Presentation of Results 2020 - Semapa 02 01 S… · Presentation of Results 2020 Page 2 1. HIGHLIGHTS O ... (Carbon Disclosure Project) for its activity within the scope of climate

Presentation of Results 2020

Page 2

1. HIGHLIGHTS OVERALL PERFORMANCE − The Semapa Group recorded a consolidated revenue at the end of 2020 of 1,867 million euros (-16.2% year-on-

year), 1,385 million euros generated in Pulp and Paper (Navigator), 451 million euros in Cement (Secil), and 31

million euros in Environment (ETSA). Revenue in the 4th quarter of 2020 amounted to 420.4 million euros, down

by 23.0% vs. the 4th Quarter of 2019. Exports and foreign sales in 2020 amounted to 1,335.4 million euros,

accounting for 71.5% of revenue.

− EBITDA in 2020 amounted to 419.3 million euros (vs. 486.8 million euros in 2019), 285.5 million euros generated in

Pulp and Paper, 123.6 million euros in Cement and 10.1 million euros in Environment. In comparison with the same

period in 2019, the positive developments in the Cement segments (+15.3%), especially in Portugal, and

Environment (+30.3%), should be noted. Since the beginning of the pandemic, all business segments have made an

extra effort to optimize costs with very relevant results, particularly in the Pulp and Paper segment (reduction of

around 47 million euros in fixed costs), resulting in a consolidated EBITDA margin of 22.5%, 0.6 p.p. above that

recorded in 2019. In the 4th Quarter of 2020, EBITDA was 93.3 million euros, -1.6% year on year.

− Net profit attributable to Semapa shareholders in 2020 stood at 106.6 million euros (vs. 124.1 million euros in

2019), not only impacted by the reduction in EBITDA, but also by the negative exchange rate effects at Secil

(Brazilian real), reflected in the financial results, and positively influenced by tax. In the 4th Quarter of 2020, Net

Profit attributable to shareholders was 33.8 million euros vs. 12.0 million euros over the same period in the previous

year.

− The gross value of the investments made in 2020 amounted to approximately 110.4 million euros, with emphasis

on the Pulp and Paper segment with 81 million euros, 25 million euros of which in environmental projects. The new

biomass boiler in Figueira da Foz, with a total investment of 55 million euros over 2019 and 2020, started tests in

2020, representing the first and most significant step in Navigator’s roadmap to decarbonisation. This investment

will allow Navigator to reduce CO2 emissions by more than 30% in 2021, achieving this year over one-third of the

reduction announced in order to achieve carbon neutrality in 2035.

− In the context of the Covid-19 crisis, the Group was still very focused on the optimization of cash generation, with

particular emphasis on the already mentioned cost reduction and also on the optimization of the working capital

and Capex, resulting in the generation of a Free Cash Flow of 345.4 million euros (vs. 207.2 million euros in 2019).

− Consequently, during 2020, net debt decreased in all business segments, and consolidated interest-bearing net

debt totalled 1,215.5 million euros, 255.1 million euros and 23.6 million euros lower compared to the end of 2019

and the end of Q3 2020, respectively.

− Navigator was once again recognised by the CDP (Carbon Disclosure Project) for its activity within the scope of

climate change with the rating “A”, a score achieved by only 3% of the companies assessed in the world-wide survey.


Page 3

LEADING BUSINESS INDICATORS

OPERATIONAL PERFORMANCE − In the Pulp and Paper segment, it should be highlighted that although the 4th quarter was beset by partial

lockdowns, the recovery of the production levels of European UWF was maintained, so that, since July, Navigator

has operated at full capacity. Paper sales stood at 343 thousand tonnes (+2% compared to the 3rd quarter and -6%

in relation to the same quarter last year ); pulp sales totalled 97 thousand tonnes, -7% compared to the 3rd quarter

and -3% in relation to the same quarter of the previous year, given the very low level of stocks. Tissue sales stood

at 26 thousand tonnes, in line with the previous quarter and 22% above the same quarter of 2019. 2020 was marked

by a significant drop in sales prices compared to 2019: the BHKP pulp index (in euros) fell 22% and the A4 paper

index dropped 7% (average price change).

− The impact of the pandemic on the Cement and Other Building Materials business was felt differently in the various

geographical regions of Secil's operations, standing out the revenue growth in Portugal (+4.8% compared to the

previous year) and in Brazil (+19.4%, in local currency, compared to 2019). Lebanon, on the other hand, is

experiencing a serious economic, financial and social crisis, worsened by the Covid-19 pandemic and the explosion

in the Beirut Port in August. In addition, there was a strong currency devaluation of the Lebanese pound, which

went from 1,507.5 LBP/USD to 8,400 LBP/USD. Because the Lebanese economy was considered hyperinflationary

(inflation over 100%), the IAS29 accounting standard was applied. In Tunisia, the measures imposed by the

IFRS - accrued amounts (million euros)2020 2019 Var. Q4 2020 Q4 2019 Var.

Revenue 1,867.4 2,228.5 -16.2% 420.4 545.7 -23.0%

EBITDA 419.3 486.8 -13.9% 93.3 94.8 -1.6%EBITDA margin (%) 22.5% 21.8% 0.6 p.p. 22.2% 17.4% 4.8 p.p.

Depreciation, amortisation and impairment losses (214.7) (241.8) 11.2% (48.6) (77.8) 37.6%Provisions (5.5) (4.1) -34.4% (4.5) (6.6) 32.6%

EBIT 199.2 241.0 -17.3% 40.2 10.4 287.7%EBIT margin (%) 10.7% 10.8% -0.1 p.p. 9.6% 1.9% 7.7 p.p.

Net f inancial results (58.9) (54.4) -8.4% (1.8) (18.8) 90.4%Net monetary position 13.9 - - 13.9 - -

Profit before taxes 154.3 186.6 -17.3% 52.4 (8.5) 719.5%

Income taxes (12.0) (23.9) 49.8% (1.0) 16.0 -106.1%

Net profit for the period 142.2 162.7 -12.6% 51.4 7.6 579.8%Attributable to Semapa shareholders 106.6 124.1 -14.1% 33.8 12.0 182.3%Attributable to non-controlling interests (NCI) 35.7 38.6 -7.7% 17.6 (4.4) 497.4%

Cash f low 362.4 408.6 -11.3% 104.4 92.0 13.5%

Free Cash Flow 345.4 207.2 66.7% 81.4 67.7 20.2%

31/12/2020 31/12/2019 Dec20 vs. Dec19

Equity (before NCI) 948.8 960.9 -1.3%

Interest-bearing net debt 1,215.5 1,470.7 -17.3%

Lease liabilities (IFRS 16) 80.3 75.2 6.9%

Total 1,295.9 1,545.8 -16.2%


Page 4

government to contain the Covid-19 pandemic from spreading practically paralysed the country's economic activity

from mid-March to early May. Although operations have been resumed, the construction sector, namely public

works, have been hit hard, as evidenced by the 23% drop in revenues year on year.

LEADING OPERATING INDICATORS

Unit 2020 2019 Var. Q4 2020 Q4 2019 Var.

