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Altri SGPS Interim / Quarterly Report 2020
1914_iss_2021-03-18_325e99b0-cea0-4ee0-bbb6-9b7173f376ca.pdf
Interim / Quarterly Report
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Informação financeira 2012
ALTRI, SGPS, S.A. Public Company
Financial Information – 2020 Results (Unaudited)
This document is a translation of a document originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards as adopted in European Union (IFRS-EU), some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.
1
Head Office: Rua Manuel Pinto de Azevedo, 818 – Oporto Fiscal Number 507 172 086 Share Capital: 25,641,459 Euro
| 1. | HIGHLIGHTS 3 |
|---|---|
| 2. | FINANCIAL REVIEW 5 |
| 3. | INVESTMENTS 10 |
| 4. | DEBT 10 |
| 5. | SUSTAINABILITY 12 |
| 6. | PULP MARKET 14 |
| 7. | ALTRI – Business Profile 15 |
| 8. | OUTLOOK 16 |
1. HIGHLIGHTS
1.1. COVID-19
Since the beginning of the pandemic, Altri Group implemented a set of measures for the prevention, control and surveillance, in order to respond to the demands arising from the COVID-19 pandemic and, in particular, to ensure the permanent well-being of all Employees, their families and the community. Thus, the Group implemented a series of preventive actions and proceeded with the elaboration of the COVID-19 Contingency Plan, to protect the health and safety of its Employees, based on the recommendations of the Portuguese Health Authority to face the pandemic. These measures have been continuously monitored and revised by the Group, whenever necessary, considering the evolution of the pandemic.
As a result of the various measures implemented by the Group, during the 2020 financial year, there was an impact on the income statement in the amount of approximately 1.2 million Euro (including personnel expenses, namely extra shifts and overtime, as well as travel expenses, donations, protective equipment, expenses with hiring companies specialised in disinfecting spaces, among others).
Regarding liquidity risk management, the Group maintained a liquidity reserve in the form of credit lines with its relationship banks, in order to ensure the ability to meet its commitments, without having to refinance in unfavourable conditions. As of December 31, 2020, the amount of consolidated loans1 maturing in the next 12 months is 183.4 million Euro. On the same date, the Group has consolidated credit lines available (namely bank overdrafts, pledged current accounts and not used commercial paper programs) in the amount of approximately 86 million Euro. Additionally, the Group's cash and cash equivalents reaches 254.6 million Euro, representing approximately 77% of its current liabilities.
1 Consolidated loans: Bank loans + Other loans + Reimbursable government grants + Lease liabilities.
1.2. Altri Group's 2020 Activity Summary
- ✓ Pulp production amounts to 1.102 million tonnes;
- ✓ Pulp sales amount to 1.098 million tonnes;
- ✓ Renewable electric energy production through forest biomass amounts to 732.6 GWh;
- ✓ Exports reach 397.7 million Euro;
- ✓ EBITDA of 130.4 million Euro:
- o 97.5 million Euro in the Pulp segment;
- o 32.9 million Euro in the Energy segment.
- ✓ Nominal remunerated debt 2 of 475.3 million Euro;
- ✓ Annual decrease of the nominal remunerated debt amounted to 37.7 million Euro;
- ✓ Free Cash Flow3 of 2020 reached approximately 100 million Euro (considering dividends paid of 62 million Euro and decrease of net debt of 37.7 million Euro);
- ✓ Board of Directors will propose for approval in Annual General Meeting a dividend per share of € 0.25 per share.
The fourth quarter of 2020 was marked by a recovery in demand in Asian markets, namely in China, being that the first indicators of a price increase in that geography arose during November. European markets also recorded an increase of pulp demand by almost all customers. However, the announcement of a price increase was recorded only in January 2021.
In operational terms, Altri Group's industrial units produced, during the fourth quarter, 272.9 thousand tonnes of pulp (+2% comparatively to the same period of 2019), which allowed to end 2020 with a record production higher than 1.1 million tonnes. On the other hand, pulp sales of the fourth quarter amounted to 271.3 thousand tonnes, which corresponds to a 0.3% decrease over the same period of 2019. This reduction was justified by the need to restore inventory levels in order to ensure quality customer service.
During the quarter under analysis, the average BHKP pulp price remained at 680 USD/ton (since November 2019). Notwithstanding, the average price for the fourth quarter was 571.4 EUR/ton, which corresponds to a 2% decrease compared to the third quarter of 2020.
