Hello. Good afternoon, ladies and gentlemen. Welcome to The Navigator Company conference call and webcast for the fourth quarter and full year 2021 results. Participating in the call today are the following members of the board: António Redondo, Fernando Araújo, João Lé, and João Paulo Oliveira. As usual, we will start with a brief presentation of the main highlights for the period, and we will have a Q&A session at the end. The presentation can be accessed through the links available on the website, and questions may be addressed also through the webcast platform. António will start with a comment on the main figures recorded in this period. António, please.
Good afternoon, and thank you for joining us this afternoon. I am very pleased to be here today and share with you our fourth quarter and full year 2021 results. We believe the results demonstrated, once again, our ability to adjust to an uncertain and volatile market environment this year, very constrained by higher variable input costs that Navigator successfully and proactively managed to mitigate, demonstrating the resilience and flexibility of its business model. I will invite you to start by going to slide number 4 and make a global overview on Q4 and closing numbers of 2021. The recovery on paper consumption, boosted by the economic upturn, as well as the improvement between supply and demand in the United States, Europe, Middle East and North Africa region, following the capacity closures and conversions already announced, allows for a good recovery of the performance in 2021.
Actually, Q4 was a record turnover quarter. Turnover stood at EUR 476 million, up by 18% from Q3 and by 40% from 2020, driven by uncoated wood-free volumes and higher prices. Following the pulp rally that occurred since the beginning of the year, paper prices started an upward adjustment and Navigator implemented price increases across all geographies. We registered a very strong order book throughout the quarter, and we ended 2021 with the highest order book ever registered of more than 80 days. As a result of the paper demand, the focus on pricing and product market strategies, the continuation of our efforts to contain fixed costs and manage working capital, EBITDA in Q4 improved 14% to EUR 109 million, reaching a 22.8% margin. Tissue business continues to perform with revenue increasing 3% year-on-year.
Our packaging project performing well as production more than doubled and turnover was above EUR 40 million last year with a very low CapEx so far. Free cash flow remains strong at EUR 235 million. Net debt stood at EUR 595 million, decreasing EUR 85 million versus 2020, after the distribution of a EUR 100 million of dividends to shareholders in the first semester and advanced on 2021 profits of EUR 50 million by December. Finally, sustainability has always been at the core of our business. It continually drives our innovation agenda and our collaboration with all stakeholders.
Following the commitment made in our 2030 agenda, Navigator has signed up to the Science Based Targets initiative and, underlining this commitment different from the practice of the peers from the sector, the company immediately submitted for validation its targets for cutting greenhouse gas emissions on the basis of the latest climate science data, therefore dismissing the 2-year period that companies have at their disposal and typically use to do so, taking another important stride in its positioning to fight against climate change. João Lé will give more details on Navigator's sustainability achievements further ahead. Now let's turn please to slide number 5, the financial highlights of the year. After 2020 marked by a strong impact of the pandemic on demand and sharp fall on prices, 2021 registered a strong order intake, reaching historically high levels during the second semester and an impressive increase on pulp and paper prices.
Turnover stood at EUR 1,596 million, 15% above 2020, and Q4, as mentioned, total EUR 476 million, increasing 18% over the third quarter. This performance was mainly due to the increase in paper volumes. EBITDA amounted to EUR 355 million with increase of uncoated woodfree paper prices and volumes offsetting raw material costs. EBITDA sales margin was 22% for the year. Strong free cash flow generation of EUR 235 million, as I referred previously. Our balance sheet remains solid. Our net debt was reduced by EUR 85 million to EUR 595 million, allowing a comfortable net debt EBITDA ratio of 1.68 times versus 2.38 in 2020.
CapEx stood at EUR 80 million, mainly including investments in modernizing equipment, optimizing production capacity, maintenance, and environmental projects. To note that the CapEx execution plan over 2021 was hampered by the pandemic, not only causing delays to start projects, but also delaying deliveries by most suppliers, pushing back to 2022 some of the CapEx originally scheduled in 2021. I'll invite you to return to slide number six, where we have an overview of the evolution of the last six quarters. Regarding paper sales, Q4 2021 clearly shows a strong improvement over the previous quarter. It is the highest performance since Q2 2018. In terms of pulp, Q4 shows a strong increase of volumes by 56% in relation to the third quarter.
This year, we have less pulp available to sell, resulting from the high integration into paper and longer maintenance shutdowns postponed from 2020. Tissue, as mentioned previously, kept the good performance we have been commenting in the last few quarters. Turnover, EBITDA, and operating cash flow all experienced. On the EBITDA evolution. Fernando, please.
Thank you, António. Turning to slide 7, we can take a closer look at the main impacts of EBITDA on year-over-year comparison. As António mentioned this year, we registered clear improvement over 2020, with the increase in pulp and paper price, as well as strong demand for both. In terms of price impact, paper, pulp, and tissue evolved favorably year over year, especially pulp and paper. Still, costs were impacted by over EUR 50 million by the extraordinary increase in logistics and the inflationary pressure on energy and commodities, and by more than EUR 20 million due to the increase of A&R costs, human resource costs, mainly in its variable elements. The increase in HR costs follow Navigator's strong results in 2021. That allowed, again, the payment of performance bonus to staff and resume the rejuvenation program suspended in 2020.