Pulp and Paper

BEKP Sales (pulp) 1 000 t 394 314 25.5% 97 99 -2.8%

UWF Sales (paper) 1 000 t 1,276 1,447 -11.8% 343 365 -5.9%

Total sales of tissue 1 000 t 106 96 10.8% 26 22 22.1%

Cement

Sales of Grey cement 1 000 t 4,652 5,060 -8.1% 1,179 1,274 -7.5%

Sales of Ready-mix 1 000 m3 1,737 1,743 -0.4% 432 432 -0.1%

Environment

Collection of raw materials - Animal w aste 1 000 t 121.4 122.1 -0.6% 31.5 32.9 -4.0%


Page 5

2. NET DEBT Pulp and Paper Cement Environment Holdings Semapa

On 31 December 2020, consolidated net debt stood at 1,215.5 million euros, representing a reduction of around 255.1

million euros over the figure ascertained at the close of 2019. Including the effect of IFRS 16, net debt would have been

1,295.9 million euros, 250 million euros below the figure at the end of 2019. Besides the operating cash flow generated,

these variations compared to the end of 2019 are explained by:

− Pulp and paper: -35.2 million euros, resulting from an efficient management of the working capital and capex,

including investments of about 80.6 million euros and the distribution of 99 millions euros in reserves in January

and paying 99 million euros in reserves in December. The partial reimbursement made to Navigator in the USA for

anti-dumping payments (17.6 million euros) is worth highlighting, which resulted from decisions made by US

authorities;

− Cement: -85.4 million euros, including the reimbursement of 19.7 million euros in supplementary payments to

Semapa, the release of operating cash flow, investments made of approximately 27.1 million euros, the result of

sale of financial investments of 9.5 million euros and the foreign exchange devaluation of the Brazilian real, which

did not compensate the negative effect of the Lebanese pound devaluation that reduced the amount in Euros of

the cash position;

− Environment: -6.2 million euros, in spite of the difficulty in collecting the amounts billed to the Government; and,

− Holdings: -128.3 million euros, resulting namely from reserves received from Navigator (138.7 million euros) and

supplementary payments from Secil (19.7 million euros) and the payment of dividends (10.0 million euros), plus

the acquisition of own shares (7.0 million euros).

715 680

-35

762733

358273

-85

384298

5.7 -0.5

-6.2

7.4 1.4392

263

-128

392 264

1.471

1.216

-255

1,546

1,296

31/12/19 31/12/20 Net Debt + IFRS Net Debt + IFRS 16

Mill

ion

Euro

s


Page 6

On 31 December 2020, total consolidated cash amounted to 444.8 million euros, in addition to 777 million euros in

contracted and unused credit lines for the Group, thus ensuring strong liquidity position in this uncertain moment.


Page 7

3. PERFORMANCE OF BUSINESS SEGMENTS

BREAKDOWN BY BUSINESS SEGMENTS

Notes:

• For the purpose of calculating the change in net debt the values of 31.12.2019 are used.

• Figures for business segment indicators may differ from those presented individually by each Group, as a result of consolidation adjustments.

The Navigator Company (“Navigator”) released its results on 25 January 2021, so only the highlights of that report will

be presented herein. Secil and ETSA, which are not listed, did not publish their results. Therefore, their operations are

described in more detail.

IFRS - accrued amounts (million euros) Pulp and Paper Cement Environment Holdings and Eliminations

Consolidated

2020 20/19 2020 20/19 2020 20/19 2020 20/19 2020

Revenue - External 1,385.2 -17.9% 450.8 -11.7% 31.4 3.7% - - 1,867.4

Revenue 1,385.4 -17.9% 451.0 -11.7% 31.4 3.7% (0.4) 33.7% 1,867.4

EBITDA 285.5 -23.3% 123.6 15.3% 10.1 30.3% 0.1 183.0% 419.3EBITDA margin (%) 20.6% -1.4 p.p. 27.4% 6.4 p.p. 32.2% 6.6 p.p. 22.5%

Depreciation, amortisation and impairment losses (158.0) -2.8% (53.1) 37.3% (3.1) -3.0% (0.4) -19.3% (214.7)Provisions (2.3) <-1000% (3.1) 22.8% - - - - (5.5)

EBIT 125.2 -42.7% 67.4 265.0% 7.0 48.5% (0.3) 47.0% 199.2EBIT margin (%) 9.0% -3.9 p.p. 14.9% 11.3 p.p. 22.2% 6.7 p.p. 10.7%

Net f inancial results (14.7) 22.3% (33.5) -38.7% (0.3) 19.9% (10.5) 4.7% (58.9)Net monetary position - 13.9 - - 13.9

Profit before taxes 110.5 -44.6% 47.8 942.8% 6.7 53.5% (10.8) 6.6% 154.3

Income taxes (12.3) 70.8% 4.9 -66.2% (1.3) -123.3% (3.2) -172.8% (12.0)

Net profit for the period 98.1 -37.6% 52.7 500.0% 5.4 42.5% (14.0) -97.7% 142.2Attributable to Semapa shareholders 68.7 -37.4% 46.5 163.3% 5.4 42.5% (14.0) -97.7% 106.6Attributable to non-controlling interests (NCI) 29.5 -38.0% 6.2 169.6% 0.0 43.2% - - 35.7

Cash f low 258.5 -16.9% 108.9 11.7% 8.5 24.5% (13.6) -101.8% 362.4

Free Cash Flow 233.5 25.8% 118.8 269.2% 6.8 15.7% (13.7) 16.7% 345.4

Interest-bearing net debt 680.0 272.6 (0.5) 263.4 1,215.5

Lease liabilities (IFRS 16) 53.1 25.2 1.9 0.2 80.3

Total 733.1 297.8 1.4 263.6 1,295.9


Page 8

PULP AND PAPER

HIGHLIGHTS IN 2020 (VS. 2019)

• In 2020, revenue amounted to 1,385.4

million euros. In the 4th quarter it stood at

341.4 million euros, reducing 2.0%

compared to the 3rd quarter of 2020 and

presenting a decrease of 17.5% compared

to the same period last year, due to a

significant drop in prices.

Revenue

74%

% o

f con

solid

ated

tota

l

Revenue 2020

68%

% o

f con

solid

ated

tota

l

EBITDA 2020

2019 2020

1,687.9

1,385.4-17.9%

Mill

ion

Euro

s


Page 9

REVENUE BREAKDOWN BY SEGMENT:

• EBITDA amounted to 285.5 million

euros. The EBITDA margin went from

22.0% in 2019 to 20.6% in 2020. In Q4,

EBITDA was 75.1 million euros, +6.7% vs.

the third quarter of 2020 (+4.5% vs. the

same period of the previous year).

EBITDA

1,385.4

944.6155.5

141.1143.7 0.4

UWF Paper BEKP Pulp Tissue Energy Others andeliminations

2020

1,197.6 165.1 132.0 32.4 1,687.9160.8

-21.1% -99%-10.6%+6.9%-5.8% -17.9%

Mill

ion

Euro

s

Δ% 20/19

2019

2019 2020

372.1

285.5-23.3%

22.0% 20.6%

Mill

ion

Euro

s

EBITDA Mg


Page 10

SUMMARY TABLE OF FINANCIAL INDICATORS

Note: Figures by business segment indicators may differ from those presented individually by each Group, as a result of consolidation adjustments.

SUMMARY TABLE OF OPERATING INDICATORS

In 2020, Navigator revenue totalled 1,385.4 million euros, paper sales accounting for around 68% of the revenue (vs.

71% year on year), pulp sales 11% (vs. 10%), tissue sales 10% (vs. 8%), and energy sales also around 10% (vs. 10%).


Revenue 1,385.4 1,687.9 -17.9% 341.4 413.6 -17.5%

EBITDA 285.5 372.1 -23.3% 75.1 71.8 4.5%EBITDA margin (%) 20.6% 22.0% -1.4 p.p. 22.0% 17.4% 4.6 p.p.

Depreciation, amortisation and impairment losses (158.0) (153.8) -2.8% (35.3) (39.6) 11.0%Provisions (2.3) 0.0 <-1000% (2.8) (2.2) -24.2%

EBIT 125.2 218.3 -42.7% 37.0 30.0 23.3%EBIT margin (%) 9.0% 12.9% -3.9 p.p. 10.8% 7.3% 3.6 p.p.

