The Navigator Company

Investor Presentation • Oct 24, 2024

RESULTS FIRST NINE MONTHS 2024 0 | 17

PERFORMANCE IN FIRST 9 MONTHS OF 2024 2
Analysis 3rd Quarter (vs. Q2 2024 and vs. Q3 2023)2
First 9 Months of 2024 vs. 9 Months 20233
LEADING INDICATORS 3
ANALYSIS OF RESULTS 4
The printing and writing papers industry4
Pulp Market5
Growth and strong performance in Tissue business 6
Packaging - From Fossil to Forest – investment in sustainability, innovation and transformation 7
Start-up of integrated Moulded Pulp production 9
Power Output of 1,085 GWh, of which 77% was from renewable energy sources 9
EBITDA of € 431 million10
Financial Results10
Free cash flow generation 10
New finance facilities reaffirm Sustainable Financial Management 10
Capex of € 151 million11
A BIOINDUSTRY ON THE RIGHT SIDE OF THE FUTURE 12
A responsible business for the Climate and Nature and for Society 12
MARKET OUTLOOK14
FINANCIAL STATEMENTS16

PERFORMANCE IN FIRST 9 MONTHS OF 2024

After a first half marked by the rapid rise in the European benchmark index for pulp prices, the 3rd quarter saw a sharp correction in prices in China and a consequent adjustment in Europe, albeit more moderate. This volatility in the pulp price contrasted with the resilience in benchmark prices for printing and writing paper.

In Europe, the usual seasonal factors brought a slowdown in the pace of new orders in the 3rd quarter, as anticipated as early as May. However, although the seasonal effect was more severe than in previous years, the quarter turned out to be better than initially expected, benefiting also from the increased importance of new business segments, in particular tissue, where growth and performance have been strong.

Navigator's competitive position, anchored in efficient management of its business mix, the commercial strategy and cost control, has proved remarkably flexible in adapting to changing market dynamics, as demonstrated again this quarter.

Navigator's trademark commitment to innovation and sustainability has continued to underpin its strong performance. As part of the strategy of business diversification, this quarter saw the start-up of integrated production of moulded pulp, at the product trial and equipment acceptance stage, with the first products being offered on the market in October, designed to replace single-use plastic packaging in the food service and food packaging market. Alongside this, we successfully pressed ahead with integration of the new Tissue operation in the United Kingdom, Navigator Tissue UK.

Analysis 3rd Quarter (vs. Q2 2024 and vs. Q3 2023)

• Navigator recorded turnover of € 503 million (down 5% on Q2 2024; up 5% on Q3 2023);
• EBITDA stood at € 133 million (down 20% on Q2; up 7% on Q3 2023), reflected in an EBITDA margin of 26.3% (down 4.9 pp on Q2; up 0.7 pp on Q3 2023);
• Net income totalled € 83 million (down 13% on Q2 2024; up 30% on Q3 2023);
• Sales of printing and packaging paper totalled approximately 275 thousand tons (down 14% on Q2 2024; down 1% on Q3 2023); in a quarter marked by seasonal factors in Europe, earlier and more severe than usual, offset by growth in Overseas business; sales in value were down by 13% in relation to the 2nd quarter and up by 1% YoY;
• Pulp sales totalled 96 thousand tons (up 35% on Q2 2024; down 38% on Q3 2023), in a quarter marked by slowing demand in the European market and a reduction in pulp integrated into paper; the value of sales rose by 15% over the 2nd quarter and fell by 18% YoY;
• Tissue sales totalled 62 thousand tons (up 12% on Q2 2024; up 52% on Q3 2023), driven by dynamic demand and the new capacity at Accrol, now called Navigator Tissue UK; the value of sales grew by 15% over the second quarter and by 59% over the same period in 2023;
• The packaging sector continued to present growth in orders due essentially to consistent improvements in demand and development of new product ranges in flexible packaging, enabling Navigator to press ahead with plans to diversify its business and achieve growth in its client base and markets.
• Start-up of moulded pulp packaging production in the 3rd quarter the world's largest fully integrated eucalyptus fibre moulded pulp packaging production unit.
• Forestry Producers Club new strategic partnerships established, in order to promote and strengthen an economic environment more favourable to Portuguese businesses in the agro-forestry sector.

First 9 Months of 2024 vs. 9 Months 2023

• Turnover stood at € 1,569 million (up 7% on 9M 2023);
• EBITDA stood at € 431 million (up 15% on 9M 2023), EBITDA margin of 27.5% (up 1.7 pp on 9M 2023);
• Net income totalled € 241 million (up 20% on 9M 2023);
• • Net debt of € 643 million, impacted by acquisition of Accrol (due to payment of € 153 million for the shares and consolidation of additional debt), capex of € 151 million and distribution of € 150 million in dividends; Net Debt / EBITDA ratio of 1.16x.