At the same time, the amount of HR costs in 2021 compares with the low cost in 2020, which were favorably affected by the public support measures adopted in view of the pandemic. Alongside this, the company implement a new career framework for operational technicians, and a collective employment agreement was also concluded for the first time in the tissue segment. Uncoated woodfree volumes improved 16% year-over-year, supported by strong demand growth with a strong positive contribution to EBITDA. Tissue volumes were in line and pulp stood below as, of course, we registered a much higher integration of pulp into paper. Longer maintenance stoppage shutdowns postponed from 2020, and we have been operating with extremely low levels of stocks.
Opposite to what had occurred in 2020 when we had a strong positive impact from the valuation of our forest in Mozambique, as the fair value was adjusted to harvest wood from Manica and positive evolution of Mozambique project in Zambezia. In 2021, the impact of this is almost negligible. It is the comparison with 2020 that leads to the significant negative valuation, almost EUR 18 million against last year. In addition, we have a negative anti-dumping estimated impact of almost EUR 6 million, resulting essentially for the increase of logistic cost to U.S. dispatch. It should be noted that the final rate of 2.21% was published in October for POR4, period of revision four, March 2019 till February 2020 period.
In January 2022, the U.S. authorities decided to continue with the anti-dumping process for a further five years, despite Navigator continued price increase in the U.S. market and the supply reduction from local producers in this market. Let's turn to slide 8 with the key quarter-over-quarter comparison, namely quarter four, 2021 versus quarter three, 2021. We registered a 14% increase in EBITDA to EUR 109 million from Q3 to Q4. The market environment sustained improvements in uncoated wood-free, +10%, and tissue price, +7%. Higher pulp availability compared with Q3, +56%. Uncoated wood-free maintained the positive quarter-over-quarter trend, plus 4%, while tissue was above last quarter, +6%. In the last quarter performance, it is already very clear the negative impact of logistics, energy, and raw materials price.
The price improvement implemented in uncoated wood-free and tissue helped to compensate the inflationary pressure on purchase price. Now, turning to slide 9 with EBITDA Q4 2021 versus Q4 2020 analysis. EBITDA improved 45% from EUR 75 million to EUR 109 million, sustained by higher prices across all business segments, backed by higher pulp prices, paper market dynamics, logistics disruptions, and constant price improvement measures. Uncoated wood-free sales volume significantly grew more 15% compared with last year-end quarter. Pulp integration limited volume ability to sell in the market less 12%. The negative effect of logistics, energy, wood, and other commodities price impact, particularly Q4 2021 performance, while optimization efforts in fixed costs persist. We have a non-recurring impact comparing with Q4 of last year, namely in the fair value of biological assets.
As I said previously, that impact is related with the valuation of our forest in Mozambique in the previous year. Comparing quarters, we have other main non-recurring impact due to foreign exchange hedge in place. João Paulo will comment on market performance. João Paulo, please.
Thank you, Fernando. Let's look at pulp and paper prices evolution on slide 11. Pulp benchmark prices saw a sharp and significant hike at the beginning of the year, first in China, then in Europe. The benchmark index for hardwood pulp in Europe, the PIX BHKP in EUR, was up 82% at year-end, with a historical high level of 1,013 EUR per ton. The benchmark index in China for hardwood pulp rose steeply to a peak of $780 per ton in May, later adjusting downwards to $550 per ton at the end of November. Following on from announcements of further price increases, it rallied to $576 per ton at the end of December, 15% up on the start of the year.
Average price for the year of $1,023 per ton is well above 2020's average price of $680 per ton, and above the average for the period 2012 to 2019 of $823 per ton. This price in Europe is hampered by the exchange rate in 2021, but still above 2020 and also above the 2014-2019 period. The paper index in Europe reflects the price increases of the last quarter, with the average price of 2021 above 2020, and now in line with 2014-2019 period. On slide 12, we have an update on the pulp market.
As already commented, there was a sharp and significant recovery in benchmark prices in the pulp market in the beginning of 2021, first in China and then in Europe. The benchmark index for hardwood pulp in Europe stabilized in record levels, peaking at the BHKP of $1,140 per ton. In terms of demand evolution year-on-year, global hardwood demand dropped 4.5% in November year to date, hit by China's abnormal negative performance, -10.9% year-on-year. In Europe, demand is growing healthy, 4% year-on-year, with end users printing and writing, packaging and more recently tissue performing a strong order intake in the last few months, with very limited competition of imports leading to the implementation of successive price increases.
