial momentum sustained by record high order books in Europe together with low levels of stocks across the supply chain.

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