	9M	9M	Change (8)
Million euros	2024	2023	9M 24/ 9M 23
Total Sales	1,568.5	1,460.6	7.4%
EBITDA (1)	431.3	376.5	14.5%
Operating Profits (EBIT)	316.6	277.6	14.1%
Financial Results	-9.7	-15.7	-38.1%
Net Earnings	241.4	200.8	20.3%
Cash Flow	356.1	299.7	56.4
Free Cash Flow (2)	-3.3	32.5	- 35.8
Capex	150.9	142.1	8.8
Net Debt (3)	643.2	549.7	93.5
EBITDA/Sales	27.5%	25.8%	1.7 pp
ROS	20.2%	19.0%	1.2 pp
ROCE (4)	21.9%	21.5%	0.4 pp
ROE (5)	21.4%	21.4%	0.0 pp
Equity Ratio	45.1%	46.1%	-1.0 pp
Net Debt/EBITDA (6)(7)	1.16	0.98	0.18

LEADING INDICATORS

	Q3	Q2	Change (8)	Q3	Change (8)
Million euros	2024	2024	Q3 24/Q2 24	2023	Q3 24/ Q3 23
Total sales	503.0	529.1	-4.9%	481.1	4.6%
EBITDA (1)	132.5	165.2	-19.8%	123.5	7.3%
Operating profits	91.0	127.6	-28.7%	90.0	1.2%
Financial results	0.7	- 1.6	-145.3%	- 7.2	-110.3%
Net earnings	82.6	94.8	-12.9%	63.3	30.4%
Cash flow	124.1	132.4	- 8.3	96.9	27.2
Free Cash Flow (2)	21.3	- 70.8	92.1	22.8	- 1.5
Capex	57.8	52.3	5.5	29.5	28.3
Net Debt (3)	643.2	664.5	- 21.3	549.7	93.5
EBITDA/Sales (%)	26.3%	31.2%	-4.9 pp	0.0 25.7%	0.7 pp
ROCE (4)	18.9%	26.8%	-8.0 pp	20.9%	-2.1 pp
ROE (5)	24.3%	28.6%	-4.3 pp	20.2%	4.0 pp
Equity ratio	45.1%	42.9%	2.2 pp	46.1%	-1.0 pp
Net Debt/EBITDA (6)(7)	1.16	1.21	-0.06	0.98	0.18

1. Operating profits + depreciation + provisions;

2. Variation in net debt + dividends + purchase of own shares l Q2 2024 includes impact of acquisition of Accrol

(payment of € 153 million for the shares and consolidation of additional debt)

1. Interest-bearing liabilities - liquid assets (not including effect of IFRS 16)

2. ROCE = Annualised operating income / Average Capital invested (N+(N-1))/2

3. ROE = Annualised net income / Average Shareholders' Funds last -1 months

4. (Interest-bearing liabilities - liquid assets) / EBITDA corresponding to last 12 months

5. Impact of IFRS 16: Net Debt / EBITDA of 1.36; Net Debt / EBITDA (September 2023) of 1.10;

6. Variation in figures not rounded up/down

ANALYSIS OF RESULTS

The focus on efficiency and cost management made it possible to achieve a further significant reduction in cash costs of between 4% and 12%, in relation to the same period in the previous year, in all pulp and paper segments (printing and writing, tissue and packaging); ongoing efforts to control costs have resulted in reductions in cash costs of between 20 and 30%, in relation to the peak level recorded in late 2022, although these costs are still higher than before the pandemic. The resilience of printing, packaging and tissue paper prices and the growing proportion of total business represented by new business segments - tissue and packaging - have enabled Navigator to secure strong results.

The printing and writing papers industry

Globally, apparent demand for Printing and Writing Paper grew by 2.6% (January to August) across all segments, with demand for UWF up 2.4%, and CWF papers growing by 2.4%, whilst papers with mechanical fibre (coated and uncoated) experienced growth in demand of 3.8%.

Global Demand for Printing and Writing Papers

Source: PPPC, August (2024 vs. 2023)

In Europe, apparent demand for UWF paper recorded strong growth of 11% over the first nine months, with the folio segment as the top performer, at 15%, followed by office paper (up 11%) and reels for the paper converting industry (up 9%).

Demand in the United States edged down by 1% (January to August), whilst China recorded growth of 5% (January to August), in relation to the previous year.