On the supply side, pulp stocks at European ports are below 2015 and 2021 period average 1.3 million tons, at 1.1 million tons by December. Stocks at Chinese ports by year-end were one of the lowest of the last two years already, although above the period 2015-2021 average. Exponential rise in logistics costs and freight constraints hampering pulp imports too, and paper exports from Asia. At the same time, constraints have been felt in the pulp market due to production shutdowns, planned and unplanned, and longer than usual maintenance shutdowns as a result of the pandemic. Increasing production and new capacity entries in Latin America are expected to create downward pressure on prices later in the year. On slide 13, we have summarized some of the main developments in uncoated woodfree.
We have seen an increasing pressure throughout 2021 on paper producers' margin due to cost inflation coming not only from pulp prices, but also from other cost inputs such as energy, chemicals, packaging, and logistics. In terms of demand, as Antonio mentioned, figures for global printing and writing papers recovered 1.4 million tons year to date November, which is 2%+, with uncoated wood-free paper showing a positive performance of 3%, comparing once again more favorably versus demand evolution for other grades, namely 2% for coated paper and 0% for mechanical paper. In Europe, the demand for uncoated wood-free paper in 2021 continues the positive evolution with a +7%. That compares with a drop in 2019 of 7%. In the USA and rest of the world, uncoated wood-free accumulated demand in 2021 grew 3% year-on-year.
It is important to highlight that the current market decrease is only slightly higher than the structural market decrease before the pandemic. Looking at the growth rate, the compounding growth rate, 2019-2021 of -3.3% per year versus the compound growth rate, 2014-2018, with a -2.4% per year. Worth noting that office paper is not yet contributing to the increased demand during 2021 due to the pandemic limitations on normal office work. In terms of the supply and demand balance, there have been some shutdowns and conversions that are creating positive pressure. In North America, producers have been reducing their uncoated wood-free capacity by approximately 1.7 million tons. In Europe, the reduction in uncoated wood-free stands at approximately 1.2 million tons for the period 2019.
European imports at low levels pressured by price availability and costs, while European producers' sales in Europe up to 10% year-on-year. Finally, just a word on prices. We saw a positive and gradual evolution since the beginning of the year. Paper benchmark in Europe had a positive evolution. Following industry price increases announcement due to inflation cost, the benchmark index in Europe stood at 976 EUR per ton at the end of December, well above the 806 EUR per ton at the beginning of the year. Navigator implemented increases in all regions during the year.
The upward trend of sales prices over the course of 2021, namely during the second half, resulted in an average sales price for the year higher than that recorded in 2020, up 6%, while also outperforming the benchmark index up 1%. In uncoated wood-free, the average price between January and December went up almost 30%, an unparalleled increase in the group's history. We go to slide 14, where we have a few remarks on group's paper performance. Navigator closed the year with an order book above 80 days, an all-time high record. The market share among its European competitors increased in the second half compared to the first half in Europe up 2 percentage points and worldwide up 2.4 percentage points.
To highlight the resilience and Navigator's dynamics, Navigator diversified its product and markets in reaction to the pandemic situation in Europe, channeling more of its sales to overseas markets. In the second half, the group kept pace with surging demand in Europe and in the USA with growing sales in these markets. Regarding Navigator product mix, the share of premium paper increased 4%, and the share of mill brands increased another one percentage point when compared with 2020. Now, looking into tissue performance on slide 15. Tissue performed well during 2021 despite the volatile environment. The sharp rise in pulp prices over the years, currently peaking at $1,140 per ton for BHKP in Europe, has put heavy pressure on the margins of tissue producers with a large number announcing price rises.
Tissue sales were up by nearly 3% above market performance. This good performance stands on top of the business performance of 2020 when it recorded a 7% increase. Positive evolution on average selling prices along a favorable sales turnover. Tissue sales stood at 105,000 tons, with sales of finished products once again overcoming 80,000 tons as tissue consumption normalizes from 2020 levels. In 2021, Navigator launched the new differentiated and innovative products such as Amoos Naturally Soft, offering a high standard of softness without using chemical bleaching agents, Amoos Aqua Active, a new generation of tissue paper incorporating soap, and Amoos Air Sense with a perfume activated on every usage.
Navigator continues to step up its commercial presence in this segment, investing in differentiated products and creating new sustainable and environmentally responsible paper ranges, offering an innovative response to its customer needs. Fernando will now give some color on CapEx. Fernando, please.
Thank you, João. On slide 16, we have an overview of the CapEx over the years. Capital expenditure in 2021 was close to EUR 80 million. This amount includes mostly projects aimed at modernizing plants, maintaining production capacity, and achieving efficiency gains. It also includes EUR 40 million in environmental projects and decarbonization, most significant the final components of the investment in new biomass boiler at Figueira da Foz and the new evaporation line in Aveiro. Execution of the CapEx plan during 2021 was constrained by restrictions related to the pandemic, as already mentioned. It may be recalled that in 2020, in view of the uncertainty created by the pandemic, Navigator only executed, beyond the biomass boiler investment, potential projects to maintain the group's capacity to produce, while postponing all other projects.
