Earnings Call: Q1 2021

Jun 1, 2021

Good morning, ladies and gentlemen. Welcome to the webcast for the Q1 of 2021 results. Participating in the call today are the following members of the Board: As usual, we will start with a brief presentation of the main highlights of the period, and we will have a Q and A session at the end. The presentation can be accessed through the link available on the website, and questions may be addressed also through the webcast platform. Antonio will start with a comment on the main figures recorded in the series. Antonio, please. Good morning and thank you for joining us today. I will start by going to Slide 4 and like a global overview of Q1 2021. The quarter was marked by the new lockdown implementing most of the group's key markets And the pace of paper demand remained at the same level as it was in the Q4 of 2020. Lease prices were hoped reported strongly over the period and successive price increases were implemented and number of price increase intact in the copper paper mills in a period of 11 day shutdown and the small parts that completed a total of about 13 days shutdown. This has, of course, an impact on the available good for sales and volumes of pulp, paper and energy, which declined versus Q4 2020 and versus Q1 2020 as well. Tissue business progressed well in the quarter in spite of the impact of lockdowns and charter restrictions continuing to affect the away from home segment. We kept our efforts to contain costs, both fixed and variable, and ended the quarter with some relevant savings. We registered an EBITDA margin of €71,000,000 dollars and reached an EBITDA sales ratio of 21%. We maintained the capital management of our working capital and ended the quarter with a strong generation of free cash flow. We finished the construction of our solar plant at Preguela Porch with an annual installed capacity of 2.6 megawatt hours, increasing the energy generation through renewable sources and going one step further in our decarbonization road map. We also present our new 2,030 sustainability agenda, a responsible business management agenda, which seeks to increase the company's positive contribution to creating value and sustainable growth in a changing world. This agenda is fully aligned with our purpose of commitment to creating sustainable value for our shareholders and for society as a whole. So let's go now to Slide number 5, please, with the overview of the main figures for the quarter. Turning over to Slide 341,000,000, in line with Q4 2020 and 16% below Q1 2021. This year on year evolution was mainly due to the reduction in paper and pulp volumes and the lower sales price for paper. EBITDA reached $71,000,000 6% below Q4 2020 and 20% lower than a year ago. CapEx stood at 20,000,000, dollars 9,000,000 above Q4 and $3,000,000 under Q1 2020. Adriana Silveira will comment on the CapEx plan, but this included mainly maintenance and environment and decarbonization projects. Strong free cash flow registered in the quarter, as just mentioned previously, of $56,000,000 comparing very favorable with EUR 50,000,000 registered in Q1 2020. So net debt stood at EUR 624,000,000 at the end of the quarter and net debt to EBITDA ratio improved slightly to 2.33 times from year end. If we turn to Slide 6, we have an overview of the evolution of the last 6 quarters. In terms of production output and sales for paper and pulp, Q1 2020 is clearly impacted by the lockdown restrictions and by planned maintenance stoppages that took place in March and that implies about 13 days of downtime as commented before. Maintenance at Pepe del Suriara occurs every 18 months, So the last equipment downtime was in Q3 2019. The maintenance stoppages in Sotou and Availo took place in Q2 2020, and we have planned the 2021 stoppages to AVEVA during Q3. Tissue output remained solid and comparable to previous quarter. The decline in pulp and paper volume was partially offset by the improvement in average selling price, namely in pulp. Financial figures in Q1 reflect the stabilization versus the preceding quarters in terms of turnover and EBITDA. The comparison with Q1 2020 is of course not harder as that period was only impacted by the COVID-nineteen difficulties at the very end. I will ask now Fernando to comment on the EBITDA evolution. Fernd, please? Thank you, Antonio. Turning to slide 7, we can take a closer look at the main impact of EBITDA on a year on year comparison. As mentioned, COVID lockdowns and planned production stoppage had the negative impact on the top line of Q1 2021. Declining volumes for pulp and paper has a negative effect of NIS 9,000,000, but the greatest impact comes from pricing with overall effect BRL 29,000,000. The benchmark index logged 6 point 5% and navigator average price was also negatively influenced by the US dollar exchange rate, 25% negative impact and geographical and product mix. These two negative impacts of prices and volumes were partially offset by the positive revaluation in fixed and variable costs in a global amount of ERL 18,000,000. Variable costs were positively impacted by the reduction in energy costs due to the savings registered with a new biomass boiler at Figueres de France Mill, namely related to reduced consumption of natural gas. Also price of natural gas was lower. Lower costs with chemicals, especially due to lower price. Positive evolution of crude costs mainly in terms of specific consumption. This was quite visible at Tuvomil where specific consumption improved from 3.1 cubic meters per tonne to 2.93 cubic meters per tonne. Exchange ratio also impacted the cost. The stronger euro versus U. S. Dollar impact positively on supply of crude from ex-three variant markets. Fixed costs also