The Navigator Company

Earnings Release • May 4, 2017

The Navigator Company

Q1 2017Results Presentation

4 May 2017

Diogo da Silveira – CEO

Fernando Araújo– CFO

Joana Appleton - IR

Q1 2017 – Strong volumes and cost reduction

• • Negative impact of pulp and paper prices mitigated by cost reduction and increased sales volume
• • Sales improved 2.1% sustained by good operating performance; very strong volumes QoQ:
• +BEKP+ 40%
• +Tissue + 24%
• +Energy + 15%
• •High level of UWF volumes, but slightly down QoQ
• •Energy activity normalised
• • € 90.2 million in EBITDA (vs.€ 93.5 million in Q1 2016), impacted by lower pulp and paper prices
• • Improving market conditions during the quarter with significant order book and higher prices intra quarter
• • Cost reduction program with positive impact of € 6 million in Q120172

Cash flow remains strong during Q1 2017

( ) i l l i m o n e u r o s	Q 2 0 1 1 7	Q 2 0 1 1 6
T l S l t o a a e s	3 9 2 7	3 8 4 5	% 2 1 +
E B I T D A	9 0 2	9 3 5	3 6 % -
( ) / % E B I T D A S l a e s	2 3 0 %	2 3 % 4	3 1 p p -
N I t e n c o m e	3 5 6	4 4 7	% 2 0 5 -
F C h F l r e e a s o w	2 4 2	1 8	% 3 3 9 +
N D b t t e e	6 1 6 6	6 3 6 4	% 3 1 -
/ N D b E B I T D A t t e e	1 6	1 6	-
R O C E	1 1 1 %	1 2 0 %	0 9 p p -

Pulp prices: upward trend in spite of lower pulp prices in Q1

Average prices for BHKP in Euros during Q1 2017 were 6% below Q1 2016, (9% below in USD), but 6% above Q4 2016 (5% in USD)

BEKP - Market conditions improvement continues

• • BHKP market continues to improve and upward pulp price momentum remains
• • Very strong demand in both Europe and China – high level confidence that prices continue to rise in May
• • Some major suppliers are shifting sales volume from European customers to more profitable markets (Asia and Middle East)
• • Reduction in supply due to several maintenance and unplanned downtime during Feb-May - ~1,1 Mt supply of SW and HW (6% of world capacity); ~600 K t BHKP
• • Cost increase for pulp mills (oil, energy, chemical products etc. )

Paper Market impacted by several events (I)

World

USAADD attracted European volumesEuropean producers placing more volumes in USA

ASIA

Capacity Changes e.g. Bilt -600 kt (India/Malaysia) Polution Controlling capacity shut in China (unknown volume)

Growing Demand (China)

Pipeline stocks depleted (China) trying to building up

Europe

• • The valuation of USD against the Euro have made prices in Asia and Latin America more interesting than in Europe
• • Operating rates during Q1 2017 improved significantly to 97%, with shipments increasing throughout the quarter
• +European deliveries substituting exports
• • Imports have declined 30% QoQ: since H2 2016, all world regions have been redirected volumes from Europe and are placing them either domestically or in other better paying regions
• +Producers destocking and using full capacity

The average price for paper lost 4.0% QoQ (803 vs. 836 €/ton), but shows signs of improvement, with last price for March at 808 €/ton

NVG Paper sales - Main Highlights

• • Sales of 371 thousand tons of UWF – second best first quarter registered
• • Decrease in average sales price YoY (-3.2%), but improvement from December 2016 until March 2017 (+2.6%)
• • NVG announced price increase in overseas markets (Jan.) and Europe (Feb.)
• • Recovery in product mix: premium products share up to 50% and mill brands up to 60%
• • Increase of UWF market share in Europe to 20% (+0.3pp) and to 24% in cut-size (+0.8pp)

Pulp and tissue business performance

Pulp

• • Pulp sales increased 40% in volume to 90 thousand tons (record volume sold since 2009), sustained by capacity increase in Cacia mill
• • 13% Growth YoY in Décor and Special papers segments, high contribution segments
• • Average sales price decreased 11% Q1 2017 vs. Q1 2016, but improved almost 8% vs Q4 2016
• •End of march inventories lower then at year end 2016

Tissue

• • Volume of Tissue sold improved 24% YoY sustained by the 2015 capacity increase; sales increased to € 18 million (vs €15.8 million);
• • Average sales price decreased 7% due to change in mix (increase percentage of reels sales);
• • Estimated apparent consumption growth in Europe forecasted to grow in line with GDP