As the outlook became clear, execution of the CapEx plan resumed at the end of the first half of 2021. The next few years are expected to bring a gradual resumption of activity, and the CapEx plan will return to the levels of previous years. The 2022 CapEx plan will be targeted to asset replacement and performance, environmental, and decarbonization projects, and at Industry 4.0 as well. The 2022 plan contains also several projects to modernize plants and facilities, some of them launched already in 2021, such as the new wood processing plant in Figueira da Foz, the new evaporation line in Aveiro, and replacement of fuel oil boilers by new natural gas boilers. There are also other projects that we are considering. The European Council has created the NextGenerationEU, a strategic instrument to mitigate the economic and social impact of the crisis.
The Recovery and Resilience Facility has been developed on the basis of this instrument, and the Recovery and Resilience Plan fits into this framework. Navigator's commitment to innovation and to projects that promote resilience, climate, and digital transition position the company for investments under the Recovery and Resilience Plan. Navigator submit a number of applications together with other companies in line with its own strategy. Namely, the project From Fossil to Forest focus on several packaging initiatives, but also many other projects in partnership with our counterparts as other companies are being considered. Namely, a project focused on biomass-based bioethanol, another one focused on e-methanol produced from green H2 and biogenic CO2, a project that aims at the industrial waste circularity, one on industrial robotization focused on logistics, and another one focused on digital transformation of forest value chains.
These projects were successful in moving to the next stage, and a further submission will be made at the end of first quarter of 2022. Navigator is thereby focused in its growth strategy and mindful of investment and/or partnership opportunities for developing its business. On slide 17, we have an update on the package project. Good start of package project. The group has continued to invest in the packaging segment with both production and sales dynamics continuing as planned. The paper machine 1 and paper machine 3 machines at the Esposende mill are supplied on flexible basis, with PM1 already fully dedicated to package, white and brown. The packaging sector achieved sales of more than EUR 40 million in 2021, serving bag manufacturing industries, flexible packaging, and corrugated carton box.
Sales reflect favorable conditions on demand, the effort in developing innovative products, and the creation of a broad base of new clients, reaching in 2021 a total base of 125 active packaging clients. The ambitious product development plan launched in 2021 will continue into 2022 through the expansion of the existing range and the innovation and development of new sustainable packaging solutions able to replicate fossil plastic-based products. Last quarter, Navigator launched the gKraft brand. As said before, gKraft presents itself as the solution that guarantees the reduction of use of fossil materials, mainly single-use plastics, by using renewable, recyclable, and biodegradable product raw materials under the concept from fossil to forest. This will help us all to build a more sustainable future.
Despite having produced packaging paper for almost 20 years, The Navigator Company capitalized on the pandemic period to carry out extensive research, development, and innovation, led by a multidisciplinary team and supported by RAIZ Forest and Paper Research Institute, which took advantage of the specific molecular structure and morphology of Eucalyptus globulus fibers to develop resistant and sustainable paper materials as alternatives to single-use plastic. These virgin fibers are safer and healthier for the food industry when comparing with the usage of recycled fibers that are recognized to carry harmful contaminants. Estimated CapEx for PM one and PM two machines fully dedicated to packaging of EUR 50-60 million until 2025, with total capacity of 250,000 tons.
As a recap, this continues to be an extremely attractive growth and diversification option with low risk, limited CapEx at start, and significant return over capital employed, given the moderate level of investment and the possibility to replace uncoated wood-free less added value products. Additionally, the growth can be done in the first phase by improving the use of existing uncoated wood-free assets, opening the way for future greenfield investment in new machines as we learn how to efficiently operate in this market. João Lé will update on the Mozambique project now. João?
Thank you, Fernando. Let's go to slide 18, please. Navigator and the Mozambican government have continued to work in the implementation of an outgrowers program, a government initiative with World Bank's funding and other partners that aims promoting small and medium-scale sustainable commercial forest plantations and restoration of degraded areas. We keep also focusing efforts on establishing the necessary groundwork for phase one export of wood chips, in particular, but not exclusively on logistical issues relating to the Port of Macuse. The port concessionaire, TML, and the U.S. fund, Ethos Asset Management Inc., announced in the market in mid-November the conclusion of a long-term financing agreement worth $400 million that will assure the construction of Port of Macuse phase one and access roads.
This will entail building terminals for agricultural products operations, wood chips, fertilizers, and fuels able to accommodate vessels of up to 65,000 deadweight tons. The construction is planned to start in 2022 and operating in 2025. Concurrently, Navigator has other initiatives ongoing. Approximately 100,000 cubic meters of own and third-party wood was harvested in the course of 2021, and three vessels have been shipped to Portugal, totaling around 90,000 cubic meters. Five vessels are planned for 2022, with new markets for wood export being considered. Among other goals, this will put Mozambique in the world map of the forest, in the forest-based industries. More opportunities for wood exports are being analyzed that can enhance the continuous wood flow in the next few years from Manica to worldwide markets.