Net f inancial results (14.7) (18.9) 22.3% (5.6) (7.5) 25.1%

Profit before taxes 110.5 199.4 -44.6% 31.4 22.5 39.5%

Income taxes (12.3) (42.2) 70.8% (0.2) (4.5) 95.4%

Net profit for the period 98.1 157.2 -37.6% 31.2 18.0 73.3%Attributable to Navigator shareholders 98.1 157.2 -37.6% 31.2 18.0 73.3%Attributable to non-controlling interests (NCI) 0.0 (0.0) 324.3% (0.0) (0.0) -33.2%

Cash flow 258.5 311.0 -16.9% 69.2 59.8 15.7%

Free Cash flow 233.5 185.6 25.8% 63.1 60.7 3.9%

31/12/2020 31/12/2019

Equity (before NCI) 806.6 818.9

Interest-bearing net debt 680.0 715.3

Lease liabilities (IFRS 16) 53.1 46.8

Total 733.1 762.1

in 1 000 t 2020 2019 Var. Q4 2020 Q4 2019 Var.

Pulp and Paper

FOEX – BHKP Usd/t 680 855 -20.4% 680 691 -1.6%

FOEX – BHKP Eur/t 597 762 -21.8% 570 625 -8.7%

BEKP Sales (pulp) 394 314 25.5% 97 99 -2.8%

FOEX – A4- BCopy Eur/t 836 903 -7.4% 809 884 -8.5%

UWF Sales (paper) 1,276 1,447 -11.8% 343 365 -5.9%

Tissue

Total sales of tissue 106 96 10.8% 26 22 22.1%


Page 11

The period featured a significant drop in global paper consumption as a result of the Covid-19 pandemic, mainly in the

second quarter, with a notable recovery recorded in the third and fourth quarters, especially in Europe. Navigator was

able to make up for the decline in UWF sales by further diversifying its business, with growth in pulp and tissue sales.

The global demand for UWF is estimated to be -13% YTD in November, a drop that is less than that in the other segments

of printing and writing papers, since the demand for coated paper was 17% lower and that of mechanical paper fell by

21%. In Europe, the estimated cumulative drop is 12% and in the United States the figures point to a drop of around

19%.

After the particularly adverse months of April and May, there was a gradual recovery in demand for paper from June

onwards, a trend that was confirmed throughout the third and fourth quarters as the economies reopened, particularly

in the European markets. All UWF formats show signs of recovery, and the reels recorded a more resilient behaviour

since the start of the pandemic.

In this context, Navigator managed its UWF paper production over the course of the year in order to keep up with the

fall in demand and to control stock levels. After a production adjustment in the most critical months, the Company

increased its paper production again from July, after which all its machines have been working at full capacity.

At the close of the second quarter, Navigator launched a wide range of innovative initiatives to support its distributors

and sales forces in different geographies in Europe and the rest of the world, which have made it possible to significantly

further increase the order book. This major commercial effort made it possible to register a good level in the order book

over the course of the second half of the year and resulted in a gain in market share in Europe for Navigator (+1.2 p.p.

vs. 2019), an especially expressive gain of 2.6 p.p. when comparing the change between the 1st and 2nd halves of 2020.

As a result of these initiatives in support of distributors and after a careful management of stock, the Company ended

the year with a level of stocks at the factories below the 2019 average (-1.1 days), and a comfortable 30-day order book,

in line with that of the close of previous years.

UWF sales for the year totalled 1,276 thousand tonnes, about 12% lower year on year. UWF business revenue was

negatively affected by the fall in paper price, dropping around 21% to 944.6 million euros. Navigator’s selling price

accompanied the PIX, the average price outside Europe being negatively influenced by variations in the exchange rate

and by developments in the product and market mixes.

Year-on-year sales price performance reflects the adjustment that started in the second half of 2019, and continued

throughout 2020, negatively affected by the pandemic and low pulp prices. The A4 paper benchmark adjusted

downwards by 7% YoY to an average price of 836 €/t, compared to 903 €/t in 2019, falling 8.3% over the 12-month

period.


Page 12

The global pulp market proved to be quite resilient to the adverse context of less activity due to the pandemic. Global

demand for hardwood pulp is estimated to have grown 8% YoY (YTD November), driven by the 16% growth in China.

Hardwood pulp was sustained by the robust demand for final products, especially in China, where growth in tissue, UWF

and package paper surpassed expectations, especially in the second half of 2020. The demand for hardwood pulp also

benefitted from its use to replace softwood pulp, due to the large difference in prices between the two fibres (the price

of long fibre pulp being abnormally greater than the price of short fibre). Finally, given the low price of hardwood pulp

(virgin) and the increasingly scarce supply of good quality recycled fibre, which has also been affected by the pandemic,

there has been a move to replace recycled fibre with virgin fibre/pulp, another major factor in explaining the strong

growth in demand this year.

Additionally, the supply of pulp suffered constraints in the fourth quarter due to planned maintenance shutdowns

carried out by a large number of manufacturers, which ended up being more extended than usual as a result of the

safety precautions required by the pandemic.

The net price of pulp continued its downward trend over the course of the year, reaching the low point in this price

cycle in the summer. There was a recovery in the prices on the international markets in the second half of the year, with

substantial increases being announced for both short and long fibre pulp in various geographies, including Europe, as

from in Q1 2021.

Thus, over the course of 2020, the gross benchmark price of BHKP pulp in Europe in USD remained at 680 USD/t, 20%

below the average price of 855 USD/t registered in 2019. The price of BHKP pulp in Euros fell by about 22%, standing at

597 EUR/t vs. 762 EUR/t, and the recent depreciation of the USD against the Euro in the second half penalised PIX in

Euros and, consequently, the profit of European pulp producers.

In 2020, Navigator managed to record a market sales volume of pulp that was significantly higher than the previous year

(approximately +25% in tonnes). This growth was fostered by a greater diversification of sales to destinations outside

of Europe, taking advantage of opportunities in the Tissue and Packaging segments and greater availability of pulp to

market arising from less paper production in the second quarter.

However, the strong increase in volumes sold was not enough to mitigate the impact of the reduction in the average

pulp selling price in the period, so the revenue totalled 156 million euros, compared to 165 million euros in 2019 (-6%).

The tissue business evolved favourably in 2020, with sales in volume amounting to 106 thousand tonnes, which

represents an increase of about 10% over the previous year.

Navigator's tissue operations were able to react positively to the opportunity provided by the peak in demand triggered

by Covid-19 for the At Home products (AH). This good performance compensated for drop in the Away from Home (AFH)


Page 13

segment, which was affected by the Covid-19 pandemic. These products are largely directed to HORECA channels

(Hotels, Restaurants and Cafés) and to companies, which were heavily affected by the lockdown measures implemented

from mid-March onwards. In the summer, this impact was particularly relevant due to the strong reduction of tourists

in the Iberian Peninsula where Navigator places most of its sales for this segment.

The demand for tissue products was quite resilient and grew, even in an environment of economic downturn and during

a pandemic. The demand for tissue in 2020, therefore, grew by 1.8% in Europe, despite the overall reduction in the

Away from Home segment.

Navigator has made considerable industrial and commercial efforts during the year to meet the increased demand for

At-Home products, having managed to increase sales of finished products by about 8%.

Consequently, Navigator’s tissue revenue grew around 7% to 141 million euros. The relative share of finished products

fell slightly in relation to the previous year, recording 76% vs. 78%.

In 2020, power sales totalled about 144 million euros, which represents a reduction of 10.6% year on year, even though

the total volume of sales in MWh registered marginal growth. The drop in the power sales in relation to 2019 was due

essentially to the combination of the following factors:

(i) Various cogeneration assets became subject to a less favourable tariff system during the year, under the terms of

Ministerial Order 140/2012 of 14 May, specifically the renewable cogeneration at the Setúbal pulp plant (TG3) in

January, the combined-cycle natural gas cogeneration plant at Setúbal in April, and the renewable cogeneration at the

Figueira pulp plant (TG4) in July;

(ii) The reduction in sales volumes at renewable cogeneration facilities deriving from lower production levels of pulp

and paper due to the pandemic, especially in April and May. In addition, the natural gas combined-cycle plant at Setúbal

operated with only one of the two gas generator groups in May;

(iii) A sharp drop in Brent 603 prices—used as the index for the sale of electrical energy—which fell from an average

price of 67 USD/bbl in 2019 to 49 USD/bbl in 2020.

