Navigator Co/the Aktie

Good afternoon. We welcome you to The Navigator Company 1 Half 2026 Results Presentation. [Operator Instructions].

I will now hand the conference over to Ana Canha. Please go ahead.

Ladies and gentlemen, welcome to the Navigator Company's conference call and webcast covering our second quarter and first half year results. Joining us today are Antonio Redondo, Fernando Araujo, Nuno Santos, Joao Le, Dorival de Almeida, and Antonio Quirino Soares. As usual, we will begin with a brief presentation followed by a Q&A session. The presentation is available on our website and questions may also be submitted using the webcast platform.

I will now hand over to Antonio, who will take you through the main highlights of the period.

Good afternoon, and thank you for joining us. The first half of 2026 was characterized by a challenging external environment. Despite geopolitical uncertainty, cost inflation and temporary operational disruptions, Navigator continued to execute its strategy with discipline and focus. While short-term performance was affected by largely nonrecurring operational factors, the underlying performance of the business continued to improve. Pricing recovery gained momentum across our core business. Our efficiency programs delivered tangible results, and we continue to make significant progress in the execution of strategic investments that are enhancing competitiveness, reducing our cost base and supporting long-term growth.

I will begin with Slide #5 with an overview of the key highlights. There are 6 key messages we would like you to take away from today's presentation. First, H1 performance was impacted by a combination of adverse weather conditions and planned industrial interventions aimed at improving efficiency and competitiveness. Second, pricing momentum continued to improve across businesses. In uncoated wood-free, June average prices were up 10% versus December levels. And in Europe, quarter-on-quarter, price increases outpaced the PIX benchmark by more than 3x. In Packaging, June average prices were 13% above December levels.

Third, cost optimization and innovation continued to support margins with cash costs improving year-on-year across all stand-alone businesses: Paper, Packaging and Tissue in both Iberia and U.K. Fourth, our strategic investments and diversification initiatives continue to strengthen Navigator's long-term value creation potential and future earnings capacity. Fifth, while the Middle East crisis negatively impacted H1 results and cost pressures are expected to persist into H2, Navigator has proactively launched a specific mitigation program focused on logistics optimization, product engineering, operational efficiency and energy management. These initiatives are expected to offset around 2/3 of the additional cost impact while strengthening competitiveness and generating structural benefits from 2027 onwards. Further details will be provided later in the presentation.

Finally, we are funding this transformation on the back of a strong financial position. During the first half, we reduced net debt by EUR 10 million while investing EUR 127 million in strategic growth and efficiency initiatives. Our strong balance sheet gives us the flexibility to continue investing in the future, accelerating our transition towards a more diversified, innovative and higher value-added business. I will now hand it over to my colleagues, who will walk you through the results in more detail and share some insights on how our different business areas have been doing.

I will now hand over to Fernando to walk you through our financial highlights.

Thank you, Antonio. Now turning to Slide 6. EBITDA increased by 20% quarter-on-quarter, confirming a clear earnings recovery driven by strong pricing and continued cost discipline as operational conditions progressively normalize. For the first half, turnover reached EUR 869 million, while EBITDA stood at EUR 143 million. The year-on-year comparison was affected by reduced operational availability, lower production availability and historically low inventory levels, which limit our ability to fully meet demand. We also continue to invest in our strategic transformation program. Several projects supported by next-generation EU funding are now in their final stage and are expected to be fully completed this quarter.

In the first half, CapEx totaled EUR 127 million with 57% allocated to value-added sustainability and ESG investments. Dorival will provide further details later in the presentation on these strategic investments and how they support Navigator's future growth and competitiveness. The level of CapEx and temporary operational constraints affect H1 free cash flow. As our main strategic projects move closer to completion, CapEx is expected to progressively normalize with H2 investment below H1 levels. Despite the PM3 rebuild, the U.K. transformation project and the new tissue machine in Aveiro, planned CapEx over the next 2 years is expected to remain below 2026 levels, supporting stronger cash generation and providing greater flexibility for the group next phase of growth.

Turning to Slide 7. We can take a closer look at the key drivers behind the year-on-year EBITDA evolution. The year-on-year EBITDA comparison was mainly affected by reduced operational availability during the period, while historically low inventories limit our ability to fully meet demand. Lower pulp and paper volumes, together with higher energy and CO2-related costs, weigh on short-term performance. Part of the lower paper volumes reflects preparation for the PM3 flexible packaging launch in Q3.

One of our largest uncoated wood-free paper machines was used to produce lower grammage packaging papers, reducing output and consequently the volume of uncoated wood-free available for sale. These effects were partially offset by improving price trends and lower production costs resulting from our efficiency programs and operational optimization initiatives. Importantly, several factors affecting H1 profitability are already behind us, while the strategic investments and initiatives executed during the period are expected to support efficiency and competitiveness.

Turning to Slide 8 with debt maturity and liquidity. As Antonio mentioned, Navigator has maintained a robust financial position by securing new long-term debt, ensuring we have no significant payments due within the next 5 years. Over the past 2 years, we have successfully increased our average debt maturity to more than 5 years with a well-staggered repayment schedule. We continue to lead in sustainable finance with 95% of our total debt now indexed to sustainability indicators. This directly aligns our financial strategy with our environmental targets.

In a volatile global rate environment, our balance sheet remains well protected. 60% of our total debt is at fixed rate, supported by a combination of fixed rate debt and interest rate hedging instruments. Despite the general rise in market rates compared to the previous financing cycle, our proactive treasury management has kept our average cost of finance highly competitive at approximately 2.9%. We closed the quarter with ample liquidity of approximately EUR 590 million combined with a conservative net debt ratio of 2.29x, this is more than enough to provide Navigator with agility to fund our short-term CapEx requirements, namely the conversion of PM3 to packaging and the new tissue mill in Aveiro as well as to consider further expansion while navigating market volatility with total confidence.

Dorival will now comment on our CapEx execution.

Thank you, Fernando. Turning to Slide 9 to discuss the evolution of our strategic CapEx execution. Responsible investment remains central to our strategy. Across all business areas, we continue to invest in projects that improve efficiency, reduce our environmental footprint and strengthen the long-term competitiveness of our operations. Recent investments in renewable power generation, biomass-based and solar energy solutions and industrial modernization have significantly reduced fossil fuels consumption and related fossil CO2 emissions while improving energy efficiency, energy self-sufficiency, and operational performance.

A key milestone during the quarter was the start-up of the oxygen delignification line in Setúbal. This project enhances water efficiency, improves effluent quality, reduce chemical consumption, supports product quality and reduces operational risk while contributing to the overall modernization of our industrial base. Alongside these sustainability-driven initiatives, we continue to advance strategic growth projects that will further strengthen Navigator's market position and future earnings potential. One of the most important projects currently underway is the conversion of the PM3 paper machine in Setúbal. PM3 will expand our packaging capabilities with innovative eucalyptus-based products, increase flexibility and efficiency, and support our growth in attractive flexible packaging. This investment positions Navigator to capture growing demand for sustainable packaging solutions and further expand the gKraft brand while providing greater flexibility to optimize production between packaging and printing and writing paper according to market conditions.

In tissue, we took the final investment decision in early 2026 to install a new tissue machine at the Aveiro Industrial Complex. With annual production capacity of 70,000 tons, the project will support the growth of our U.K. operation with an innovative logistics concept. Currently, the U.K. operation has converting capacity exceeding 100,000 tons per year, excluding wipes, but no integrated reel production. The new machine represents a total investment of approximately EUR 115 million, with EUR 48 million in 2026, EUR 53 million in 2027 and EUR 14 million in 2028, supported by Portugal 2030 funding. Scheduled to start operations by Q2 2028, the new machine will strengthen vertical integration, improve competitiveness and support profitable growth in a high-value segment. We have already started project implementation during the last quarter.

Together, these investments are reinforcing Navigator's competitiveness, diversification and long-term earnings capacity while reinforcing the resilience and sustainability of our operations. Importantly, innovation, sustainability and competitiveness go hand in hand. Beyond that, there are environmental benefits, these recent projects are lowering our structural cost base, reducing energy dependence and improving operational efficiency. Without the implementation of our decarbonization plan launched in 2019 and implemented since 2020, our CO2 and fossil fuel-related costs in 2025 would have been more than EUR 50 million higher than in the 2018 baseline year, reflecting reduced emissions, fewer free CO2 allowances and significantly higher CO2 and fossil fuel prices.

Antonio Quirino will now comment on pulp and paper prices.

Thank you, Dorival. Turning to Slide 11 to discuss the pricing environment in our core markets. Pricing conditions improved during the semester, particularly in pulp markets and progressively across paper markets. This provides a supportive backdrop as we move into the second half of the year.

Looking at the pulp market, we have moved past the significant pressure seen in 2025. The downward cycle that began in China in April last year finally signaled a turnaround in August, and that momentum continued to improve throughout the first half of 2026, although market conditions remain mixed across regions. As a result, the PIX BHKP benchmark for hardwood pulp in Europe closed the first half at $1,409 per ton, representing an increase of approximately 27% in Europe compared with the first week of 2026. Meanwhile, in China, prices ended the period at $605 per ton, reflecting a more moderate increase of 7%.

Turning to the European office paper market. The PIX A4 B-copy index stood at EUR 938 per ton at the end of June versus EUR 926 per ton at the end of March. Since the start of the year, the index has edged up by around 1%. Over the course of the first half, Navigator announced and applied 3 price hikes in Europe, contributing to growth in prices from December to June of 5% in Europe, 8% in overseas and 2% in the United States and 10% overall in uncoated wood-free on average. The competitive environment held down the increase in the market index just to 1%, as mentioned, and this compares with the 5% achieved by Navigator in Europe.

This meant that Navigator's average uncoated wood-free prices remained on an upward trajectory during the first half and average prices in June were about EUR 90 per ton above those recorded in December, an increase above 10%. Between June and December, our economy range of office paper saw a price increase of 14%, 12% in Europe, reflecting the company's strong ability to implement price increases and reposition the market towards healthier levels of profitability. At the same time, our ongoing commitment to differentiated brand management enabled us to maintain in Europe a price premium of 30%, over the PIX A4 B-copy benchmark in the premium cut size segment, in line with the best levels achieved historically by the company.

Moving please to Slide 12. We have summarized the main developments in uncoated wood-free market. Apparent global demand for printing and writing paper saw a slight decrease of 0.8%. However, uncoated wood-free remains the most resilient grade in the industry, while coated papers and mechanical pulp products saw a sharper declines of up to 4%, uncoated wood-free remained resilient, increasing by 0.4% versus last year. To be noted that uncoated wood-free grade represents now 65% of global printing and writing market demand. In Europe, while uncoated wood-free demand was down by 1% only in the first half of the year, the industry is maintaining healthy order books, supported by a strong inflow of export orders.

Supply-side shifts are also providing support. The discontinuation of production by a leading manufacturer late last year, removed 185,000 tons of annual capacity from the European market. While no further closures have been announced for 2026, many of our competitors continue to face intense margin pressure, which may lead to further announcements of consolidation in the future.

A key highlight for us this quarter is our operating rate. Despite the disruptions experienced during the semester and the output reduction resulting from producing flexible packaging in one of our largest uncoated wood-free machines, Navigator achieved 90% operating rate, tons-based, compared with our competitors' average of 85% in the period. Regarding the United States, the reported 7% decline in apparent consumption through May seems to be largely a supply side distortion. We believe real consumption remains relatively stable, but the figures have been skewed by the anticipated shutdown of a major U.S. plant and the correspondent preparatory stock buildup and also the gradual destocking of the high import volumes from 2025. This creates a temporary statistical dip rather than a shift in long-term demand.

Finally, we continue to see robust order books, outperforming the industry average by 8 days and 31% above the industry average over the last 12 years. Also, our inventory levels at the end of the first half reached a historical low for this time of the year, standing 18% below the average of the same period of 12 years.

Now, Nuno will give some more market context on pulp. Nuno, please.

Thank you, Quirino. Turning to Slide 13 with the pulp market. As previously mentioned, after challenging '25, the pulp market entered a recovery phase in the latter part of last year. This positive momentum continued to build during the first half of '26, supported by tighter supply conditions and ongoing downtime across the industry. Market conditions were influenced by capacity reductions from a major Indonesian producer following the cancellation of forestry licenses on the grounds of deforestation as well as by limited hardwood pulp supply resulting from the strategic conversion of certain pulp lines to dissolving pulp, particularly in Latin America.

In Europe, inventory levels at ports remain below both '25 levels and the 5-year average. Combined with delays in shipments to the region, these tighter supply conditions provided producers with the opportunity to implement successive price increases throughout the semester. At the same time, geopolitical uncertainty and trade tensions continue to generate volatility in global markets. The conflict in the Middle East contributed to higher energy, chemicals and logistics costs, creating additional inflationary pressure across the pulp value chain. Overall, tighter supply conditions, disciplined capacity management and low inventory levels supported the recovery in pulp prices throughout the first half of '26.

Turning to demand. Global demand for market hardwood pulp remained relatively resilient, declining by 2% year-to-date through May. China recorded growth of 2%, while Europe saw a marginal decline of 0.6%, broadly reflecting softer consumption trends in uncoated wood-free paper and tissue.

Looking now at tissue performance on Slide 14. The European tissue market remains resilient. As of April, global apparent demand grew by 1.6% year-on-year. Tissue remains one of the key pillars of Navigator's diversification strategy. The business continues to grow, supported by international expansion and increasing operational scale. Tissue sales volumes remained broadly in line with the first quarter. While average selling price improved, increasing by 2% quarter-on-quarter.

In the U.K., transformation initiatives are progressing as planned. We are currently streamlining U.K. assets, optimizing locations and exiting unprofitable client contracts. This project is on schedule for completion by middle '27, aimed at restoring operational efficiency and segment margins. Our U.K. business currently operates on a converting-only model and unlike our fully integrated Iberian operations, where 1 of the 3 mills is even integrated with our own pulp, the U.K. operation currently offers significant margin enhancement potential through the addition of integrated reel production. The approved strategic tissue expansion, as highlighted by Dorival earlier, will provide in-house reel supply for our U.K. operations, structurally enhancing margins through greater vertical integration.

Project implementation already started last quarter. Our diversification strategy has successfully rebalanced our geographical exposure. Finished products now account for 99% of sales. The at-home or consumer segment represents 84% of our mix. We continue to strengthen our premium positioning through the launch of innovative products resulting from an intense R&D activity and partnerships with the leading FMCG brands, Procter & Gamble. In the first half, we reached the final development stages for a series of high-impact innovations in the toilet paper category. With launches focused on consumer experience, sustainability and product differentiation.

These advancements reinforce our position as a leader in tissue innovation. By delivering high perceived value and sustainability-led differentiation, we are effectively insulating our premium offering in an increasingly competitive global market. The extension of the Procter & Gamble licensing agreement is reflected in the strengthening of Navigator's position in the Iberian tissue market through the rollout of Don Limpio range in Spain, alongside the preparation for entry into France with the Monsieur Propre brand in the coming quarters.

Joao will now comment on the main developments in packaging.

Thank you, Nuno. Now turning to Slide 15, please. Flexible packaging market growth in line with expectations, with European deliveries up 2.8% year-to-date through May, with Navigator outperforming the market. The packaging business delivered another strong performance in the first half. The business now represents 6% of group sales with turnover up 41% and paper area sales in square meter increasing 66%. Average prices in June were around 13% higher than in December. This growth has been achieved largely through the repurposing of existing uncoated wood-free assets with limited capital investment, highlighting the strength of Navigator asset base and commercial execution.

Performance was led by flexible packaging, particularly applications serving the food and personal care markets, where eucalyptus fiber offers a compelling combination of performance, sustainability, and cost competitiveness. We also saw an encouraging momentum in the box segment, one of the first users of our eucalyptus paper, which represented 11% of gKraft sales during the first half, underlining its growing relevance within our portfolio. This segment is focused on high-value applications, including food contact packaging, premium consumer goods and e-commerce solutions, where demand for high-performance virgin fiber products continues to expand, supported by increasingly stringent food safety and quality requirements.

Having invested several years in developing expertise and consumer relationships in these markets, we believe they offer significant long-term growth potential and further highlight the unique characteristics of eucalyptus globulus fiber. As a result, gKraft continues to strengthen its position in attractive value-added segments, supporting both profitable growth and portfolio diversification. Overall, the packaging business continues to execute strongly, reinforcing gKraft as a growing packaging brand with increasing international reach and exposure to attractive value-added applications.

I will now hand over to Antonio for a wrap-up.

To conclude, let me leave you with 4 key messages on Slide 17 that we would like you to take away. First, despite the challenging operating environment, the business demonstrated a strong recovery in the second quarter. EBITDA increased by 21% quarter-on-quarter as pricing recovery gained traction across our businesses and cost discipline continued to deliver results. Importantly, the maintenance shutdowns carried out during the period were also used to accelerate strategic investment and innovation projects that will enhance competitiveness.

Second, our strategic investments and diversification agenda continue to strengthen long-term value creation. In Packaging, the rapid growth of gKraft brand demonstrates our ability to create new growth avenues by leveraging existing assets with limited capital investment. In Tissue, we continue to scale operations and capture the benefits of integration, positioning the business for further profitable growth.

Third, we remain focused on transforming the company for the future. Our value-added CapEx program is progressing well and is expected to deliver meaningful structural cost reduction. As discussed during this presentation, without the decarbonization initiatives implemented since 2020, our CO2 and fossil fuel-related costs in 2025 would have been more than EUR 50 million higher than in the 2018 baseline year. Additionally, another series of cost mitigation initiatives focused on product engineering, logistics optimization, operational efficiency and improvements in energy, raw material and consumable usage are expected to generate additional EUR 90 million of savings in 2026, increasing by EUR 20 million on an annualized basis from 2027 onwards. These measures are expected to offset nearly 2/3 of the estimated 2026 cost impact arising from the Middle East conflict. In parallel, we have initiated organizational adjustments affecting 136 positions by the end of 2026, compared with the end of the first half of 2025, in support of a more agile operational model.

Finally, all of this is being achieved while maintaining a conservative financial profile, giving us the flexibility to further increase investments to grow and continue creating value throughout the cycle.

The next slide showcases how we are leveraging our eucalyptus expertise to create new products, applications and growth opportunities. In the first half of the year, beyond strengthening our core businesses, we continue to make progress in developing innovative products and new growth business areas that leverage Navigator's unique fiber base, industrial capabilities and R&D expertise. In Tissue, our focus remains on differentiation through higher value-added and functional tissue products, supported by a growing portfolio of innovative hygiene solutions, driving enhanced consumer performance and sustainability, also through a strategic partnership with Procter & Gamble, a leading global FMCG player in the household premium category.