Reforestation in Manica province, aiming to renew harvested areas and guarantee the sustainability of the forest alongside forest maintenance activities with a view to the new product cycle. The company signed up in 2021 to the Circular Bioeconomy Alliance, CBA, underlining its commitment to the circular economy with the aim of reversing forest degradation in rural areas to more resilient and developed landscapes. CBA is an initiative sponsored by His Royal Highness Prince Charles, which places nature at the heart of the global circular bioeconomy. This inclusive project takes a holistic approach that ensures the integrity of ecosystems, community development, and well-being, and increasing production of natural products.
Now, moving on to our sustainability commitment on slide 19. Following the commitment made in the 2030 agenda, Navigator has signed up to the Science Based Targets initiative, and underlining this commitment, as opposed to what the majority of the peers from the sector have been doing, the company immediately submitted for validation its targets for cutting greenhouse gas emissions on the basis of the latest climate science, therefore dismissing the two-year period that companies typically use to do so, taking another important stride in its positioning to fight against climate change. Scope 1 and Scope 2 targets consistent with the level of decarbonization required to keep global temperatures increased to 1.5 degrees, and for Scope 3, well below 2 centigrade degrees.
To highlight the annual assessment by the Sustainalytics rating agency, published in late January, which again puts Navigator at the lowest risk level, as well as improving its previous rating to 14.3. Navigator was ranked third out of a total of 81 global companies in the paper and forest industry cluster, and third in a subset of 60 global companies in the paper and pulp cluster. Navigator's score reflects its ongoing efforts to integrate sustainability as a priority in its business model, demonstrating its capacity to anticipate and manage ESG risks in the conduct of its operations.
Regarding Navigator's carbon neutrality program, we recall that Navigator's roadmap objective is to reduce 85% of the CO2 emissions from 2018 to 2035, and this remains unchanged with 2021 achieving a reduction of 30% of CO2 direct emissions at mill sites as of 2018, which with the 35% of total reductions goal already achieved. Fernando will comment now on the FCF generation.
Thank you, João. Let's go to slide 20. Strong free cash flow generation of EUR 230 million, EUR 52 million in Q4, reflecting the good operational performance. Investment in working capital was kept at low levels over the year in a context of a moderate hike in some stocks following the gradual activity upturn. Above all, this was observed in pulp stocks, which although still at historically low levels, rose slightly in 2021 from their historical but unsustainable low level at year-end 2020. In this context, our supplies management policy, combined with the provision of liquidity to support client solutions for our partners, actively contributed to the level of cash flow generation. Going now to slide 21.
Net debt has significantly reduced by EUR 85 million compared to year-end 2020, despite the payment of EUR 100 million in dividends during the first half and in advance profits of EUR 50 million in December regarding 2021 profit of the year. Supported by the improvement in operational performance, the net debt, EBITDA ratio of 1.68 times, shows a downward course, further consolidating the robust financial position of the group over the last years. On slide 22, we have an overview of our debt maturity profile. Group's debt profile continues conservative. Two financial transactions in 2021 were especially significant as they paved the way to lower sustainable finance. In the first half, the company issued EUR 25.5 million related to a loan contract with the European Investment Bank in 2020.
This debt was directly linked to the new biomass boiler at Figueira da Foz industrial complex, which with overall capital expenditure equivalent to EUR 55 million, will enable the company to reduce emissions of fossil carbon dioxide. In the second half, Navigator issued a sustainable linked bond of EUR 100 million indexed to ESG goals. With these two operations, we reach year-end 2021 with approximately 20% of total borrowing on a sustainable finance basis. This new five-year sustainable linked bond was issued against early repayment of a financing operation of the same amount, one hundred million euros, which had been due to mature in 2023. This operation, which was combined with a floating for fixed swap, further extend the average maturity of the group debt and reduced the company's financing cost, as well representing a commitment to sustainable goals alignment.
The terms of the loan are indexed to two ESG indicators embedded in the company's sustainability agenda, which in turn are aligned with the United Nations Sustainable Development Goals.
The first indicator sets targets for reduction of CO₂ emissions consistent with the company roadmap for carbon neutrality. As João mentioned, in 2021, Navigator already achieved a reduction of 30% of CO₂ direct emissions at mill site as of 2018, circa 35% of total reduction goal. The second indicator sets targets for increasing the percentage of certified wood purchase on the Portuguese market. Certification of wood is one of the most direct routes to achieve the sustainability goals in our business sector, and the best guarantee that processes leading to sustainable forest management have been adopted.
After distributing dividends of EUR 100 million in the first half of the year, the group proceed, as already mentioned, to pay interim dividend in December in relation to its 2021 profits totaling EUR 15 million, while maintaining a cash position of EUR 239 million at the end of the year. The average cost of the debt remains low and the weight of fixed-rate debt increased to 86%. In January 2022, Navigator paid already EUR 65 million of commercial paper, reducing gross debt. I will return the floor now to António Redondo.