evolved positively, improving 9% year over year, especially in functional costs. Turning to Slide 8 with the quarter over quarter comparison. The EBITDA figures are more aligned, reflecting a similar demand context, both impacted by COVID-nineteen restrictions. In terms of prices, global impact is clearly positive with an improvement in pulp, which sustained a special recovery in paper price as well. Still volumes for paper and pulp impact negatively in EBITDA. Costs involved also positively during the quarter and had a positive contribution. Variable cost factors such as energy and chemicals performed well and we also achieved significant savings in fixed costs, mainly consumption costs. Also noteworthy is the revaluation of biologic assets, mainly in Mozambique in Q4 2020, which impact in the period by around EUR 10,000,000 in liquid terms. I will now ask Nuno Sainz to comment on the next slide. Nuno, please? Thank you, Fernando. Let's take a look at pulp and paper prices during the quarter on Slide 10. The recovery in pulp prices is very steep and occurred in a short period of time. The current level is similar with the one registered at the beginning of 2018 at around €8.40 per ton, timing €2.90 per ton. The increase in pulp prices has given support to an improvement in paper prices, but the index still shows a modest increment as it is backwards looking and is usually a delay regarding pulp. Paper index has risen €15 per ton from beginning of the year until May 2025 to €824 per ton, but it's still below the average for 2020 of €836 per ton. On Slide 11, we have an update on the pulp market. After proving to be particularly resilient in 2020 with short fiber growing by 6%, The global pulp market showed a strong price recovery in 2021 with several increases. Hardwood pulp in dollars in China was up by around 46% in the 1st 3 months of the year, up $230 per tonne and rose 29% in Europe, up from $6.80 per ton to $8.76 per ton, up 34% in euros. Of course, these prices are at the end of the quarter. Today, risk prices, fixed in Europe, are above $1,000 or at €8.42 per ton and at $7.70 in China. Considering that China prices are net and those in Europe are gross before discounts, we see that there is still room for price convergence between Europe and China over the course of the second quarter. The improvement in prices was sustained by a wide range of factors among which we may point to macroeconomic aspects as well as others more closely related to the industry. Regarding the more global factors, stimulus measures for the global economy and the strong recovery of the Chinese economy fueled an upward cycle in commodities. Wealth exchange rate trend, appreciation of the Chinese yuan and euro against the dollar also sustained higher prices in dollars. In what relates to the specifics of the industry, the strong recovery in pulp demand, which already started in late 2020, in particular in China, driven by global increase in tissue consumption, a robust printing and writing demand especially for uncoated wood free and by demand for carton board made from virgin fiber, ivory board. Also significant was the wide price gap between long and short fiber, which pushed hardwood pulp prices up and also the decline worldwide in availability of recycled fibers. On the supply side, low stocks in the supply chain, several planned and unplanned production stoppages with longer than usual maintenance shutdowns as a result of pandemic related restrictions and the conversion of some short fiber pulp capacity to dissolving pulp combined to constrain the amount of hardwood pulp available on the market. Another constraining factor on the availability of pulp is related to logistical issues. So currently, there is still a gap between pulp prices in Europe and China. And very recently, there were some new prices increases announced for Europe for June from major pulp producers, announcements that aim to reduce that gap as announcements put the prices at $11.40 for next month, more than $100 from today's picks. Antonio will now comment on the paper market. Antonio, please. Thank you, Nuno. On slide 12, we have summarized some of the main developments in NANDCO2-three. Global demand for printing and writing papers fell by around 8% year to date March, with Encode 2.3 papers showing a reduction of 5%, more favorable than for coated papers and mechanical papers once again. In Europe, demand for Enco to the free paper during the Q1 evolved along similar lines, now 9%, improving in April 2 year to date of minus 4%, with apparent demand up 16% in April. In the United States, demand for ENCO2-three dropped by approximately 14% in the 1st 3 months of the year. The demand evolution and capacity reduction of around 15% allowed for a recovery in the capacity utilization rate, up from 83% in January to about 88% in March. In terms of balance between demand and supply, North American producers have been reducing their Also in Europe, other closures were recently announced, which will take around 8% of European capacity in 2021. These shutdowns are creating positive pressure on the balance between paper supply and demand. So looking a little closer at the market collision in Europe on Slide 13, please, we wanted to share some visibility on the market evolution until April as the 1st 3 months of 2021 were impacted by new surges in COVID-nineteen infections and the subsequent lockdowns versus a period in 2020 where the economic impact of the pandemic was only felt towards the end of Q1. So, APA consumption in March April improved significantly over 12 preceding months, with March only minus 1% and April increasing to 16%. As a result, year to date April declined to 3.9% as mentioned