In uncoated wood-free, we continue to expand our range with differentiated products that address evolving customer needs, including products for pharmaceutical leaflets, premium cream offset grades for the growing book publishing sector and enhanced-surface inkjet papers, the fastest growing product in UWF, all reinforcing our competitive position in attractive higher-value segments.

In Packaging, we are developing solutions tailored to specific end-use applications, including flexible packaging for food service, carrier and shopping bags, industrial, release-liner, medical, and e-commerce, combining product performance with sustainability credentials. These innovation efforts are being further supported by the work carried out under the NextGen EU program, where advanced barrier technologies have now reached the stage of industrial testing for packaging applications, including paper and molded fiber solutions.

Beyond our existing businesses, we continue to evaluate opportunities in biomaterials, bio-based chemicals and renewable fuels. Among the opportunities within our innovation pipeline, the renewable biomethanol project has progressed in the final pre-engineering stage for an industrial-scale plant, accelerating its path towards industrial deployment. Initially as a fossil fuel substitute within our operations and over time as a biochemical platform for higher value downstream applications. These initiatives illustrate how Navigator is combining innovation, sustainability and industrial know-how to create new growth avenues, diversifying its business portfolio and further strengthen the resilience of its business model over the long term. In spite of being a European leader in the production of eucalyptus pulp and uncoated wood-free papers, we are becoming much more than that, transforming ourselves into a diversified, profitable company with several growth options.

Let's move on to Slide 19 with a few comments on the market outlook. While the macroeconomic backdrop remains uncertain and volatile, supply-side discipline and limited new capacity continue to support market conditions across our businesses. In Europe, pulp prices are expected to continue strengthening, while market conditions in China remain mixed in the near term. Despite near-term price pressure in China, higher wood and wood chip costs, increased logistics costs, wood supply constraints, mainly in Indonesia, potential typhoon-related disruptions and the delay of Indonesian capacity expansion should provide downside protection. Together with the recent $15 per ton price increase announcement by a leading Asian player. These factors may help limit further price erosion and support the recovery towards year-end.

On the supply side, no significant capacity additions are expected this year. The start-up of the Indonesian project is now expected to be delayed until Q1 2027, while the Brazilian project is not anticipated to impact supply before the second quarter of 2028, supporting a favorable supply-demand balance in the near term. In printing and writing paper, we successfully implemented a multistage pricing strategy across Europe, international markets, Latin America and the United States, supported by strong order books and the need to offset rising production costs. As a result, pricing momentum continued to build throughout the quarter, and we expect average prices in Q3 to be higher than those achieved in Q2.

Although consumption trends remain challenging in some regions, ongoing capacity rationalization in Europe and North America is contributing to a progressively more balanced market and improved industry fundamentals. In the U.S. specifically, supply is tightening rapidly. We estimate a shortfall of around 1.2 million tons, equivalent to approximately 25% of market consumption. While no further cuts have been announced for the remainder of 2026, high margin pressure persists across the industry, maintaining a very tight operating environment.

In the Tissue segment, demand remains resilient with an estimated annual growth rate of 1.6%. We continue to extract significant value from the integration of Navigator Tissue Iberia and Navigator Tissue U.K. To protect margins, last quarter, we have announced a price increase of 5% to 7% across all markets that will impact Q3. Our packaging business continues to perform strongly with growth quarter-on-quarter in both volumes and price. On the price side, we have already moved prices upwards by 5% to 10% as of April with an additional increase in June that will also impact Q3. Supported by stronger pricing, strategic investments nearing completion, structural cost reductions and the robust balance sheet, Navigator is converting its transformation efforts into stronger competitiveness, enhanced earnings capacity and long-term value creation. Thank you.

Thank you, Antonio. This ends our presentation. We are now open for the Q&A session.

[Operator Instructions]

Our first question comes from Maksym Mishyn from JB Capital.

Two questions from me, please. One is a follow-up on the cost efficiency plan. I was just wondering if it involves any upfront investments you have to make to generate the savings? And then also a follow-up on CapEx, just if I missed it, apologies. What kind of CapEx you expect in the second half of 2026? And any color on 2027 would be super helpful. And then just a quick one on pulp. Sales volumes went down notably in the second quarter. You mentioned restocking. When do you expect it to finish and get back to normalized sales volumes?

Thank you for your questions. I'm not 100% sure if I understood the last one, but I understand the first one is a follow-up on our cost initiatives and if this requires any additional CapEx?

The second one is what kind of CapEx we will expect for H2 2026 and 2027? The last one, I understood is about restocking, but I'm not 100% sure...

When will pulp sales will be normalized, I guess.

Exactly. Exactly.

Can you please specify what normal are you referring to? What kind of sales?

Well, I mean, historical in terms of tons, like 70,000 80,000 tons per quarter, according to my estimates, you did 45,000 in the second quarter, which is significantly below the historical average. So I was just wondering what we should expect for the next quarters?

You are referring to normal sales of pulp?

Market pulp, yes.

Yes, yes, yes.

Okay. I will make some introductory comments and then I'll ask my colleagues to follow up on that.

Regarding the cost initiative, as you most surely know following our conference calls, this is another initiative because we have always ongoing initiatives on cost reduction. This one is geared towards the offsetting of the impacts of the Iran war, conflict, and the resulting cost of energy, logistics and some chemicals, mainly oil-based chemicals. This particular initiatives, as I think it was mentioned in the call is looking through things like logistics optimization, product engineering, operational efficiency, energy management, and they do not require any significant CapEx at all.

I'm not sure if any of my colleagues want to follow up on this?

Just a quick comment. We have, in our initiatives for cost reduction in the industrial area. We are developing the advanced process controls and it requires minimum investment and our savings [ related to that ].

Thank you, Dorival. Regarding the CapEx, as you probably know, we don't give any specific guidance on that. But as it was explained, our -- we anticipate that the CapEx, in spite all the projects that are ongoing, the CapEx on the second half of the year to be below the CapEx of the first half of the year. And at the same time, in spite of the fact that in 2027, we are peaking the CapEx of the tissue machine, the new tissue machine, we expect the overall CapEx in 2027 to be below the CapEx of 2026.

Raw figures, we expect CapEx by the end of this year to be on the region of EUR 220 million, and we expect 2027 to be below that level.

Regarding the pulp sales, as it was expressed, we have 2 impacts, one unplanned and one planned. The one unplanned on first half of the year were the result of the storms, which significantly affected our pulp capability in Q1. And we ended the year last year with tight stock on all our products. And in Q this year, we have a significant number of the shutdowns, mainly shutdowns to restart projects that we have initiated in the last few months. So this also affected our capability to produce pulp.

And as it was mentioned, we have increased our paper and packaging sales. So we have integrated a bit more pulp in paper and packaging. The large majority of the projects and the shutdowns are over. The last one, we are actually ending it now in our Figueira da Foz mill. We had a very long shutdown in July because of the mid-age of our recovery boiler, which requires special attention. So we are -- as we speak, we are starting up the pulp line. So we expect a normalization towards the next 5 months, so August until December and growing volumes already in Q3 and the normalized volumes in Q4.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to follow up on the commentary that you made around your kind of office paper business. I mean you mentioned some impressive statistics around your operating rates being at 90%, industry below 85%. You've got stronger order books versus the industry, lower inventory versus the industry. And you're also able to achieve higher pricing versus industry. Can I just follow up on the pricing point considering you're already more premium, how were you able to push through more pricing versus the industry? Just some color there would be helpful.

Cole, thank you for the question. This is an easy one because we are much better than our competitors. Let me try to give more color and I'll ask Quirino also to follow up on this one.

First of all, we have over the course of the last quarter, we have clearly valued price more than volume. Although in the last quarter, we have worked with volume and price. We have a very strong value proposition to our customers. We rely strongly on our brands.

And 70% of our sales in Q2 have been based on our brands, which helps pricing and about 60% of our sales have been based in the premium products, which also helps pricing. Having said that, we are aware and concerned that selling our Navigator office paper 30% above the PIX is probably stretching a bit too much. And we expect, of course, as well our competitors will do their part and we'll be more in a position to stabilize the prices that we have achieved on the first half of the year.

But unfortunately, we are facing very weak competition and although this has been helpful so far is obviously advantageous for the future. I don't know if Quirino wants to add something more.

Nothing really relevant. So I think you touched everything. It's really centered around 30 years of building brands, so on top of extremely high quality, a very complete range. Typically, these products, these branded products have historically a 10%, 15% price premium. Indeed, as Antonio mentioned, today with the 30% we are stretching historically high levels for these kind of products. So therefore, the strategy for this plus 2 quarters on the price increase that we have made was actually to push stronger on the economy products.

I mentioned we increased 14% the price of economy products. So that we try to guide the market to -- so that the commodity rates are on a higher level of price. And therefore, the price premium on our -- price premium products start to go down to a more adequate level.

And then maybe just following up on office paper. I mean you've got -- you always mentioned the supply rationalization point and office paper is one where there is more supply, and we haven't seen the closures like we've seen in some of the other grades. And I'm just wondering what do you think is going to be the trigger to finally see these closures come through? Because the closure costs, the cash closure costs are quite high to close the mills, I'm just wondering, is it realistic to assume that we see closures sooner rather than later or is this going to take a long time?

Well, that one is very hard to guesswork. But when we look to the past quarters and the results of some of our competitors, it's difficult to believe that they can continue to perform in this fashion for the near future. On top of that, as we explained, and in spite within this effort to reduce costs, which was shown in the presentation, there are significant cost pressures. Many but not only, still persists in logistics, in energy, in chemicals. So either some of these competitors that have posted very weak results, if not negative results, are able to turn around their businesses in the coming quarters. Or probably this will accelerate will accelerate their agony. But it's guesswork, and I don't even dare to share names.

It's still helpful. So hopefully, we see some closures. And then I do have a difficult question and I understand if you don't want to answer this, but I completely understand your strategy to consolidate and grow in tissue. And hopefully, as you build on this transformation and you get more synergies out of that business, it's going to be helpful. But I just wondered, do you see benefit from doing selective M&A? And we -- if I was to point to Essity as an example with some U.K. operations and some Iberian operations, there would be sites that geographically and from a commercial standpoint, I think would offer Navigator a lot of synergies. But I'm just wondering, would there be challenges with brand issues or market share issues. I'm just wondering if within tissue, M&A at the right price is on the table for you.

Thank you for the question. I'll make an introductory comments, and then I will ask one Nuno to complement the thoughts.

Actually, our development issue is more M&A based than organic growth based. So we started the tissue business by acquiring a company. Then we developed or concluded the project of doubling capacity that company had. We installed a greenfield tissue machine in Cacia. Then a few years later, we bought the company in Spain. One plus a few months later, we bought in U.K. Now we are building again a new tissue machine in Cacia, and this is our priority, for sure. And we are always, particularly in tissue, we are always very attentive to M&A. And M&A is not only a viable strategy, but something that we have in our rather permanent.

We are not pressured to grow and buy if we are not convinced it's a good business or buy up whatever price, but definitely, not only, but particularly in the geographies that we are already present, M&A is for sure a viable strategy.

Okay. I think just to add a couple of thoughts. On your questions on synergies, yes, I mean, I guess you're right in the sense that we see value creation in consolidated in the regions where we are present from several angles. So indeed, we learned when we acquire and consolidate new industrial operations. There is always room to learn. Learn from the new operations, but also to improve the operations that we acquire. There is also some commercial synergies in the sense that we're able to serve better our clients. Most of our largest clients are present in the region across many markets and countries. And this way, we're able to supply and give them an offer that is present in all the regions where they are.

In addition, as well as we get bigger, economies of scale in some areas of important fixed cost can also be leveraged. So as we get bigger, if the assets and the operations are good operations and have potential to grow or potential to perform very good operationally, we have found so far that the history over the last 11 years when we started, we have been able to successfully lead this M&A, let's say, positions that we have undertook, as Antonio mentioned.

You probably noticed that during the call, we mentioned one of the reasons we want to maintain a conservative financial profile is exactly to give us the flexibility to further increase investments. So if the right opportunity arises, for sure, we will take a very serious consideration.

[Operator Instructions]

The next question comes from António Seladas from A|S Independent Research.

I have 2. First one on wood prices. So if you could provide more color for the coming quarters related -- regarding wood prices, so compared with current prices. My idea is that wood prices in Iberia should have room to come down. But up to now, I don't see it or I didn't see it from my understanding. So if you can provide some color on this topic.

And second one is related to the external supplies on service, on costs. So figures have been ranging on a quarterly basis between EUR 120 million and EUR 140 million. I think, so quite volatile. I don't know if you can provide more color for the second half of the year. You mentioned about EUR 19 million savings. Should we see it on this slide, external supplies and service?

So if I understand correctly, I'm going to repeat the questions. The first one is about wood prices, in Portugal or in Iberia how do we expect them to evolve in the coming quarters? Correct?

Exactly.

And the second question is you say that there is a certain level of volatility in external supplies. And you'd like to have a kind of explanation for that and some comments on the way forward.

Absolutely.

Okay. Let me start with wood prices. I will then pass to Joao Le, and on the second one I'll ask Fernando to answer.

Wood prices, actually, our wood prices in both in Portugal or if you will, in Iberia, our average Iberian wood price. And our overall wood prices in Q2 have already been able -- we have already been able to reduce them vis-a-vis Q1. So we had a reduction from Q1 to Q2.

Also, to be fair, in Q1, wood prices were also quite affected by Kristin and cost associated with Kristin. And in Q2, we didn't have Kristin. But still, we went further down than the impact of Kristin alone. So my expectation, our expectation is that our peak wood prices has been in Q1 or if you will, in H1. And we have announced a couple of months ago, more or less 2 months ago, we have announced initiatives to reduce the wood cost in Portugal, which is in parallel with what's happening across Europe.

So if you look to wood prices in Scandinavia or even in Eastern Europe, wood prices have been increasing significantly, actually more than in Portugal in the last few years. And since probably second half of last year, wood prices have started to decrease. So this will happen as well in Portugal.

And we will see that already happening again in Q3. So Q2 was below Q1 and Q3 is going to be below Q2. And eventually, wood prices in 2027, will keep on decreasing. We need to be careful, however, to make sure that the wood producers, which are namely small and medium-sized farmers have enough price to justify and to guarantee they keep interest in planting or developing their forest plots. But yes, I think the peak wood prices in Portugal most is behind us. Joao?

Yes, I think Antonio said the most of it. Some measures were announced in May, mainly regarding top-ups that we were -- we have introduced in the recent years for the second semester and particularly for Q3, we recently announced also withdrawal of support for some origins of the bark wood. And we believe that we would have -- maybe some adjustments more to introduce, but that's something too early to anticipate to disclose because we are also concerned about, as Antonio said, about the [ small wood producers ] in part and the sustainability of the forestry model that we are pursuing.

And then also important, we mentioned that in previous calls, we need to make sure there is no link in the evolution of wood prices and the impacts, the natural or exogenous impacts on forestry namely by storms and by forest fires. So we have been always very, very careful in separating the things. We don't benefit from storms. We don't benefit from forest fires. So we need to be careful to separate the events from this trend of wood price reduction. Regarding external supplies, I'll ask Fernando to comment.

The first statement that I want to stress is the fact that on the fixed costs, we are well. This means we are below in what concerns payroll and labor costs. We are below last year. Mainly, to be honest, because of the bonus to be paid to -- related with our performance -- our performance is lower than last year. This means the bonus premium is below that amount.

In addition, on function costs, we are also below the budget, and we are below the normal increase of the inflation. This means, we have a slight increase in the figure, but it's really below what is the inflation costs. What we cannot control is the stability in what concerns geopolitical. This means there are some costs that manage or are very sensitive to the politics and now the confrontation in Hormuz Strait, mainly what concerns logistic costs, that depends a lot on that and natural gas costs.

In addition to that, natural costs implies also in what concerns chemicals. But fortunately, we're able to negotiate a fixed price in many of our chemicals in the pulp and the paper sector. And I would say that it's a slight difference. I would say the main instability is on logistics and on gas. If that will continue on the next quarters, I cannot make a guess because like we see there is no war, there is a war. There is no war, there is a war. And I cannot make a bet on that.

Okay. Just a third question, if I may, in terms of your transformation project in U.K. I think that now you are pointing to first half 2027 to be concluded while before, I think it was by the end of the current year. So I don't know if you want to comment on this topic.

Yes. In fact, we had anticipated first that it could be by the end of this year. And now we are anticipating that's going to be first half of next year. A couple of reasons for that. First, we are doing this at the same time that we are supplying our customers. So we -- and we cannot dismantle one line to re-erect that line in the different locations without being sure that we have enough product to supply our -- to supply our customers.

So it's not starting a greenfield operation, it's moving existing machines that are busy supplying the market from one location to the other. Secondly, during the process, we have decided to buy new equipment. So we are going to install 2 new lines, particularly for wet wipes, which is a growing and interesting business. And this implies also the installation of lines that originally were not fully anticipated. Nuno?

Okay. Just to add that, in any case, by the end of the year, we should be able to exit all sites that are to be exited and actually to, let's say, reduce all costs that are to be reduced. As Antonio mentioned, we will cautiously need the first half of next year to finalize the transfer of some lines. But most of -- all cost reduction and all the sites that are to be exited should be done before year ends.

Including HR costs.

That's right.

Is a significant part of the cost savings is HR, so this includes HR costs.

Okay. So just on the equipment that you mentioned that you decided to buy, to replace current equipment or is new capacity?

Sorry, can you repeat the question? It's very bad line.

You mentioned that you decided to buy in the process, in the transformation process, you decide to buy new equipment. So I'm asking if it's replacing capacity or it is new capacity to add to your U.K. operation?

Actually, it's both. We are speaking about 2 lines. One line is -- 2 new lines. One line will help us to get rid of older, less efficient lines. And another one is a line for a specific type of product that we want to grow. So we have both.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to ask on the current fires that are ongoing in Spain and France. Is there any potential impact on mills in the area that you're aware of that might kind of tighten the office paper markets? I mean I know Smurfit Kappa has got their virgin containerboard mill and potentially, there's Gascogne might have some procurement issues, but nothing material that I can see on uncoated fine paper. I'm just wondering if I've missed something or any kind of wood cost increases to your business?

No. Direct in uncoated free fine papers, basically in Spain, you have 1 uncoated free producer in the Basque Country. And the fires are, as you know, in Ávila, Madrid region, and there is no any significant wood-based paper production there.

In France, as you likely said, there are at least 2 companies affected, both in the packaging, one more in containerboard and the other one more in flexible packaging which is one of our competitors in flexible packaging. From the news, we access the same news that you access. From the news, we are able to access, it seems that the impact might be relevant. As far as I understand, the closest uncoated free mill is about 200-plus to 300 kilometers from the center of the forest fires.

So although I don't see a direct impact, I will not rule out the possibility to have indirect impact because the radius of supply for the existing affected mills needs to increase. So this might have an impact on wood costs even for that uncoated free mill, in spite of being 300 kilometers away from the forest fires region.