Thank you, Fernando.
Let's please turn to slide 23 with an overview. I will probably restart on slide 23 because we had a technical problem with our mic here. I invite you all to turn to slide 23, where we have an overview of what we have just presented. We had a record quarter, and we also see a very good first quarter approaching. Driven by demand, Navigator registered the largest order book ever above 80 days that has been kept so far this year. With full year results showing our resilience as well, tissue business with total revenue increasing 3% after an increase of approximately 7% in 2020. Also worth noting, a good start of the packaging pro-project with turnover above EUR 40 million.
In parallel of the phase one export of wood chips of Mozambique's project, 3 shipments from Portucel Moçambique exported and further 5 vessels are planned for 2022, with new markets for wood export being considered. Net debt reduction to EUR 595 million, allowing a comfortable net debt to EBITDA ratio of 1.68 times. Following the commitment towards 2030 agenda, Navigator joined Science Based Targets initiative and submitted simultaneously its goals for validation in reduction of greenhouse gas emissions. Dismissing the 2-year period that companies have at their disposal and typically use it to do so, taking advantage of its level of preparedness. Aligning emission reduction targets with the latest climate science is an important step to reinforce the company's leading position in contributing to fight climate change.
Regarding capital allocation, the board will propose a distribution of an ordinary dividend of EUR 0.1406 per share, totaling around EUR 100 million, in addition to the EUR 50 million advanced last December. Finally, a few words on the outlook on slide 25. On the pulp side, China is registering a climb on index prices since the end of 2021, driven mainly by supply and logistics disruptions and a moderate to low level of stocks throughout the pipeline. In Europe, pulp prices shall be supported by economic recovery, healthy level of demand, also logistical constraints in exports from Latin America to Europe, and the ongoing labor dispute in Finland. Going forward, a significant increase in supply in Latin America and possible improvement in the present logistics situation are expected to create a downward pressure on prices.
On paper, a positive outlook with economic rebound and a strong balance between supply and demand to occur in the first months of 2022, both in Europe and U.S., following the capacity closures already announced. Above normal order books, balanced-to-low pipeline stocks, reduced capacity while logistics constraints continue will help consolidate this perspective. In 2022, Navigator will also expand its client and packaging offer into new markets. Regarding the tissue business, as tissue consumption normalizes from 2020 levels, demand for tissue products is expected to gradually pick up in Iberia as tourism and consequently away-from-home segment activities recover. Navigator will continue to analyze strategic opportunities to grow its business. These views, parallel with the global economic recovery, lead us to believe that conditions on pulp, paper, and tissue segments will remain globally positive in the coming months.
However, with strong inflationary pressures on virtually all relevant inputs, which will oblige in the short term to pass along new price increases. Thank you.
Thank you, António. This here ends our presentation. We are now open for the Q&A session.
Thank you. As a reminder, if you would like to ask a question, please press star followed by 1 on your telephone keypads now. If you change your mind, please press star followed by 2. When preparing to ask a question, please ensure your phone is unmuted locally. The first question comes from António Seladas from AS Independent Research. Please, António, your line is now open.
Good afternoon. Thank you for the presentation and thank you for taking my questions. The first one is related with energy. From your press release, I understood that your cogeneration facilities are now going to sell energy in the market instead of at regulated prices. However, I also understood that that will offset the increase in energy, which means the final result will be close to nil. Just to confirm if I understood well. Second question is related with the shipping market. If you can provide some insight, and how do you expect it will evolve over the year? Also related to your cost base, that increase also sales also increased too, fortunately. But your cost base, should we...
Well, is your cost base now starting to flatten versus Q4 last year, or do you still expect more price increases? Finally, just pulp prices. You already mentioned that you expect pulp prices could come down by the second half of the year or by the end of the year due to higher supply. If you can provide more color on this, or if it's just enough with what you mentioned. Thank you very much.
Just to be clear, the first question is regarding on energy and pricing, and pulp prices outlook as well?
Exactly. Then the other one is related with the shipping market, the current constraints, how do we expect that will evolve over the year? How do we expect your cost base, your variable cost base will evolve versus Q4, 2021?
I will pass to Antonio.
Okay. I will try to answer the three questions, and I invite my colleagues to add any further details that I might miss. Regarding your first question, yes, you are right. Our cogeneration facilities are all now on market sales, and this will compensate the rising prices for energy. But we believe that it will more than compensate the rising prices for energy. However, and I will probably jump to the last question, we still see a lot of pressure on our cost base, not only on energy, but on all other raw materials, wood, chemicals, and logistics. I will come back to logistics.
Even if we more than offset the energy bill by selling our cogeneration facilities on the market, the remaining cost drivers will probably get a good part of the delta we will generate by selling the energy. In reality, we still see pressure on our cost basis. How are we dealing with the pressure? We try to be more efficient in all our operations. We have ongoing programs in all mills to improve the specific consumption of the different inputs in our pulp, paper, tissue, and packaging operations. Regarding your question about shipping, we still see the shipping market quite tough, particularly which was what affected us most in 2021, deep sea.
