PART 1

MANAGEMENT REPORT

INTERIM REPORT | 9 MONTHS 2022

1

INTERIM REPORT | 9 MONTHS 2022

1 HIGHLIGHTS

  • The rapid change in the European macroeconomic and geopolitical framework triggered by the Russian invasion of Ukraine has increased global uncertainty, volatility and insecurity over the first nine months of 2022. The costs of energy, logistics and raw materials, which were already at historically high levels at the beginning of the year, rose substantially. The resilience and adaptability shown by the Semapa Group and its subsidiaries in managing the impact of these unfavourable events was achieved through a strong commitment to increasing efficiency, boosting productivity, moderating the increase in variable costs by curbing specific consumption and with continued efforts to contain fixed costs.
  • Investments in fixed assets made in the first nine months of 2022 grew 47.1% and amounted to approximately 121.1 million euros, vs. 82.3 million euros over the same period in the previous year. The Pulp and Paper segment, with
    1. million euros, and the Cement segment with 51.9 million euros, 29.4 million euros related to the CCL ‐ Clean Cement Line project at the Outão cement plant stood out, maintaining the Group's commitment to the progressive decarbonisation of its business units.
  • Investments in financial assets made by the Venture Capital segment / Semapa Next totalled 15.2 million euros, divided between six companies (five of which correspond to new investments) and six funds (one being a new investment).
  • At the close of the first nine months of 2022, consolidated interest‐bearing net debt stood at 797.8 million euros,
    1. million euros below the figure at the end of 2021. As at 30 September 2022, the Group has a comfortable liquidity position backed up by cash and equivalents and a set of committed and undrawn credit lines.
  • In the first nine months of 2022, the Semapa Group recorded consolidated revenue of 2,312.3 million euros (vs. 1,515.3 million euros in the same period of 2021): 1,822.5 million euros were generated in Pulp and Paper / Navigator (+62.8% year on year), 448.6 million euros in Cement / Secil (+22.3%) and 41.3 million euros in Environment / ETSA (+42.2%). Exports and foreign sales for the same period amounted to 1,740.4 million euros, accounting for 75.3% of revenue.

  • Driven by the pulp price index, the overall increase in the cost of energy, logistics and raw materials, and a great imbalance between supply and demand, the price index for UWF paper in Europe also increased significantly in the first nine months of 2022, contributing to growth in Navigator's revenue. Cement revenue reflects mostly the favourable progress in Portugal and Brazil.
  • EBITDA in the first nine months of 2022 amounted to 673.2 million euros (vs. 364.8 million euros in the same period of 2021): 551.6 million euros were generated in Pulp and Paper (+124% year on year), 106.1 million euros in Cement (‐1.1%) and 15.1 million euros in Environment (+31.3%). The consolidated EBITDA margin of 29.1% was 5.0 p.p. over that in the same period of 2021.

  • The increase in EBITDA was driven by growth in the Pulp and Paper segment, benefiting from efforts to improve efficiency and consumptions and positive developments in the selling price of UWF paper on the international markets. The EBITDA of the Cement segment was penalised by the negative effects of the increase in production costs, mainly energy costs and a decline in sales of surplus CO2 emission licences.
  • Net profit attributable to Semapa shareholders at the end of the first nine months of 2022 stood at 231.4 million euros (vs. 122.2 million euros in 2021).
  • In the last quarter, Navigator received approval for its greenhouse gas (GHG) emission reduction targets from the Science‐Based Targets Initiative (SBTi), an internationally recognized global organisation for evaluating the initiatives taken by companies towards a low‐carbon economy.

2

LEADING BUSINESS INDICATORS

IFRS ‐ accrued amounts

9M 2022

9M 2021

Var.

Q3 2022

Q3 2021

Var.

(million euros)

Revenue

2,312.3

1,515.3

52.6%

846.6

543.9

55.6%

EBITDA

673.2

364.8

84.6%

248.1

140.0

77.2%

EBITDA margin (%)

29.1%

24.1%

5.0 p.p.

29.3%

25.7%

3.6 p.p.

Depreciation, amortisation and impairment

(169.4)

(140.5)

‐20.6%

(59.0)

(47.1)

‐25.3%

losses

Provisions

0.3

(2.1)

114.6%

(1.1)

0.2

‐843.5%

EBIT

504.1

222.2

126.9%

188.0

93.1

102.0%

EBIT margin (%)

21.8%

14.7%

7.1 p.p.