Focus on cost reducing measures continues

• • M2 cost reduction programme continues with estimated impact on EBITDA in Q1 2017 of € 6 million
• • Main areas contributing to this impact:
• +Chemicals and packaging: € 1.9 million
• +Extra volumes: € 0.9 million
• +Purchase of natural gas: € 0.7 million
• +Wood acquisition: € 0.7 million
• •Programme for 2017 foresees significantly more initiatives than in 2016
• •Estimated impact on EBITDA in 2017 is accordingly greater than in 2016

Main cost reducing measures in 2017

Other variable costs include procurement gains with packaging materials, pallets & others; includes gains with forest activities, reduction in water consumption, etc

EBITDA - Negative impact of prices offset by cost reduction and volumes

The negative impact of pulp and paper prices was reduced by higher volumes and cost reductions

* Non recurring items include reversal of anti-dumping and start-up costs for pellets business

Q1 EBITDA and EBITDA/Sales slighlty EBITDA of ³⁹⁰ M€ : highest EBITDA in the last ⁵ years lower than Q1 2016

EBITDA in Q1 2017 decreased 3.67% versus Q1 2016, but compares favorably with other Q1

FCF was negatively impacted by working capital evolution, namely increase in inventories, ^a normal trend in first quarter, after the sales effort at year-end; working capital also affected by increase in wood inventories

* Other includes antidumping, taxes and insurance

YoY Net debt reduced by € 24 million

• Net debt decreased € 24 million from year-end (€ 20 million QoQ) and Net Debt / Ebitda stood at 1.6

D i i d d P t v e n a y m e n	2 0 2 1	2 0 3 1	2 0 1 4	2 0 1 5	2 0 1 6
l i d T t t o a a m o n p a u ( ) i l l i € m o n	1 6 4 4	2 0 1 4	2 0 0 8	4 4 0 5	1 7 0 0

Continuous improvement in debt profile

• • The successful restructuring of the Group´s debt in 2016 resulted in a longer maturity and lower cost of debt, as well as an increased diversification of counterparties.
• +In February, a new credit facility of USD 10 million was contracted in the US
• • At the end of march the total amount of unused committed commercial paper programmes was € 225.0 million; these lines reach their maturity in 2020.

Total Debt– € 705 mln

* Cost of debt as of March 31th, derivative hedging instruments and anual fees included.

Cost of Debt

Significant reduction in borrowing costs Negative impact of forex

Significant reduction in interest costs following 2016 debt restructuring:

• repayment of the € 350 mln Portucel Senior Notes 5.375%
• new debt issued with better conditions and longer maturity;

€ 777 thousand interest costs improvement YoY

Forex: negative impact of € 1,5 mln comparing with the Q1 2016 positive impact of € 1 mln

Tough start of operations at Colombo Energy

• • First pellets sold from Colombo Energy Inc project in Greenwood, South Carolina during the quarter: 15.4 thousand tons
• •Mill in its start-up phase, still working on production and cost issues
• •Initial tests point to ^a premium product with high calorific value

• • Difficult market environment, but sales efforts proceed for 2018 onwards for both in the industrial market (Europe and Japan/Korea) and residential market (Europe and US)

• • Scale down rhythm of investment and operations due to political and economic situation, which remains unstable

• • Completion of experimental operation to export 2,000 tons woodchips from Zambézia via the port of Nacala, with unexpected port/export tariffs issue
• • Capex for 2017 reduced to 10 M€ - Company remains engaged but needs to clarify situation
• • Announcement by the Government of Mozambique (?) of plans to build the Moatize-Macuse railway line and the port of Macuse, due for completion in 2021-22.

Cacia tissue mill

• • Project to build an integrated tissue production line and converting facilities developing as planned:
• +main equipment suppliers have already been selected
• +preliminary site preparation work is under way
• +paper machine is planned to start up in August 2018.
• +estimated capex of 120 million

Pulp Capacity in Figueira da Foz

• • Target to increase production efficiency and pulp capacity at Figueira da Foz, by 70 thousand tons, progressing:
• +Initial pile work started
• +Civil construction contract adjudicated
• +Main equipment to be fitted in September
• +New capacity is planned to come online in March 2018.
• • Estimated capex of € 85 million – 76% of capex already comissionned

• • Positive momentum in the pulp market continues as new price increases are announced for Q2; but concerns still persist over the new capacity to come on stream in the second half of 2017

• • Tissue will be constrained by more aggressive competition and increased pressure on margins due to rise in pulp price
• • Paper business has been experiencing improved market conditions and will likely continue in Q2:
• +Group has currently a very strong order book - 54 days

• +New price increase implemented in April

• •AGM to be held on May 24th 2017

• • Dividend proposal:
• • Navigator Board of Directors proposes dividend of € 170 million to be paid in June
• • Main shareholder proposes distribution of reserves: € 80 million to be paid in July
• +Implicit dividend yield of 9%

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