And then just because you've been so helpful in other answers. I've got another one which you might not be able to answer as well, but it's on Russian pulp and office paper and general supply globally. I mean, we've had now a number of years of the Russia-Ukraine war. We probably haven't had the machine suppliers and the service providers being able to get to those mills and maintain them. And no one's asked the question, as far as I can see over the last 2.5 years from your key competitors on the pulp side, whether there's increased risk of one of these Russian pulp or paper mills going down just from extended downtime. And I'm just wondering, have you heard anything based on your industry discussions, is this a risk that people raise or is the Russian pulp and paper industry just not really in discussion because people don't have the visibility?

No. The visibility we have is very, very limited. And since there's the barbarous invasion of Ukraine is even less. Having said that, we have some anecdotal evidence. Some of that paper appears in the Middle East, Turkey, Middle East region and China. And some of the pulp appears more in China than in the Middle East region, not surprisingly.

Having said that, I probably read the same reports that you read. People are commenting about the lack of maintenance, the lack of spare parts, the lack of support. So it's not impossible that going forward, the productivity or the efficiency of those mills will be seriously affected. But I cannot -- I don't know more than this.

There are no further questions at this time at the conference call. We will start now with the written questions.

The first question comes from Bruno Bessa from Caixa Bank.

About pulp prices, you expect some recovery until the end of the year, but prices in China witnessed another relevant decline this week. Why do you expect a price recovery under a backdrop of new pulp capacities in China and Indonesia by the end of the year?

There have been growing concerns about natural gas, with industry sources suggesting further price inflation and potential shortage of gas in Q4, if Europe goes through an aggressive winter, how protected are you against this? What is your stance about merger and acquisition? Should we expect new moves in the short term? And what will be the kind of company you might be targeting?

Okay. Regarding the price of China, I will make a comment and my colleagues can obviously follow up.

Regarding gas and protection, I'll ask Nuno to comment. Regarding M&A, I think we have already covered this. I don't think we have anything else to add on the previous cost on M&A.

Prices in China. Yes, we understand and we reckon that last Friday, prices achieved about USD 570. I think it's not even impossible that they will further drop another USD 10 or USD 20. But we are positive about the recovery on the following basis.

The cost of wood in China, both local and imported wood is increasing. So $550 might be most likely the absolute floor because I don't think at prices below $550 the Chinese producers, the marginal Chinese producers will be over and the third quartile will not make any money.

On top of that, we understand -- and this is probably one of the reasons why the price of the wood is increasing. We understand that there are severe limitations of wood in Indonesia and most likely these severe limitations of wood in Indonesia are not only the explanation for the increased cost of wood in Southeastern Asia, but also on the announced delay of the Indonesian startup from Q4 to Q1. So they are now allegedly looking to start up somewhere in the middle of Q1.

And following that announcement, which also happened last Friday, one, I understand it's another question that has been asked. One Asian player, in this case, it was APRIL announced last Friday formally $15 price increase on pulp. So equating everything together, we expect that the prices will recover and have a continuous recovery towards the year-end.

We also know that even if the new investment in Indonesia will start up by the middle of 2027 -- of Q1 2027, it will take some time before new production reaches the market and is doubtful, how much wood they will have available to start to start up.

I'm going to ask any of my colleagues, if you want to add anything on this one.

Complete answer. The only thing is that stock levels, we are told that stock levels by Chinese let us say clients and paper producers are low so they cannot actually afford too much time with arm wrestling with the pulp producers. So that's also relevant element here.

Actually that's a very good point because probably one of the reasons, probably -- I'm entering into a more speculative matter, mostly. Probably one of the reasons why prices dropped is because Chinese buyers were looking to the possibility to buy the start-up tonnage from these Indonesian mills. And now they realized that they are not able to buy the startup tonnage, and they need to restore their stocks and they need to buy from existing suppliers.

Nuno do you want to comment on gas, our view on gas evolution and how protected we are?

Yes. I mean our view on gas evolution or on gas prices is not that relevant. We have futures on natural gas. They do not look nice as we know as of today. Maybe if the conflict eases again, Fernando was mentioning, we will have maybe better news next week or so.

But that's not so relevant for us. I think -- we -- what we can say is that we are, at this moment, 60% covered on our natural gas needs in terms of prices. So we're hedged 60% fixed price. And so we're not fully hedged, but we're -- for the majority of our needs, we have our price settled and closed. The same for energy -- electricity prices. In fact, it's even higher. The level of hedging we have there is around 2/3. So we're basically relatively comfortable with our position. Of course, if there's a huge crisis on energy prices, both natural gas and electricity, the open position that we still have will suffer from that from them.

But we're sure that all the industry will also be affected. And if there is persistence of very high energy prices we will soon see them reflected on our end products prices, paper, pulp, et cetera.

The next question comes from [ Jaume Ribera ] from GVC Gaesco.

And his question is, after all the operational impact during the first half, with the current market conditions, is it possible to achieve EBITDA margins near average Navigator posted in the last decade in the second part of the year?

No, this is definitely towards the ambition and the goal towards which we are working every day. And let me just probably put here a couple of caveats. First, our EBITDA margin over the last 10, 15 years is about 25%. Without the U.K. operation, U.K. operation being a converter and having the margin of a converter and because of the size of the operation, this takes 1% to 1.4% EBITDA margin on our average basis.

So let's say that we work towards 23.5% to 24%, 24% on a comparable basis. And as we mentioned, we expect a normalization of volumes towards the rest of the year. We expect prices in Q3 in those tissue, paper and packaging to be above Q2. But also a very important -- a very important driver towards having significant paper prices, tissue prices and packaging prices is the price of pulp. If the price of pulp does not move above $650, $700, it's going to be very difficult to keep on increasing paper prices. Therefore, it's going to be very tough to achieve this 23.5% to 24%. But this is obviously our goal is to be as close as possible to that. Anyhow, we expect in H2 to deliver stronger EBITDA margins than in H1.

This concludes today's session. Thank you for joining us. Should you have any further questions, please contact us through the usual channels. We wish you a pleasant afternoon.

Good morning. We welcome you to the Navigator Company First Quarter 2026 Results Presentation. [Operator Instructions] I will now hand the conference over to Ana Canha. Please go ahead.

Good afternoon, ladies and gentlemen. Thank you for joining us for the Navigator Company First Quarter Results Conference Call and Webcast. We are joined today by the following directors: Antonio Redondo, Fernando de Araújo and Joao Le. As usual, we will begin with a brief strategic overview, followed by a Q&A session. You can access the presentation using the links on our website, and we invite you to submit your questions through the webcast platform at any time. I will now hand over to Antonio to walk us through the key highlights for the quarter.

Thank you for joining us again today. This quarter was defined by a particularly complex operating environment. We saw an increase of the global volatility driven by increased geopolitical tensions in the Middle East, compounded by very severe weather events in Portugal that led to temporary operational disruptions. However, despite these headwinds, Navigator's performance underscores the strength of our strategic diversification. Our focus on cost discipline and productivity remains consistent. And as we will see in today's presentation, our growth segments are providing vital balance to our portfolio. In a demanding market environment, Navigator demonstrated superior resilience, delivering results that once again surpassed those already reported by European pulp producers and global competitors in the paper, tissue and packaging segments.

I will begin with Slide 5 with an overview of the key highlights. Before we dive into the detailed operational metrics for each segment, I want to provide a high-level overview of our performance and strategic trajectory during the first quarter of 2026. As referred, the start of this year was defined by significant external pressures, increased geopolitical instability and extreme weather in Portugal created significant hurdles for our production and logistics, while rising energy and supply chain costs tested our operational agility. Despite these headwinds, Navigator delivered a resilient performance. We responded proactively with price increases across all business segments. Notably, the pricing initiatives we led in Europe since the end of last year have already succeeded in reversing a 6-quarter downward trend in the PIX A4 index.

The core message of today's presentation is that resilience provided by our diversification strategy is no longer a plan. It's a sound reality. With the reduction of prices in euros in both pulp and paper year-on-year and sales volumes affected by the impact of weather events, tissue and packaging businesses contributed with nearly 40% of our EBITDA. In tissue, we are successfully scaling up through premium positioning and partnerships such as our license agreement with Procter & Gamble. We are prioritizing margins over volume, particularly in U.K., while investing in new capacity in Aveiro. In packaging, our gKraft brand is driving exceptional growth with sales tonnage up 36% year-on-year.

Our PM3 rebuild is on track, transforming a mid-tier uncoated woodfree asset into a first quartile competitive machine at a fraction of a greenfield CapEx. We are funding this growth from a positive -- from a position of strength. This quarter, we reduced net debt by EUR 28 million, maintaining a conservative net debt-to-EBITDA ratio of 2.08x. This balance sheet provides the cushion and the capital to continue our transition into a more diverse, innovative and value-added company.

Turning to Slide 6, please. We can clearly see the external impact on our results. The quarter was negatively impacted by the before-mentioned temporary disruptions to some of our industrial operations, resulting from the extreme weather conditions experienced in Portugal. These constraints affected the available volumes of pulp and paper and led to an increase in fossil fuel consumption, particularly natural gas with a direct impact on costs, both through higher consumption and elevated price levels and through the increased need to purchase higher-priced CO2 allowances. Additionally, limited domestic wood access due to weather-related constraints forced an increased reliance on imports, driving up our raw material expenses during the quarter. Furthermore, we incurred additional logistic costs due to both the exceptional reliance on sea transport as rail transport could not be used for inbound logistics due to weather as well as due to cost increases in outbound logistics.

Our diversification strategy is clearly paying off. Recent international expansion and portfolio diversification have strengthened Navigator results in tissue and packaging, providing a more balanced and resilient earnings profile. Tissue and packaging, although they represent only 31% of our turnover, this quarter, they sum up, as mentioned, to nearly 40% of our EBITDA. A key strength of Navigator is its ability to generate strong cash flows, underpinned by our vertically integrated model and leading cost position in pulp, uncoated woodfree paper, tissue and flexible packaging in Europe.

Finally, our strategic investments boosted by NextGenerationEU funding are now in their final stages and will be fully completed this year. In the first quarter, CapEx totaled EUR 42 million, with 53% dedicated to value-added sustainability and ESG investments. These projects will make a significant contribution to reducing our future cost base. It should be noted that our industrial performance across our pulp and paper mills improved over the course of the quarter, with January and particularly early February being clearly impacted by the extreme weather events in Portugal. I will now hand over to Fernando to walk you through our financial highlights and debt profile. Fernando, please go ahead.

Thank you, Antonio. Turning to Slide 7, we can look at our debt maturity profile. Navigator has maintained a robust financial position by securing new long-term debt, ensuring we have no significant payments due within the next 5 years. Over the past 2 years, we have successfully increased our average debt maturity to more than 5 years with a well-staggered repayment schedule. We continue to lead in sustainable finance with 94% of our total debt now indexed to sustainability indicators. This directly aligns our financial strategy with our environmental targets. In a volatile global rate environment, our balance sheet remains well protected. 64% of our total debt is at a fixed rate managed through a combination of direct issuance and strategic interest rates hedging instruments.

Despite the general rise in market rates compared to the previous financing cycle, our proactive treasury management has kept our average cost of financing highly competitive and approximately 2.8%. We closed the quarter with ample liquidity of approximately EUR 570 million, combined with a conservative net debt-to-EBITDA ratio of 2.08x. This provides Navigator with the agility to fund our short-term CapEx requirements, namely the conversion of PM3 machine to packaging and the new tissue mill in Aveiro and navigate market volatility with total confidence.

Turning to Slide 8. Let's look at the primary drivers of EBITDA on a quarter-on-quarter basis. EBITDA stood at EUR 65 million, a 14% decrease compared to the previous quarter, resulting in a margin of 15.2%. It's important to note the structural dilutive effect of the non-integrated U.K. tissue business poorly based [ on converting ], a situation that the new tissue mill will address from 2028 onwards. The EBITDA decline was primarily driven by both price decrease expressed in EUR and the temporary production disruptions we discussed, which impacts sales volumes and push up energy, wood and CO2-related costs.

On a positive note, quarter-on-quarter, pulp and paper price start to increase this quarter. This reflects the upward trend in main benchmark index where Navigator continued to lead in uncoated woodfree sale. Regarding volumes and costs, sales volumes were constrained by production disruptions and lower inventory levels at the beginning of the year. However, we successfully reduced overhead costs, driven mainly by lower fixed rates in spite of lower production, which helped partially offset the spike in energy and raw materials expenses.

Turning to Slide 10 to discuss the pricing environment in our core markets. Looking at the pulp market, we have moved past the significant pressure seen in 2025. The downward cycle that we began in China last April finally signed a turnaround in August, and that moment has accelerated significantly since the start of 2026. In Europe, the PIX BHKP index ended the first quarter at $1,296 per ton, representing a 16% increase. While this was just below the $1,330 target. I'm pleased to note that those higher price levels successfully took full effect in April.

Meanwhile, in China, prices closed the quarter at USD 600 per ton, reflecting a more moderated 7% increase. However, the market continues to show room for further appreciation, supported by recent industry price increase announcements with announced list price moving from USD 610 per ton in March to USD 630 per ton following additional increase announced in April. Current market price in China have already moved up to USD 606 per ton.

Turning to European office paper market, the PIX A4 copy index averaged EUR 925 per ton this quarter. While this is 30% lower than the same period last year, more importantly, it marks the definitive end of a downward cycle that persists for 6 consecutive quarters. Even after recent adjustments uncoated woodfree market index remained historically strong, standing 8% above the 2016-2020 average. Navigator took a proactive stance on pricing in Q1 with the rest of the industry following our lead. In Europe, we implemented hikes in January and in May and announced already an additional one to be implemented next June. In overseas markets, we applied an increase of $30 in January, an increase of $30 to $50 per ton through March, alongside a 5% to 8% price increase for the U.S. market in March and another 5% to 8% now in mid-May.

In Europe, the initial move was instrumental in halting the downward trend of the European benchmark. In the downward cycle that ended in Q2 2025 and Q1 2026, Navigator premium products, which are the majority of our sales did not decrease by the same amount. And therefore, the price gap of Navigator branded cut size over copy-B went from the typical 10%, 12% or 19% in Q1 '25 to a staggering 31% in Q1 '26 without loss of market share. This reflects our brand resilience in the European market. However, as price trend upward, we are mindful of the impact of the growth pace of our value-added portfolio. In contrast, on the lower value products, we lead the European market increase with 5% gains quarter-over-quarter, but the impact on our net price is limited to the low share of -- on total sales, 15%.

In Slide 11, we have summarized the main developments in uncoated woodfree. Apparent global demand for printing and writing papers saw a slight decrease of 1.2% However, uncoated woodfree remains the most resilient grade in the industry, while coated papers and mechanical pulp products saw sharper declines of up to 4% and coated woodfree fell by only 0.5% globally. This consistently superior performance is a direct result of the segment versatility. In Europe, while demand was down 4% in the first quarter, the industry is maintaining healthy order books supported by a stronger flow of export orders. Supply side shifts are also providing support. The discontinuation of production by a leading manufacturer late last year removed 185,000 tons of annual capacity from the market.

While no further closure have been announced for 2026, many of our competitors continue to face intense margin pressure, which may lead to further future movements of consolidation. A key highlight for us this quarter is our operating rate. While the European industry averaged 84%, Navigator achieved 90%. This reflects a robust recovery towards the end of the quarter as we move past the initial operational instabilities caused by weather events. Finally, regarding the United States, the reported 9% decline in apparent consumption through February seems to be largely a supply-side discussion. We believe real consumption remained stable, but the figures have been skewed by the anticipated shutdown of a major U.S. plant and the gradual destocking of import volumes from 2025. This creates a temporary statistical dip rather than a shift in long-term demand. Joao Le will now provide further context on the global pulp dynamics. Joao.

Thank you, Fernando. Turning to Slide 12. As just mentioned, the pulp market spent much of 2025 under severe pressure. However, the turnaround that began last -- late last year has gained significant traction in 2026. Looking deeper into why prices recovered this quarter, we see a combination of supply side discipline and specific logistical constraints. On the supply side, the market has tightened significantly due to both planned and unplanned downtimes. Notably, one leading Indonesian manufacturer removed approximately 150,000 tons from the market following the cancellation of harvesting licenses by the Indonesian government on the grounds of the forestation accusations. Furthermore, we've seen swing producers strategically pivot away from BHKP towards dissolving pulp, further reducing available supply.

Regional factors also played a role. In Asia, hardwood chip prices rose by roughly $20 per ton, driven by increased Chinese wood imports as a major local producer resumed operations. Meanwhile, in Iberia, the extreme weather conditions created broader constraints in several mills output and trade flows. From a historical perspective, the current recovery follows the unsustainable lows of late 2025, which represented the lowest pulp price levels in recent years, excluding 2020. Current geopolitical tensions, particularly in the Middle East, have added inflationary pressure to production costs affecting energy, chemicals and logistics, which in turn supports a higher price floor for pulp.

Turning to demand. China and the U.S. remain growth drivers with demand up 3% and 13%, respectively, through February. Europe remains more challenged with demand down 9%. Despite these regional variations, eucalyptus pulp continues to gain market share. Its competitive edge over long fiber is driven by both cost advantage and the technological superiorities of hardwood fiber. We are navigated as the global pioneer of eucalyptus market pulp since 1956 remains the industry benchmark. While the sector has faced structural overcapacity from recent expansions in Latin America and China, the current shift towards high-quality eucalyptus fiber continues to strengthen our strategic position. European port stocks remain stable and aligned with historical averages. In contrast, Chinese stocks are currently above historical norms, suggesting that inventory levels are not the primary driver of recent price support.

Looking at tissue performance on Slide 13. The European tissue market remains resilient. In January, demand grew by 1.7% year-on-year, outperforming the 1.4% growth rate seen in the previous year. Q1 turnover decreased by 19% year-on-year with sales volumes down 13%. This performance reflects a deliberate strategic shift towards margin management and the ongoing industrial transformation of our U.K. operations. Our U.K. business currently operates on a converting-only model. And like our fully integrated Iberian operations, the U.K. lags the margin contributions from primary paper production, which structurally dilutes consolidated segment results. We are currently streamlining U.K. assets, optimizing locations and exiting unprofitable client contracts. This project is on schedule for completion by late 2026, early 2027, aimed at restoring operational efficiency and segment margins.

Furthermore, we confirmed our strategic tissue expansion this quarter with the investment of EUR 115 million in the new 70,000 ton tissue machine at the Aveiro complex scheduled for a March 2028 start-up. This project will provide internal raw supply for our U.K. operation, structurally improving margins through vertical integration. Our diversification strategy has successfully rebalanced our geographical exposure. Sales volume outside Portugal reached 81% in Q1, a significant increase from 54% in 2022. Spain is our largest market at 33%, followed by U.K. at 31% and France at 15%. Finished products now account for 99% of sales. The at-home retail segment represents 85% of our mix.