22.2%

17.1%

5.1 p.p.

Net financial results

(84.9)

(36.2)

‐134.6%

(22.6)

(12.2)

‐84.5%

Net monetary position

‐

(0.2)

100.0%

‐

(0.0)

100.0%

Profit before taxes

419.2

185.8

125.6%

165.4

80.8

104.7%

Income taxes

(108.4)

(32.5)

‐233.6%

(43.8)

(17.8)

‐146.4%

Net profit for the period

310.8

153.3

102.7%

121.6

63.0

92.9%

Attributable to Semapa shareholders

231.4

122.2

89.3%

89.9

49.1

83.0%

Attributable to non‐controlling interests (NCI)

79.4

31.0

155.8%

31.6

13.9

127.8%

Cash flow

479.9

295.8

62.2%

181.7

110.0

65.2%

Free Cash Flow

296.7

216.0

37.4%

138.7

60.8

128.0%

30/09/2022

31/12/2021

Sep22 vs.

Dec21

Equity (before NCI)

1,333.9

1,092.3

22.1%

Interest‐bearing net debt

797.8

1,015.6

‐21.4%

Lease liabilities (IFRS 16)

98.5

96.7

1.9%

Total

896.4

1,112.3

‐19.4%

INTERIM REPORT | 9 MONTHS 2022

3

2 PERFORMANCE OF THE SEMAPA GROUP BUSINESS UNITS

2.1. BREAKDOWN BY BUSINESS SEGMENTS

IFRS ‐ accrued amounts

Pulp and Paper

Cement

Environment

Holdings

Consoli

(million euros)

dated

9M 2022

22/21

9M 2022

22/21

9M 2022

22/21

9M 2022

22/21

9M 2022

Revenue

1,822.5

62.8%

448.6

22.3%

41.3

42.2%

(0.1)

66.2%

2,312.3

EBITDA

551.9

124.4%

106.1

‐1.1%

15.1

31.3%

0.1

373.5%

673.2

EBITDA margin (%)

30.3%

8.3 p.p.

23.7%

‐5.6 p.p.

36.5%

‐3.0 p.p.

‐

‐

29.1%

Depreciation, amortisation and

(128.0)

‐26.9%

(38.8)

‐4.8%

(2.5)

‐2.4%

(0.2)

4.3%

(169.4)

impairment losses

Provisions

2.5

>1000%

(2.2)

1.8%

‐

‐

‐

‐

0.3

EBIT

426.5

193.5%

65.1

‐4.2%

12.6

38.9%

(0.1)

53.0%

504.1

EBIT margin (%)

23.4%

10.4 p.p.

14.5%

‐4.0 p.p.

30.6%

‐0.7 p.p.

‐

‐

21.8%

Net financial results

(60.1)

‐371.9%

(25.9)

‐35.2%

(0.1)

20.2%

1.2

128.5%

(84.9)

Net monetary position

‐

‐

‐

100.0%

‐

‐

‐

‐

‐

Profit before taxes

366.4

176.3%

39.2

‐19.3%

12.5

39.8%

1.1

125.6%

419.2

Income taxes

(104.2)

‐291.3%

(15.2)

‐112.1%

(2.8)

‐40.9%

13.8

318.9%

(108.4)

Net profit for the period

262.2

147.4%

24.0

‐42.1%

9.7

39.5%

14.9

>1000%

310.8

Attributable to Semapa

183.4

147.5%

23.4

‐44.5%

9.6

38.2%

14.9

>1000%

231.4

shareholders

Attributable to non‐

78.7

147.4%

0.6

172.2%

0.1

>1000%

‐

‐

79.4

controlling interests (NCI)

Cash flow

387.6

87.6%

65.0

‐19.5%

12.2

30.0%

15.1

>1000%

479.9

Free Cash Flow

322.3

76.4%

(14.2)

‐133.1%

5.1

32.9%

(16.5)

‐23.1%

296.7

Interest‐bearing net debt

372.5

317.0

(12.3)

120.7

797.8

Lease liabilities (IFRS 16)

58.7

38.1

1.4

0.3

98.5

Total

431.2

355.1

(10.9)

121.0

896.4

Note: Figures for business segment indicators may differ from those presented individually by each Group, as a result of consolidation adjustments.

INTERIM REPORT | 9 MONTHS 2022

4

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Semapa - Sociedade de Investimento e Gestão SGPS SA published this content on 05 December 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 December 2022 22:01:05 UTC.