Capacity utilisation rates in the industry (output/capacity) adjusted downwards in the 3rd quarter in response to the usual seasonal factors, which led to a slower pace in new orders. Navigator also eased off the pace of production leading to an average capacity utilization rate in the first 9 months of 87%, as a compared to European industry-wide average of 82% for the same period.

The benchmark index for office paper prices in Europe - PIX A4 B-copy – stood at 1,109 €/ton at the end of September and has held very steady since the start of the year, with prices rising by approximately 2% since year-end 2023. Navigator's average price for printing and writing products has increased by 5% since the end of 2023.

Navigator's printing and packaging paper sales totalled 948 thousand tons in the first nine months, up by 17% on the same period in the previous year, with sales growing 7% in value. This has highlighted the strength of our business model, based on differentiation, premium products and strong brands in the various markets where we operate.

Mill brands represented approximately 78% of sales in the first nine months (vs. an average of 67% over the period 2012-2023), again pointing to the resilience of the company's branding strategy. The proportion of premium products remained high in relation to 2023, at 60% (compared to an average of 53% in the period 2012-2023). When market conditions are more difficult, mill brands and segments with greater value added offer an additional safeguard for Navigator's results.

Pulp Market

The European benchmark index for hardwood pulp – PIX BHKP in dollars – rose to an all-time high in July (1,440 USD/t), adjusting down to 1,261 USD/t at the end of September, and currently standing at 1,162 USD/t. The 3rd quarter brought a sharp correction in prices in China, with knock-on effects in Europe, albeit at a slower pace. The average pulp price in the 3rd quarter was 1,361 USD/t, still slightly up on the 2nd quarter.

In Europe, the markets for end consumers of pulp continued to perform well, especially in the printing and writing paper industry (UWF up 11% YoY January to September; Tissue up 7% YoY January to July), despite the usual seasonal slowdown observed in Europe. On the supply side, new ventures in 2023 in Chile and Uruguay and the start-up of new production capacity in 2024 in Latin America and China both led to a gradual increase in supply, especially over this period, putting downwards pressure on prices.

In this context, global demand in the first eight months fell by 1.0% for bleached chemical pulp (BCP), whilst demand for hardwood pulp (HW) grew by 0.5%, with eucalyptus pulp (EUCA) growing by 3.7% (all figures YoY). The main highlights were growth in Europe (BCP up 13.6%, HW up 18.5%, EUCA up 19.4%), and falling demand in China (BCP down 12.1%, HW down 9.5%, EUCA down 7.2%). It should be stressed that, worldwide, eucalyptus pulp represent almost half of all pulp in the market and more than 75% of hardwood pulp.

Global Demand for Pulp

Demand for EUCA has represented a growing proportion of BCP and HW

Source: PPPC, August (2024 vs. 2023)

In August, stocks at European ports stood at 1.5 million tons, in line with the historic average for the past 5 years. In China, pulp stocks stood at 1.7 million tons in September, just below the historical average for the past 5 years (1.8Mt).

As a result, pulp sales stood at 277 thousand tons, due to increased integration in paper products, down by 25% YoY, with the value of sales falling by only 13% in relation to the same period in 2023, thanks to the upward course of pulp prices.

Growth and strong performance in Tissue business

The demand for tissue paper has remained lively, with growth of 5.8% since the start of the year in Western Europe. This strong rate of growth is due essentially to recovery in consumption in the Away-from-Home segment and growing household spending power.

Healthy demand for tissue has been accompanied by growing pressure on margins, due to rising production costs, with the result that prices increases were implemented across the market.

Navigator's tissue sales totalled 155 thousand tons in the first nine months, up by 53% on the same period in 2023, with the value of sales growing by around 48%. These figures have benefited from the additional capacity provided by Navigator Tissue Ejea as from the 2nd quarter of 2023, and by Navigator Tissue UK as from 1 May 2024.

International sales in tissue business therefore accounted for 78% of turnover in this segment in the first nine months of 2024. The most important markets were the Spanish market, with 32% of total sales, followed by the UK, with 28%, and France, which accounted for 16% of sales. Sales broke down into 97% finished products and 3% reels, representing an improvement in the mix of 3pp when compared with the same period in 2023.

In terms of client segments, At Home or Consumer (retail) business has grown in importance, currently accounting for 81% of sales, whilst Away-from-home and wholesalers account for the remaining 19%. The client portfolio remains diversified and balanced, with the largest client accounting for around 10% of total sales.