We continue to strengthen our positioning through R&D and partnerships. In Q1, we reached the final development stages for a series of high-impact innovations in the toilet paper category with launches scheduled for the coming quarters. These include proprietary odor mitigation and long-lasting aromatization technologies, notably 100% microplastic-free alongside the introduction of hypoallergenic properties for several key product lines. These advancements reinforce our position as a leader in tissue innovation. By delivering high perceived value and sustainability-led differentiation, we are effectively insulating our premium offering in an increasingly competitive global market. The extension of the Procter & Gamble licensing agreement is reflected in the strengthening of Navigator's position in the Iberian tissue market through the rollout of the Don Limpio range in Spain, alongside the preparation for entry into France with the Monsieur Propre brand in the coming quarters.

Now turning to Slide 14 on the main developments in packaging. Our packaging business delivered EUR 25 million in turnover this quarter, representing 23% year-on-year growth. This was driven by a robust 36% increase in tonnage, reflecting our successful penetration into the high demand, low grammage segments. Packaging now accounts for 6% of the group's total sales. Performance was led by flexible packaging, specifically low grammage applications for food and personal care. These priority segments benefit from the unique technical and cost advantages of our Eucalyptus Globulus fiber, a key differentiator that allows us to compete on both quality and cost.

Our growth is driven by our proprietary gKraft brand across its 3 segments: BAG, FLEX and BOX. Geographically, 73% of our sales are in Europe, while 27% are strategically located to high potential overseas markets in the Americas and the MENA region. The rebuild of our PM3 at the Setúbal integrated industrial site is progressing as planned. This EUR 30 million investment will introduce state-of-the-art technology, strengthening flexibility, improving energy efficiency and supporting the production of higher quality low grammage packaging papers. Once operational, at the end of Q3 2026, PM3 will produce approximately 90,000 to 100,000 tons of low grammage flexible packaging paper. Crucially, we are achieving this at a capital cost of 5x to 7x lower than a greenfield project of a similar capacity.

Furthermore, we maintain industrial flexibility to switch between uncoated woodfree and flexible packaging on the same machine, allowing us to pivot based on the market demand and margins obtained. This conversion transforms PM3 from a mid-tier uncoated woodfree asset into a first quartile competitive flexible packaging machine. As a result, Navigator will become the fourth largest producer of low grammage flexible packaging in Europe, perfectly positioned to capture a market projected to grow 2.5% to 3% annually through 2035. I will now hand over to Antonio for a wrap-up of the quarter results.

Thank you, Joao. Let's please turn to Slide 16. We cannot ignore the geopolitical instability and extreme weather events that pressured our early quarter results. These factors created logistical bottlenecks and inflated energy and raw material costs. However, we have been proactive. To offset these inflationary pressures, we have successfully implemented price increases across all business segments, ensuring our margins remain protected. Navigator took a proactive stance on pricing in Q1 with the rest of the industry following our lead. In Europe, we implemented hikes in January, another one in May and announced an additional third increase for June. In overseas markets, we applied an increase of $30 in January, an increase of $30 to $50 per ton through March, alongside a 5% to 8% price increase for the U.S. in March and another 5% to 8% now in mid-May as well in U.S.

As we have demonstrated today, our diversification is now a proven driver of our financial results. In a very challenging quarter for both volumes and prices of pulp and uncoated woodfree paper, 40% of our EBITDA was generated from tissue and packaging. This diversification is a bedrock for our stability. In packaging, we are achieving high-margin growth by repurposing uncoated woodfree assets with minimal CapEx. Our gKraft and FLEX brands are leading the way in international expansion and innovative eucalyptus-based solutions. In tissue, we are scaling operations and capturing synergies, and we are now consolidating our U.K. operations to drive greater efficiency. Our focus remains on operational excellence. The PM3 rebuild is on schedule and our new tissue capacity in Aveiro is strategically positioned to serve directly part of our U.K. jumbo rolls needs. These are high value-added investments designed to structurally reduce our future cost base.

Furthermore, we remain committed to financial discipline with a comfortable debt profile. It is worth emphasizing we are a fundamentally different company today. We maintain Europe's leading uncoated woodfree business, and we have built a tissue business that leads the market in innovation as well as innovative eucalyptus-based packaging business that is scaling rapidly. We are leaner, more diversified and strategically positioned to turn global challenges into a competitive advantage.

Let's move on to Slide 17 with a few comments on outlook. While geopolitical volatility continues to weigh on global business sentiment, the group remains well positioned to navigate these headwinds. Despite broader economic uncertainty, our core segments demonstrate significant resilience. Average pulp prices in 2026 are expected to be higher than in 2025, but with different trends throughout the year. In Europe, prices are expected to continue rising until Q3 in China until end of Q2, after which there might be -- that might be a moderate correction in the following quarters. In other words, no significant decline is anticipated compared to 2025, and the outlook remains positive. This appears to be driven more by supply discipline and the lower influx of new capacity in 2026 than by a strong recovery in demand yet, given that global demand for hardwood remains under relatively pressure so far.

On the supply side, the market will not face significant capacity increases this year. Major projects in Indonesia and Brazil are not expected to impact market supply until 2027 and 2028, respectively providing a favorable supply-demand balance for all the current fiscal year. In printing and writing paper, we have successfully implemented a multistage price strategy in response to robust order books and escalating production costs. In Europe, a second price increase of 4% to 6% is currently being implemented during the month of May with a third hike scheduled for June. In the international markets, increase of 3% to 5% in Latin America and 5% to 8% in U.S. take effect this quarter. While in the remaining international markets, price is likely to move up in the second quarter by some 3% quarter-on-quarter after the 5% increase in Q1.

In these markets, we are fully booked until end of June, booking already volumes for July. With the operational constraints of Q1 largely resolved, we anticipate Q2 average prices to be higher than the previous quarter. Despite this positive pricing momentum, the global environment remains complex, characterized by a structural decline in consumption and stagnation across key regions. However, we are seeing a significant rebalancing of the market driven by capacity closures in Europe and North America. In the U.S., specifically, supply is tightening rapidly. Following an initial 350,000 tons reduction by a major player, a second mill closure announced for early 2026 will remove another 320,000 tons of annual capacity starting in the second half of this year.

Furthermore, scheduled downtime at the primary U.S. mill in Q4 will pull an additional 80,000 tons from the market. When we aggregate these cuts, we estimate a structural shortfall of not less than 1.2 million tons in U.S. per year, representing 25% of total consumption. While no further cuts have been announced for the remainder of 2026, high margin pressure persists across the industry, maintaining a very tight operating environment. In the tissue segment, demand remains resilient with an estimated annual growth of 1.1%. We continue to extract significant value from the integration of Navigator Tissue Area and Navigator Tissue U.K. To protect margins, we have announced a price increase of 5% to 7% across all markets effective from this month onwards.

Our packaging business continues to perform strongly with growth quarter-on-quarter on both volumes and prices. Kraft packaging papers are very technical businesses with important qualification processes with customers and often with brand owners, lasting an average from 6 to 12 months to qualify a new product or supplier. These thorough testing processes tend to produce a lasting adoption once product benefits are demonstrated to customers.

GKraft presents an innovation to the global Kraft packaging markets with Eucalyptus Globulus as a main fiber and in some products being 100% eucalyptus furnish. This presents numerous advantages to global customers on performance and therefore, operational cost and unique sustainability advantages, but can extend somewhat the qualification process. As mentioned before, PM3 conversion project at Setúbal site is progressing as planned. Once completed, this investment will position Navigator as the fourth largest producer of low grammage flexible packaging in Europe. On the price side, we have already moved prices upwards by 5% to 10% as of April, with an additional increase scheduled for June.

The agility and proficiency of our teams and our integrated value chain management remain our primary competitive advantages supported by a robust financial position. Navigator is not only navigating current challenges, but is actively transforming its portfolio to ensure long-term value creation. In a particularly challenging quarter for the sector, Navigator once again delivered performance well ahead of both European pulp producers and international paper, tissue and packaging players that have already reported results. We look forward to executing our strategy with confidence throughout the remainder of 2026, driven by ongoing diversification and continuous innovation in our core business. Thank you.

Thank you, Antonio. This ends our presentation. We are now open for the Q&A session.

[Operator Instructions] The first question comes from Cole Hathorn from Jefferies.

I'd just like to follow up on the uncoated freesheet market and just hear your thoughts around what is needed in the European industry because it feels like we haven't seen material capacity reductions on the uncoated freesheet side. We're seeing some M&A from -- potentially from UPM and Sappi more on the coated mechanical grades. But I'm just wondering, what would you like to see firstly on the uncoated freesheet side? Is it M&A? Is it capacity closures? And does higher gas prices and higher pulp prices increase the probability of closures from some of the non-pulp integrated producers?

Okay. Thank you, Cole, for your question. Well, it's a rather difficult question to answer, but we'll try to give you some elements of our reasoning. Historically, we cannot say that the European market didn't react to the environment and didn't close capacity. Quoting from memory, in 2016, the European uncoated woodfree market had a capacity of over 7 million tons. This year, we believe it's around 5 million tons. So we had a reduction of at least 2 million tons on the last decade. And the operating rates are materially not very different. So it means that the market has been somewhat adjusted or being able to adjust to the dynamics of demand. Well, if you ask us what is our preference, our preference will be either M&A or shutdowns, but we cannot influence any of them directly. We don't intend to shut down capacity because as we speak, all our uncoated free mills generate positive and sound cash flow.

And at the same time, we are always looking to opportunities to participate in M&A, and we did so namely in tissue. We have failed so far to do the same exercise in uncoated woodfree because we don't find in Europe so far. It might happen in the future, but so far, we don't find any asset in Europe that increases our competitiveness, an asset that we can turn around and generate a significant higher return than the present owners and that can make sense in our portfolio. We own, as you know, 5 uncoated-free paper machines. 3 of them are not only the largest, but by far, the most competitive uncoated-free machines in Europe and actually in some other parts of the world, not only in Europe. And we have 2 paper machines, one more dedicated to specialty uncoated woodfree papers might be heavier grammages or creamy papers for book publishing and another one that we are reconverting for flexible packaging without losing the capability to swing in between flexible packaging and some uncoated woodfree grades in function of market demand and margins.

So we don't see in Europe, as far as we can see it today, we don't see in Europe any imminent candidates for further shutdown and further reconversion to other grades. We believe that a good part of that has been done in the past. We don't see it in the very immediate future. However, as you pointed out, we don't rule out if we have an up cycle of pulp prices together and pulp is an important driver, but is by no means the only driver. An upcycle on pulp prices, which actually we are witnessing since middle of last year, plus a very significant and severe cost increase on energy, plus a significant cost increase on chemicals, plus a significant cost increase in logistics, we don't rule out the possibility if this trend continues that less competitive players will shut down their capacities or will reconvert to other type of grades.

Reconversion is difficult because we believe that after our reconversion of PM3, the large packaging sectors are balanced. So I don't think it's going to be easy to have any reconversion. I mean, balance, I'm being probably conservative. I think they are balanced in flexible packaging. They are probably oversupplied in other packaging grades, but you dominate packaging much better than ourselves.

[Operator Instructions] The next question comes from António Seladas from A|S Independent Research.

So first one is regarding volumes. If you could provide some color in terms of volumes in paper and tissue that you expect to sell over the coming quarters, namely when compared with last year? And second question is related with your U.K. operation that you are trying to become -- well, you are rationalizing the operation. So my question is, when do you expect the process to finish?

Thank you, for your question. I'm going to try to rephrase it to make sure that we understood correctly. The first part of the question, you would like to get some guidance on how do we expect volume evolution in Q2 for both uncoated woodfree and pulp. Is that correct?

Exactly.

The second question, I'm not sure if you are referring to our tissue process in U.K. or if you're referring to conversion of uncoated free machines to packaging. Can you please clarify?

Sorry, is regarding your U.K. operation and the process that is now on the -- well, are you trying to become more efficient, your U.K. operation, sorry?

Okay. U.K. Very good. As you easily understand, we cannot provide and we will not provide specific guidance on volumes for uncoated free and pulp. But I think we can share some elements. Past, the majority of the issues we had in Q1, namely in the first half of Q1 with weather-related events, we believe that we will -- on the uncoated side, we will have more volume available to sell during Q2. Having said that, we have some maintenance shutdowns during Q2, particularly in the Setúbal mill and Setúbal is quite large. So this will have, of course, an impact. And we are starting Q2 or we started Q2 with a very low level of stocks, okay? So the issue is not demand. We have a very sound order book. As we mentioned, in overseas, we are already booking July.

But overall, we have a very sound order book. It's around about 45 days, which is historically high. A good order book for us in this sector is around 20, 25 days. So we have more or less doubled. So we don't have an issue with order book. We don't see an issue with demand for our products. In spite we have a very high premium price as it was referred, we are selling without any significant impact on market share. We are selling our office premium 31% above our -- the copy-B index in the marketplace. So uncoated free is what we can say. We expect normally a higher sales volume, no issue with demand, but a shutdown this quarter in a large mill and at the same time, low stocks to compensate if anything goes wrong.

On pulp side, also, we have shutdowns this quarter. We have 2 shutdowns this quarter. One actually is in the end of Q2, beginning of Q3, planned maintenance shutdowns and the availability of pulp will very much depend on the performance of uncoated woodfree packaging and tissue. If our performance on tissue, packaging and uncoated woodfree is what we expect, we will have most likely less volumes of pulp to sell. Regarding U.K., this is a major turnaround process. We are moving from 5 mills and 3 warehouses or 8 locations to 2 locations. At the same time that we are serving customers so this is them without putting any significant new capacity. We have some slight new capacity on wipes, but not on tissue. So we are migrating existing tissue converting lines to one existing site and one new site. The 2 sites are strategically positioned to serve the north part of England and the south part of England efficiently from the logistic cost point of view.

So the process is complicated, it's long. It's a process that also involves consultation with employees because, of course, we are going to reduce our workforce, part of the synergies are related to that. And of course, with efficiency to have everything together in 2 sites rather than 5. Our original plan is to have it largely completed by the end of this year, Q1 2027. We expect that this will help us to generate -- of course, now we are having the costs of this turnaround, which are significant, as you may imagine, in U.K. So we are paying that cost. We expect in 2027, again, to go back to our historical or above historical converting margins. And from 2028 onwards, we expect to serve the U.K. tissue operation with the new tissue mill in Aveiro.

The new tissue mill in Aveiro will start somewhere in between March and April 2028 if everything runs according to schedule. So it means that by end of Q2, early Q3, after testing and start-up curve phase, we expect by Q3 to start supplying the U.K. operation with tissue rolls from Aveiro.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to ask on order books and logistics globally. On the packaging side, we've seen probably some stronger orders as people have built up some safety stocks. There's been a bit of restocking on some of your peers in the packaging side. And I'm just wondering what have you seen in the uncoated freesheet side from a European perspective? Have you seen less competition from some of the Asian players? Have you been able to take a little bit more market share? Have some of your buyers been stocking up ahead of price increases and to build up safety stock. So just understanding order books and stocking.

And then the second question is linked to that, and that's on your commercial decisions to push price. And I completely understand we've got higher gas. We've got higher chemicals. We've got logistics. We have cost inflation and you need to raise prices. But Navigator has also got best-in-class position on the cost curve. Is this not an opportunity now to potentially hold back on pushing price and force some capacity to exit the market? Or is that not a commercial decision that you're making at this point, you'd rather just push the price. I just want to understand how you think about it.

Okay. Thank you, Cole, for your follow-up questions. On a bit on order book and stocking. So as I mentioned, the 45 days -- around about 45 days we have on order book is actually for paper, both uncoated and packaging together. I don't have with me here the precise split, but I don't think it's very different one and the other. So it's probably slightly more in uncoated than in packaging, but the difference is not material. I'm sure that some customers have been stocking a bit ahead of price increases, both in Europe and overseas. I'm sure. I don't know, I cannot quantify the impact, but this is typically an effect that happens. Having said that, if you look to the financial performance of the European distributors of paper, you easily reach the conclusion that they don't have the means to overstock paper. On top of the financial situation, forever in our case, we have been always extremely tough on credit. We only sell with credit coverage. We don't sell at risk. It's why we have always meaningless bad debts in our books.

So from one side, they are limited by the credit that the credit insurers give them or the other credit instruments they can provide us. And from the other side, they don't have the financial means, unfortunately, to stock a lot of paper ahead. So I think the order books that we are seeing are really demanding -- demand for our products. Obviously, I think we are all benefiting Navigator as well with the fact that the U.S. market is now a significant net importer of paper and the companies that have the quality and the technological capacity and the converting equipment to serve the U.S. market, there are not many in Europe. There are a handful of European companies that have both the quality, the technology capability and the converting equipment to serve the U.S. market are also exporting a bit more to U.S.A. than in the past. And of course, this also helps to enlarge order books.

Regarding your comment on imports, this is quite interesting. I think Europe has a big threat of imports, particularly from Asia. I'm going to quote from memory. If we go back to pre-pandemic 2018, 2019, the Asian imports were probably around 30% of the total imports into Europe. Today, Asian imports are over 70%. So Asians are taking a significant step change into the European and coated woodfree market and namely in office papers. I think it's going to be very difficult for them to compete in volume sizes for the printing industry and rolls. Those are very technical, very specific sizes, long-lasting relations with printers, very short delivery times. So they are not standardized products. So I don't think they will have a chance over there with the present business model. But in [ quarter 3 ], they are a real threat. And I think Europe needs to wake up to that reality and provide a level playing field with those imports.

And by a level playing field, I can comment 2 things. I can comment EUDR, the European deforestation regulation that is already postponed twice, should be implemented by no late than 2026, end of 2026. We have a significant cost to behave like we are behaving vis-a-vis our forest sourcing of wood. And we know that the Asian suppliers are not doing that. The proof is exactly what my colleague has commented during the call, what has happened in Indonesia with the local government taking out licenses from Indonesian pulp and paper producers on the grounds of proven deforestation. So if Europe needs any more proof of deforestation, they just need to rely on the Indonesian government and their decisions.

So EUDR is one area. And the other one is CBAM. CBAM unfortunately, is not a uniform view on the industry across Europe. We at Navigator are very favorable to have CBAM. However, a CBAM mechanism that allows a grace period without losing free allowances for CO2 and with a decrease of allowances smoother than what Europe is anticipating. If not, Europe is going to be very green, but it's going to lose all industry. So I think you point rightly, there is a real threat on Asian imports going forward, and Europe needs to make up to that.