We had impacts in road, we had impacts in short sea, but by far the largest impacts were in deep sea, and we still see impacts going up in some lines on deep sea. We hope these impacts will be reduced all along 2021. Sorry, along 2022. It's very early to say for how much and when. As we mentioned in previous conference calls, let's not forget that the maritime leg is only one part of the full logistics model. We still see issues at ports. We still see issues in road transport with lack of truck drivers in many regions across the world.
Even if the shipping market eases a bit in 2022, it's not fully guaranteed that the remaining logistics elements will be easy during the rest of the year. I would like to go back to shipping in a second, but I'll try now to answer your question regarding pulp. We see the trend in 2022 as we saw it probably in November, December. We just see this trend starting at a much higher level than we were anticipating, but the trend is the same. I think we didn't mention that we see prices going down in the second half of the year or in the last part of the year. We don't know.
I don't think it's adequate to comment when prices will go down, but we see the trend as more or less the same as it was before. However, starting with a more comfortable level than we were all anticipating three or four months ago. Regarding shipping market, let's not forget the following. As it was mentioned by myself and my colleagues during the call, although shipping costs are an important part of our cost, and they have been increasing, they have also been protecting significantly prices on all grades, on pulp, on paper, on tissue and on packaging.
The overall balance in between the increased cost of shipping and the fact that Europe and our, let's say, closer influence markets like Middle East, North Africa, and so, the overall balance has been positive in spite of this shipping cost increase.
Just to recapitulate, shipping, despite the direct price increases because it is closing EMEA to import, has been positive or is, the net result is positive, is what you mentioned, yes?
Yes. Yes.
Okay.
Overall.
Thank you very much.
It's positive.
Okay. Thank you very much, and congratulations for the figures.
Thank you.
Thank you. Our next question comes from Carlos Jesus from CaixaBank. Please, Carlos, your line is now open.
Hello, good afternoon from CaixaBI. I have a couple of questions, if I may. First of all, when do you expect a normalization of working capital needs going forward? The second question, coming after the ones that were answered, in terms of OpEx, do you expect that the price increases that the company is implementing could offset completely the cost inflation in 2022 and its impact on margin? Finally, a third one, if I can you give us any light on what is the impact on margin from your packaging business? Thank you.
Okay. Carlos, thank you for your questions.
Yeah.
Just to recap, the first question is about working capital needs. Next-
Yeah.
OpEx and the relation between price increases versus inflation costs, right?
Yes.
packaging margins.
Yes. The third one, I think you mentioned the EUR 40 million of contribution from packaging. I don't, I just wanted to see if...
Understand, yeah.
You can provide any light in terms of margin, yes.
Okay, thank you. I will pass to Antonio.
Thank you.
Okay, Carlos, thank you very much for your questions. I will probably start by second and third. I will ask João or Paulo to make some further inroads into this question, and I'll pass your first question to Fernando. Regarding price increases, of course, we are working towards the compensation of the costs to all the price increases. Probably it will be good to mention what has happened so far in 2021 and already in 2022 by main regions. In Europe, we had last year four price increases. We have already done this year two price increases, one in January, and no later than today, we have announced another one for March. In U.S. last year also, we increased prices four times.
We had another increase already this year, and we do believe that the conditions will show that most likely in the first part of the second quarter of the year, another price increase is possible. On overseas is a big basket of countries, we had last year three to eight price increases, depending on the region. This year we have one or two, and we also believe in the second quarter, more will come. We are doing a lot of effort on the price increases and applying surcharges to compensate the costs. I mean, it's very soon to say if they are all fully compensated, but I can tell you that our commercial teams are very much committed to work with our customers in this direction.
Of course, these price increases are not all led by cost increases. These price increases are led by what we have mentioned before, supply chain and logistics disruptions, a reduced capacity by some of our competitors that have shut down capacity. Last but not least, very important, a demand that is recovering. Namely, as it was mentioned during the call, mainly in Europe, which is by far still our main market, the demand for uncoated wood-free in the last two years, which is a negative demand, but does not distinguish itself.
From what was the trend before the pandemic, and we don't have yet the office work fully restored, therefore, office paper is not yet fully consumed. The price increases are not only led by cost increases, they are also led by the overall market dynamics. Regarding our packaging business, the margins of our packaging business, as we mentioned before, our packaging business today, the objective is to reduce the tail, so the worst businesses of uncoated woodfree, and we have successfully do so. We can tell you that on contribution margins on average, we reached not far from twice the last tons, the equivalent last tons of uncoated woodfree. I'm not speaking about the last tons of uncoated woodfree that are gone. I'm speaking now about last ton of uncoated woodfree that remain.
We are confident that so far, the packaging business generates margins that are quite interesting. João Paulo?
