Paper maker Navigator's third quarter profit falls as demand dips
25/10/2023 19:09
By Sergio Goncalves
LISBON, Oct 25 (Reuters) - Portuguese pulp and paper
producer Navigator NVGR.LS reported a third-quarter net profit
of 63.3 million euros ($67 million) on Wednesday, a 42% drop
from the previous year as sales fell with a contraction in
demand and lower prices.
Navigator, which sells more than 80% of its output overseas
in as many as 130 countries, said its sales fell 29% in the
third quarter from a year ago to 481 million euros.
The company said in a statement that its paper sales fell
31% to 276,000 metric tons compared to the third quarter of
2022, but had risen by 6% on the previous quarter of 2023.
High inflation and falling demand have squeezed forestry
sector profits, with several European companies also being hit
by customer destocking.
Navigator said that in the third quarter there was a "slight
improvement in the market context, which led to a slight
increase in the level of incoming orders placed with European
producers, particularly in September".
It said that instability in the Middle East generates
uncertainty and is likely to increase volatility in financial,
energy and raw materials markets.
However, it said that, in the paper segment, "order books
are expected to improve in the fourth quarter", highlighting
that delivery times from mills to distributors have increased,
currently standing at 2021 levels.
"Despite the economic slowdown and uncertainty, the
improvement in demand, reduction of supply in Europe, and the
strong pressure on costs will likely result in a reversal of the
fall of paper prices in Europe and some international markets,"
it said.
Earnings before interest, taxes, depreciation and
amortisation (EBITDA) fell 40% from a year ago to 123.5 million
euros, it said. Navigator said its EBITDA margin, a measure of
profitability, dropped to 27.7% in the third quarter versus
30.5% a year ago.
($1 = 0.9463 euros)
(Reporting by Sergio Goncalves; Editing by Alexander Smith)
((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))