previously. Navigator has been registered increases in its order book from 33 days in January to about 57 days in March, counting with orders not yet confirmed, and industry orders have also been improving over the last 20, albeit at a slower rate when compared to Navigator. So if we go to Slide 14, we have a closer view of the group's paper and pulp performance. As already mentioned, Navigator decided to bring forward to the Q1 the annual maintenance shutdowns for the pulp mill and for paper machines at 3.04. Paper sales totaled 335,000 tons in the 1st period, down by 8.4% in relation to the same period in the previous year and 2% vis a vis Q4 2020. The value of Encore Tullu Tree sales was affected by both the lower volumes and the reduction in global paper prices. Navigator's average sales price was also highly penalized by the dilution of exchange rates, a negative impact of 25% year on year. Also Navigator's products and markets mix reflected the pandemic situation in Europe. There was a strong recovery in demand and prices in overseas markets, where prices were up in comparison with the last quarter of 2020. So paper turnover remained stable versus Q4, but was 18.5% lower year on year. Until the end of March, we raised a strong dollar book, as I mentioned before, about 57 days and this order book has been kept during the last few months. Our inventories were kept at low levels throughout the quarter, dropping to 13 days at the end of March. Although it compares favorably with our competitors, with stocks estimate at 31 days, our low stock policy did not allow us, as it was the case in Q1 2020, to earn more sales volumes from stock variation. I will ask Nuro to comment on the pulp business performance. Ludo, please? In terms of pulp performance, sales were also impacted by the creating pulp available for sale due to both the production stoppages already mentioned and the very low level of inventories at the start of the year. So total slab volume in Q1 was 79,000 pumps, 5.5 percent lower than in Q1 2020 and 19% lower than in Q4 2020. The recovery in pulp prices observed since the start of the year helped to mitigate a decline in sales volumes with sales value showing an increase of 2% year on year, but a decline of 6.4% quarter on quarter. Sales in Europe were up in 2021 versus last year with growth in the Decor segment and in quarterly 3 and the reductions in specialties and tissue. Let's take a look at the tissue performance on slide 15. The tissue market felt the effects of travel restrictions imposed again early in the year, especially in the away from home segment, with the delay in reopening economies and the consequent impact on the ORECA channel and the return to work at the office. As vaccination programs gather speed and the prospects for a return to a degree of normality improves, the at home sector registered some destocking as households run down inventory, especially when compared with the same period in the previous year. It is now expected a gradual rebound in the away from home segments. Despite this context, Navigator sales continued the good performance recorded over the previous year and stood at 27,000 tons, up by around 4% year on year and in line with the final quarter of 2020. The average sales price was around 4% lower than 1 year previously due essentially to the share of real in the sales mix, given that sales prices for finished goods evolved positively. Sales were therefore in line with the Q1 last year and down 2.7% on the 4th quarter. Navigator showed an increase in the weight of the at home sales from a year ago, with this segment representing almost 60% of sales versus 50% of that. In terms of geographic mix, the weight of sales in Portugal increased to 44% with Spanish market remaining stable at 36%. And Rehan will comment on the CapEx now. Rehan, please. Thank you, On Slide 16, we have an overview of the CapEx over the quarter. CapEx totaled €20,000,000 and amounts slightly below the Q1 of 2020, but clearly higher than the Q1 2020. This amount includes approximately €14,000,000 of maintenance and the offset asset replacement, including the new wood chip filed in Adeyo and €6,000,000 in our environmental and decarbonization projects, of which a significant part is still associated with the biomass boiler in Figueira de Fosse and also the solar plant in also in Figueira de Foz. The new solar plant in Stuvall Mill is under construction. Now we would like to give you a very brief overview of our new 2030 sustainability agenda presented in our annual sustainability report summarized on slide 17. And I will ask Juan Le to comment. Thank you, Adriano. This agenda was designed on the basis of the findings obtained in wide ranging stakeholders engagement process and the work already carried out by a navigator in the field of sustainability. With the ambition of generating a positive impact for people in the planet through its business, the 2030 Agenda comprises 1 central focus and 3 strategic action areas, which are aligned with the company's purpose and values, which include the commitment to creating sustainable value for our shareholders and for society as a whole. The central focus area, a responsible business, is relevant to all sectors and informs all areas of strategy. This includes topics such as ethics, risk management and value creation as well as innovation. The 3 strategic action areas seek to bring together the material topics on which the company has previously focused and which are reaffirmed even more ambitiously for the coming decade. These are nature, climate and society. A set of 14 commitments have been established in the 2,030 road map in collaboration with the various operational sectors. From 2021 onwards, we