On your second question, is a choice. It's a choice that we decide and we try to measure each and every time. In the past, we did it. In the past, we have been capping price increases to benefit from our competitive cost position. To be honest, we didn't see any effect in the short to medium term. So it probably takes too many years to be able by doing the strategy to force others to exit the market. I think we have also today a very significant [ lead ] in terms of market share, and we have the responsibility also by leaving the market with our market share. We have the responsibility to behave responsibly vis-a-vis prices and vis-a-vis our customers, but also our suppliers that are charging us higher prices.

So I don't think if we change the strategy back again where we were some years ago, this will accelerate anytime soon any reconversion. This is our view after analyzing the data and thinking what is the best course of action for us.

This concludes our session. Thank you for joining us. If you have further questions, please reach out through our usual channels. Have a pleasant evening.

Good morning. We welcome you to The Navigator Company Full Year 2025 Results Presentation. [Operator Instructions].

I'll now hand the conference over to Ana Canha. Please go ahead.

Ladies and gentlemen, welcome to The Navigator Company conference call and webcast for the fourth quarter and full year results. We are joined today by the following directors: Antonio Redondo, Fernando de Araujo, Nuno Santos, Joao Le, Dorival Almeida and Antonio Quirino Soares.

As usual, we will start with a short presentation followed by a Q&A session. You can access the presentation through the links on our website, and you can also send your questions via the webcast platform. Antonio will begin by presenting the main highlights for the quarter.

I will now hand over to Antonio.

Thank you for joining us today. I am very pleased to be here once again and to share with you our fourth quarter and full year results. In the toughest market environment in decades, Navigator was able to maintain a strong market position, supported by its international footprint and the increasingly diversified business model, enabling volume growth and market share gains. Portfolio transformation remains a key driver of resilience.

Vertical integration, operational flexibility, innovation and sustainability focus continue to underpin our competitive advantage as you'll see in today's presentation. I will begin with Slide 5 with an overview of the key highlights. 2025 was defined by persistent geopolitical tensions and rapidly shifting global landscape marked by high volatility, commercial defense barriers such as tariffs, weaker consumer confidence and very limited market visibility.

In this environment, the pulp and paper sector faced particularly challenging conditions. From April onwards, pulp prices in China declined sharply with knock on effects in Europe. At the same time, uncoated woodfree consumption fell, growth in tissue and packaging slowed and in many products, operating rates reached unsustainably low levels across several regions. The industry also faced increased energy and chemical costs this year, further pressuring margins.

Navigator's strategic diversification played a key role in protecting results, with tissue and packaging accounting for 29% of the turnover, but 32% of group's EBITDA. In tissue, we continue to successfully scale up operations and capture synergies. Turnover increased by 6% year-on-year, supported by the integration of Navigator Tissue UK in May 2024. Around 80% of sales are now international with U.K., Spain and France as our core markets. Packaging also delivered strong performance with turnover up 8% year-on-year, volumes in tons up 11% and paper area in square meters at 17% reflecting the growth of the Flexible Packaging segment with a shift to lower grammage products. The rebuild of PM3 in Setubal to further focus on low basis weight flexible packaging is progressing as planned. In printing and writing, we reinforced our competitive position with uncoated woodfree volumes up 6% year-on-year in a shrinking market and market share of European deliveries increasing to 26%.

Looking ahead, we start 2026 with a positive final investment decision for the new tissue capacity in Aveiro, further strengthening our growth and resilience profile.

Turning to Slide 6, we can clearly see the resilience of Navigator business model. The key strength of Navigator is its ability to generate strong cash flows, underpinned by our vertically integrated model, and leading cost positions in pulp, uncoated woodfree paper, tissue and Flexible Packaging in Europe.

Over recent years, these cash flows have been strategically reinvested to strengthen our core business and diversify our portfolio, supporting long-term value creation. Since 2019, we have invested EUR 1.31 billion, including EUR 241 million in M&A and distributed a further EUR 1.32 billion in dividends. Our diversification strategy is clearly paying off. Recent international expansion and portfolio diversification have strengthened Navigator's results in tissue and packaging, providing more balanced and resilient earnings profile.

This robust position enables Navigator to consistently outperform its peers as demonstrated once again this year, even in very challenging market conditions, underscoring its resilience and competitive edge. Strategic CapEx boosted by next-generation new funding and started in 2023 is phasing out in 2025 and will be fully completed by 2026.

Last year, CapEx totaled EUR 210 million, with 60% classified as value-added sustainability investments, making a strong contribution to reducing future costs. While maintaining a strong financial position with net debt-to-EBITDA ratio at 1.87x.

I will now hand it over to my colleagues, who will walk you through the results in more detail and share some insights on our different business areas we have been doing. Fernando will start by commenting on financial highlights. Fernando, please go ahead.

Thank you, Antonio. Turning to Slide 7. We can look at our debt maturity profile. Over the past 2 years, we increased the average debt maturity to 5 years, maintaining a well-staggered repayment profile and strengthening the indexation of debt to sustainability indicators to 90% versus 65% in December 2024.

Also, Navigator continues to enjoy ample liquidity, EUR 390 million as of 31 of December. At the end of 2025, 70% of the total debt issue was remunerated at a fixed rate, either directly or through interest rate hedging instruments. It should be noted that despite the general rise in market rates compared to the last financing cycle, the average cost of finance at the end of December remains low at around 2.7%, an increase of 0.3% -- 0.3 percentage point, sorry.

Turning to Slide 8. We can take a closer look at the main impacts on EBITDA in a year-on-year comparison. EBITDA stood at EUR 375 million, down 30% year-on-year, with an EBITDA margin of 19%. It should also be noted that given its size, integration of U.K. tissue business converting only brings down the group's EBITDA margin by 1.2 percentage points, which without this additional operation would have been 20.3%. The downward trending in uncoated woodfree and pulp sales price was pressured by falling benchmark index. Changing our product and geographical mix also influenced our average sales price as Antonio will explain further.

On a positive note, the paper packaging and tissue segments saw a significant increase in sales volume. In 2025, cash costs were impacted by a combination of simultaneously and longer than normal planning and unplanned maintenance stoppage in our pulp mills, Figueira da Foz, Aveiro and Setubal. This includes a temporary shutdown following a small fire in the bleaching area at Setubal in July. There were no injuries and operations were fully restored within 2 or 3 weeks. This maintenance stoppage reduced energy generation from biomass during the period and led to higher natural gas consumption.

Cash costs were also affected by the U.S. customs tariffs and the resulting increase in antidumping duties. Despite these headwinds, cash costs ended the year below the level at the start of the year. Finally, the volatility of the EBITDA was mitigated by our financial risk management strategy, including the hedging for energy price and foreign exchange which offset negative impact of negative evolution of the U.S. dollar and the British pound. However, the energy hedging strategy implemented in 2025 delivered [indiscernible] effectiveness, particularly in the first quarter when its impact was most critical.

Joao will speak about the key projects focused on operational efficiency and portfolio diversification. Mr. Joao, please go ahead.

Thank you, Fernando. Turning to Slide 9, please. Navigator strategy is built on a responsible business model grounded in the belief that sustainability without performance has no impact and performance without sustainability has no future. This balance underpins responsibility, long-term growth and value creation. Drawing on decades of experiencing sustainable forest management, supported by science and technology, we have developed sector leading industrial assets and advanced R&D capabilities. Our R&D efforts span the full value chain from genetic improvement, pest and disease control, soil and climate characterization to support forestry management, industrial operations consumption efficiency and product development. At the same time, we continue to explore new long-term opportunities for product and business diversification, focused on adding value to Portuguese eucalyptus forests through new bioproducts, biomaterials and biochemicals.

Despite challenging market conditions, we continue to invest in diversification and sustainable transformation. In 2025, we completed several key investments across all segments to strengthen business resilience. This includes the new chemical recovery boiler at Setubal, which will significantly enhance the mills operational and environmental performance.

It will reduce malodorous emissions and marks a key milestone in our industrial decarbonization journey, cutting emissions by around 136,000 tons of CO2 per year, while enabling the capture in the incineration of noncondensable gases. And also, the oxygen delignification line in Setubal due to start up in April 2026, which will enable the plant to reduce consumption of chemicals at the pulp bleaching stage as well as improving the quality of the effluent from this industrial site.

AI-driven control systems reduced process variability by around 20% and lowered bleaching chemical consumption by 55%. The reduction in variability reflects, for instance, an internally developed advanced process control applied to PCC incorporation and chemical savings resulting from APC projects implemented in pulp bleaching.

We also scaled up Navigator hub, which generated EUR 300 million in online sales in 2025 and is now serving all business units, strengthening both our commercial reach and digital resilience. As already mentioned by Antonio, the evolution of our portfolio is a key pillar of our resilient business model.

The tissue segment illustrates this shift growing from 5% to around 25% of revenues over the past decade through acquisitions and organic growth, supported by in-house R&D Alongside this development, sustainable packaging solutions designed and scaled up entirely on the basis of internal expertise, R&D and technology already account for 4% of sales, an important milestone in the fast-growing segment, achieved purely by repurposing existing uncoated woodfree assets without any significant investment.

And of course, this enhances the operational flexibility of our assets, preserving the ability to produce uncoated woodfree grades while also enabling the production of a broad range of packaging grades. In 2025, we approved the rebuild of PM3 at Setubal to produce low grammage flexible packaging, equipping the machine with state-of-the-art technology to enhance flexibility, energy efficiency and product quality and to meet growing international demand.

Our diversification has reduced our dependence on uncoated woodfree paper, which declined from 75% of revenues in 2017 to around 57% in 2025. Not due to lower turnover, but to growth in new segments, while uncoated woodfree revenues remained stable at EUR 1.2 billion. Uncoated woodfree remains a resilient core business, supported by highly competitive assets, world-class quality and strong new brands. This evolution reflects a disciplined integrated strategy focused on long-term value creation, innovation and responsible resource management.

I will now hand over to my colleagues for a brief commentary on each of the business segments, starting with Quirino will comment on pulp and paper prices. Quirino, please?

Thank you, Joao. Good afternoon. Moving to Slide 11, we have the evolution of pulp and paper prices. Between April and August, the pulp price index for pulp in China, BHKP sharply decreased, largely driven by overcapacity in the pulp and paper sector. This overcapacity resulted from a sudden and expressive increase in integrated pulp capacity in China, alongside the local wood available at competitive prices, lower than imported wood.

This occurred amid the current situation of severe tensions in international freight and the reduction in demand in several paper segments across the different world regions. Although this downward cycle has been shorter than previous ones. It started from a significantly lower peak, reflecting a structurally weaker base than in previous cycles.

Recovery gained momentum in the first quarter with a clear improvement in pricing in China. Even so 2025 was the weakest year for pulp pricing in nominal terms since 2016, excluding 2020.

Average prices in China fell to around $540 per ton on average, which is down 16% year-on-year. In real terms and from the perspective of both Iberian and Brazilian producers, prices were even weaker than 2016 and 2020 once inflation and exchange rate effects are taken into account. Transforming 2025 real prices as the worst prices in decades.

In Europe, prices followed the volatile path after falling to $1,000 per ton at the start of the year, benchmarks recovered in the spring. Weakened again through the summer and then rallied in the fourth quarter. The hardwood pulp benchmark ended the year at $1,100 per ton reflecting this late year recovery, although average prices remained 12% below 2024 levels.

In 2025, the European benchmark for office paper, PIX A4-Copy B, averaged EUR 1,003 per ton, which is down 9% year-on-year. This decline was more moderate than in hardwood pulp, where European benchmarks fell by 15%. Importantly, despite these adjustments, uncoated woodfree price levels remained structurally strong, still around EUR 149 per ton or 17% above 2016 to 2019 average.

As Fernando mentioned, Navigator's average sales prices in Europe broadly follow benchmark trends, supported by 2 complementary strategies. On the one hand, we increased penetration in both economic and standard segments to quickly capture additional volumes, which weighs on the average prices, given our traditional premium rich product mix. Simultaneously, we reinforced pricing discipline on higher value-added products, particularly under our flagship brands, which achieved an 80 percentage point increase in price premium during the year of 2025.

In international markets, paper prices were affected by both the weaker dollar and more significantly by the sharp decline on the China pulp market index. This dual approach on pricing has helped us remain competitive and responsive to market dynamics, balancing volume growth with value retention.

Moving please to Slide 12. We have summarized the main developments on the uncoated woodfree markets. Apparent global demand for printing and writing papers was down by 2.4% year-on-year. Uncoated woodfree remained the most resilient grade declining by just 1.5% compared with a drop of 4.8% on uncoated woodfree and 3.2% decline in mechanical papers. This resilience reflects the versatility of uncoated woodfree end users, which has constantly outperformed other grades over time.

In Europe, however, apparent uncoated woodfree demand declined by 5% year-on-year, driven by weaker deliveries from European mills and a sharp reduction in imports. In fact, intra-European deliveries fell by 5%, while imports dropped by 10% year-on-year, confirming a significant slowdown in the effective demand across the region.

Despite a significant increase in uncoated woodfree capacity in Asia of 4.3 million tons between '24 and 2025, which more than offset the capacity reduction of 1.5 million tons in Europe and the U.S.

In the U.S., the decline was not as significant with consumption down by 3.8% year-on-year. At the same time, the closure of a major domestic mill increased the structural need for imports, which rose by 16%, partly also driven by anticipation of new tariffs last year. This tighter supply environment, combined with tariff impacts has supported higher price levels in the U.S. market, which are expected to remain elevated.

Navigator's operating rate measured as deliveries over capacity stood at 87%, up by 8 percentage points year-on-year, whilst the rate for European industry recovered slightly from 79% to 81%, up by 2 percentage points.

In 2025, Navigator increased its order intake by 13% year-on-year in volume, marking our strongest performance since 2021, and surpassing even the peak levels achieved in 2022, a particularly strong year for uncoated woodfree.

Nuno will now give some more market context on the pulp business.

Thank you, Quirino. Turning to Slide 13. As Quirino just mentioned, in 2025, the pulp market came under severe pressure, most visibly through the sharp decline in pulp prices in China from April onwards with a clear spillover effects into Europe. This weak pricing environment was driven by several structural factors. First, global overcapacity increased significantly with major hardwood pulp expansions in both Latin America in '24 and China over the last 5 years as Chinese producers pursued upstream integrations.

Second, China saw a rapid rise in the use of domestic wood by smaller and midsized mills, supported by very low cost CapEx, temporary availability of local wood diverted from the construction sector and strong state backing in areas such as financing, employment and energy.

Third, overcapacity in paper production and weak domestic demand in China compressed paper prices and in turn pulp prices, with operating rates across many segments falling to and sustainably lower levels. At the same time, demand softened in Western markets, particularly in printing papers, contributing to a decline in European hardwood pulp consumption alongside slower growth in tissue and packaging.

Finally, trade tensions, tariffs and geopolitical uncertainty increased volatility, shuffled trade volumes and accelerated the downward pressure on prices. Nevertheless, at the global level, demand for market hardwood pulp grew by 6% year-on-year.

China remained the main growth engine with demand up 8% while the rest of the world grew by 7%. This contrasted with Europe where demand declined by 1% in line with weaker printing paper consumption. In United States, demand fell by 3% following heavy restocking in '24.

The strongest mobile growth came from eucalyptus pulp, up 8% in '25 driven by a 10% increase in China, while Europe remained broadly stable. This trend continues to strengthen eucalyptus pulp share with the hardwood bleached chemical pulp market.

Looking at tissue performance on Slide 14. European tissue demand grew by 1.2% following strong growth of 6.3% in '24. Navigator's tissue sale increased by 5% year-on-year, with turnover increasing by 6%. Our tissue business operates through 2 complementary models, an integrated Iberian operation, covering paper production and converting and the U.K. operation focused exclusively on converting while margins in the U.K. are structurally lower, this model enhances scale and market research.

To strengthen our position as a leading paper tissue producer and enhance operational resilience, Navigator launched a strategic plan in '25 to consolidate its U.K. tissue rolls operations with completion planned for '26. Rolls and possibly wipe separations are being streamlined from 5 to 2 strategic hubs, the existing Leyland and the new site in Leicester, optimizing coverage of Northern and Southern England, improving proximity to key consumer markets and strengthening logistics efficiency.

Operations at the new sites are expected to start in the first half of this year, and the main workforce transition has been successfully completed with an investment of approximately GBP 18 million, this project is expected to deliver cost efficiencies through the optimization of personnel expenses and operating costs, driven by the integration, centralization and increased scale of operations. These benefits are expected to be realized from '27 onwards, following the completion of the restructuring with an estimated improvement of 2 to 3 percentage points in converted EBITDA margins, positioning them above the industry average.

Overall, acquisitions in Spain and the U.K. have improved our geographic balance and resilience with finished products accounting for 98% of tissue sales and a strong focus on the consumer segment, which now represents around 83% of volumes. Dorival will now comment on the main developments in packaging.

Thank you, Nuno. Now turning to Slide 15. In 2025, the European market for machine glazed and machine finished kraft paper grew by 2.6%. Navigator's packaging business outperformed the market with sales of 8%, supported by 11% growth in tonnage and 17% increase in paper area sold, reflecting deeper penetration in light weight low grammage segments. The strongest performance came from flexible packaging, particularly low grammage, food and nonfood applications alongside release liners for family and hygiene and personal care.

These priority segments benefit from the technical and cost advantages of eucalyptus fiber where Eucalyptus Globulus is a clear differentiator. This growth is fully driven by our own brand, kraft structured across 3 segments: bag, flex and box, where innovation based on eucalyptus fiber has been key to strong market acceptance and recognition. The packaging segment delivered a consistent performance over the year, supported by a gradual increase in sales.

Today, 71% of our sales are in Europe, with the remaining 29% in overseas markets, mainly in the Americas and the MENA region. As part of this industrial transformation, we approved in 2025, the rebuild of #3 paper machine at the Setubal complex to produce low grammage flexible packaging. This EUR 30 million investment running from 2025 to 2027 equips the machine with state-of-the-art technology, enhancing flexibility, energy efficiency and product quality.

The converted PM3 will produce around 90,000 to 100,000 tons per year, and it is expected to start up at the end of the third quarter of 2026 at a fraction of the cost, 5 to 7x lower than a greenfield project of approximately the same capacity. While we're still preserving our indusial flexibility to produce both uncoated woodfree and flexible packaging on the same machine. This conversion transforms PM3 from a mid-tier uncoated woodfree asset into a well-positioned first quartile competitive flexible packaging machine, leveraging our vertical integration and the cost advantages of eucalyptus fiber.

As a result, Navigator will become the fourth largest producer of low grammage flexible packaging in Europe, strengthening our position in a market growing at 2.5% to 3% per year through 2035.

Now I hand over to Antonio for a wrap-up of the full year results.

Thank you, Dorival. Let's please turn to Slide 16. As we said today, 2025 was the toughest year in decades for our industry. Yet, Navigator has emerged better positioned for growth. Our international footprint and diversified business model enables to capture opportunities, deliver higher volumes and continue expanding market share even in a highly challenging environment.