The production of renewable electric energy through forest biomass, in 2020, reached around 732.6 GWh, which corresponds to a 36% increase over 2019.
2 Nominal remunerated net debt: Bank loans (nominal values) + Other loans (nominal values) – Cash and cash equivalents.
3 Free Cash Flow: Change in net debt since 31.12.2019 + Dividends paid.
2. FINANCIAL REVIEW
2.1. 4Q2020 Results
The financial information was prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards, as adopted by the European Union (IFRS-EU).
4Q2020 Income Statement
| thousand Euro | 4Q2020 | 4Q2019 | 4Q20/4Q19 Var% |
3Q2020 | 4Q20/3Q20 Var% |
|---|---|---|---|---|---|
| Total revenues (a) | 146,102 | 171,396 | -14.8% | 141,523 | 3.2% |
| Cost of sales | 66,501 | 71,586 | -7.1% | 59,059 | 12.6% |
| External supplies and services | 37,895 | 46,995 | -19.4% | 37,582 | 0.8% |
| Payroll expenses | 9,487 | 11,985 | -20.8% | 9,909 | -4.3% |
| Other expenses | -902 | 324 | -378.2% | 1,715 | -152.6% |
| Fair value changes in biological assets | -1,246 | -1,937 | -35.7% | - | - |
| Provisions and impairment losses | -645 | 6,093 | -110.6% | 900 | - |
| Total expenses | 111,090 | 135,046 | -17.7% | 109,165 | 1.8% |
| EBITDA (b) | 35,012 | 36,350 | -3.7% | 32,358 | 8.2% |
| EBITDA margin (c) | 24.0% | 21.2% | +2.8 pp | 22.9% | +1.1 pp |
| Amortisation and depreciation | -17,812 | -19,156 | -7.0% | -19,553 | -8.9% |
| EBIT (d) | 17,200 | 17,194 | 0.0% | 12,805 | 34.3% |
| EBIT margin (e) | 11.8% | 10.0% | +1.7 pp | 9.0% | +2.7 pp |
| Results related to investments | -20 | -99 | -79.6% | -1 | - |
| Financial expenses | -7,724 | -4,829 | 60.0% | -7,023 | 10.0% |
| Financial income | 1,548 | 350 | 342.4% | 965 | 60.5% |
| Financial results | -6,197 | -4,578 | 35.3% | -6,060 | 2.3% |
| Profit before income tax and ESEC | 11,004 | 12,616 | -12.8% | 6,745 | 63.1% |
| Income tax | 1,680 | -2,500 | -167.2% | 8,306 | - |
| Energy sector extraordinary contribution (ESEC) | -1,998 | - | - | - | - |
| Consolidated net profit for the financial year | |||||
| Attributable to: | |||||
| Holders of equity in the parent company | 10,690 | 10,120 | 5.6% | 15,055 | -29.0% |
| Non-controlling interests | -4 | -4 | - | -4 | - |
(a) Total revenues = Sales + Services rendered + Other income
(b) EBITDA = Profit before income tax and ESEC, Financial results and Amortisation and depreciation
(c) EBITDA margin = EBITDA / Total revenues
(d) EBIT = Profit before income tax and ESEC and Financial results
(e) EBIT margin = EBIT / Total revenues
The fourth quarter of 2020, despite being a quarter traditionally less intense due to Christmas and the New Year, was characterised by an increase in demand, namely in geographies along the Mediterranean coast.
| tons | 4Q2020 | 4Q2019 | 4Q20/4Q19 Var% |
2020 | 2019 | 2020/2019 Var% |
|---|---|---|---|---|---|---|
| BHKP pulp production | 251,358 | 247,861 | 1.4% | 1,010,329 | 997,819 | 1.3% |
| DWP pulp production | 21,583 | 19,816 | 8.9% | 91,522 | 101,122 | -9.5% |
| Total pulp production | 272,941 | 267,677 | 2.0% | 1,101,851 | 1,098,941 | 0.3% |
| BHKP pulp sales | 254,266 | 257,399 | -1.2% | 997,170 | 995,280 | 0.2% |
| DWP pulp sales | 17,018 | 14,784 | 15.1% | 100,622 | 88,538 | 13.6% |
| Total pulp sales | 271,285 | 272,183 | -0.3% | 1,097,792 | 1,083,818 | 1.3% |
Pulp Production
During the quarter under analysis, Altri produced 272.9 thousand tonnes of pulp, of which 251.4 thousand tonnes were paper pulp (BHKP) and 21.6 thousand tonnes were dissolving wood pulp (DWP). In terms of sales, 271.3 thousand tonnes were sold, of which 17 thousand tonnes were of DWP.