will report our performance on each of the 14 commitments in accordance with the goals defined and with the key performance indicators. I invite you to take a look at our sustainability report available on our website. Turning to Slide 18, we wanted to make a quick reference to our most recent investment in the solar energy area. As we concluded during Q1, the construction of the solar plant at Figueres de Forz. This plant represents the Navigator's 4th investment in solar energy with the company investing globally over €5,000,000 in the installation of 7,200 solid floor panels with an area of approximately 2,005 100 square meters. With a capacity of 2.6 megawatts, encompassed by 7,700 solar panels, the new solar plant is now the largest within the group, exceeding the one in Sotuba with 2.2 Megawatt capacity. This new plant will increase the generation of electrical renewable energy with 0 CO2 emissions and will allow to further avoid emissions in alignment with our decarbonization roadmap. I will ask Fernando to make the next comments. Fernando, please? Thank you, Joao. On Slide 19, we have an overview of free cash flow in Q1. Navigetsu demonstrated once again a strong cash flow generation capacity. Free cash flow totaled EY56 1,000,000 comparing very February with the same period in 2020, EY15 1,000,000 at the time. It should be noted that Navigat's cash generation cycle normally presents very moderate levels in the Q1. In the Q4 of 2020, free cash flow stood at NIS 63,100,000. Despite the gradual upturn in activity levels, accompanied by slight increase in stock levels, especially in raw materials and clients, the continued lowest level of investment in working capital has been crucial to the healthy level of free cash flow. Effective management of working capital in which the careful policy of supplier management is combined with offers our partner solutions for supporting their liquidity, therefore remains the cornerstone of the process of managing free cash flow in the company. When looking at the free cash flow generation over the past 12 months, Navigator generated cash flow of approximately €275,000,000 the highest figure record since 2013. Slide 20, Sun Internet has navigated net debt fell by approximately EUR 56,000,000 versus EUR 600,000,000 in December 2020, standing at the end of March at EUR 645,000,000 €24,000,000 with a consistent reduction path since Q1 2020 when net debt reached BRL 800,000,000. The net debt to EBITDA ratio remains at the conservative level of 2.33 times, excluding the impact of IFRS 16 on its interest bidding net debt. On Slide 21, we can see the debt maturity level of Navigator. Gross debt held recently fees in relation to year end 2020. During Q1, Navigaso repaid a 1 year loan taken in the context of the early days of the pandemic, BRL 40,000,000 and use the facility already contract and negotiated, totaling euros 42,500,000. At the end of the quarter in April, Navigator undertook a significant restructuring of its debt, repaying loans totaling ERL240,000,000, maturity of BRL 2,000,000 long term loans of BRL 170 1,000,000 yearly repayment of a bond issue of BRL 45,000,000 and repayment of short term facilities of BRL 25,000,000. At the same time, the 2nd series of loans contract in 2020 with the value of BRL 85,000,000 with the maturity in 2023 was issued and a further bond issue was made with the value of E20 1,000,000 also contract in 2020, maturing in 2026. This operation in terms of the group to fix the maturity of its debt to 3.5 years and also to reduce the cost of medium and long term debt. Now I will return the floor to Antonio. Let's please turn to Slide 23 with an overview of the quarter and the main developments of Permian during the quarter. As mentioned before, Q1 was impacted by new surges in COVID-nineteen infections and the subsequent lockdowns in some of Navigator's key markets with paper demand evolving at an identical rhythm as the previous quarter and pulp prices showing a great recovery, the steepest recorded in history. The maintenance stoppages anticipated during Q1 impacted pulp, paper and energy output. The tissue business performed very positively in spite of away from home slowdown relative to the current situation. Navigator was able to continue to work on the cost side and registered favorable variable and fixed cost evolutions. This positive performance in costs allowed to partially offsetting the lower volume levels and reduced paper prices with EBITDA reaching $71,000,000 and EBITDA sales margin registered about 21%. Careful working capital management allowed to achieve a significant free cash flow during the period. Our balance sheet remains strong with net debt reducing to $624,000,000 and net debt to EBITDA stood at 2.33x. I will take the opportunity to quickly comment on the anti dumping process. As we reported in January, the final rate for digital review number 3, March 20, 2018 to February 20, 2019, was confirmed and fixed at 6.75%. U. S. Authorities should therefore initiate reimbursement process in the next months relative to the amount deposited in excess. It is important to note that on every 5 year anniversary of the anti dumping duty order, U. S. Authorities must begin a procedure called sunset review to reassess whether the anti dumping order will be discontinued. U. S. Authorities have now decided that a complete revision will be taking place on the anti ending process on encoding 3 paper imports to USA, objects of the original order, including imports from Portugal. Navigator expects this to be a lengthy process and this decision merely means that the first hurdle has been successfully overcome. Finally, a few words on the outlook for the rest of the year. I think it's