Tissue Sales1 2 in the First 9 Months of 2024 (vs. First 9 Months of 2023)

¹tons ² Q2 and Q3 2023 and first nine months of 2024 include Tissue Ejea l May to September 2024 includes Tissue UK ³Finished products and reels

Commercial performance by mill brands was again eye-catching, with Amoos ranked as the fastest growing brand in terms of penetration in Spanish households in 2023, in the household consumables sector, by Kantar Brand Footprint, which surveys the brands most popular with consumers. With penetration up by 57% in comparison with 2022, the Amoos brand has increasingly found its ways into Spanish homes. This award has consolidated the strategy of this mill brand, which has been to invest in innovation and visibility, building up its position in the Iberian market and continuing to grow alongside its consumers. The company's mill brands grew by 38% in relation to 2023, including figures from Navigator Tissue UK.

Packaging - From Fossil to Forest – investment in sustainability, innovation and transformation

Demand levels in 2024 had pointed to recovery and a return to normal for the packaging market. After a promising 1st half, the 3rd quarter confirmed the tendency for recovery and stability, with robust and consistent demand. European deliveries of Kraft MF papers (white and brown) reported by CEPI (YTD July) were up by 22% on the same period in 2023 in the European market.

The packaging segment has performed consistently over the first nine months of the year, with a gradual increase in sales. Navigator's sales volume in this segment was up by 108% over the same period in the previous year. At present, 70% of our sales are in Europe, mainly in Iberia, Italy and France, with the remaining 30% in overseas markets (where Turkey and North Africa are our leading markets).

This performance has been supported by the move into several new segments, above all in the area of Flexible Packaging. These segments were launched during 2023 and in the early months of this year, as previously reported, and are now generating more significant sales volumes.

Indeed, looking at the breakdown of sales by segments, since 2023, we have successfully reduced the segment's dependence on bags, strategically increasing sales in the Flexible Packaging and Box (rigid packaging) segments. This change has enabled us to diversify our portfolio and position ourselves more strongly on the market. The FLEX segment has expanded significantly, and currently tops sales at 47%, whilst the bag segment (gKRAFT BAG) has declined as a proportion of total sales by more than 20% since the start of 2023, to 46% at present, despite recording strong growth in the sales volume (up by 50% vs 9M 2023).

The fastest growth was in the Box segment, although this remains a minor part of the total sales mix. This segment focuses on niche sectors, producing added value products, such as pizza boxes for Italy, where public health rules prohibit the use of recycled paper in contact with food, as well as perfume and cosmetics boxes for France and Iberia.

Sales Breakdown by Segments (YTD September)

Navigator has therefore continued to broaden its customer base, which already numbers close to 300 clients in a sales operation 100% based on its own brand - gKraft™.

Our packaging paper offering is based on three gKraft™ macro segments: BAG, FLEX and BOX, which subdivide into 12 segments for different applications, catering for the bag, flexible packaging and box markets. The innovative introduction of the properties of eucalyptus fibre has been crucial in securing the growing acceptance and recognition that these products already enjoy in the market.

Start-up of integrated Moulded Pulp production

The 3rd quarter saw the start-up of production at the new industrial unit in Aveiro for moulded pulp products.

This new avenue for growth falls within our responsible business strategy, whereby we are seeking to contribute to a more decarbonised society, harnessing the crucial role of well-managed planted forests in the transition from a linear fossil model, with no future, to a circular bioeconomy model, which is carbon neutral and nature-friendly.

Production started up with three product lines for single-use applications in the food sector, 100% recyclable and/or compostable. The launch will be based around 7 products for the food sector: a 22cm plate, a 17cm plate (dessert), a 500ml bowl, 1 litre take-away packaging, a laminated tray for raw protein (beef, pork and chicken), a fruit basket and an espresso coffee cup.

These 7 products offer production flexibility and scalability for exploiting the various opportunities opening up for substituting single use plastics and aluminium. Alongside this, work has proceeded on developing new products, in partnership with national and international clients, and on researching and developing new sustainable barrier property solutions, as well as trials of commercial products.

The first moulded pulp items by The Navigator Company have reached the market this month (October).

Power Output of 1,085 GWh, of which 77% was from renewable energy sources

In the first nine months of 2021, electricity sales totalled € 96 million, representing a reduction of approximately 26% in relation to the same period in the previous year.

This reduction is explained essentially by the fact that the combined-cycle natural gas power station in Setúbal is operating with only one generator set for in-house consumption, with the sale of surplus power to the national grid, when last year all its power output was sold.

These lower sales figures for energy business, operating on a self-consumption basis, are matched on the other hand by lower acquisition costs for electrical power for the purchase volume indexed to OMIE. We should also stress the lower cost of electricity for the purchasing volume indexed to the market, as a result of the lower OMIE price from January to September (52.7€/MWh in 2024 vs. 93.1€/MWh in 2023).