At the same time, we have repositioned the group for future growth. Key initiatives include the consolidation of our U.K. tissue operations, the investment decision for the PM3 rebuilding packaging and the investment decision for the new tissue machine in Aveiro, each reinforcing efficiency, scale and resilience. Our diversification strategy is clearly delivering results and help to capture the impact of sharply falling price in pulp and uncoated woodfree paper.

In packaging, sales benefited from the increase of our flexible packaging portfolio initiated in 2023. In tissue, we continue to scale operations and capture long-term synergies. And an execution plan is underway to consolidate U.K. operations and enhance efficiency. Alongside this, we remain further focused on our core operations, business transformation and innovation, delivering a meaningful reduction in future cost intensity.

These investments in efficiency and environmental improvement aim to ensure the longevity and continued exceptional margin generation of our world-scale high-tech mills. This transition reflects a commitment to leveraging our core expertise while expanding into adjacent markets with high growth potential. All of this has been achieved while maintaining disciplined and conservative financial policies with net debt to EBITDA at a solid 1.87x.

A brief note on capital allocation, specifically regarding dividends. Considering Navigator's performance in 2025, the Board of Directors will propose to the General Meeting of Shareholders the distribution of dividends totaling EUR 80 million. I will now hand over to Nuno and Dorival, who will comment on the investment decision for a new tissue machine.

I will now hand over to Nuno and Dorival, who will comment on the investment decision for a new tissue machine?

Thank you, Antonio. Let's move on to Slide 17. As part of our growth strategy in the tissue segment, we took an important step in '25 by launching a feasibility study for a new tissue paper machine. This project would add around 70,000 tons of annual capacity, specifically to support our U.K. operation acquired in '24. The U.K. business has strong converting capacity of around 130,000 tons per year, but currently relies entirely on external reels, making this investment a key enabler of integration, efficiency and resilience.

The idea behind it is simple to create a more balanced vertically integrated operation. By producing our own reels, we reduced dependence on external suppliers, strengthening the sustainability of the process and improve overall efficiency. It also allows us to develop products that are even better aligned with the needs of our U.K. customers while leveraging the sustainability forestry base we have in Portugal. Dorival will now provide some color on the CapEx and investment details.

Following this feasibility study, last week we moved ahead with the final investment decision. The new machine will be installed at our Aveiro industrial complex, which was designed from the beginning to accommodate a second tissue machine. This location brings several advantages, shared infrastructure, integrated pulp supply, lower drying and transportation costs and operational efficiency from being next to the first tissue machine, the TM1.

To further strengthen efficiency and resilience, we are implementing a tailor-made logistics model at the port of [ Aveiro ] dedicated to shipping reels in mega containers, instead of breakbulk. This new model delivers significant logistics savings per ton driven by lower handling costs, fewer movements and reduced variable costs.

Today, reels supply to our U.K. operations are shipped as breakbulk. Moving to this containerized solution will also bring qualitative benefits, including more efficient handling, lower loss rates and reduced environmental footprint through more efficient shipping. The investment totals around EUR 115 million spread across 2026, '27 and '28 with start-up planned for April 2028. The project will also benefit from support under the Portugal 2030 program. Antonio will now comment on the outlook.

Thank you, Dorival. Let me share our view on the current market environment and within the very limited visibility, our outlook for the coming months. Globally, risks persist, particularly around geopolitical instability in different regions across the world, protectionism, economic fragmentation and financial vulnerabilities in major economies remain a concern. While the recession does not appear imminent, growth is still relatively subdued and ongoing uncertainty continues to weigh on investment and international trends.

Even with limited visibility, we remain cautiously optimistic about near-term market development. Looking ahead, pulp prices are expected to strengthen in the first half of 2026, supported by improving momentum both in China and Europe.

In the second half, our downside scenario points to price stability rather than any significant deterioration. Demand in 2026 is expected to be broadly in line with 2025 with growth in China offset by flat outlook in Europe.

On the supply side, new capacity additions will be limited. In contrast with 2025, no significant new capacity is expected to come online this year, considering that most of the 2.7 million tons of capacity in projects announced for 2026, including 1.3 million in China and 1.4 in Indonesia is due to start up only in the final part of the year, and this impact will essentially be felt in 2027. The project in Indonesia involves 2 lines, each with a capacity of about 1.4 million tons, of which around half is intended for the market. But only the first of these lines is expected to start at the end of the year, joined by the second some months later with an impact essentially in 2028.

Finally, recent natural disasters in Indonesia have been linked by local authorities to continuous deforestation, leading to the revocation of forestry license. The Indonesian government have linked the scale of the disaster to the high level of deforestation in the past 2 decades, laying the blame on local industry and canceling the forestry licenses of some 22 companies, which supply wood to Indonesian's major exporters of cellulose pulp and coated woodfree paper and tissue, covering an area of more than 1 million hectares.

The tragedy in Sumatra highlights the structural challenges faced by the Chinese, Indonesian producers operating in the country, including their inability to certify forests and under internationally recognized systems. It should also reinforce concerns among European authorities regarding Indonesia's risk profile for wood and wood products under the EUDR framework. This has tightened wood supply and supported prices while reinforcing the strategic importance of certification and compliance with EUDR requirements.

In the paper segment, the first quarter of this year began with renewed optimism. Navigator led the market by announcing paper price increases, which were subsequently followed by other key players. In December last year, we announced a price increase in Europe of 5% to 8% and in overseas markets of 5% to 11%.

The increase in overseas was already followed by a second increase of $30 per ton in February this year. We also announced price increases of 5% to 8% in the United States, effective from next March onwards. The impact of these global price increases in printing and writing paper will be felt mainly in the second half of this quarter. And as a result, we expect average prices in the first quarter to be above fourth quarter last year, with further increases anticipated in second quarter, subject, of course, to the evolution of pulp price.

Despite this positive price momentum, the global environment remains challenging. The sector continues to face a structural decline in consumption and economic stagnation across key regions, partially offset by recent capacity closures in Europe and North America. In the states, following the reduction of 350,000 tons of annual capacity by an Asian producer, another uncoated woodfree closure was announced early this year, removing a further 320,000 tons of capacity.

Combined with impact of import tariffs and U.S. markets heavy reliance on imports, we estimate the structural supply shortfall of approximately 1.2 million tons per year or about 25% of consumption. These import requirements will need to be met by the limited number of countries able to supply products that meet U.S. market specs, notably a small group of producers in Europe and Latin America. U.S. producers at the same time are likely to focus more on their domestic market, creating opportunities in their traditional export destinations.

Looking ahead, the expected increases in pulp prices during 2026, should provide underlying support to paper prices. European import levels remain steady with no additional upward pressure on the market. While the sector continues to face a structural decline in consumption and a sharp economic slowdown across the regions, this has been partially offset by significant capacity closures, 430,000 tons in Europe last year and the combined close to 670,000 tons in North America across last year and this year.

Within this context, the uncoated woodfree segment is showing renewed opportunities across different geographies, supported by supply discipline and Navigator's competitive position. In the tissue segment, demand continues at [ investment ] levels. The integration of Navigator's tissue chain is progressing well with stronger collaboration between local and Iberian teams driving cross-selling and a higher-margin portfolio.

At the same time, we have launched an execution plan to consolidate U.K. operations in 2 core sites, Leyland and Leicester, integrated production and storage to boost efficiency, scalability and cost competitiveness, building on an already strong operational model. We have taken a final investment decision for a new tissue machine at Aveiro, a transformational project that will enhance efficiency and further strengthen the long-term resilience and competitors of our tissue segment. It's worth pointing out that we are now a quite different company from what we were.

We boosted Europe's pulp and uncoated wood free business, which is a distinctive grade in printing and writing, in Europe at least. We globally can sell our pulp at low discounts with solid margins. Our tissue business outperforms, and we are building a diversified, innovative and growing packaging business. Packaging continues to perform strongly with growth in both volumes and price.

At the same time, our PM3 conversion project is progressing as planned. Once completed, this investment will position Navigator as the fourth largest producer of low grammage flexible packaging in Europe, consolidating our presence in the segment with robust and growing demand. From late January this year, a set of raging storms, notably storm Kristin brought severe weather with strong winds and flash flooding to Portugal, particularly affecting the center of the country. Navigator responded proactively, working closely with impacted forestry producers and regions to support the sector's operational and economic recovery.

The storm caused disruptions at Figueira da Foz and Vila Velha de Rodao Mills, due to external power and water outages and some impact on our forestry assets still under assessment. There was no material damage to essential mills equipment and production resumed normally within a few days once utilities were restored.

All other industrial units kept operating as usual. However, adverse weather conditions associated with storms have disrupted forestry operations and hindered the transportation of wood to our mills. The relatively low stock levels at the start of the year, combined with the impact of the storms may require a temporary adjustment to sales volumes in the first quarter, which is still under assessment.

Navigator's integrated business model, strong financial position and the ability to respond proactively across the value chain from forestry to a set of different finished products are enabling us to navigate current challenges with confidence. Ongoing diversification and continuous innovation in our core business will further strengthen Navigator's resilience and long-term value creation. Thank you.

Thank you, Antonio. This ends our presentation. We are now open for the Q&A session.

[Operator Instructions]. The first question comes from Bruno Bessa from Caixa Bank.

I would focus on the new plant that you announced in Aveiro. Could you share any numbers on this new plant, mainly in terms of your expectations for EBITDA margin or even EBITDA contribution once it starts up, will be appreciated. And also regarding the investment that you announced, the EUR 115 million investment. One question about this. Would it be reasonable to assume that 20% of this investment could be in the form of nonreimbursable subsidies. So this will be the second question.

The third question, just a bit of a more technical one. If you could just explain the changes in the fair value of biological assets because I saw that in Q4, you had relevant movement of around EUR 5 million contribution in the EBITDA, positive contribution. If you could just explain what are the dynamics behind this? And what should we expect from this for 2026?

Thank you, Bruno, for your questions. I'm going to try to repeat them. The second I was completely unable to understand. I'm going to repeat first and third, and I will ask you to be so kind to repeat second. So first, we would like to try to understand better the EBITDA margin impact of Aveiro new tissue machine once it starts up, correct?

Yes, that's correct.

The third one is about fair value of biological assets. You would like to understand a bit more how we see things in 2025 and going forward.

Yes. That's correct.

And the second one, are you so kind to repeat it, please?

Sure. The second one is about the EUR 115 million investment that you announced in Aveiro. You mentioned that this should have some subsidies from the government. My question here is, if it would be reasonable to assume that 20% of this investment could be then in the form of nonreimbursable subsidies?

Okay. I will give some introductory comments on the questions. I will pass to Nuno, the first one and to Fernando the second and the third.

So the impact of the tissue machine is going to bring the Tissue UK operation closer to what is the EBITDA margin of our Iberian operations. As we have heard, we believe that with the reshuffling of the converting operations we are doing in U.K., this will add to the existing conversion 2 to 3 points in margin improvement. It will be more or less the same range, the integration of tissue -- new tissue machine.

Regarding the second question, obviously, we do not share any specifics on our discussions with the Portuguese government. But I would expect the levels not to differ from similar projects that we deal with the government, of course, outside the [ NextGen EU, Innovation ] funds in previous investments. So it's not going to be materially different from that percentage-wise. Nuno, can you add something more on the first question, please?

I can only comment and stress what you just said. I think overall, I think people attending the conference also have the benchmarks for what can be a tissue machine of this size. For us, we would expect on a long-term basis [indiscernible] that this should increase the EBITDA margin of tissue by 3%, something like that. And in fact, the EBITDA margin of Navigator by 1% because, as you know, tissue is already 1/3 of the EBITDA margin of the group.

Fernando?

Some mention related with the PM2 of tissue in Aveiro, the margin of support is around 20%. And we are talking about investment of EUR 115 million. In what concerns the biologic assets, it's -- we have an increase this year. It's mainly related with Mozambique. The way that we calculate the discount cash flow, it was on the basis that we will get and transport to Portugal. And fortunately, we found better ways to monetize these biologic assets in Mozambique. This means that we have less costs and we can have increase of return. For the near future, we are not expected to have huge amounts of variation on biologic assets, like we always do, we try to manage in a way that we do not foresee a big increase for the future. This particular year, it's because of this good news that we found ways to sell directly to local.

And just a follow-up. Could you please elaborate a little bit more on those alternatives that you have now for the wood produced in Mozambique. Are you exporting to Asia, what are those alternatives?

I will ask Joao to answer the question. Joao, please?

Yes, it's a good question. We -- in the last 2 years, we found out that we could sell wood locally mostly for furniture purposes. And -- but we sell it locally for Chinese operators, mainly but also from India. And we expect that with that these local sales we can monetize almost all the stocks, the wood stock that we have in the near future.

The next question comes from Antonio Seladas from AS Independent Research.

There are no further questions at this time at the conference call. Now we will go through the webcast. From the webcast, we have the first question. Thanks for the detailed presentation. Can you please provide us with some guidance on the possible margin uplift that the new tissue machine will bring now that you will become fully integrated in Tissue?

I think that question was also already answered in a very complete way.

The next question comes from [ Michael Saido, ] a shareholder. What are the dividend relevant dates ex dividend and payment date as well as how much dividend will you propose to the AGM?

The general meeting will be held on May 22. And regarding dividends, we already gave the answer, EUR 80 million is the proposal from.

And normally, it's paid 8 days after the general assembly meeting.

Okay. Thank you. This concludes our session. Thank you for your time. Should you require any further clarification, please feel free to reach out through our usual channels, wishing you all a pleasant evening.

Good evening. We welcome you to The Navigator Company Third Quarter 2025 Results Presentation. [Operator Instructions]

I'll now hand the conference over to Ana Canha. Please go ahead, madam.

Ladies and gentlemen, welcome to The Navigator Company conference call and webcast for the third quarter and nine-months results.

Joining us today are the following directors, Antonio Redondo, Fernando de Araujo, Nuno Santos, and Antonio Quirino Soares.

As usual, we will start with a brief presentation, and we will have Q&A session at the end. The presentation can be accessed through the links available on the website, and questions may also be submitted using the webcast platform.

Antonio will start by commenting on the main highlights of the quarter. I will now hand over to Antonio.

Good afternoon, and thank you for joining us today. I'm pleased to share the results for our third quarter and first nine months of 2025.

As you will see in today's presentation, Navigator once again demonstrated its ability to adapt swiftly to very challenging market conditions while maintaining its strong competitive position in Europe. We continue to focus on creating value and protecting margins while investing in diversification and reinforcing the foundations for sustainable growth.

I will begin with Slide 4 with an overview of the key highlights. The first nine months of 2025 were marked by very significant volatility driven by geopolitical tensions and rising protectionism, adding to macroeconomic risks. Like others in global trade, Navigator felt the impact of slower demand in key markets.

The pulp and paper sector has faced severe pressure visible in the sharp downturn in pulp prices in China since April, which also significantly impact Europe. As anticipated, the third quarter marked the lowest point in this downward cycle. Faced with falling prices across its markets, Navigator succeeded in positioning itself competitively. We are firmly established around the globe, which enabled us to seize opportunities, grow our sales volumes in all paper segments and increase our market shares.

Focused on operational excellence, the company implemented initiatives to optimize its variable costs and streamline its operations. The downward course of production costs is already visible despite the temporary impact of cost categories such as energy and chemicals, the effect of which has tended to be diluted as the nine-months period progressed.

Pulp and tissue cash costs dropped to near the lowest since mid-2021, with while paper cash cost reached a two-year low. As a result, the pulp and tissue cash costs fell at the end of third quarter to the second lowest level since mid-2021. The paper cash costs were the lowest of the last two years. Despite significant market volatility across all segments, our packaging and tissue businesses delivered solid year-on-year growth and already account for 32% of the EBITDA and 29% of the turnover. In tissue, we are successfully scaling up operations and following recent acquisitions, namely Navigator Tissue U.K.

In packaging, our sales continues to show positive momentum with growth in volume, value and strategic positioning in lower basis points. We maintained a strong financial position after dividends and strong CapEx, keeping our net debt-to-EBITDA ratio at 1.85x.

Now turning to Slide 5, please, with the main financial figures. Turnover totaled EUR 1,489 million. EBITDA stood at EUR 300 million with an EBITDA margin of 20.2%. Fernando will highlight the main impact on the period.

The successful execution of our diversification strategy has strength resilience amid market volatility with tissue and packaging segments helping to offset the impact of subdued pulp and paper prices. In an uncertain macroeconomic environment, our EBITDA margin remains among the strongest in the industry, namely amongst those exposed to pulp, although below our historical average.

I will now hand over to my colleagues, who will walk you through the results in more detail and share some insights on how our different business areas have been doing.

Fernando will start by the main impacts on EBITDA. Fernando, please go ahead.

Thank you, Antonio. Turning to Slide 6. We can take a closer look at the main impacts on EBITDA in the year-on-year comparison. As already mentioned, EBITDA stood at EUR 300 million, down 30% year-on-year with an EBITDA margin of 20%. Year-to-date results were below last year's due to lower sales price and rising cash costs, mainly for energy and chemicals in the beginning of the year, which, as I mentioned, has since started to reduce. The downward trend in uncoated woodfree and pulp sales price were pressured by falling benchmark index. Change in our product mix also influenced our average sales price. Apart from pulp sales, all paper and tissue products saw a significant increase in sales volume over the nine months period.

Turning to Slide 7 with a quarter-on-quarter EBITDA analysis. In this quarter, EBITDA stood at EUR 84 million, down 17% quarter-on-quarter, reflecting EBITDA margin of 18%. Quarter-on-quarter, the EBITDA decreased mainly due to the sharp price reductions, partially offset by strong volumes and variable and fixed cost savings. Navigator sales price fell across all segments quarter-on-quarter, following the drop in key benchmark index. We witnessed a strong rebound in pulp sales versus Q2, plus 31,000 tonnes, driven by the market recovery in Europe and overseas despite our selective sales strategy amid sharp price drops. In uncoated woodfree and packaging, we sustained volumes, offsetting the typical seasonality of the third quarter. We saw a good trend regarding production costs. Wood costs were down due to lower prices and lower extra Iberian purchase. Energy and chemical costs also decreased due to lower prices. External fibers were also down as a result of lower market prices. As Antonio already mentioned, pulp and tissue cash cost dropped this quarter to near their lowest since mid-2021, while paper cash costs reached a two-year low.

Turning to Slide 8 with debt maturity and liquidity. During the first nine months, we repaid close to EUR 400 million in debt, including EUR 275 million early repayment, strengthening our debt profile and increasing the share of sustainability linked instruments. We also secured EUR 365 million in long-term facilities with EUR 140 million still available, including an European Investment Bank loan, EUR 40 million to support the decarbonization projects with no significant payments due in the next five years. We raised EUR 225 million new debt with a seven-year maturity, extending our average debt maturity to 5.2 years from 3.5 years in December. We also raised the weight of sustainability-linked debt to 79%. After this debt renegotiation cycle, Navigator reduced its debt repayment commitments to very low volumes over the next five years, hence ensuring the reduction of its average credit spreads and increasing the weight of the debt raise and the ESG requirements. At the end of the period, 78% of our debt was on a fixed rate basis. It should be noted that despite the rising interest rates in relation to our last financing cycle, our average cost of financing at the end of September remained low at around 2.6%. The unused long-term credit facilities currently totaled EUR 140 million.