It should be noted that in the fourth quarter the new biomass boiler went into operation at the Figueira da Foz industrial

complex, replacing the existing boiler and natural gas turbines that supply energy to the paper machines.

2020 was marked by a major overall cost control effort. It should be noted that extended team work has been put into

reducing significantly specific consumption by taking advantage of the reduction in production rates, despite the

instability arising from these shutdowns and changes in the pace of operations, and into the renegotiation of contracts

for raw materials and consumables.


Page 14

A significant containment in fixed costs could be observed over the year. These costs stood at around 47 million euros

below the level recorded year on year (-15%), with a positive evolution in all fixed costs, but most especially in

operational costs, and particularly in the costs of corporate areas.

Therefore, the EBITDA for the year totalled 285.5 million euros, -23.3% compared to 2019, in a context of much lower

pulp price (-22%), smaller paper volumes due to the pandemic (-12%), and lower paper prices (-7%). EBITDA margin

stood at 20.6%, 1.4 p.p. lower than that of 2019.

Navigator and the Government of Mozambique continue to work under the terms of the MoU signed in 2018, namely

on the prior conditions that deal in particular with the logistical matters related to the Port of Macuze. Wood harvesting

operations were initiated on the Portucel Moçambique plantation in Manica, for export from the Port of Beira, which,

among other objectives, will put Mozambique on the world map of this forestry-based industry. Three shiploads are

currently planned for delivery in 2021, representing around 100,000 m3 of wood. In light of these developments,

Navigator has revised its forecasts regarding the Mozambican market of eucalyptus wood, assessing the value of the

forests in Manica and Zambézia at about 16.7 million euros. Additionally, due to the uncertainties that still persist,

Navigator maintained its exposure to Mozambique fully provisioned.

The financial results amounted to -14.7 million euros (vs. -18.9 million euros in 2019), an improvement of 4.2 million

euros, year on year, resulting from the positive variation of 1.6 million euros in foreign exchange hedging, a very positive

variation of 3.3 million euros in interest on debts from the State, a 0.9 million euro variation in the current value of the

amounts still receivable from the sale of the pellet business in 2018 and the receipt of 1.2 million euros in interest on

amounts received in the course of the anti-dumping proceedings in the US.

On the other hand, the interest earned on financial investments continued its negative trend (-2.1 million euros) in

comparison with the quite positive amounts earned in the same period of the previous year, and due to the negative

impact of Covid-19 on the performance of the financial markets, despite the recovery underway. The costs of financing

operations increased in turn by 1.2 million euros due to the increase in gross debt resulting from the contracting of

surplus liquidity in the period to deal with the crisis, in spite of the year-on-year decrease of the average cost of funding.

It should be mentioned the effective tax rate reduction, resulting from the favourable resolution of the litigation with

the State. Net profit in 2020 attributable to Navigator's shareholders was 98.1 million euros.

In a year as adverse as 2020, Navigator once again demonstrated its strong capacity to generate cash, recording free

cash flow of 233.5 million euros, the highest amount since 2014, comparing with 186 million euros in 2019. It should be

noted that the year began with a Free Cash Flow generation of 15 million euros in the 1st quarter and that it was after

the first impact of the pandemic that strong growth was evident: 99 million euros in the second quarter, 56 million euros

in the third quarter, and 63 million euros in the fourth quarter. This was made possible by managing working capital


Page 15

very efficiently, combined with a strong capacity to collect customer balances and a careful supplier management policy,

under which it extended payment periods in association with financial solutions offered to support the liquidity of its

partners. There was also a generalised reduction in stocks, as well as a reduction in the amount of investments, another

determinant factor.

Navigator decided to significantly review the investment plan projected for 2020, which was reduced from an estimated

amount of 158 million euros to approximately 81 million euros. This amount is mainly made up of investments for the

maintenance of production capacity and improved efficiency. This includes around 25 million euros in environmental

projects, in particular the New Biomass Boiler in Figueira da Foz (22.2 million euros) and around 17 million euros in asset

reconditioning projects.

In Q4 2020, Navigator inaugurated a new biomass boiler at the Figueira da Foz industrial complex, the definitive

reception of which will be in 2021, representing an overall investment of 55 million euros, which will enable the

Company to reduce its fossil carbon dioxide emissions at the Figueira da Foz industrial complex by 150 thousand to 200

thousand tonnes per year, which is 30% of Navigator’s emissions in 2021, thereby achieving over one-third of the

reduction announced for carbon neutrality in 2035.

Navigator was once again recognised by the CDP (Carbon Disclosure Project) for its activity within the scope of climate

change with the rating “A”, a score achieved by only 3% of the companies assessed in a world-wide survey.

Fourth Quarter of 2020 vs. Fourth Quarter of 2019

The fourth quarter of 2020 continued the trend of a rebound in the demand for printing and writing papers seen in the

previous quarter, although weaker, as the second wave of Covid-19 infections made its appearance at the end of the

year. UWF paper registered the most favourable position among the various types of paper, with global demand falling

8% in the fourth quarter (Oct.-Nov.), compared to -9% for CWF and -18% for mechanical papers.

In this context, Navigator’s revenue stood at 341.4 million euros, falling 2.0% compared to the 3rd quarter of 2020 and

showing a fall of 17.5% compared to the same period of the previous year, due to a significant drop in prices.

Navigator ran at full-production capacity during the course of the quarter, controlling its stocks and managing its order

book. UWF sales totalled 343 thousand tonnes, an increase of 2% in relation to the third quarter and 6% lower than the

2019 fourth quarter number. The performance of sales to Europe remained more positive than in sales to the remaining

international markets.

The reference selling price of UWF paper remained under a lot of pressure in the period and stood at levels below those

of the previous quarter (-2.3%) and the same quarter in the previous year (-8.5%). Navigator's average selling price


Page 16

followed this trend, also reflecting the pressure from markets outside Europe, the change in the format/quality mix

(growth in the weight of reels and economic products) and the depreciation of the USD vs. the Euro.

It bears mentioning that, in the fourth quarter, Navigator implemented price increases in the international markets,

with an impact of more than 40 USD/t on the sales denominated in this currency. Likewise, sales denominated in euros

in the international markets showed an even higher recovery. Although these increases in dollars and euros made it

possible to recover a part of the erosion in the net dollar price experienced in the third quarter, this recovery was still

not fully reflected in the final price in euros for the quarter, due to the unfavourable evolution in the USD/EUR exchange

rate and the mix of sales by currency.

Paper sales in the quarter therefore totalled 239 million euros, in line with the third quarter, an 18% decrease compared

to the fourth quarter of 2019, due in large part to the effect of prices.

Pulp sales continued at a high level, but below the amounts recorded in the second and third quarters of 2020, due to

the lower quantity of pulp available to the market. The volume of pulp sales stood at 97 thousand tonnes, down by -7%

from the third quarter and -3% in relation to the same quarter of 2019. Navigator’s average selling price recorded a

positive variation of around 8% in relation to the previous quarter, a consequence of the improved market conditions

for pulp at the close of the year.

In the tissue business, the sales volume was 26 thousand tonnes vs. 27 thousand tonnes in the third quarter of 2020, a

growth of 22% year on year. The share of finished products was practically that recorded in the previous quarter, but

below that of the same period of the previous year.

Thus, in a context of gradual recovery of demand, combined with great pressure on prices of UWF, Navigator managed

to exploit the diversification of its business model, which, combined with a set of fixed and variable cost control

measures, allowed it to reach an EBITDA of 75.1 million euros in the quarter, +7% vs. the third quarter of 2020 (+4% vs.

the same period of the previous year). The strong recovery in the EBITDA margin should be pointed out, which was 22%,

+1.8 p.p. compared to the third quarter and +4.6 p.p. over the last quarter of 2019.