The Group's industrial units continue to participate in the Regulation Reserve Band Market, a system service provided to the operator of the power grid by qualified major power consumers, designed to contribute to the fundamental aim of safeguarding the security of supply in the National Electrical System, which has already proved to be decisive for protecting domestic consumers and critical users.

EBITDA of € 431 million

The focus on efficiency and cost management, combined with the resilience of benchmark prices for printing, packaging and tissue paper and higher pulp prices, enabled us to achieve strong results.

In comparison with the previous quarter, there was again a significant reduction in cash costs this quarter, of between 2% and 10% in all pulp and paper segments (printing and writing, tissue and packaging), with the first nine months presenting an accumulated YoY reduction of between 4% and 12% in all pulp and paper segments.

Total fixed costs ended the period at a higher level than in the same period in 2023, due to the inclusion of the Navigator Tissue Ejea unit and Navigator Tissue UK, employee profit sharing, increased compensation payments under the rejuvenation scheme and non-recurrent costs related to the acquisition of Accrol.

In this context, Navigator achieved EBITDA of € 431 million in the first nine months (vs. € 377 million in the same period in 2023), with an EBITDA margin of 27.5% (up 1.7 p.p. year-on-year).

Financial Results

Financial results showed a loss of € 9.7 million (as compared to € -15.7 million in the same period in 2023), reflecting an improvement of € 6.0 million YoY, mainly as a result of improved foreign exchange results.

Financing costs rose slightly, but the average financing rate remained at a competitive level (average rate in September of 2.3%), benefiting from the policy of hedging interest rate risk.

Earnings from financial investments remained at a similar level to the same period in 2023, thanks to optimised management of cash surpluses.

Pre-tax profits totalled € 307 million (vs. € 262 million in the same period in 2023) and the corporation tax burden for the period was € 66 million (vs. 61 million in 9M 2023), with a tax rate for the period of 21% (vs. 23%). Net income stood at € 241 million (vs. € 201 million in the same period in 2022).

Free cash flow generation

Free cash flow generation has remained at a high level, although it was affected by acquisition of Accrol, now called Navigator Tissue UK, standing at € -3 million in the first nine months of the year (€ 150 million, excluding the effect of the acquisition), in a context of a substantial volume of capital expenditure over the period (€ 151 million).

New finance facilities reaffirm Sustainable Financial Management

Net debt grew by € 153 million in relation to year-end 2023, representing only one third of the main flows in the last 9 months: the payment of € 153 million (acquisition of Accrol), distribution of € 150 million in dividends and the level of capex (€ 151 million). Even so, the Interest-Bearing Net Debt/EBITDA ratio stood at 1.16, further consolidating the financial strength displayed by the Group.

Over the first nine months of the year, Navigator repaid debt of € 102 million, whilst also contracting a significant volume of new long-term finance. Navigator contracted: i) a long-term loan (7 years), of € 55 million, of which € 30 million has been issued and the remaining € 25 million is available for issue up to March 2025; ii) three new long-term finance facilities – maturing in 5, 6 and 7 years with a value of € 300

million, two of which are bond issues with a value of € 50 million each, maturing in 5 and 7 years (bullet), respectively, and were issued at a floating rate, although derivatives have been contracted to hedge the interest rate risk. The remaining finance facilities, with a value of € 200 million, will be issued in the 4th quarter.

Navigator also has long term finance available from the European Investment Bank (EIB) with a value of 115 million euros, which can be drawn in 3 tranches over a period of 18 months after signing (in December 2023), with maturities of up to 12 years. Lastly, there are commercial paper programmes (more than one year), contracted but unused, with a value of € 128 million.

As a result, Navigator continues to enjoy ample liquidity, with € 468 million in long term facilities available, an appropriate level of average debt maturity, with rationally staggered repayments, and approximately 60% of total debt tied to sustainability (vs. 40% 9M 2023) and 93% of total debt issued on a fixed rate basis, directly or via hedging instruments, enabling us to maintain low financing costs in a scenario of sharply rising interest rates.

It should be noted that, despite the new facilities contracted, incorporating higher market interest rates, our average cost of financing at the end of September remained low, at approximately 2.3%.

Navigator is committed to carrying on its business in full compliance with principles and best practices related to the Environment, Society and Governance issues (ESG) and has established this Sustainability-Linked Finance Framework to support the financing and/or refinancing of its activities in general, through bond issues or loans indexed to sustainability indicators. These sustainability-linked financial instruments are effective tools for securing the funding for its operations, and at the same time bolster its commitment to sustainable practices.