fair to say that as the economy recovers and the vaccination plan is implemented, conditions in the pulp, paper and tissue sector can be expected to remain positive overall. Continued high pulp prices in all regions are sustaining the gradual implementation of price rises for paper. As we have seen today, Navigator's order book and those in the industry stood at historically high levels, 5732 days, respectively, at the end of April. On the supply side, some of the constraints experienced in the Q1 remain in place, in particular, the continued high levels of marketing trade along with the delays in logistics chain limiting access to Europe and navigated ski markets by competitors from other geographical regions. The shutdown of capacity in order of about 12,800,000 tons net in U. S. Between 2019 2021. As mentioned before, 26% of all U. S. Capacity and another announced closure in Europe, which will take 8% of European capacity, are creating positive pressure on the balance between paper supply and demand. In the pulp market, after sharp prices in prices over recent 'nineteen, the prospects now point to moderate evolution with a degree of stability in China and prices rising in Europe narrowing the price differential between the two regions as we have witnessed in the last 2 months. In tissue, rising prices for pulp and other factors of production have cooked manufacturers' margins under pressure. In February, Navigator announced to the market that price rises between 6% 8% will be implemented for tissue products as from April and a number of other producers have also announced price increases for Q2. These increases are currently underway. Navigator will continue to take action on the variables it is able to control, particularly in the management of its fixed and variable costs. The company estimates it will maintain approximately 80% of the savings achieved in running costs between 2019 2020, namely, inspectioning costs as well as on implementing its investment plan and its sustainability projects. Thank you very much. Thank you, Antonio. This ends our conference for the presentation. We are now open for the Q and A We have a question in from Antonio Salazar from AS Independent Research. Antonio, your line is now open. Please go ahead. Hi, good morning. Thank you for the presentation and for taking my questions. I have three questions. The first one is related with your net debt EBITDA level. You mentioned 2.3% and it's a conservative level. If you can provide us what is a level that you consider normal? The second question is related with the slowdown or coming down of paper demand and your exposure to paper. I know that you don't like to ask to this question. Nevertheless, if you can share with us how do you believe the market will evolve in the coming years, namely more tissue, more packaging, less paper or printed and writing? And how navigator will be on this environment? And the last question is related to Mozambique, if you can provide us an update on Mozambique project. Thank you. Okay. Thank you very much for your question. We will distribute the questions. I will try to answer your question number 2, and I will start by that one. I will ask Fernando to comment on the net debt to EBITDA levels and I will ask Moulin to comment about Mozambique. And we don't mind pursuing your question. I was very happy to answer all the questions that we had asked, but we cannot provide guidance. So we can tell you what is possible to tell you at this stage. And we are confident that the M42 III market will probably be more resilient than the majority of people believe. And we are confident of our footprint on the M42 III market, which is based in very high qualities, very strong brands and a very wide geographical distribution across different continents, different regions of the world, different markets. Some will be probably decreasing further than others, but some in which we are present are still growing, namely Middle East and Africa. But definitely, definitely, the uncontrolled free market will hardly be an history of growth for this company. So the two areas that we have just mentioned, tissue and progressing in packaging, as we have mentioned before, we are producing packaging for almost 20 years, although it's something that we don't give a lot of visibility. We are keeping developing this area of business. We'll likely be together with pulp the areas of the development for the company in the coming years. Having said that and going back to Encotadu 3, let's not forget that we are very well positioned in the cost curve and we have been working very hard in the last few years to keep this cost position, working on variable and fixed costs. And we do believe that in EMEA, although we have probably a more positive view than majority of the people in the region of the market, Even if the market decreases, we keep having a very competitive position in Eco Tubular 3, which today as we have seen represents about 70% of our business. It represented already a few years ago 80%. So it's natural that not by decreasing the loan, but by increasing address of the business the representativeness of Encodul 3 will slightly go down in the coming years. I will ask now Fernando to comment the first question of net debt at EBITDA and what we consider a normal level, if we can define what is a normal level. Fernando? Okay. From our side, investment grade companies should have a net debt EBITDA lower We are lower than 2.5. That's why we call it conservative level. Okay. Thank you. Okay. About the Mozambique projects, well, we as we expected and we have planned, we are going with the we are going on with the operations of harvesting the wood, transportation for that wood