Page 17

CEMENT AND OTHER BUILDING MATERIALS


• In 2020, Secil's accumulated revenue amounted to

451.0 million euros, 11.7%, less than that in 2019,

representing a drop of 60 million euros.

• This negative change was due primarily to the strong

exchange rate depreciation of some currencies

against the Euro in the countries where Secil

operates (in particular the Brazilian real and the

Lebanese pound) and by the fact that Lebanon was

classified as having a hyperinflationary economy in

2020, resulting in the application of the IAS 29

accounting standard. The combined effect of the

variations in the exchange rates of the currencies of

the various countries and the application of IAS 29

had a negative effect of around 93.2 million euros on

Secil’s revenues for the year.

Revenue

24%

% o

f con

solid

ated

tota

l

Revenue 2020

29%

% o

f con

solid

ated

tota

l

EBITDA 2020

2019 2020

511.0451.0

-11.7%

Mill

ion

Euro

s


Page 18

REVENUE BREAKDOWN BY COUNTRY:

Note: Others includes Angola and Others

• EBITDA reached 123.6 million euros, which

corresponds to an increase of 16.4 million

euros, compared to that registered in the

previous year (+15.3%), as a result of the

positive evolution in Portugal and Brazil.

• It is worth mentioning that in 2020 Secil

obtained capital gains on the assets sale (+7

million euros), and the sale of surplus CO2

licenses amounted to circa 3 million euros more

than those sold in the same period of the

previous year.

EBITDA

EBITDA BREAKDOWN BY COUNTRY:

Note: Others includes Angola and Others

451.0

310.176.2 16.4

44.0 4.2

Portugal Brazil Lebanon Tunisia Others 2020

295.9 85.3 63.0 9.4 511.057.4

+4.8% -55.4%-23.2%-73.9%-10.6% -11.7%

Mill

ion

Euro

s

Δ% 20/19

2019

2019 2020

107.2123.6

15.3%

21.0% 27.4%

Mill

ion

Euro

s

123.6-0.8

88.520.8 3.2

11.9

Portugal Brazil Lebanon Tunisia Others 2020

60.9 16.3 16.0 -1.5 107.215.5

+45.4% -47.7%-23.4%-79.7%+27.1% +15.3%

Mill

ion

Euro

s

Δ% 20/19

2019

EBITDA Mg


Page 19

• Secil's net financial results deteriorated from the same period in the previous year, going from -24.1 million

euros to -33.5 million euros. The negative effect resulted above all from adverse exchange differences of -13.7

million euros, mainly due to the depreciation of the Brazilian real on accounts receivable and payable in foreign

currency for intra-group loans.

• In 2020, because the Lebanese economy was considered hyperinflationary (three-year cumulative inflation

rates exceeding 100%), the IAS 29 accounting standard was applied. The application of this standard, combined

with the strong monetary devaluation of the Lebanese pound, from 1,507.5 LBP/USD to 8,400 LBP/USD led to

Secil’s recognition of a Net Monetary Position gain of 13.9 million euros in its results.

• Net income attributable to Secil shareholders at the end of 2020 totalled 46.5 million euros vis-à-vis 17.7

million euros registered in 2019.


Note: Figures for business segment indicators may differ from those presented individually by each Group, as a result of consolidation adjustments.


Revenue 451.0 511.0 -11.7% 71.0 123.5 -42.5%

EBITDA 123.6 107.2 15.3% 16.2 20.7 -21.8%EBITDA Margin (%) 27.4% 21.0% 6.4 p.p. 22.8% 16.8% 6.0 p.p.

Depreciation, amortisation and impairment losses (53.1) (84.6) 37.3% (12.4) (37.4) 66.8%Provisions (3.1) (4.1) 22.8% (1.7) (4.4) 61.4%

EBIT 67.4 18.5 265.0% 2.1 (21.1) 110.0%EBIT Margin (%) 14.9% 3.6% 11.3 p.p. 3.0% -17.1% 20.0 p.p.

Net f inancial results (33.5) (24.1) -38.7% 6.3 (8.7) 172.6%Net monetary position 13.9 - - 13.9 - -

Profit before taxes 47.8 (5.7) 942.8% 22.4 (29.7) 175.2%

Income taxes 4.9 14.5 -66.2% 11.1 20.8 -46.7%

Net profit for the period 52.7 8.8 500.0% 33.4 (8.9) 473.7%Attributable to Secil shareholders 46.5 17.7 163.3% 25.2 0.9 >1000%Attributable to non-controlling interests (NCI) 6.2 (8.9) 169.6% 8.2 (9.8) 183.6%

Cash flow 108.9 97.5 11.7% 47.5 32.8 44.7%Free Cash flow 118.8 32.2 269.2% 18.9 15.0 26.1%

31/12/2020 31/12/2019


Interest-bearing net debt 272.6 358.0


Total 297.8 384.4


Page 20

SUMMARY TABLE OF OPERATING INDICATORS

Note: Volumes excluding inter-segment sales.

PORTUGAL

Revenue EBITDA

In Portugal, according with estimates of AICCOPN and AECOPS, the construction sector will show a growth of 4.3% in

GFCF. Cement consumption in Portugal during 2020 was marked by positive year-on-year monthly variations, and it is

estimated that in cumulative terms, the market grew about 8.5% compared the same period of the previous year. The

impact of the Covid-19 pandemic was felt only slightly, since virtually all facilities maintained regular operations.

in 1 000 t 2020 2019 Var. Q4 2020 Q4 2019 Var.

Annual cement production capacity 9,750 9,750 0.0% 9,750 9,750 0.0%

Production

Clinker 4,301 4,488 -4.2% 1,095 992 10.4%

Cement 4,990 5,360 -6.9% 1,312 1,344 -2.4%

Sales

Grey cement 4,652 5,060 -8.1% 1,179 1,274 -7.5%

White cement 65 70 -8.2% 16 13 20.2%

Clinker 504 279 80.5% 107 0 -

Aggregates 2,784 3,276 -15.0% 671 728 -7.8%

Precast 157 162 -3.0% 61 66 -7.0%

Mortars 208 197 5.4% 52 47 10.2%

Hydraulic lime 17 27 -37.7% 4 6 -32.1%

in 1 000 m3

Ready-mix 1,737 1,743 -0.4% 432 432 -0.1%

2019 2020

295.9 310.14.8%

Mill

ion

Euro

s

2019 2020

60.988.545.4%

20.6% 28.5%

Mill

ion

Euro

s

EBITDA Mg


Page 21

Revenue of combined operations in Portugal stood at 310.1 million euros, 4.8% more in relation to the same period in

2019.

Revenue in the Cement business unit in Portugal fell slightly (-1.4 million euros) from the same period in the previous

year, due to a lower volume of sales to the external market. The surplus supply in Europe, the Mediterranean and West

Africa continued to drive strong competition. In this context, total Cement export revenue decreased approximately

8%, despite the increase in quantities sold (+4.6%).

On the other hand, Cement domestic market revenue increased around 3.1% compared to 2019. This development is

explained by the combined effect of the increase in quantities sold (+6.3%) and the variation of average selling prices.

In the other business segments with operations based in Portugal (Ready-mix concrete, Aggregates, Mortars and

Precast), revenue in 2020 amounted to 142.1 million euros, up by 12.3% year on year.

This growth took place in all areas of building materials, benefiting from greater building dynamics, although it was

higher in the Concrete business unit, which recorded 7.8% more in sales volume.

EBITDA of total operations in Portugal increased by 45.4%, standing at 88.5 million euros vs. 60.9 million euros registered

in 2019.