Altri Group exported 231.1 thousand tonnes of pulp, which corresponds to 85% of its pulp total sales. In monetary terms, quarterly exports amounted to 91.9 million Euro.
The average market pulp price (BHKP) during the fourth quarter of 2020 was €571.4/ton, which corresponds to a decrease of 9% compared to the average price registered in the same period of 2019 and a 2% decrease over the average price recorded in the previous quarter of 2020.
Total revenues associated with pulp production units amounted to approximately 125.2 million Euro, which corresponds to a 5% increase comparatively to the third quarter of 2020.
In the quarter under analysis, EBITDA of the pulp production units amounted to 26.3 million Euro.
GREENVOLT Indicators Evolution
| tons | 4Q20 | 4Q19 | 4Q20/4Q19 | 3Q20 | 4Q20/3Q20 | 2020 | 2019 | 2020/2019 |
|---|---|---|---|---|---|---|---|---|
| Energy sales MWh | 176.3 | 168.0 | 5.0% | 189.9 | -7.1% | 732.6 | 540.2 | 35.6% |
| Energy sales M€ | 20,931 | 19,888 | 5.2% | 22,547 | -7.2% | 86,864 | 64,283 | 35.1% |
| EBITDA M€ | 8,672 | 6,629 | 30.8% | 8,599 | 0.8% | 32,888 | 22,029 | 49.3% |
Revenues associated with the units of energy production through forest biomass, developed through the subsidiary GREENVOLT – Energias Renováveis, S.A. (previously designated as Bioelétrica da Foz, S.A.), amounted to, in the fourth quarter of 2020, 20.9 million Euro, which corresponds to a decrease of 7.2% compared to the third quarter of 2020 and to an increase of 5.2% compared to the same quarter of 2019.
EBITDA, in the fourth quarter of 2020, reached 8.7 million Euro, which corresponds to a 31% increase over the same period of the previous year and a 1% increase over the third quarter of 2020.
It should be noted that, during the period under analysis, there was a maintenance stoppage in the principal industrial unit, the Sociedade Bioelétrica do Mondego (company owned by GREENVOLT – Energias Renováveis, S.A.), which has an installed injection capacity of 35MW. There is no maintenance stoppage scheduled for this unit in 2021.
4Q2020 Consolidated Results
Altri's total revenues, during the quarter under analysis, reached 146.1 million Euro, corresponding to a decrease of about 14.8% compared to the same period of the previous year and an increase of 3.2% compared to the third quarter of 2020.
Total expenses in the quarter, including the fair value changes in biological assets, amounted to 111.1 million Euro, which corresponds to a 1.8% increase over the previous quarter and a 17.7% decrease over the same quarter of 2019.
Thus, Altri's Group EBITDA, in the quarter under analysis, reached 35.0 million Euro, a 3.7% decrease when compared to the EBITDA recorded in the same period of the previous year. Over EBITDA of the third quarter of 2020, there was an 8.2% increase.
Altri's Group EBIT amounted to 17.2 million Euro, which is in line with the same period of 2019 and an increase of 34.3% when compared to the third quarter of 2020. The consolidated net profit of the quarter reached 10.7 million Euro.