Capex of € 151 million

In the first nine months of 2024, capital expenditure totalled € 151 million (compared to € 142 million 9M 2023), of which approximately € 81 million was classified as environmental or sustainability investment (ESG), accounting for 53% of total.

Capital expenditure consisted mostly of projects aimed at environmental and decarbonisation projects, maintaining production capacity, modernising plant and achieving efficiency gains, as well as structural and safety projects. The most significant capex projects include the new high efficiency Recovery Boiler in Setúbal, Moulded Pulp in Aveiro, the new biomass-fuelled lime kiln in Figueira, conversion of the Setúbal lime kiln to burning biomass and the new solar facilities in Figueira da Foz and Vila Velha de Ródão.

Navigator has moved ahead with projects under the Recovery and Resilience Plan (RRP), and these projects are proceeding to plan. For eligible investments under the RRP, an incentive rate of around 40% is anticipated, corresponding to close to € 100 million, and the company received approximately € 21 million in 2023 and € 18 million in the first 9 Months of 2024.

A BIOINDUSTRY ON THE RIGHT SIDE OF THE FUTURE

A responsible business for the Climate and Nature and for Society

The 3rd quarter brought Earth Overshoot Day, on 1 st of August, the date on which the planet goes into an ecological deficit, i.e. when mankind is consuming more natural resources and environmental services than the planet's ecosystems are able to regenerate, and which should only start to be used the following year. The fact that this date falls ever earlier in the year is a clear sign of the urgent need to speed up joint efforts to achieve efficiency and reduce our use of natural resources, and to strive for carbon neutrality and a lowcarbon circular bioeconomy.

Navigator remains committed to responsible management of the natural resources which underpin its business. The company managers approximately 109 thousand hectares across Portugal, enabling it to respond to the growing demand for wood and new bioproducts, which result in goods and services valued by the market, but also in the positive externalities made possible by sustainable management, such as carbon sequestration and production of oxygen, regulation of the hydrological cycle and promotion of biodiversity.

Aware of the need to manage natural resources responsibly, Navigator has made remarkable strides in its contribution to management of Portugal's forests, in particularly by setting up the Forestry Producers Club.

The Navigator Forestry Producers Club is a pioneering and unique scheme for strengthening relations with its partners and making an important contribution to a significant increase in Portugal's forestry yields and wood output, by disseminating sustainable and active management practices in the country's woodlands. With the slogan "Working Together for the Forest", the Navigator Forestry Producers Club sets out to support our forestry sector partners, on a collaborative basis, in implementing active and responsible forestry management. An online platform is used for providing solutions for: bringing actors in the sector up to speed, access to a purchasing hub and a varied range of benefits. The Club also offers direct access to programmes that support production, provision of forest management tools, as well as training and coinvestment opportunities. By increasing the area of land in Portugal on which best forestry practices are applied and all certification requirements are complied with, the project will bring benefits that extend well beyond a stronger eucalyptus sector. It will also contribute to lower fire risks, less CO² emissions, increased biodiversity, with more conservation areas, and to a more dynamic economy in inland regions of Portugal.

As part of these cooperative efforts, Navigator has this quarter established partnerships with Crédito Agrícola, Galp and Interprev, in order to promote and strengthen an economic environment more favourable to Portuguese businesses in the agro-forestry sector. With these agreements, members of

Navigator's Forestry Producers Club will have access to: (i) preferential financing terms; (ii) exclusive discounts for refuelling at Galp filling stations and (iii) a package of occupational health and safety solutions, available exclusively to members, helping to reduce their operating and financial costs. This collaborative venture seeks not only to modernise actors in the sectors, but above all to promote economic development, financial resilience and growth in the business of forestry operators, helping to boost the vitality of rural communities in Portugal and to combat desertification.

Having started up in November 2023, the Forestry Producers Club already has 326 members, representing combined turnover of approximately € 437 million and a workforce of 2,233.

We accordingly pay keen attention to global developments, seeking to consolidate our strategy and our ability to steer our operations, successfully and sustainably, through an uncertain future, building partnerships with various stakeholder groups and seeking to cooperate with organisations that share our values, creating a positive impact on Society, the Climate and Nature.

Support for Forestry Producers affected by fires

Regrettably, the 3rd quarter was also marked by forest fires.

Navigator feels deeply for the families and populations affected by the major fires which ravaged parts of Portugal. It also wishes to acknowledge the work of all those who helped to combat the fires - the civil protection authorities, the security forces, firemen, civil society, Afocelca's team and all our employees who have been on the ground all summer supporting prevention, coordination and combat.