The Cement business unit had an increase in EBITDA of 58.4%, compared to 2019. The increase in sales volumes on the

domestic market, together with the reduction in variable costs, namely energy costs, and capital gains obtained from

the sale of financial investments (+5.2 million euros) contributed positively to this variation, as did the sale of surplus

CO2 licenses, which amounted to circa 3 million euros more in sales year on year.

The EBITDA of the other building material business units grew by 10.6%. This upward variation was the result of the

increase in revenue, despite the rise in variable production costs due to lower availability of ashes in the Concrete

segment, and also the recording of capital gains on the sale of fixed assets (land) in the Pre-cast and Aggregates segment,

which together represented 1.2 million euros.


Page 22

BRAZIL

Revenue EBITDA

According to SNIC estimates (Sector Report - December 2020), cement consumption in Brazil in 2020 increased by 10.7%

over that in 2019.

Revenue of combined operations in the country stood at 76.2 million euros in 2020, down by 10.6% from revenue

recorded in the same period in 2019. However, discounting the effect of the exchange rate devaluation of the Real

against the Euro, with a negative impact of around 25.6 million euros, revenue would have been higher by 16.5 million

euros (+19%).

Cement sales to the internal market increased by 8.1% in comparison with 2019, with average sales prices falling 14.5%

(contrary to the variation in local currency, which was positive on the order of 17%).

The EBITDA of activities in Brazil totalled 20.8 million euros, which compares with the 16.3 million euros recorded year

on year (i.e. 27.1% increase). It should be noted that EBITDA for 2019 included a gain of 3.4 million euros from sales tax

refunds. If we exclude this effect, and the very unfavourable exchange rate effect (-7 million euros), EBITDA would have

increased by 114%, reflecting the good performance of commercial activity and the reduction in production costs.

2019 2020

85.376.2-10.6%

Mill

ion

Euro

s

2019 2020

16.3 20.827.1%

19.1% 27.2%

Mill

ion

Euro

s

EBITDA Mg


Page 23

LEBANON

Revenue EBITDA

Lebanon is plunged in a serious economic-financial and social crisis. Despite the efforts made by political forces to

stabilise the situation, the outbreak of the Covid-19 pandemic and the explosion in the Beirut Port in August aggravated

further an already precarious situation. The effects of the pandemic were felt sharply from mid-March onwards, with

the publication of a presidential decree banning industrial activities, excluding the food industry.

In this context, cement consumption was expected to continue to decrease. However, the magnitude of the reduction

exceeded all expectations. In fact, cement consumption in 2020 is estimated to have dropped 37% in relation to 2019,

which had already declined 32% vis-à-vis 2018.

However, the revenue of all operations in Lebanon fell by 73.9% to 16.4 million euros, in contrast to 63 million euros in

the previous year. This change is the result of the sharp foreign exchange devaluation (the Lebanese pound ended the

year at 8,400 LBP/USD versus 1,507.5 LBP/USD in the beginning of the year) and the application of IAS 29

(hyperinflation), which had an overall effect of 64.4 million euros. This decrease was partially offset by the sharp rise in

the average selling price of cement in local currency, consequence of the inflationary environment the country is going

through, plus the increased export of clinker from Lebanon to external markets.

Cement sales to the domestic market fell by 6.9% year on year, and the revenue was down 73%, mainly due to the high

foreign exchange devaluation of the Lebanese pound, the effects of which are partially compensated for by the price

increases in the local currency.

Concrete revenue was down sharply in comparison with the previous year (-84.9%), due to the monetary devaluation

and the reduction in quantities sold (-37.2%), reflecting the fact that the construction sector was one of the hardest hit

by the current crisis.

2019 2020

63.0

16.4

-73.9%

Mill

ion

Euro

s

2019 2020

16.0

3.2-79.7%

25.3%19.7%

Mill

ion

Euro

s

EBITDA Mg


Page 24

EBITDA from operations in Lebanon stood at 3.2 million euros, down by 79.7% in relation to the previous year. The

decrease is mainly due to the lower quantities sold, the impact of the exchange rate devaluation of the Lebanese pound

recorded on purchases of goods and services in foreign currency, partially offset by the increases in average selling

prices in local currency and measures to contain fixed and variable costs.

TUNISIA

Revenue EBITDA

Tunisia is still facing significant challenges, including high external and fiscal deficits, increasing debt and insufficient

growth to reduce unemployment. Some social unrest and pressure from union claims continue. Government deficit is

reflected in public works and the real estate sector faces challenges due to difficulties in obtaining funding (arising from

the fragility of the banking sector), which impacts construction output.

The measures imposed by the government to contain the Covid-19 pandemic from spreading practically paralysed the

country's economic activity from mid-March to early May, and construction activity was no exception.

In this context, it is estimated that the domestic cement market was down by approximately 10% in relation to 2019.

The cement market is still subject to strong competition, due to excess installed capacity.

Revenue for combined operations in Tunisia showed a negative year-on-year variation of 23.2%, totalling 44.0 million

euros and benefited from a positive impact of the appreciation of the Tunisian dinar against the Euro by 1.1 million

euros.

Revenue of the Cement business decreased around 24.7% to 39.1 million euros, reflecting the decline in cement sales

in the domestic market (-30.3%), and in the external market (-44.4%). The positive variation in average sales prices in

euros on the domestic market (+5.5%) made it possible to mitigate the fall in revenue.

2019 2020

57.4

44.0

-23.2%

Mill

ion

Euro

s

2019 2020

15.511.9-23.4%

27.0% 27.0%

Mill

ion

Euro

s

EBITDA Mg


Page 25

Subsequently, the EBITDA from operations in Tunisia amounted to 11.9 million euros, which, compared to the 15.5

million euro figure in 2019, represents a drop of 23.4%. The positive effects of the reduction of fixed and variable costs

(in particular lower solid fuel costs) must be underscored.

ANGOLA AND OTHERS It is estimated that, according to the latest figures available, the Angolan cement market will be down by 28% compared

to 2019. The impact of the adopted measures to contain the spread of the coronavirus may have contributed to the

worsening of the economic situation, which had already been affected by the drop in oil prices since the beginning of

the year.

In this context, the volume of cement sold fell 36.5% in comparison to sales in 2019. In a context of strong inflation and

significant depreciation of the Kwanza vis-à-vis the Euro, Secil has been implementing a strict price policy that can help

it tackle significant increase in costs in the national currency and those arising from necessary imports. Under these

conditions, the price of cement in local currency increased by about 16.8% year on year, partially offsetting the fall in

quantities sold.

Consequently, revenue totalled 4.2 million euros, i.e. 55.4% below that of the previous year, and was strongly affected

by the currency depreciation, which had a negative effect of 2.7 million euros.

EBITDA in 2020 amounted to a negative figure of 0.8 million euros, which despite all else, in contrast with the negative

1.5 million euros recorded over the same period in the previous year, is a favourable trend.


EBITDA in the fourth quarter of 2020 was lower than that recorded in the fourth quarter of 2019 by 4.5 million euros.

This change resulted from the positive influence of the businesses in Portugal (+63.1%) and Brazil (+66.9%), and the

negative business results in Tunisia (-31.3%) and Lebanon (a decline of 10.3 million euros), heavily impacted by the

worsening of the economic and social crisis these countries are going through.

The 5.2 million euro increase in Portugal is basically due to the EBITDA of the Cement business, but to the Aggregates

and Mortars, as well, reflecting the positive growth experienced by the construction sector.

The 2.4 million euro increase in Brazil is explained by lower production costs, since the average selling price in euros for

the internal market decreased by about 3.4% due to the strong depreciation of the Real.

The negative change in EBITDA in Lebanon is related to the unfavourable economic environment of the operation in

2020, together with the conjoined effects of the strong foreign exchange devaluation and the application of IAS 29

(hyperinflation).


Page 26

ENVIRONMENT


• ETSA recorded revenue of approximately 31.4

million euros in 2020, up by around 3.7% against

the previous year.