2.2. 2020 Results
| thousand Euro | 2020 | 2019 | 2020/2019 Var% |
|---|---|---|---|
| Total revenues (a) | 615,649 | 753,520 | -18.3% |
| Cost of sales | 287,335 | 285,623 | 0.6% |
| External supplies and services | 158,870 | 182,781 | -13.1% |
| Payroll expenses | 39,012 | 40,320 | -3.2% |
| Other expenses | 3,055 | 6,316 | -51.6% |
| Fair value changes in biological assets | -1,246 | -1,937 | -35.7% |
| Provisions and impairment losses | -1,755 | 7,274 | - |
| Total expenses | 485,271 | 520,376 | -6.7% |
| EBITDA (b) | 130,377 | 233,144 | -44.1% |
| EBITDA margin (c) | 21.2% | 30.9% | -9.8 pp |
| Amortisation and depreciation | -76,906 | -75,347 | 2.1% |
| EBIT (d) | 53,471 | 157,797 | -66.1% |
| EBIT margin (e) | 8.7% | 20.9% | -12.3 pp |
| Results related to investments | 30 | 29 | 4.5% |
| Financial expenses | -27,745 | -25,525 | 8.7% |
| Financial income | 4,174 | 3,958 | 5.4% |
| Financial results | -23,541 | -21,538 | 9.3% |
| Profit before income tax and ESEC | 29,931 | 136,259 | -78.0% |
| Income tax | 7,036 | -35,436 | -119.9% |
| Energy sector extraordinary contribution (ESEC) | -1,998 | 0 | - |
| Consolidated net profit for the financial year Attributable to: |
|||
| Holders of equity in the parent company | 34,977 | 100,826 | -65.3% |
| Non-controlling interests | -9 | -4 | - |
(a) Total revenues = Sales + Services rendered + Other income
(b) EBITDA = Profit before income tax and ESEC, Financial results and Amortisation and depreciation
(c) EBITDA margin = EBITDA / Total revenues
(d) EBIT = Profit before income tax and ESEC and Financial results
(e) EBIT margin = EBIT / Total revenues
Total revenues amounted to 615.6 million Euro, which corresponds to a 18.3% decrease. In terms of EBITDA, there was a 44.1% decrease to 130.4 million Euro. The consolidated net profit achieved, approximately, 35 million Euro.
During 2020, 1.102 million tonnes of pulp were produced, being 1.01 million tonnes of BHKP pulp and 91.5 thousand tonnes of DWP pulp.
Total revenues associated with the units of pulp production amounted to 528.6 million Euro, which corresponds to a decrease of 23% compared to 2019. Exports reached 945.3 thousand tonnes of pulp, which corresponds to 397.7 million Euro in revenues.
GREENVOLT total revenues amounted to 86.9 million Euro, which corresponds to a 35% increase when compared to total revenues of 2019, having EBITDA reached 32.9 million Euro, which corresponds to a 49% increase over 2019.
Pulp Sales: Detail by Use
Pulp Sales: Detail by Region
3. INVESTMENTS
The total net investment4 made during 2020 by the Group's units amounted to approximately 37 million Euro.
4. DEBT
Altri's nominal remunerated net debt on December 31, 2020 amounted to 475.3 million Euro, which corresponds to an annual decrease of 37.7 million Euro.
Debt maturity profile (million Euro)
Total net investment: Payments in the period related to the acquisition of property, plant and equipment related to the operational activity of the Pulp and Energy segments.
Key balance sheet indicators
| thousand Euro | 31.12.2020 | 31.12.2019 | Var% |
|---|---|---|---|
| Biological assets | 105,621 | 104,491 | 1% |
| Property, plant and equipment | 523,508 | 555,289 | -6% |
| Right-of-use assets | 65,463 | 69,601 | -6% |
| Goodw ill |
265,631 | 265,631 | 0% |
| Intangible assets | 52,202 | 52,043 | 0% |
| Investments in joint ventures and associates | 756 | 725 | 4% |
| Others | 31,330 | 37,066 | -15% |
| Non-current assets | 1,044,510 | 1,084,846 | -4% |
| Inventories | 75,455 | 85,966 | -12% |
| Trade receivables | 64,150 | 83,739 | -23% |
| Cash and cash equivalents | 254,569 | 181,344 | 40% |
| Others | 47,292 | 46,557 | 2% |
| Current assets | 441,465 | 397,605 | 11% |
| Total assets | 1,485,975 | 1,482,451 | 0% |
| Equity and non-controlling interests | 445,321 | 466,043 | -4% |
| Bank loans | 27,500 | 27,500 | 0% |
| Other loans | 532,418 | 558,765 | -5% |
| Reimbursable government grants | 2,942 | 2,942 | 0% |
| Lease liabilities | 65,462 | 70,392 | -7% |
| Others | 81,482 | 82,337 | -1% |
| Non-current liabilities | 709,803 | 741,936 | -4% |
| Bank loans | 2,136 | 6,203 | -66% |
| Other loans | 168,870 | 102,651 | 65% |
| Reimbursable government grants | 2,847 | 3,026 | -6% |
| Lease liabilities | 9,589 | 9,316 | 3% |
| Trade payables | 104,104 | 102,378 | 2% |
| Others | 43,305 | 50,898 | -15% |
| Current liabilities | 330,851 | 274,471 | 21% |
5. SUSTAINABILITY
For Altri it is essential to respond to the future challenges, namely those related to the sustainability of the planet, society and the economy. Hence, Altri promotes the development and dynamisation of strategies and initiatives based not only on sustainability but also on continuous improvement and innovation. Altri Group's long-term strategy places sustainability on its three axes - economic, environmental and social - at the center of its decisions.