to the Baillar Harbor. And the first shipment predicted the first of 3 shipments predicted for this year is about start. We believe that we in the middle of this month, we will start the loading and the other two shipments will be following and be concluded this year. And everything is going as predicted with no surprises at all whatsoever until now, of course, but everything going ahead like planned. In terms of the Zambezia province, we are following the developments in what relates to the harbor construction. And as far as we know, everything is going okay according to the scenario and the prediction that the concessioner so far has been sharing with us and with the government. So we are following what is related with those developments and everything is going normally so far. We have a question in from Bruno Vesser of Caixa Bank. Bruno, your line is open. Yes. Good morning. Thank you very much for taking my question. I have 4, if I may. First one related with first and the second one related with prices, but focusing on the first one. If you could provide more color on the implementation of the announced hikes for February and May and how we stand on this front as of today and linked also to prices, the second question will be related or would be following. Do you plan any further hike over the coming months? We saw a German peer today announcing a price hike for July. Are you planning any kind of hikes over the coming months? So this will be the number 1 and number 2 question. The number 3 question, how does the current backlog of the company compare with the same period in 20 19? And the last question related with the collection of the compensation in the U. S. If you could share with us the amount still pending related with this compensation will be appreciated very much. Thank you, Bruno, for your questions. Can you repeat the last one, please? Yes. Last one is related with the compensation that you are receiving in the U. S. Related with the tariffs that were imposed. If you could share with us the amount that is still pending from collection related with this compensation. You're talking about the anti dumping and the POR3 situation? Yes, that's correct. How much is pending for to be collected there. Okay. Thank you. Okay. Thank you, Bruno. I will try to answer the first two questions and Fernando will comment about the compensation of anti ramping. I must say that the line was not very, very clear. So I hope I'm going to answer the right passengers have intended to raise. Regarding price increases, just a recap. In Europe, we have led an increase a price increase announcement in February that was implemented in March April, and it was implemented more or less what we have been announcing. We have announced another price increase for May, which will be implemented from the 1st July onwards. On top of that, we have certain type of businesses that have fixed prices by semester. So we expect those businesses also to increase regardless of the announcement to increase anyhow from July onwards. In the rest of the world, U. S. A, we have announced 2 price increases. The first one was also implemented in March, April and the second one will also be implemented somewhere around July. In overseas markets, we have announced a price increase in December that was implemented in January, another one in January, another one in February, another one in April. So now we are completely focusing ourselves in making sure that these announcements are going to be fully implemented. We do believe there are probably still some room to have further price increases, but this will depend very much on demand evolution on the second half of the year as well as the evolution of the pulp prices. Regarding your second question, which I think was related with our 57 days backlog, it compares very favorably not only with 2020, but also with 2019. Actually, I think it's the 3rd best in our last 12 to 13 years history for this time of the year. I will ask now Fernando to comment on the anti dumping POR3 reimbursement compensation. Okay. We have still in the balance sheet amount to be reimbursed around USD 5,000,000. This means more or less US4 $1,000,000 to be recovered. That's very clear. Thank you very much. We have a question in from Louis Di Toldo from ODDO BHF. Your line is open. Good morning. I would like to know if you could provide further detail on the current strong backlog. You already mentioned that it's record levels. I would like to know if there's particular points of strength that could be related to the reactivation of the economy in particular sectors, if it's all at the distributor level or if there's something at the regional level that you would like to stress? And finally, if these high levels could be related with logistic issues that overseas markets may be facing? Thanks. Very good. Thank you for your question. Well, indeed, as we Prati mentioned during the presentation, the logistic constraints that we have been witnessing all over this year and we are expecting to continue at least through the summer are also partially responsible for the strong backlog the European industry is witnessing. And there are regions that where the European producers compete with other geographies, namely Middle East, North Africa that have been underserved by these other geographies. So it's normal that European producers are getting a stronger order book because of that. On top of this, the fact that there is a very large mill that was announced to be shut down from Q3 onwards also put some pressure on backlogs of European producers. Last but not least, the fact that this pandemic situation and vaccination seems to be under control. And most likely over summer, the majority