We should remember that the majority of fires of known origin are preventable, as they are the result of carelessness, negligence or intent, accounting for around 80% of cases, half of which are intentional fires. Fires cause significant damage to the country and increase costs for industry, which is forced to resort to importing wood.

Professional management of forest areas has proved to be the most effective solution for preventing fires, as demonstrated by the fact that the areas managed by the industry accounted for only around 2 per cent of the total area affected, a proportion 5 to 10 times lower than unmanaged stands of eucalyptus, pine or even other hardwoods.

Aware of the impact of the fires on forestry production in the region, Navigator has designed a series of measures to mitigate the consequences for producers in the regions affected.

• Implementing means of support so that it is possible to select and segregate wood without any traces of charcoal, thus valorising it;
• The company will continue, as it always has, to pay for wood from the regions devastated by the tragic fires at market price, while also assuming a price premium to support debarking that eliminates any possible traces of charcoal, in order to fulfil the demanding quality criteria defined in the reception conditions of our mills and allow it to be used for pulp production - the industrial use that values it most. It will thus combat any possible attempt at speculative profiteering that could seek to capitalise on the situation, further harming the forestry producers affected;
• In furtherance of receiving wood under the above conditions, aid for the purchase of forestry equipment will be reinforced and cash advances will be made available to our suppliers and partners affected by this scourge;
• In addition, for burnt wood or wood with traces of charcoal that cannot be recovered for industrial purposes, its use as a source of crushed biomass for renewable energy production will be accepted, and it will also be paid for at market prices.

Navigator is known for its constant and systematic support for its forestry partners, and we are eager to do even more at this especially challenging time.

External recognition of our commitment to sustainability

Navigator recognised as the forestry sector's most sustainable company worldwide

Our commitment to improving ESG performance, backed up by investment, has also been reflected in positive assessments from independent rating agencies.

Navigator was again classified as a low-risk company for investors and an "ESG Industry Top Rated Company" in Sustainalytics' ESG Risk Rating published in July. The company was awarded a score of 11.6, in its last evaluation reaching 1st place of 85 global companies in the Paper & Forestry industries cluster, and also ranked first in the sub-group of 63 companies in the Paper & Pulp cluster, listed in the top 5% of more than 16,200 companies in all industries worldwide.

MARKET OUTLOOK

The 4th quarter got off to a turbulent start, with rising geopolitical tensions, most notably the escalation of the conflict in the Middle East, and also disappointing macroeconomic data. Another aggravating factor was the announcement of strikes at US ports, which have disrupted supply chains, with knock-on effect on economic flows. At the same time, the polarisation and uncertainty surrounding the US elections have serious implications for global stability and significantly hinder short-term forecasting. Nonetheless, macroeconomic forecasts remain cautiously optimistic.

In our sector, and in particular in pulp business, prices are expected to recover in China, after bottoming out. In combination with the post-summer season of higher demand, this could lead to a degree of recovery in the 4th quarter. Elsewhere, a player in Latin America has announced a 4% cut in output, and 8 production lines in the region will have maintenance shutdowns in the 4th quarter. These events could exert positive pressure on market prices, since, in total, is estimated, that the capacity in the 4th quarter will be brought down by approximately 670 thousand tons. In Latin America, another player has announced plans to switch from production of hardwood pulp to dissolving pulp in the 1st quarter of 2025, which will remove a further 300 thousand tons of paper pulp from the market.

In the paper segment, the pace of order book growth is expected to accelerate in the 4th quarter, and this has been felt since September, seasonally the strongest time of year worldwide. On the supply side, there is the potential for further temporary or permanent reductions in capacity in the paper sector. In Europe, capacity was cut by close to 200 thousand tons in the 1st quarter, followed by the closure of mill in the US in June, eliminating UWF production capacity of approximately 170 thousand tons. A further closure was announced in Germany in the 2nd quarter, due to take place by the end of 2024, which will remove more

another 280 thousand tons a year from the market, and in the 3rd quarter an Italian mill also announced its closure, removing around 130 thousand tons of UWF capacity from the market.

These changes, combined with a level of cash costs which, despite coming down, are still higher than before the pandemic, will continue to sustain price levels in Europe and the international markets in which we operate.

In the tissue segment, demand continues to be lively, and estimates suggest it will remain healthy, with growth in Europe of 3.2% in 2024. The Group has moved to create synergies and economies of scale driven by business growth, in particular with the acquisition of Navigator Tissue Ejea in 2023 and that of Navigator Tissue UK in 2024.