Turning to Slide 9 with an overview on CapEx. The high strategic CapEx cycle start in 2023, boosted by the NextGenerationEU and innovation funds is coming to an end and expect to be phased by mid-2026. In the first nine months of 2025, CapEx totaled EUR 160 million, of which approximately 61% of total corresponds to value creating environmental or sustainable investments. NextGenerationEU projects advancing on schedule, reflecting our strategic discipline and focus on delivering results with 77% is secured by the end of September in time within the PRR calendar and in budget.

Moving to Slide 10, which presents key performance indicators. Let me highlight our ongoing commitment to operational excellence and long-term value creation with a strong focus on decarbonizing our industrial process and investing in innovative technologies that improve resource circularity and cost efficiency.

This quarter, we achieved a significant milestone in our decarbonization road map, namely with two biomass power lime kilns in the operation at our Aveiro and Setúbal sites and the third biomass power kiln at Figueira da Foz is now in the start-up phase. These projects are designed to reduce both greenhouse gas emissions from pulp mills and the dependence on fossil fuels.

Notably, the new lime kiln in Figueira da Foz will also make a very significant contribution to simpler use of resource by enabling reclamation of carbonate sludge, reducing the quantity of this waste sent to landfill by around 90%. Thanks to this investment, the Aveiro and Figueira da Foz mill will operate in 2026, producing around 9% renewable energy. The conversion of lime kilns from fossil fuels to sustainable biomass will open the door to the innovative use of Eucalyptus globulus, a byproduct from wood preparation operation as a renewable fuel. At the Setúbal mill, the conversion of lime kiln to biomass as this energy source will lead to a reduction in carbon emissions of around 17,000 tonnes CO2 emission license per year.

In Aveiro and in Figueira da Foz, the project will allow a reduction of approximately 10,000 tonnes CO2 per year in each site. In Setúbal, this groundbreaking project has attracted support from the Innovation Fund, the European Union Fund for climate policy, geared especially to energy and industry and working to bring to the market solutions for decarbonizing the European industry and helping it make the transition to climate neutrality. The Aveiro project and the new lime kiln in Figueira da Foz have been partially financed by the NextGenerationEU funds.

Together, these three projects represent a total investment of approximately EUR 60 million. This innovation substitution of fossil fuels will improve the cost base of the pulp production process. It once again demonstrates Navigator commitment to operational efficiency and underlines how its actions are aligned with the principles of sustainability in transforming waste into value and taking real steps to consolidate the group's circular economy strategy.

Antonio Quirino will now comment on pulp and paper price.

Thank you, Fernando. Turning to Slide 12 with pulp and paper prices. Between April and August this year, the hardwood kraft pulp price index in China sharply decreased, strongly influenced by overcapacity in the pulp and paper sector in view of the current situation of severe tensions in international trade and the reduction in demand in several paper segments in Western markets.

The price dropping cycle bottomed out at a price of $493 per tonne, which is down by 18%, the lowest since 2021. Although this downward cycle has been shorter than previous cycles, it started from a significantly lower peak, reflecting a structurally weaker base than in preceding cycles. In Europe, the benchmark index for hardwood pulp, the peaks hardwood kraft pulp in dollars rallied to $1,218 per tonne in April, up 22%, only to lose ground again in the months that followed, returning to $1,000 per tonne in August, down by 18% as well and remaining at that level until the end of September. In both regions, China and Europe, prices ended the third quarter on an upward trajectory.

Moving to paper. The benchmark index of office paper in Europe, PIX A4 B-copy stood at an average of EUR 1,023 per tonne in the first nine months, which is 8% down on the same period last year, but 21% above the pre-pandemic average of EUR 847 per tonne in the period of 2015 to 2019, but below 25% from the 2022 peak.

As we review Navigator's performance in Europe, I would like to highlight our approach to sales pricing, which closely track the evolution of benchmark indices. We pursued two different strategies. First, we placed greater emphasis on economy products. So this allowed us to increase our sales volumes, though it did have some impact on our overall product mix. This strategy enabled us to offset the decline in imports into Europe by offering products with superior quality and stronger environmental credentials compared to typically typical imported papers into Europe, particularly those from Asia, while maintaining a price point above imports, but below our premium and standard ranges. At the same time, it allowed us to continue supporting our most loyal premium customers with this economy offerings.

Second, we maintained price premiums on our value-added product. This strategy ensured that our pricing on premium and standard products remained favorable compared to the market index and specifically for A4 B-copy PIX. It's important to note that in international markets, our prices were affected by two other factors, namely the weaker dollar and the decline in the pulp markets in China. This dual approach has helped us remain competitive and responsive to market dynamics, balancing volume growth with value retention.

Moving to Slide 13 on printing and writing paper market, we see that the global apparent demand for these papers fell by 2.7% until August. Specifically, uncoated woodfree paper remained the most resilient, falling 1.6% this year, which is aligned with historical average market decline, and this compares with 5.1% decrease in coated woodfree papers and 4.2% decrease in mechanical fibers papers.

In Europe, the apparent demand for uncoated woodfree paper fell by 6.4% until August, driven specifically by a reduction in imports that were 11% below the same period of last year. In the United States, demand slipped by just 1%, while the closure of a major mill drove import reliance at 31% year-on-year, leveraged by tariff expectations. With capacity cuts and duties adding pressure, prices have climbed and are likely to remain strong with more increases forecast through 2026. In the first nine months of 2025, Navigator grew its share of total deliveries from European mills by 1.2 percentage points year-on-year, reaching about 26%. This was driven by strong gains in international markets at 6 percentage points, while our European share remained steady at over 18%.

Navigator's operating rate rose to 87% in the first nine months of the year, 7 percentage points above the same period last year. Meanwhile, the industry rate as a whole recovered slightly from 80% to 81%. These developments enabled Navigator to strengthen its order intake market share by 3 percentage points globally to 27% and by 2 percentage points in the European market to reach 19% year-on-year.

Now moving to Slide 14 to discuss pulp market. As Antonio mentioned previously, from April through August, there was a steep downward adjustment in pulp prices. In terms of demand, global demand for hardwood pulp grew by 8% year-on-year until August. China remaining the main engine of growth with an impressive increase of 12% due to the continuous in new paper capacities in several grades followed by the rest of the world with a 9% increase. In contrast, demand in Europe continued to fall following the shrinking consumption of printing paper, as mentioned before, edging down by 1%. In the U.S., demand dropped by 1% as well after heavy restocking over the same period last year.

The strongest global growth was for eucalyptus pulp, which was up by more than 10% in the first eight months of the year, with China growing impressive 14% and Europe in line with the same period of last year. This performance has consistently boosted Eucalyptus share in the hardwood reach segment on the chemical pulps.

On the supply side, the ramp-up of projects on the pulp side that were brought online in 2024 increased the availability of market pulp in 2025, exerting pressure on operating rates. Even so, factors such as growing consumption, maintenance shutdowns and recently announced cuts in production helped to balance the market and sustain the activity of hardwood producers in the first nine months of the year. The global pulp market will continue to be influenced by China, where growth in domestic consumption and projects for new tissue, paper and board capacity have shaped the market balance. However, a significant proportion of these new lines are still at the initial start-up stage, which could mitigate the impact in the short term.

Doubts also mounting as to the region's ability to supply wood sustainably for the new capacity. In Europe, stock levels remained relatively stable. In China, although stocks at ports have been building up since January, analysis of paper production suggests that this growth is proportional to the expansion of their industrial operations and not an anomalous accumulation. The ratio of stock of days of production has been stable in recent months, pointing to a balance between supply and demand. Our sustained competitive advantage is anchored in the uniqueness of Eucalyptus Globulus, eco-efficiency and fiber quality.

On a positive note, as Antonio mentioned, our pulp cash costs ended Q3 at the second lowest level since mid-'21, down 20% from January to September and 19% quarter-on-quarter.

Moving to Slide 15, covering the tissue market. We see that after a substantial growth of 6.3% in 2024, Western European demand for tissue was up year-on-year by 0.6%. Navigator's tissue sales volume, finished products and mills grew to 177,000 tonnes, a 14% increase compared with the same period of last year, with sales up 17%, boosted by the integration of Navigator Tissue U.K. in May last year. The recent acquisitions in Spain, '23 and the U.K., '24 have enabled us to balance our geographical mix and creating greater resilience in our tissue business.

Finished products accounted for 98% of total sales, while wheels accounted for the remaining 2%. The at home or consumer retail segment has grown in importance and currently accounts for around 83% of sales. The away-from-home segment, wholesalers, the Horeca channel and offices accounts for the remaining 17%. The highlight of the quarter in the Tissue segment was the business in Iberia, which recorded its best ever quarter in sales of finished products.

We continued with the integration of the U.K. operation with increased collaboration between local and Iberian teams, aiming to boost cross-selling opportunities between markets, optimize the portfolio and identify and implement further cost cutting and efficient opportunities. Navigator also launched a strategic plan to consolidate its U.K. tissue rolled operations, building on an already efficient model to achieve even greater competitiveness and alignment with best practices.

Moving to Slide 16 on the Packaging segment, we see that the global market for machine glazed and machine finished kraft papers grew by approximately 11% year-to-date August, reflecting its strong performance. In this segment, Navigator sales were up 7% year-on-year in volume compared to last year, thanks to a rise of 1% in price and a 7% increase in volume with a 10% growth in the area of paper sold due to an increased penetration in low grammage segments according to the strategy.

Navigator has been developing and investing in the gKRAFT sustainable packaging segment, offering alternatives to fossil-based plastics and supporting the transition to renewable low-carbon products. gKRAFT brand has won market recognition, achieving a 15% growth in new customers opened during the period of year-to-date September with a presence now in more than 40 countries worldwide. The top performance in the period was the release liner products, together with solutions for food and nonfood packaging, which are strategic priority areas for our business. These segments benefit more significantly from the use of lightweight papers, where the Eucalyptus Globulus offer significant competitive advantages, both economically and technically.

MG and MF kraft papers or machine glazed and machine finished kraft papers are used in similar applications such as bags, sachets and several flexible packaging items. Traditionally, machine finished is a slightly lower cost alternative with inferior surface quality in comparison with machine glazed. However, with the conversion of PM3 in Setúbal, production of machine-finished kraft papers in the gKRAFT range will be able to compete with machine glazed on quality.

In Europe, machine finished kraft paper for packaging purposes is produced by paper suppliers who typically can only ensure products above 60 grams. The overwhelming majority of the paper machines able to produce below 40 grams are old, small and nonintegrated machines and aimed at the machine-glazed kraft papers. The rebuild of the PM3 machine in Setúbal takes advantage of Navigator's vertical integration and the cost efficiency of the Eucalyptus Globulus fiber for production of distinct top quality kraft papers. As a result of this project, Navigator will move up to fourth place in the European league table of low-grammage flexible packaging manufacturers, strategically consolidating its presence in the segment where demand is surging.

In order to ensure that the asset maintains its flexibility and it is adaptable, the project has been designed to allow, if necessary, the production of different grades of uncoated wood-free paper, guaranteeing our capacity to respond to market dynamics and preparing us for future scenarios.

I will now hand over to Antonio.

Thank you, Quirino. Let's please turn to Slide 17 with a wrap-up of the Q3 and nine months results. Our diversification strategy is paying off. The diversification to higher growth and less cyclical markets such as tissue and packaging, although more dependent on end user consumption, reinforces the company's long-term value creation and resilience.

In tissue, we are successfully scaling our operations, expanding into new markets and positioning ourselves to further unlock long-term synergies that will drive sustained growth. In packaging, increased penetration in low-grammage segments confirmed the strong appeal of Eucalyptus Globulus fiber for the same, leading to a 10% increase in paper area sold compared to a 7% increase in sales volume in tonnes. By focusing on efficiency and cost management, we achieved a significant reduction in cash costs across all pulp and paper segment. We kept our focus on core operations, business transformation and innovation. We carried out value-added CapEx of EUR 160 million aimed at sustainable long-term cost efficiency, while keeping consistent conservative financial policies after high level of CapEx and EUR 175 million dividend payout.

Let's turn to Slide 19 with a few words about the outlook. Let me now share our perspective on the current market environment and our outlook for the coming months. Globally, we are seeing a reduction in overall uncertainty and still moderate growth prospects. It's important to recognize the continued presence of risks, protectionism, economic fragmentation and financial vulnerabilities in major economies remain a concern. While a recession does not appear imminent, growth is still relatively subdued and ongoing uncertainty continues to weigh on investments and international trade.

Despite the challenges and limited visibility, we are cautiously optimistic about short-term market development. We anticipate that conditions will improve, particularly in the pulp, tissue and packaging segments, where the printing and writing paper segment demand is expected to remain under pressure, although with uncoated woodfree presenting most likely again better perspective than other printing and writing papers.

Regarding the pulp market, China continues to play a decisive role. Growth in domestic consumption and new capacity projects have shifted the market focus. That said, many of these new lines are still in the early stages, which should moderate the immediate impact. There is also increasing uncertainty regarding the region's ability to source wood sustainably for the expansions. As a result, we have seen pressure on global prices and a change in trade flows with China in growing.

Notably, the third quarter of 2025 was the weakest since 2021 with prices averaging USD 500 per tonne in China. We believe this marks the bottom of the current price cycle as both China and Europe saw prices start to recover towards the end of the last quarter.

In the printing and writing paper, the overall global outlook remains challenging and need a structural consumption downturn. Europe with strong uncoated woodfree demand contraction, while U.S. and remaining overseas markets with a more moderate fall. Global uncoated woodfree demand with minus 1.6% so far this year is in line with the last 10 years yearly rate. On the supply side, Europe has seen significant capacity reductions with recent closures removing around 430,000 tonnes annually, about 7% of the region's capacity. Another major European player is also facing financial difficulties, which could lead to further capacity cuts.

European imports remain stable with no upward pressure. EUDR discussions continue and its implementation is expected to reinforce European pulp and paper market. Meanwhile, the U.S. market has shown great resilience. The closure of the country's largest mill accounting for 8% of total capacity has deepened the market shortfall with North American production estimated to lag 800,000 to 1.1 million tonnes versus North American demand.

Another closure announced this quarter will remove 320,000 tonnes of uncoated woodfree capacity by Q3 next year, further increasing U.S. import requirements. Meeting this demand will depend on a select group of countries able to supply products meeting U.S. market stringent specifications, primarily manufacturers in Europe and Latin America. Latin American suppliers, however, are facing the prospect of higher tariffs, both antidumping duties and custom service than those currently imposed on European imports. In response, U.S. producers may focus on their domestic market, potentially creating opportunities for competitors in their existing export market.

Despite this complexity, new opportunities are arising in the uncoated woodfree market. For example, Mexico's customs tariffs on Asian imports and Colombian tariffs on imports from Brazil are providing competitive advantage for Navigator in these countries, supporting sales and expanding our footprint. In tissue, demand has increased by an estimated 0.4% so far in 2025, with annual growth expected to hold steady at around 1% through to 2029. The integration of Navigator Tissue U.K. is progressing with stronger collaboration between the local and Nigerian teams, unlocking cross-selling, optimizing the portfolio for higher-margin products.

To strengthen our market position and operational resilience, we have launched a strategic plan to consolidate our U.K. tissue roll operations in two sites, Leyland and Leicester, reducing sites from five to two, integrating production and storage for greater efficiency, scalability and cost competitiveness, building on an already efficient model to achieve even greater competitiveness and alignment with best practice. Regarding a new tissue machine, the final investment decision is anticipated by year-end 2025.

Packaging continues to perform strongly with growth in sales and price. Our project to convert the PM3 paper machine at Setúbal is progressing as planned. This will elevate Navigator to fourth place among European manufacturers of low-grammage flexible paints, consolidating our presence in a segment with robust demand.

Navigator's integrated management, sound financial position and our ability to respond flexibly to market demand from forest to finished products are enabling us to face these challenges and prepare confidently for the future. Continued development and diversification of our business base will further reinforce the resilience and sustainability of our business model.

The next slide provides a quick update on our operational excellence initiatives. Amid the ongoing global uncertainty, Navigator is proactively strengthening its resilience through several targeted initiatives under a program called Operational Excellence Initiatives 2025, 2026 as already announced last quarter. Keeping its focus on high operational standards, the company has launched internal programs designed to act on different fronts to protect results. These involve programs for the optimization and reduction of variable costs by streamlining specific consumption of raw and subsidiary materials, seeking strategic negotiation with suppliers as well as logistic cost reductions. The company will also step up its commitment to Iberian wood, promoting local and sustainable fossil fuel. in this first quarter is already visible the impact of some of the measures implemented.

As mentioned in our previous call, Navigator is advancing its operational excellence through a robust investment in AI, namely advanced process control solutions aimed at enhancing process stability, efficiency and product quality. The company has successfully deployed third-party APC systems, two in classification processes and value of breaching with two more in the pipeline, while it is also developing proprietary machine learning algorithm solutions internally. These include optimization of precipitated calcium carbonate incorporation and reduction of variability in tissue grammage control and integrated control of thickness, grammage and reference in uncoated woodfree paper production. This multipronged approach reflects Navigator's commitment to innovation and continuous improvement and across its industrial operations.

We're also focusing on improving efficiency by cutting fixed costs, mainly freezing headcount and optimizing running costs. We continue to invest in reliability by speeding up implementation of the asset performance management, APM system and executing specific action plans to build up teams and improve systems for asset management, maintenance and reliability. Along CapEx -- alongside this CapEx plans will be subject to careful review, especially as regards to scheduling, seeking to reduce projects in 2025 by approximately EUR 40 million, prioritizing those under the resilience and recovery program and those offering higher rates of return.

Lastly, we will address our commercial strategy and market diversification by relaunching economic products, being more aggressive with low-end products in the face of the current economic situation, while protecting the margins and volumes of premium products. With a positive perspective following the decisions of the European Commission on 24th of April 2025, the ERSE, the energy regulator in Portugal on 22nd of July, a revised third-party access tariff for less intensive customers has been set. Navigator installations in high and medium voltage will benefit from rant discussion on those tariffs between May and December '25. In addition, with approval of increased support for indirect CO2 costs in Portugal through the environmental fund. This support, we must say, has been both delayed and very modest, especially when compared to the more substantial measures provided to our competitors in several other European countries, notably in Spain, in France, in Germany, and in Finland. Business diversification and innovation in products remain at the heart of Navigator strategy, especially in the tissue and packaging segment, where there is still great potential for growth. Thank you.