Revenue

2%

% o

f con

solid

ated

tota

l

Revenue 2020

2%

% o

f con

solid

ated

tota

l

EBITDA 2020

2019 2020

30.3 31.43.7%

Mill

ion

Euro

s


Page 27

• EBITDA for ETSA totalled approximately 10.1

million euros in 2020, representing a growth of

about 30.3% compared to 2019, essentially due

to a higher revenue, which in turn reflects an

improvement in fat and meal price conditions on

the market and tightly managed costs under the

main items.

EBITDA


Note: Figures for business segment indicators may differ from those presented individually by each Group, as a result of consolidation adjustments.

ETSA revenues were around 31.4 million euros in 2020, which was about 3.7% higher than in the previous year.

This variation resulted from growth of about 10.7% in consolidated services rendered, essentially due to (i) a 4.1%

increase in quantities of Class I received, (ii) a 1.0% increase in quantities of Class II received, (iii) a 12.8% increase in

2019 2020

7.8

10.130.3%

25.7% 32.2%

Mill

ion

Euro

s


Revenue 31.4 30.3 3.7% 8.0 8.6 -7.3%

EBITDA 10.1 7.8 30.3% 2.3 2.5 -6.5%EBITDA margin (%) 32.2% 25.7% 6.6 p.p. 28.8% 28.5% 0.3 p.p.

Depreciation, amortisation and impairment losses (3.1) (3.0) -3.0% (0.8) (0.8) -3.2%Provisions - (0.0) 100.0% - (0.0) 100.0%

EBIT 7.0 4.7 48.5% 1.5 1.7 -9.6%EBIT margin (%) 22.2% 15.5% 6.7 p.p. 19.0% 19.4% -0.5 p.p.

Net f inancial results (0.3) (0.3) 19.9% (0.1) (0.1) 7.7%

Profit before taxes 6.7 4.4 53.5% 1.4 1.6 -9.7%

Income taxes (1.3) (0.6) -123.3% (0.1) (0.1) 20.3%

Net profit for the period 5.4 3.8 42.5% 1.3 1.5 -8.6%Attributable to ETSA shareholders 5.4 3.8 42.5% 1.3 1.5 -8.6%Attributable to non-controlling interests (NCI) - - - - - -

Cash flow 8.5 6.8 24.5% 2.1 2.2 -5.5%

Free Cash flow 6.8 5.9 15.7% 1.8 2.8 -35.9%

31/12/2020 31/12/2019


Interest-bearing net debt (0.5) 5.7


Total 1.4 7.4

EBITDA Mg


Page 28

quantities of blood collected and (iv) a 4.3% increase in quantities received through the services for collection of animals

on farms.

Sales fell by 1.6% face in relation to the previous year, essentially due to (i) the 8.3% drop in sales of Class 3 meal, (ii)

the 20.6% drop in sales of Class 3 fat, a difference explained basically by the sales of stock in 2019, (iii) the 39.9% drop

in sales of Class I fat, and (iii) the 26.3% drop in sales of used cooking oils. This effect was partially offset (i) by the 5.4%

increase in the quantities of blood meal sold and (ii) by the 10.3% increase in the quantities of fish sold.

In addition, the following are highlighted: (i) the increase in selling prices for Class 3 meal, essentially due to the

increased price of substitute products such as soy meal, (ii) the increase in selling prices of Class 3 fat, essentially due to

the increased price of substitute products such as soy oil and palm oil, and (iii) the increase in the quantities and average

price of farm animal collection services, this latter being basically explained by the mix of types involved in the service.

EBITDA for ETSA totalled approximately 10.1 million euros in 2020, representing a growth of about 30.3% in comparison

with 2019, explained in large part by the higher revenue and tightly managed costs under the main items, including (i)

the lowering of costs for thermal fuels, due to increased process efficiency and the drop in the corresponding purchase

price, and (ii) the lower cost of Energy and Fluids, supported by the reduction in the fleet costs with diesel. EBITDA

margin stood at 32.2%, up by around 6.6 p.p. over the margin for the same period of 2019.

Financial results improved by about 19.9% in relation to previous year, mostly due to the reduction in average debt.

The combined impact of these factors resulted in a Net Profit attributable to the ETSA shareholders in 2020 of

approximately 5.4 million euros, an increase of around 42.5% compared to the previous year.


ETSA recorded revenue in Q4 2020 of about 8.0 million euros, which is around 7.3% less than that of the same period

in the previous year. This variation results from a decrease of about 7.6% in sales and around 7.0% in consolidated

services rendered.

The development in sales is fundamentally due to the decrease in the volumes of Class 3 fats sold of around 19.9%,

which, combined with an increase in the average selling price of around 12.9%, resulted in a decrease of the product’s

sales value of approximately 8.4%. Additionally, there was a decrease of around 88.2% in the volumes of Class 1 fats

sold and about 85.9% of their value. As for the variation in services rendered, this was mainly due to the lower quantities

collected, around -7.2%, and when combined with a reduction in the average SIRCA (mix) service price of about 30€/t.,

resulted in a drop of around 0.3 million euros in invoicing.


Page 29

EBITDA totalled approximately 2.3 million euros in the 4th quarter of 2020, about 6.5% lower in comparison with the

same period of the previous year.

VENTURE CAPITAL In the last six months, Semapa Next concentrated on accompanying the portfolio companies and the investment funds

it is investing in. In addition to this, two new innovative initiatives stand out: (1) the Pathfinder partnership with

Techstars, in which Semapa Next will organise two Global Business Challenges to identify start-ups with potential for

accelerated growth; and (2) active participation in the Global Sustainability Challenge with the goal of finding and

helping start-ups that are developing supply chain technologies, with special emphasis on data & automation and new

materials. This is a joint initiative that has the participation of multinationals such as ABN AMRO, Cargill, Comcast, EG,

Endeavor, Equinor, Princeton University, Stanley Black & Decker, The Heritage Group, The Nature Conservancy,

Temasek, and World Federation of United Nations Associations.


Page 30

4. OUTLOOK

The intensification of the Covid-19 pandemic, forcing new lockdowns and restrictive measures on businesses at the

beginning of 2021, has delayed the recovery that was expected this year. In the light of the risks created by the new

strains of SARS-Cov-2 and the delays and difficulties involved in the vaccination processes, Governments are being

forced to announce the extension and/or tightening of lockdowns. This environment should penalise growth in the first

quarter of 2021, with the possibility of quarterly declines in GDP, extending further the declines expected in the 2020

fourth quarter numbers.

PULP AND PAPER The pulp business in 2020 was characterised by extremely low levels in the prices of short fibre, particularly in Europe,

as well as by a differentiation between regions (especially in regard to China) and by the large gap between short and

long fibre, factors that created a positive pressure on the price of hardwood pulp in Europe at the close of the year, and

which resulted in several announcements of price increases for January 2021.

The recent announcements of price increases for long fibre and short fibre have been successfully implemented, and

they should quickly make a full impact on the price index (PIX); in fact, the PIX has already started to rise. One cannot

exclude the possibility of new announcements of price increases for short fibre, leveraged on the evolution of long fibre

prices in China. The expectation that the current level of exchange rates against the dollar will be maintained may make

it easier for Chinese and European buyers to accept higher prices in dollars.

At the moment, the stocks at the pulp producers are close to or below normal levels, especially for short fibre, which

have been impacted by the postponement of maintenance shutdowns from the first to the second half of 2020 or even

to 2021 (due to the pandemic), by significant unplanned stoppages in softwood pulp, and by closures of capacity, also

for softwood pulp, in North America (~0.7Mt/y). The new capacity for short fibre expected in the market at the end of

2021 will only make its impact in 2022, so that the capacity use rates estimated for 2021 should remain close to those

of 2020, at around 92%.

