The Navigator Company (NVG) H1 2024 earnings summary

Executive summary

• H1 2024 turnover reached €1,066 million, up 9% year-on-year, with EBITDA of €299 million, up 18%, and a 28% EBITDA margin, driven by strong pricing, product mix, and cost reductions.

• Net profit reached €159 million, up 16% year-on-year, marking the second highest first-half results ever.

• Completed the acquisition of Accrol (Navigator Tissue UK), expanding presence in the UK tissue market and furthering diversification strategy.

• Navigator ranked 1st in Sustainalytics ESG for Paper & Forestry, top 5% globally.

• Progressed on the Moulded Pulp packaging project, with commercial production to start in Q3 2024.

Financial highlights

• EBITDA margin reached 28% for H1 and 31% for Q2, reflecting improved product mix and cost reductions.

• Net debt stood at €665 million at June-end, impacted by Accrol acquisition, €150 million dividend distribution, and higher CapEx; Net Debt-to-EBITDA ratio at 1.21.

• Free cash flow was negative at -€25 million in H1, due to high capex and Accrol acquisition.

• CapEx totaled €93 million, with 44%-45% directed to sustainability/ESG investments.

• Liquidity close to €530 million, with €468 million in available long-term facilities and additional €150 million EIB facility available.

Outlook and guidance

• Q3 expected to see seasonal slowdown in demand and increased pulp supply, putting negative pressure on pulp prices, but H2 prices to remain above H1 and 2023 averages.

• Paper segment in Europe to experience above-average seasonal slowdown in Q3, with recovery anticipated in Q4.

• Cost pressures to persist, with costs stabilizing above pre-pandemic levels; freight rates and capacity exits to support paper prices.

• Tissue demand in Europe estimated to grow 3.2% in 2024, with continued synergies from recent acquisitions.

• Margins expected to remain strong but not at Q2 record levels; historical EBITDA margin range of 21%-30% with low deviation.