In 2020, the world was shocked by an unexpected event which marked everyone indelibly. We know that various pandemics have occurred before over the course of human history, although in different eras and contexts, where globalisation and community and economic interdependency were far from being so deep-rooted. For this reason, in addition to health aspects shared by all other pandemics, the implications of this crisis are completely different from before. These are unique challenges being faced by humanity which demand an immediate response. As was inevitable, our company was also confronted with this massive challenge: as an industrial company, with four factories in continuous operation requiring in-person work, exporting around 94% of its production in more than 130 regions around the entire world, using various raw materials and some imported consumables, we naturally experienced a major shock and tremendous challenge with this unexpected and serious pandemic.
We can contend that 2020 was the most difficult year in the Group’s history, since we all had to change our work habits and routines, while deteriorating conditions in international pulp and paper markets due to the pandemic forced us to shut down paper machine production in Setúbal and Figueira da Foz, as well as the pulp mill in Aveiro. This completely new situation was a cause of concern for our employees, despite measures taken to ensure their continued compensation. This was the general picture we were immersed in during the second quarter of 2020. I wish to underscore this point to highlight what, for me, is the greatest source of pride as Chairman of this company’s Board of Directors. Difficulties were turned into strength, and opportunities were found in adversities.
This crisis also showed the strong resilience of our business model. Despite this entirely unexpected situation and the downturn in the markets where our production is sold, Navigator was able to end the year with an EBITDA of €286 million, a substantial capacity to generate cash, and free cash flow of €234 million (a significant amount under the current circumstances) – higher than in 2019 – also thanks to our proven ability to react to market conditions and manage costs, CapEx and cash flows. These results not only prove that Navigator is a company highly resistant to adversity, but also that it can adapt to new circumstances and reinvent itself, standing out for its quality and the diversity of its products. As proof of this was the sale of the highest volume of market pulp in a decade, in various regions, its ability to capitalize on opportunities in UWF paper target markets, and its unveiling of innovative products in tissue, significantly increasing sales volume and finding new markets for this and other differentiated products.
As a company, Navigator is a benchmark in sustainability, long aware of its important role in adapting its production process to mitigate and combat climate change.
For this reason, in 2019, it took on the public commitment of accelerating its carbon neutrality goal to 2035, as the very first company to do so in Portugal and among the first throughout the world, a decision requiring a €154 million investment, of which €55 million have already been invested through the end of 2020. In this regard, as the most relevant investment to date, I wish to highlight the new biomass boiler in Figueira da Foz, completed in 2020 to replace the existing boiler and natural gas combined-cycle power plant, which will reduce CO2 fossil emissions by 81%. We can say that sustainability is part of the company’s DNA. Around 90% of the materials we use are renewable, and 87% of our waste is recovered through energy efficiency, composting and the incorporation of value-added products, with the commitment of raising this bar to 90% by 2030.
Navigator’s forests are well-managed, preserving biodiversity, and with a carbon stock equivalent to 6.1 million tonnes of CO2. For many years, Navigator has been part of Portugal’s Business Council for Sustainable Development (BCSD), where it has presided over the management of this important corporate forum of more than 100 companies proactively committed to transitioning towards sustainability. It is also on the Executive Committee of the World Business Council for Sustainable Development (WBCSD), combining more than 200 companies worldwide with a strong, focused commitment to sustainability. In conclusion, because of who we are and what we have done, we can face future challenges with nothing more than great confidence, since: – We have a team whose ability to react was quite apparent in the response to last year’s crisis; – We invest in our factories and forests; – Our growth vision is clearly focused on tissue, an innovative direction in the areas of packaging and, further on, bioproducts, with a long-term focus on Mozambique; – We have come out stronger compared to last year, with a clear vision for the future. For all these reasons, we know we are on the right path.