Altri was awarded a B rating by Carbon Disclosure Project (CDP), within the scope of the Climate Change program, having obtained the maximum score in monitoring and emissions reduction initiatives.
On the other hand, in 2020, Altri subscribed to United Nations Global Compact, being one of the largest national companies to commit to the objectives defined by this United Nations organization. As a signatory to this commitment, Altri is committed to aligning its strategy and reflecting its Ten Principles involving Human Rights, Labour Practices, Environmental Protection and Anti-Corruption Mechanisms in its culture and daily operations.
The company is equally committed to contributing to the Sustainable Development Goals (SDGs) defined in the 2030 World Agenda, identifying those in which it has the greatest positive impact through its operations, products and solutions and those in which it intends to minimise the impact negative. The Ten Principles are based on universally accepted declarations, namely the Universal Declaration of Human Rights, the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work and the Rio Declaration on Environment and Development.
In social terms, some of its industrial units, namely Celbi (located in Figueira da Foz), Caima (based in Constância), GREENVOLT (in Mortágua) and Celtejo (in Vila Velha de Rodão) gathered information about some of the school groups' needs in Paião (Figueira da Foz), Constância, Mortágua and Vila Velha de Rodão in terms of computer equipment, in order to make their contribution to mitigating the lack of equipment felt, especially at a time when lessons take place remotely, having distributed 50 computers to students in these schools.
With the ambitious objective of reaching the target of "zero accidents" in its units, Altri Group has been implementing programs to induce responsible behaviour in order to approach this value. In 2020, the frequency index was 3.7 ("Good" according to the ILO), corresponding to a 60% decrease compared to the 2019 index. Regarding the severity index, it was 0.11 ("Good" according to the ILO), also corresponding into a 15% decrease compared to 2019.
6. PULP MARKET
According to data from the Pulp and Paper Products Council (PPPC), World Chemical Market Pulp Global 100 Report, December 2020, the cumulative total demand for 2020 of hardwood pulp increased by 6.0% compared to the same period of 2019. The inventory days on hand at hardwood pulp producers were 35 days at the end of December 2020, which corresponds to a decrease of 2 days compared to the level of inventories that occurred a year ago. Geographically, it is verified that consumption of hardwood pulp in Europe (Western Europe and Eastern Europe) decreased by 4%, while the demand from China increased by 13%.
In terms of sales price, benchmark was stable at 680 USD/ton in Europe since November 2019. However, converting the price to EUR, the average price in 2020 was approximately 597 EUR/ton. The average price recorded in the fourth quarter of 2020 was 571 EUR/ton.
Already during 2021, the announcement of three consecutive price increases were made, which means that the current market price is currently at 910 USD for the month of March.
Evolution of BHKP pulp price in Europe from 2010 to March 2021
7. ALTRI – Business Profile
Altri is a reference in European eucalyptus pulp producers. In addition to pulp production, the Group is also present in the renewable power production business from forest base sources, namely industrial cogeneration through black liquor and biomass. The forestry strategy is based on the full use of all the components provided by the forest: pulp, black liquor and forest wastes.
Currently, Altri manages around 86.3 thousand hectares of forest in Portugal, entirely certified by the Forest Stewardship Council® (FSC®) 5 and by Programme for the Endorsement of Forest CertificationTM (PEFCTM), two of the most acknowledged certification entities worldwide.
Currently, Altri has three pulp mills in Portugal, with an installed capacity that, in 2020, reached more than 1.1 million tonnes/year of eucalyptus pulp.
Altri's current organic structure can be represented as follows:
8. OUTLOOK
The current context, although still characterised by a pandemic scenario, is globally optimistic in the medium term, which has resulted in an increase in demand and, consequently, an increase in prices.
It should be noted that, as of the date of this press release, the market price announced for March 2021 is 910 USD, which reflects an increase of 230 USD between the final of December 2020 and the current date.
Altri Group will continue to develop a set of projects that seek to continuously improvement, essentially based on the digital field, which aim to reinforce the efficiency of its production units.
In terms of Environmental, Social and Governance (ESG), Altri Group will present during 2021 its commitments in this matter for the period 2020-2030.
In terms of stoppages for maintenance in 2021, the schedule is as follows:
- Celbi: October 2021
- Caima: September 2021
- Celtejo: No stoppage scheduled
Oporto, March 18, 2021