As for paper, the price increases for pulp in all the regions around the world and for both long and short fibres create a

support base for the rise in the price of paper. In line with what it had already done for the international markets at the

end of 2020 for the start of 2021, Navigator also announced an increase of 4 to 6% in the price of its UWF products in

Europe for February 2021, an announcement followed by various other companies of the sector. The producers of UWF

began 2021 with a comfortable order book—around 30 days at the close of December for Navigator and 28 days for its

European competitors, in line with the level of previous years.

Additionally, the increased cost of maritime shipping would be a dissuasive factor, in the short term, for the placing of

significantly large additional volumes in Europe by the large exporting countries (Indonesia, United States, Canada and


Page 31

Brazil). Also, the closures of Uncoated Woodfree capacity between 2019 and 2021 in the US and Asia, as well as for

Coated Woodfree in Europe, work together for a better balance between supply and demand.

It should also be mentioned that the level of stocks of office paper in the distribution chain is at a relatively low level

and the January orders compare favourably with those registered at the beginning of 2020.

However, in the current context, a high level of uncertainty persists regarding the duration, extent and impact of the

current lockdowns on European countries and on the potential new wave in the international markets. The impacts on

the global economy and Navigator’s key markets, as well as on the activity of the graphic and office paper sectors may

result in a reduction of paper orders during the first quarter.

The tissue business underwent a positive evolution over the course of 2020, substantially improving its industrial

performance, with the consolidation of operations in Aveiro and a robust performance in Vila Velha de Ródão. This

progress, along with the commercial efforts, enabled Navigator to grow its sales of finished products and its market

share in the At Home and Away From Home segments, despite the contraction of the latter. 2021 is expected to be

another challenging year, in which Navigator intends to continue improving the efficiency of its operations in Aveiro and

optimising its specific consumption.

Just as in the other segments, as soon as the increases of pulp become a reality, it is very likely that there will be an

increase in the prices of Tissue on the market (possibly around 4-5%) so as to not deteriorate the profitability of the

various producers.

CEMENT AND OTHER BUILDING MATERIALS The Bank of Portugal (Outlook for the Portuguese economy - December 2020) estimated that Portugal’s economy will

contract by -8.1% in 2020, maintaining the October forecast but reviewing upwards the forecasts published in June that

hinted at -9.5%. GDP growth for 2021 is estimated to be of +3.9% according to the above mentioned December

projections.

The IMF’s World Economic Outlook Update (WEO), published in January 2021, estimates that the world GDP in 2020

will suffer an actual decline of 3.5%, (4.4% according to the October estimate), followed by an increase of 5.5% in 2021

(5.2% according to the October estimate) and 4.2% in 2022. For the Euro Zone, the drop is estimated to be 7.2% in 2020

(-8.3% according to the October estimate), followed by an increase of 4.2% in 2021 (5.2% according to the October

estimate) and 3.6% in 2022. For Portugal, the most recent estimates are those published in October which projected a

real drop of 10% in GDP in 2020, followed by a 6.5% growth in 2021.

For Brazil, according to the World Economic Outlook Update, published in January 2021, the IMF expects a 4.5% decline

in the GDP of Brazil in 2020 (-5.8% according to the projections in October), followed by 3.6% rebound in 2021 (2.8% in


Page 32

the October projections), and by 2.6% in 2022. Cement consumption was more dynamic in the second half of 2020,

which was influenced by the demand for self-construction projects for residential and commercial remodelling.

In Lebanon, the political and economic environment has faced much uncertainty since the last quarter of 2019, leaving

the country plunged in a serious economic and social crisis. The measures implemented to contain the pandemic, which

brought the country to almost a complete halt, and the explosion in the Beirut Port only made matters worse.

Displaying one of the World’s highest external debts, the country announced in March its first default after several

months of declining foreign currency reserves and a strong depreciation of the Lebanese pound in the parallel market.

Negotiations with the IMF have been going on since May following the request for external assistance, but no agreement

has been reached so far.

According to the latest IMF estimates (World Economic Outlook, IMF October 2020) the scenario for the Lebanese

economy is recession with a 25.0% drop in the GDP and 85.5% inflation rate.

With regard to Tunisia, the most recent forecasts published by the IMF (World Economic Outlook, IMF October 2020)

expect the Tunisian gross domestic product to decrease by 7.0% in 2020, followed by growth of 4.0% in 2021. Projected

levels of inflation are 5.8% and 5.3% in 2020 and 2021, respectively.

Tunisia had already found itself in financial hardship and social instability, and the pandemic has increased uncertainty

as to the country’s progress. The measures adopted by the government to contain the spread of the pandemic—curfews

from 17 March and a nationwide declaration of quarantine on 20 March—virtually paralysed the country's economic

activity until early May, and the construction activity was no exception.

The outlook for Angola (World Economic Outlook, IMF October 2020) hints at a decline in real GDP of 4.0%, followed

by a 3.2% increase in 2021. Projected levels of inflation are 21.0% and 20.6% in 2020 and 2021, respectively.

The efforts to contain the spread of the coronavirus may have contributed to the worsening of the economic situation,

which had already been disrupted by the drop in oil prices since the beginning of the year.

ENVIRONMENT The crisis caused by the Covid-19 pandemic has significantly altered the economic landscape in Portugal, as in Europe

and the rest of the world, with consequences difficult to predict in several markets. However, one can say that the food

market where the ETSA moves, given its nature, is less affected by the health crisis when compared to other sectors of

activity.

With the vaccination plan currently underway, all indications are that 2021 will be a year of economic recovery in

Portugal, but this does not mean that the country will regain its pre-pandemic economy very soon. In this regard, the


Page 33

awaited recovery of the purchasing power of the Portuguese over the course of 2021 would likely result in a slight

increase in the amount of raw material collected and therefore in the amount of finished products sold.

The current crisis also presents several short-term opportunities that include (i) concentrating on the horizontal

expansion of its production and destination markets (exports accounted for around 46.7% of total sales on 31 December

2020), (ii) identifying new opportunities for vertical growth, channelling its investments to improving operational

efficiency, extracting maximum value from the channels operated and retaining the loyalty of the main conventional

and alternative collection centres, and (iv) focus on sustained innovation and research and development addressed at

ensuring new profit thresholds for the business.

Lisbon, 29th January 2021

The Board of Directors


Page 34

FINANCIAL TIMETABLE

Date Event

14 May 2021 First Quarter 2021 Results Announcement

30 July 2021 First Half 2021 Results Announcement

4 November 2021 First 9 Months 2021 Results Announcement

DEFINITIONS EBITDA = EBIT + Depreciation, amortisation and impairment losses + Provisions

EBIT = Operating profit

Operating profit = Earnings before taxes, financial results and results of associates and joint ventures as presented in

the Income Statement in IFRS format

Cash-flow = Net profit for the period + Depreciation, amortisation and impairment losses + Provisions

Free Cash Flow = Variation in interest-bearing net debt + Variation in foreign exchange denominated debt + Dividends

(paid-received) + Purchase of own shares

Interest-bearing net debt = Non-current interest-bearing debt (net of loan issue charges) + Current interest-bearing debt

(including debts to shareholders) – Cash and cash equivalents

DISCLAIMER This document contains statements that relate to the future and are subject to risks and uncertainties that can lead to

actual results differing from those provided in these statements. Such risks and uncertainties are due to factors beyond

Semapa's control and predictability, such as macroeconomic conditions, credit markets, currency fluctuations and

legislative and regulatory changes. Statements about the future made in this document concern only the document and

on the date of its publication, therefore Semapa does not assume any obligation to update them. This presentation of

results is a translation of a text originally issued in Portuguese. In the event of discrepancies, the Portuguese language

version prevails.

Documents

Presentation of Results 2020 - Semapa 02 01 S… · Presentation of Results 2020 Page 2 1. HIGHLIGHTS O ... (Carbon Disclosure Project) for its activity within the scope of climate