Portugal's Navigator sees cost pressures after reporting Q1 profit doubled
24/05/2022 07:53
By Sergio Goncalves
LISBON, May 24 (Reuters) - Portuguese pulp and paper
producer Navigator NVGR.LS said on Tuesday its first-quarter
net consolidated profit more than doubled thanks to price
increases, but warned rising production costs will make the near
future very challenging.
Navigator, which sells more than 80% of its output overseas
in as many as 130 countries, said it netted 50.6 million euros
($54 million) in the quarter, compared with a net profit of 23.5
million euros in the same period last year.
Total sales grew 44.4% in the first quarter from a year ago
to 492.2 million euros, "driven by a general rise in prices
internationally."
Even though inflationary pressures have allowed it to jack
up prices to its customers, Navigator is concerned that soaring
commodity and energy costs may end up denting its profit margins
and down the road lead to shrinking demand for its products.
In early January, the company raised prices for uncoated
woodfree paper (UWF) by between 10% and 15% and two weeks later
it increased prices for tissue paper by 15%, in reaction to huge
cost increases in natural gas, chemicals, raw materials and
logistics.
Navigator said that though it maintains "a strong order
book", Russia's actions in Ukraine have triggered several risks,
and "the near future looks very challenging, in an international
context of extreme uncertainty and instability."
It fears that costs could remain at "historically high
levels or even rise" further, and said strong inflationary
pressures coupled with expectations of rapid rates hikes "could
result in a global economic slowdown."
The company has focused on increasing efficiency to protect
itself.
Earnings before interest, taxes, depreciation and
amortisation (EBITDA) rose 72.3% in the quarter from a year ago
to 121.6 million euros.
The operating margin - EBITDA/sales - went up to 24.7% in
the first quarter versus 20.7% in the same quarter of 2021.
($1 = 0.9370 euros)
(Reporting Sergio Goncalves, editing by Inti Landauro and
Louise Heavens)
((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))