of the European markets will get herbal immunity is helping people to return back to the offices, which obviously improves office consumption schools to reopen fully, which obviously also helps the office paper consumption. But probably most important than that is the fact that the economy is starting to improve and everybody is looking to a very strong second half of the year. And the recovery of the economy implies a recovery of advertising and communication strategies. Hence, all the graphical industry will probably be rather busy on the second half of the year. So all of that will help to push the demand for compulsory papers. Thank you very much. We have several questions on the webcast platform. So if we don't have any more audio questions, I would like to start with those. The first question comes from Ignacio Arce from BSNIDER. Now I'll read the question. Considering the expected release of pent up demand in Q2 2021, the current record low level of inventories for producers, the record high order books for producers, the large capacity shutdowns and increase in hardwood prices, which should reduce further converting margins, it seems that unconsolidated free prices are set to rally strongly from June onwards. Do you agree with this view? And if not completely, can you tell us why? Well, probably, rally strong is too strong an optimistic view of the market. But yes, as we commented, because of all the price increase announcements that have been done so far and implemented so far, the ones that have been announced and to be implemented from July onwards. And we agree, we expect an overall boom in the economy across the world. I think further price increases might be expected. I mean, at rally, I don't know exactly what percentage determines what is a rally, but the rally is probably too strong a word if we compare it to the rally that we have witnessed on the pulp side. But yes indeed we are positive about the evolution of the price of ANCO Q3 now in Q2 already in Q3 and in Q4. Okay. 2nd question on the platform comes from Sargis Vethren from Trion Capital. Could you please comment on the discount effect in realized paper prices versus the index? We have seen an increase in discount on pulp size in the industry. How is it evolving in the paper industry? What are the main drivers of the change? Thank you. As we have mentioned in the previous calls, the nature of discounts in paper are very, very different from the nature of discounts in pulp. We are not witnessing in first of all, we need to split regions: Europe, U. S. A. And the other the rest of the world, if I may use this expression. In Europe and U. S. A, we are not witnessing any significant increase in discounts on paper through 2021. And we don't expect them to increase with this positive stance on prices and the evolution that we are just commenting. On discounts outside Europe, most likely they have actually been decreasing because of the scarcity of paper that was commented before mainly because of logistics and difficulties to supply. And we also don't expect them to increase during 2021. And actually it's very typical when the market prices go up, the discounts on paper go down. But again, they are of very different nature, discounts of paper from discounts of course. 3rd question comes from Cole Rathorn from Jefferies. The improvement to 57 days in the unquote reorder book is very encouraging. Do you think there is an element of cup size restocking from paper distributors as they return to offices starts across Europe? Or ask another way, how are you monitoring to help customers and navigators to best manage inventory levels to the supply chain? The second part of the question is on the European industry capacity closure. 25 percent of the Enco's the Woodfree industry is not integrated and is under a lot of pressure given the higher pulp prices. Does this alone support further uncoated crude price increases? Or are further capacity closures needed to drive prices higher like in the U. S? I think the second part of the question we have somehow already answered in previous questions. I would like just to remember that if we look probably for the last 10 years, the majority of the large shutdowns of capacity of Anco Gold 3 in Europe were actually not coming from non integrated producers, but from integrated producers that have other areas of the business and they could repurpose their paper machines to other types of the non profits. Regarding the first part of the question, yes, besides what I've commented regarding demand in Europe that led to 57 days and demand outside Europe, we see that most likely there is a restocking effect not only in cut size also in graphical papers. But with the information that we have available and we monitor this monthly, We don't believe that this restocking is yet of any sort of concern. So stocks are becoming merchant stocks, the stocks are becoming a bit more stocker stock, but they have not by no means being out of control. So there is further room to develop the value chain. And we are helping our customers like we mentioned last year in the during the pandemic. We are helping our customers as well to manage better their stocks and to increase visibility for the mills of their stock levels in order to control more efficiently stocks over the supply chain. Okay. Next question comes from Ignacio Arce from partially answered, but I will say it again. Considering that the pandemic impact is mostly over and that the navigator somehow has strong visibility now, is the company considering to resume the tissue expansion plan or perhaps to start other investment plans with regards to business diversification for the production of other sort of products