Navigator remains focused on operational efficiency, managing its fixed and variable costs across its ventures, and also on building up productivity and energy efficiency, ensuring the sustainability of its operations. At the same time, business diversification and the development of new products remain our main priorities, especially in the Tissue and Packaging segments. The Tissue segment will benefit from synergies from the integration of the new unit in the United Kingdom, which will also bring new product lines, and in the Packaging segment we remain committed to innovation and developing new products, as well as launching sales of moulded pulp products as from the 4th quarter.

Navigator's product range, the quality of our brands and distinctive products, our sustainable business approach, the scale of our operations and our sound finances have all supported a resilient business model, enabling us to present consistent results, in changing market conditions.

Lisbon, 24 October 2024

Conference Call and Webcast for Analysts and Investors

Date: Wednesday, 30 October 2024

Time: 12:00 WET (Western European Time, GMT)

Link to the Conference Call webcast:

https://streamstudio.world-television.com/1076-1695-40687/en

Link for advance registration for telephone access to Conference Call:

https://aiti.capitalaudiohub.com/navigator/reg.html

FINANCIAL STATEMENTS

The Navigator Company, S.A. Consolidated Income Statement on September 30th 2024 and 2023

	9 months	9 months
Amounts in Euro	30/09/2024	30/09/2023
Revenue	1 568 542 386	1 460 559 742
Other operating income	60 197 636	46 487 975
Changes in the fair value of biological assets	2 105 380	(1 629 153)
Costs of goods sold and materials consumed	(666 463 752)	(658 202 460)
Variation in production	8 256 760	2 038 370
External services and supplies	(347 636 622)	(307 223 688)
Payroll costs	(152 971 921)	(128 189 117)
Other operating expenses	(40 774 433)	(37 307 648)
Net provisions	(104 902)	(1 289 652)
Depreciation, amortisation and impairment losses in non-financial assets	(114 516 135)	(97 637 432)
Operating results	316 634 397	277 606 937
Financial income	16 154 626	9 769 797
Financial expenses	(25 862 786)	(25 462 742)
Net financial results	(9 708 160)	(15 692 945)
Profit before tax	306 926 237	261 913 992
Income tax	(65 461 060)	(61 121 814)
Net profit for the period	241 465 177	200 792 178
Attributable to Navigator Company's Shareholders	241 444 011	200 755 870
Attributable to non-controlling interests	21 166	36 308

The Navigator Company, S.A. Consolidated Statement of Financial Position on September 30th 2024 and December 31st 2023

Amounts in Euro	30/09/2024	31/12/2023
ASSETS
Non-current assets
Goodwill	484 106 675	381 496 008
Intangible assets	61 620 749	46 198 240
Property, plant and equipment	1 342 515 677	1 233 223 791
Right-of-use assets	105 234 827	65 044 454
Biological assets	117 697 359	115 591 979
Investment properties	363 350	463 404
Defined benefit plans	1 881 090	-
Receivables and other non-current assets	18 857 727	44 399 506
Deferred tax assets	61 189 775	23 653 501
	2 193 467 229	1 910 070 883
Current assets
Inventories	320 858 460	286 490 362
Receivables and other current assets	520 425 569	424 740 973
Income tax	24 682 073	18 385 534
Cash and cash equivalents	65 359 479	169 464 967
	931 325 581	899 081 836
Total assets	3 124 792 810	2 809 152 719
EQUITY AND LIABILITIES
Capital and Reserves
Share capital	500 000 000	500 000 000
Currency translation reserve	3 433 054	5 309 023
Fair value reserves	17 809 385	12 898 767
Legal reserve	100 000 000	100 000 000
Other reserves	(5 960 836)	3 481 014
Retained earnings	549 700 052	418 633 191
Net profit for the period	241 444 011	274 923 820
Equity attributable to Navigator Company's Shareholders	1 406 425 666	1 315 245 815
Non-controlling interests	347 165	327 018
Total Equity	1 406 772 831	1 315 572 833
Non-current liabilities
Interest-bearing liabilities Lease liabilities	566 553 764 101 079 686	560 085 341 62 848 761
Deferred tax liabilities	124 563 350	95 856 013
Provisions	28 318 304	27 837 286
Payables and other non-current liabilities	118 457 351	114 670 790
	938 972 455	861 298 191
Current liabilities
Interest-bearing liabilities	141 995 750	99 259 122
Lease liabilities	12 114 117	7 148 060
Payables and other current liabilities	556 399 462	503 046 782
Income tax	68 538 195	22 827 731
	779 047 524	632 281 695
Total Liabilities	1 718 019 979	1 493 579 886
Total Equity and Liabilities	3 124 792 810	2 809 152 719