Thank you, Antonio. This ends our presentation. We are now open for the Q&A session.

[Operator Instructions] Our first question comes from Cole Hathorn from Jefferies.

I'd just like to follow up on your office paper business. In a challenging demand environment, you've done exceptionally well. So I'm just wondering on your commercial strategy, how did you maintain the stronger operating rates of kind of 87% versus the industry? Was this a real focus on the economic products to keep your operating rate elevated. I'm just wondering commercially how you drove the better operating rates in uncoated woodfree.

And then I'm also just wondering, sticking to Europe, was there also something around one of your competitors or some of your competitors dropping the ball commercially? Just wondering if it's a bit of both.

Okay. Thank you for your question. And I'm trying to rephrase it just to make sure we fully understand them. I will give some elements to the answer, and then I'll ask Quirino to follow up.

Your first question is focused on office papers. And you realize that our results are quite resilient under the present situation, and you would like to understand how this resilience can be explained vis-a-vis our European competitors. Is this right?

That's correct.

Okay? And the second question is if you believe that some of our European competitors have dropped the ball under the same context, I understand.

Yes.

Okay. I will give you some elements of answer and then Quirino will follow up with more details.

For the first question, I think there is not a silver bullet. We didn't perform one single action that allow us to be significantly more resilient than our competitors. First and probably foremost, we have a unique product quality that is second to none to anybody else in the world. And we have very, very strong brands. And I think, again, this quarter, our quality has proven to be very differentiated from our competitors. And in an environment where people consume less products, they probably can afford to choose better products. At the same time, our brands have a very large recognition in the world, but particularly in the markets where we are in.

The second element, I think, is related with our sustainability practices and our sustainability reputation. We didn't saw and we are not seeing any drawback any decrease on sustainability when choosing papers, namely office papers and filling and writing papers. And we have the sustainability credentials that we show, we prove, we demonstrate, again, second to none in the group.

The third element is probably related with our geographic spread. We are very much present in the corners of the world, if you will, with a strong presence in Europe and a growing presence outside Europe, which I think also Quirino demonstrated.

I will stop here on the first question. I will ask Quirino to complement what I've mentioned. And then we can also explain how economic products has helped us to support the high end.

Absolutely. Thanks for the question. So I think Antonio mentioned the key points. So we see a strong resilience on our premium and branded offering products in the market. And this is related with the fiber and the quality of the products, which is very appreciated in the market. So I think this is really, as Antonio mentioned, a strong element to the answer.

The other one is in geography. Actually, our coverage of around 130 countries in the world provide contrary to some of our smaller competitors in Europe provide an insurance, let's say, because we're covering several regions, we take profit from local regional growth. We did see the Americas, both in North America and Latin America quite positive for us as well. Don't forget that we saw this year also a decrease in imports into Europe, which was also helping the European industry to find some space. But your question relates to our comparison to Europeans. So imports is not an element to answer this, but it helps everyone, I would say.

And I would just comment on what I mentioned before on the dual pricing strategy where we continue to protect more the price -- decreasing less the prices on the premium and branded products. But we went more strongly into the economy market with our partners, supporting them on their needs of economy products now that imports are reduced. And so this increased penetration in economy products also boosted our operating rates compared to European mills.

Regarding your second question, I think we can -- sorry, regarding your second question, I think we can concur with you. What we have seen so far is exactly in a market where demand is shrinking in some regions more than others. We see a significant amount of competitors leaving this market, either leaving to other markets or just, as you said, dropping the ball. This was the case clearly in the States, as we mentioned, with one large mill announced for this year, actually already stopped and another one preannounced for next year. We had a sale towards the end of last year and early this year in Europe.

And without naming competitors, I think we can keep on seeing the same pattern. If you just look to the results and keeping the geography around if you just look to the results of our European competitors in Q2 and Q1 this year, I think it's easy to understand that some of these companies will never be viable. So in a market that is going down in terms of demand and lacking strong elements of competitiveness, I think it's a question of time before we see others keep on reducing capacity.

And maybe just as a follow-up, your cash costs, you have on Slide 14, your cash cost going down 19% quarter-on-quarter. That's a very big reduction in cash costs. We've seen some of the Nordic players talk about lower wood costs. We've seen some easing of wood costs after a rally in wood costs, but most people are talking about an easing of costs into 2026.

So I was just surprised to see cash costs coming down so much for Navigator. So I'm just wondering if you could give a little bit more color of what drove the lower cash cost. Is it wood? Is it just better operating rates? Is it your own self-help initiatives to reduce chemical energy consumption? Any color would be helpful.

Okay. So if I understand correctly, you'd like us to give a bit more color on the cash cost reduction, correct?

Yes, please.

So the cash cost decreased in all different segments. They have decreased in pulp, they have decreased in uncoated woodfree and packaging and they have decreased in tissue.

The ones that you mentioned that are in our Slide 14 are specifically referring to pulp. And let me add the following. I think probably we have a couple of elements here. One, as we have seen, our cash costs are on top at the level of 2021. So it's a significant reduction on 2021. Having said that, we had an increase of cash costs in Q1. So we are comparing Q3 with the Q1 where we had higher cash costs. At the time we explained, this was mainly related with energy and chemicals.

So the different elements that we have mentioned, they all play a part here in the reduction. I think we can also say that in between September and January this year, our total cash cost dropped 20%. So you see the big impact that we are trying to have on cash cost control.

What are the main elements? For sure, energy and chemicals that have a bigger impact on the first quarter of the year. Also, wood is mainly by managing wood origins by managing the sources of wood. And also, we have managed to keep in control fixed costs. Of course, when your operating rates are improving, you have also an efficiency element on it.

I will pass to Fernando if he wants to add something.

No. Perhaps on the fixed cost that is on the payroll side, at the beginning of the year, the expectations for the year were higher than the ones that we have now. And part of our payroll expenses are related with the performance of the company. This means it's also some justification for the declining in the cash costs in the period.

Related to direct costs, it's like Antonio said, the energy, chemicals and the wood. Part of it is price and part of that is management, the proportion of wood available from different sources and trying to be more efficient on the operational side.

Following up the comments from Fernando,, let me just add one thing about HR, which is we took the decision on -- already on the second quarter. We announced it when we present second quarter results as a freeze in recruitment. So we are managing our operations with, I would say, a more limited number of people, which is a challenge because in some areas, we are building new equipment, we are building operations, we are growing. In some other areas, we are not. So we are balancing people between different operations to keep costs under control.

Our next question comes from Bruno Bessa from Caixa Bank BPI.

I have three, if I may. The first one, you mentioned an improvement in terms of your backlog for the Q4. Just wondering whether this is a pure seasonal effect or if there is an upturn in terms of demand that is above the usual pattern in Q4. This will be the first question.

The second question regarding paper prices. In the last cycle trough, you control quite well the price level because you reduced you and your competitors reduced the average capacity utilization rate. My question is why aren't you doing the same this time around? What has changed in the market for you not to follow the same strategy this time?

And the third question, we saw a relatively weak quarter on volumes in the tissue business following on a year-on-year basis. Just trying to understand what is behind this effect, if there is any kind of one-off impact in terms of production? And what are your expectations for the upcoming quarters?

Okay. Thank you. Again, for sake of clarity, I'm going to try to rephrase the questions and I will give some elements of answer. I will ask my colleagues to help on replying. So your first question is about the improvement of backlog. I think you are referring to uncoated woodfree and you'd like to understand if this is demand or purely a seasonal effect.

Correct.

Okay. Thank you. Your second question is that you believe that previously this industry a better discipline on pricing and we try to understand what is happening right now.

That's correct.

And the third question is about tissue. You saw coming to what you were expecting weaker volumes on Q3. And would like to understand if this is one-off impact or any issue regarding our mills.

That's it.

Okay. I will give elements over three questions. For the first two, I would then ask Quirino to follow up. And for the third, I will ask Nuno also to comment.

So starting with backlog improvement. A very quick comment, and Quirino will detail much more than myself. This is much more than seasonal effects. We are actually conquering, if you will, market share. I think we have shown that in one of the slides. We are conquering market share in order intake. Quirino can elaborate a bit more why we are doing that, but some elements of that have already been given, namely by enlarging our product offer with adding new -- not new, adding products that we didn't have before.

On paper prices, I think we agree with you. We see the same. We see that the discipline of the market this time was not at the level that was before. We, as a market leader, try to keep prices and provide actually an umbrella for prices where the majority of our competitors could protect themselves, but they choose not to do. They choose to -- in spite of that to lower prices and, of course, we are also reacting namely with low-end products.

Look, I'm not sure if I mentioned this in one of these calls, but I mentioned this very often. There is a very famous sentence from Robert Crandall. Robert Crandall was the CEO of American Airlines after the liberalization. And he said the airline industry was run by the dumbest competitor. And I think this applies also to pulp and paper. I mean no matter the effort that we, as a market leader, do to protect prices, some of our competitors, I guess, out of the aspiration, I go back to the first question that was raised by our colleague from Jefferies. Out of the aspiration, they just give up drop wall, I think was the expression and decreased prices.

Nuno, do you want to follow up, please?

Yes. So on the backlog on Q4 is a bit seasonal, but more than seasonal. So we see -- first, we are getting our market share in deliveries, in sales. But what you see in backlog is actually our ability more recently to progress more in market share in order intake, which is a bit more forward-looking because these are orders to be delivered in the next few months. So we are progressing on that.

Again, in the Americas, a bit in Europe as well. And in what we call the overseas markets, the North African and Turkish market, which also are picking up a little bit due to the opening of the upward trend on the pulp prices that we mentioned. So this is bringing more activity to the paper market as well.

On the prices, only to agree with what Antonio said, I mean, with low pulp prices in -- during the number of months in a row with a portion less now than in the past, but with a portion of players which are nonintegrated, operating on average. Our competitors were, on average, at a lower level. You listened for sure that on average, including us, the uncoated woodfree industry in Europe was operating at 81%, so slightly up from 80% last year, but we increased much more than the market. So our competitors are under severe pressure. So probably that's the explanation over there.

Regarding your third question on tissue, also an introductory comment and I'll pass to Nuno. First of all, no, we don't have any issue in our mills, so no operational issue, no one-off impact. The economic situation across Europe is not across the world, but particularly across Europe, and this affects tissue, obviously, that affects other brands, less tissue than other brands that also affects tissue. But also, we have been working on improving profitability and we have decided to net down some sales that we believe are not profitable for our objectives.

Nuno, do you want to follow up, please?

Okay. Can you hear me? I hope so.

Yes.

Okay. No, basically, you said it all already. The market in tissue this year is slightly slower in terms of growth. I think we've said it versus last year, we were -- we have a 3%, 4% growth rate in the market. This year, European market, Western market has been growing at around 0.3%, 0.4% growth rate, which is relatively small, reflects the economy, some tendency for some consumers to trade a bit on specs. So instead of buying three or four ply products, they might choose a similar product, but with two plies or reduce a bit the kitchen rolls used at homes.

But I mean, this reflects the overall economic sentiment on one side. And the second reason that Antonio also mentioned, we want to have sustainable and healthy relationships for both sides, always with our partners and clients and protect the long-term sustainability of the relationship. In some situations, it's better to drop a bit some volumes, but to protect the way we are able to serve those clients, and this is what we've been doing. But nothing that is concerning for others.

Okay. If I may, just a follow-up on the first question about the demand for -- and the backlog that you have. From what I understand, the improvement you are seeing is mostly driven by your market share gains more than an effective healthier end demand market at this stage, right?

Yes. The market in Europe in the latter part of the nine months is not significantly better than what it was in the beginning of the year. Of course, there is one positive impact is that imports are significantly increasing. And this, of course, also open space for long-term strategic suppliers to our customers.

[Operator Instructions] Our next question comes from António Seladas from A|S Independent Research.

I have three. First one is related with the different dynamics between Europe and U.S. regarding the printing and write paper. So U.S. is coming down by 1% and Europe about 6%. So what are the difference why the difference is so large, taking consideration that, I guess, the digitalization and all that stuff is more or less similar.

Second question is related with saving costs at your U.K. tissue operation. If you can provide some color on it and when we should start to see the results on the profit and loss account.

And last question is related with -- there were some provisions on the third quarter figures that you released last week. So I don't know if you can provide also some insight or explain why were these provisions.

António, sorry, I'm so sorry, but I think I can summarize the first two. I didn't at all got the third one. Can you please be so kind to say it again?

Sure. There were some provisions on your profit and loss on your third quarter figures in your third quarter results release last week. So if you provide -- if you can explain why were -- what was the reason for the provisions?

Okay. I'm going to rephrase the questions just to make sure that we fully understand them. First one, you'd like to understand the different dynamics between U.S. and Europe in terms of the downturn so far this year?

Yes, exactly. What explains the difference, so big, so large.

Okay. Okay? The second one, if I understood correctly, is about our tissue U.K. operation. And by saving costs, I'm not sure if you were referring about synergies or if you're referring about our project to consolidate into a smaller number of installations.

It's the second one, in fact.

Second one. And the third one are provisions on the third quarter results. Correct?

Correct.

I will give a quick comment on the first one and the second one, I'll pass then to Quirino or Nuno and the third one, Fernando will answer you.

So the different dynamics. I think most likely, we cannot justify what is happening in the uncoated woodfree market no longer by digitalization because I agree with you, if it was purely digitalization, the conversion will be more or less the same, and it is quite significant.

Having said that, let's not forget that the market downturn started in U.S. prior to Europe, a couple of years, three or four years prior to Europe. And in U.S. for probably quite some time, we see more an asymptotic behavior of demand. So I think the main explanation for the difference is the economic dynamics on -- between U.S.A. and Europe. But I will leave to Antonio to comment further.

I think just the same, if you think on the data between '19 and '25, if you compare 2019 with 25% and you average the average percent will increase in the market, the annual -- the compound annual growth rate is actually quite the same. It's 5.5% in North America per year from '19 to '25 with COVID in the middle and all of that and Europe as well, 5.5%.

So as you mentioned, Antonio, there is a matter of timing where U.S. started to decline much before and now it's more an asymptotic with 1% decrease.

Regarding the cost savings in tissue by consolidating the operation, and before passing to Nuno, just to remember, we are doing this with an ongoing operation in five sites. and we are not buying new machines. So this process is a process that is relatively slow because we need to make sure that we do not let our customers down. So we can only migrate the machines when we are able to reach production in such a way that we keep on supplying our customers in a continuous way. Also, this implies a reduction of number of people and in some cases, a reduction, which is the most expensive. In some other cases, people moving from one side to the other.

So if this takes people into consideration, you have from one side, our concerns with people like a company that is very much concerned with its HR. And also we have consultation processes with the employee representatives. So the process already started. It started around August to take significantly more than one year. Nuno?

Yes. I think it might be worth stating even though that's not exactly the objective of your question, but we are addressing both fixed costs and structural costs, but also variable costs in the U.K. operation. So we have -- since we acquired the company last year, we have been performing a revision and the redesign of all cost items. So our paper costs are going down significantly, but also, let's say, the packaging materials, logistics, et cetera. So that's one big element that we are working on.

Second, as Antonio mentioned, we are working on the fixed costs. First, of course, Accrol, as you know, as you remember, was floated in the market. We took out a lot of PLC costs and cost -- excess costs that a company that was independent and directly floating in the U.K. market required. Now we have started as it was announced in the process of restructuring and consolidation of our sites. We've just started. It's planned to last until last year. We will again optimize the cost structure of the company, and we will do this in order to have one of the most competitive and most efficient operations in the U.K.

In addition to that, something that we are working also in parallel, let's call it the third element of it is increasing productivity of our lines and our plants for you to have an idea, efficiency when we started and we -- the company joined Navigator one year ago, 1.5 years ago was around the OE of the operation was around 30%, 35%. And since then, we have already improved it to 45%. So this is a technical industrial measure KPI, but it's worth mentioning that productivity on the lines, the production lines has also increased significantly over the last 16 months. So overall, we're working on all of these elements.

About the provision, the provision has two elements. One element is the fact that we will dismiss some people at the U.K. and that represents more or less 30% of the value. The remaining value regards different with a supplier in our investment phase that is asking works and things like that, and it starts with process. And despite the fact if you lose this will increase only the amount of investment, we have accounted a provision because we have some tax benefits on that.

Okay. Just a follow-up question regarding the different dynamics between U.S. and Europe. Should we expect -- what kind of demand should we expect in Europe for next year? So I don't know if you can share with us your ideas.

This is the hundred million dollar question. Again, First of all, we cannot share what we have, but this is competitive information. But I think some of the elements that we gave you as an answer can provide you -- before I can provide you an answer now. If we believe this is very much linked to the economic situation across Europe, if we are positive that the economy next year is going to be significantly better, I think we will see a significantly lower decrease. If we believe that the economy is going to be more or less at the same level, we will probably see more or less the same type of decrease.

Ladies and gentlemen, there are no further questions from the conference call at this time. We will now proceed to read the first question from the webcast.

The question comes from Jaume Rey Miró from GVC Gaesco. And the question is, do you expect CapEx linked to ESG projects to keep these high levels we have seen in the last three years until you achieve these CO2 targets in 2035? Can we have a forecast in absolute terms for CapEx in general next year?

Okay. I'm going to give an introduction and then Fernando will follow up. ESG is not only decarbonization, but I understand that the main concern and of course, also the main CapEx so far has been decarbonization. If you probably remember the slide in our presentation, Slide #10, and you see that the emissions will be stable from 2026 to 2030. So we will drop vis-a-vis the reference here, which is 2018. In '26, we expect to drop 55% out of 86%, and in 2030, 58% out of 86%. So I'd say the large majority of the emission reduction is done.

So purely decarbonization, the large majority of the projects are behind us. is why we are able to keep this level of emissions in the next four to five years. Of course, we are always willing to look to opportunities to speed up the decarbonization provided we find that the projects are value added and they are value added by themselves or Europe makes available funds to increase decarbonization and we increase the value added by using those sites.

So, in short, a large majority of the ESG investments dedicated to decarbonization, which is the largest part, I would say that will be concluded by 2026 when we conclude the PRR, the EU Next Generation funds.

This means 2026 despite lower than the amount that we are expected to spend in 2025, it's still above our average investment.

Our average CapEx is around EUR 100 million and EUR 120 million. This means from 2027 onwards is what we would expect. Of course, without expansion CapEx. So the PM3 expansion, which will mainly in 2026 and using again grants from next-generation funds will be concluded by September 2026, and we hope to be able to take the final investment decision on the tissue machine by the end of this year and also the impact of '26 and '27. Fernando was referring this ballpark EUR 120 million is outside the normal maintenance CapEx without expansion CapEx.

This ends our session. Thank you all for your time. As always, we are available for any additional clarification through our usual contact. Have a great evening.