I think I won't need to add anything else, Tony. You mentioned all the most important points. Just as an add-on, the packaging business internally has to compete along with the uncoated woodfree business, and we are therefore creating an internal, let's say, competition because the machines are able to produce both uncoated and packaging. Machines are quite flexible, and therefore we have this internal, let's say, competition as I mentioned before, that will help us to select the best businesses for the company. At the end of the day, that's the most important thing.
Okay.
Regarding working capital needs, I'm not quite sure what you intend with the question. What I can say is, we are above the levels of December 2019. At December 9, 2019, we had working capital of EUR 28 million. Now we have EUR 40 million. Regarding December, we are below December 2020, where we had EUR 75 million as working capital. I would say that after the pandemic, we are more cautious, more rigorous, and we have more instruments to manage the working capital and free cash flow generation. I would say that we intend to be in the same level that we are having today. Perhaps we expect a little more on clients. We expect our turnover will increase. For sure, the inventories will increase.
We are confident that, despite these low levels, comparing with, for instance, 2018, we have instruments to manage and do not exceed the values of 2020.
Okay. Understood. Thank you.
Thank you. Our next question comes from Bruno Bessa, from CaixaBank BPI. Please, Bruno, your line is now open.
Yes. Good afternoon. Thank you for taking my questions. Yeah. The first one was related with the change to market sales in your co-generation business. Just trying to understand if you could give us an indication of what will have been the impact on the EBITDA in the fourth quarter of 2021 if all your production units were selling energy at market prices. This will be my first question. The second question related with the tissue business. Trying to understand where the profitability of this business lies today, considering the very high level of pulp prices.
If you could give us an indication of the EBITDA margin or at least how it compares with your long-term objectives, it will be appreciated. The third question, if I may, related with your cash flow and dividend policy. You already announced this EUR 100 million dividend to be proposed to the shareholders meeting. This will mean a EUR 150 million dividend to be distributed related with the 2021 results.
My question here is if you feel that you have room to distribute another dividend on top of the one that you have proposed this year, considering the strong evolution of the paper industry and your healthy balance sheet situation. And that will be all from my side. Thank you very much.
Thank you, Bruno, for your questions. Just for a recap, the first one will be about energy and the change in the regulatory context on energy. About tissue business profitability and regarding cash flow and dividend policy. I don't know
Do you have any more questions? I think, these are the four ones that you talked about.
Perhaps I can start with the easiest one, about dividends. For the moment, we are not considering any further distribution of dividends.
Thank you, Fernando Araújo. Regarding your first question about energy, if I understood it correctly, in Q4 last year, we didn't have all the installations. We had one installation selling in the market. Only in Q1 this year, and not exactly in the beginning of January, but during the month of January, we had the other installation selling into the market. Regarding your second question about profitability, and I fully understand your question because some of our competitors already published results on their tissue operations, which were considerably worse than 2020. Actually, this was not our case. The results have not been as good in terms of EBITDA margin as 2020, which was a very good year for tissue, an excellent year for tissue.
The results have been on the same ballpark figure, no matter if you speak about total EBITDA margin or EBITDA in terms of percentage margin. We are quite happy with the results of tissue so far. As mentioned before, we do believe we have here an area that we can further reinforce into the future.
Yes, thanks. Thank you very much. Just to follow up, if I may, on the energy. On the question related with the energy topic. My question was a bit on the sense of trying to understand what would have been the EBITDA in Q4 if you had all your cogeneration plants selling at market prices. I know that only from January or only from Q1 this year you will move to that regime. If you were in that regime during the fourth quarter of last year, would you have an estimation of the EBITDA that you have generated in Q4 under these circumstances?
Bruno, thank you very much again for your follow-up question. I think we understood very well your question in the beginning, but this is exactly what we are prepared to share at this moment.
Okay, fair enough. Thank you very much.
Thank you.
Thank you. As a reminder, if you would like to ask any question, please press star followed by number one on your telephone keypads now. Our next question comes from António Seladas from AS Independent Research. Please, António, your line is now open.
Thank you. Just a quick question regarding CapEx for 2022. You didn't mention a figure, but should we take a level between EUR 110 million and EUR 140 million? You think that is right figures or? Millions, of course. EUR 110 million.
As you know, António , we don't give this kind of specific guidance.
Okay.
We have in previous call mentioned that our normalized CapEx should be ballpark figure, not far from EUR 100 million to EUR 100+ million. I think although we are a bit delayed because of the reasons we have explained during the call, on launching some projects. At the same time, all suppliers are also delayed in supplying the equipment, the materials and so on. We believe that we are going back to a more normalized figure. Probably the second figure you mentioned, the highest figure you mentioned is a bit too high.
Okay, thank you very much.
Thank you. We currently have no further questions, so we'll hand over back to the management team for any webcast questions.
Okay, thank you. We have no further questions, so this ends our session. Thank you all for your time. As always, we are available for any additional clarification through our IR usual contacts. Have a great day.