different than unpositive free focus? Yes. I think the question has been answered already. But indeed, the issue has proven to be a very interesting platform for the navigator to grow and develop their business. And was very clear in 2020 and this is very clear also in the beginning of 2021. So it's more than normal that we'll keep on studying expansion on this area of the business if the opportunities are presented in the right moment and with the right step. Sense. Regarding Gardena's of the business, as well we have also commented that we have been producing packaging papers for quite some time and we are developing new grades of packaging. We are bringing some innovation for packaging based on Calyptus. So it's probably also normal that in the coming quarters we'll be able to share a bit more information, share a bit more light into the developments of other papers regarding parallel to Next question from Ignacio as well. 2021 could be a very strong year for Navigator in terms of free cash flow generation. Will you submit a proposal to the AGM to distribute a higher dividend than that $100,000,000 already distributed a few days ago? Yes. The dividend is already known and it was already paid. Final question also from Ignacio. Several of your peers in Iberia have decided to monetize their renewable energy assets through an IPO or a private sale. Are you considering any of these options in order to crystallize the value of your energy business? Can you remind us what is your energy installed capacity? And what was the EBITDA generated by this segment in 2020? Thank you. I will ask you to answer this question. Okay. So first on our assets, we have currently around 200 megawatts of installed capacity in cogeneration renewable cogeneration plants of biomass driven cogeneration plants, additional 20 megawatts of fully dedicated electricity production out of biomass. In addition, we also have around 75 megawatts of cogeneration out of natural gas. And as Joao mentioned earlier, we also have 10 megawatts of solar photohopipe plants in our sites. Regarding your question, our competitors are considering IPOs or crystallizing their asset, but they have their strategy and driven outside Portugal. So either in Spain or in Poland or in the U. K, this is where they plan to improve and continue growing. The Portuguese market, we do not consider it sufficiently attractive go for a growth strategy in Portugal in energy. And I think if you would ask our competitors, they would probably agree with us. And so right now, we have sufficient we consider to have sufficient attractive growth opportunities. Now our core business is mostly driven in that are done in base in Portugal. So we are not considering any IPO or any stuff like that. Okay. We have a couple of more questions on the webcast platform. This one from Raumiere from GVC Galesco. Considering you are in a good financial shape, what would you what would it be to focus on the company for the next years? Apart from ESG, the idea is to be more focused in itself on gaining more and more productivity? Or are you considering external opportunities? Somehow the question has been already answered, but I will try to be more precise. And the first and number one priority apart from ASG as Vikram has commented is to strengthen our Eco 2 business by working in our pricing, by working in our cost base and by working in our product mix. This will allow us to gain time to redefine the future for the company in different areas. Those areas, I would say, will be normal, is the development of tissue, as it was mentioned, is the development of pulp. We do believe we still have space to have some slight improvements on the pulp side and as well is to find a road map on packaging that we have already started. Last but not least, it was commented as well, is to develop a wood business base in Mozambique in view of having Mozambique in the world good soon and preparing also a long term future for our Mozambique investments. So those are the areas in which the company will focus in the coming future. We have one final question from the group Petercam from Jonas Briseis. First, what will you do with your free cash flow not paid out? Maybe some more details on gross CapEx or M and A? And second, order book is strong. Can you give an idea of which percentage of order book was booked at prices before non surprises versus after? Regarding the first question, I don't think we will be in a position to give at this stage any more details than when that they already gave them. Regarding the second question, the prices in Europe and Europe represents 60% or above of our input 3 business, prices in Europe are valid from the moment of dispatch. So no matter when the orders were booked, the price that counts is the price in the date of dispatch. Prices in overseas markets, we have a mixed bag. We have markets and products where prices are fixed the way they are in Europe. So what counts is the moment of dispatch. There are prices of businesses that are accounted in the moment where the price was registered. Having said that, we have been discussing with lots of our customers outside Europe. And even those customers where prices were fixed, majority of them have accepted to change prices to the new prices that we have increased. So I would say the majority of the business that we have prices are valid from the moment of dispatch regardless if the order was booked previously or not. Okay. Thank you, Antonio. This ends the questions written on the webcast platform. I believe that there are no more questions on the phone. Can you confirm that, please? We have no further questions on the phone lines. Okay. Thank you. So this ends our presentation for today.