The Navigator Company, S.A. announced its financial and operational results for the second quarter (Q2) and first half (H1) of 2026, reporting lower year-on-year earnings as temporary operational disruptions and an intensive strategic investment program weighed on production and profitability. Despite these short-term headwinds, the company recorded a sequential recovery during the second quarter, continued expanding its Tissue and Packaging businesses, strengthened pricing across its product portfolio, and reaffirmed confidence in its long-term growth strategy:

·      First Half Revenue: €868.6 million (-14.8% year-on-year), reflecting temporary production constraints despite resilient pricing and continued growth in higher-value businesses.

·      EBITDA: €143.4 million (-33.7% year-on-year) with an EBITDA margin of 16.5%, impacted by planned maintenance shutdowns, adverse weather conditions, higher energy costs and the integration of major industrial modernization projects.

·      Net Income: €49.1 million (-42.3% year-on-year).

·      Second Quarter Recovery: Revenue increased 3.5% quarter-on-quarter to €441.9 million, while EBITDA rose 21.1% to €78.5 million, improving the EBITDA margin to 17.8%.

·      Business Diversification: Tissue and Packaging represented 25% and 6% of Group turnover, respectively, continuing to strengthen Navigator’s earnings mix.

·      Pricing Momentum: Multiple price increases were successfully implemented across Paper, Packaging and Tissue businesses, supporting margin recovery heading into the second half.

·      Strategic Investment Program: Capital expenditure reached €127.3 million during H1 2026, with approximately 57% (€72 million) dedicated to decarbonization, environmental performance and industrial modernization.

·      Major Growth Projects: Commissioning of the new €40+ million oxygen delignification system at Setúbal and approval of a €115 million investment in a new 70,000-ton Tissue machine at Aveiro, scheduled to start production in 2028.

·      Solid Financial Position: Net debt stood at €693 million (excluding IFRS 16), with a Net Debt/EBITDA ratio of 2.29x. Liquidity remained strong, supported by €179 million in cash and €413 million in committed unused long-term credit facilities, while 95% of total debt is linked to sustainability targets.

Navigator’s first-half performance was influenced by an exceptionally challenging operating environment, including geopolitical tensions in the Middle East, volatile energy markets, inflationary pressure on logistics and raw materials, severe weather conditions in Portugal during the first quarter, and scheduled maintenance shutdowns at its Setúbal and Aveiro industrial complexes during the second quarter.

These temporary factors reduced pulp and paper production volumes and limited sales opportunities, while higher natural gas prices and CO₂ costs negatively affected profitability.

At the same time, the company used scheduled downtime to accelerate the implementation of strategic modernization projects that are expected to deliver long-term improvements in operational efficiency, environmental performance and production flexibility. Navigator emphasized that these projects represent a transitional phase designed to strengthen its long-term competitiveness and support sustainable value creation.

Financial Highlights

Segment Performance

Printing & Writing Paper

The Printing & Writing Paper business remained resilient despite weaker market conditions. Paper and Packaging sales reached 602,000 tonnes during the first half, while inventories finished the period 18% below the historical 12-year average, reflecting strong demand.

Navigator implemented three successful price increases in Europe, lifting average Uncoated Woodfree (UWF) prices by approximately 10% between December and June. Premium cut-size paper continued to command a 30% premium over the European market index.

Tissue

The Tissue segment continued to strengthen its contribution to Group results, representing 25% of total turnover.

First-half Tissue sales totaled 106,000 tonnes, with finished products accounting for 99% of sales volume. International markets represented 80% of total Tissue sales, led by Spain (32%), the United Kingdom (31%) and France (15%).

Navigator also approved the construction of a new 70,000-ton tissue machine at its Aveiro complex. The €115 million investment, scheduled for completion in 2028, will supply the company’s growing UK converting operations and improve overall operating margins.

The company further expanded its premium consumer offering through the launch of tissue products under the Don Limpio brand in Spain and preparations for the Mr Propre range in France, while developing new innovations including odor-control, fragrance-enhanced and hypoallergenic tissue products.

Packaging

Packaging continued to be Navigator’s fastest-growing business.

Revenue reached €53 million, supported by a 50% increase in sales volume and higher average selling prices. Growth was driven by increasing demand for lightweight flexible packaging papers, food packaging, release liners and virgin-fibre liner products marketed under the gKRAFT™ brand.

The company also implemented packaging price increases during the first half, with additional increases expected to contribute positively during the third quarter.

Pulp & Energy

Navigator sold 111,000 tonnes of market pulp during the first half, with lower volumes reflecting maintenance shutdowns and temporary production constraints.

The company also completed the strategic integration of its Energy operations into the Pulp segment as renewable cogeneration facilities increasingly supply internal energy requirements, improving long-term energy efficiency and competitiveness.

Cost Optimization & Sustainability

Navigator continues to advance operational efficiency initiatives designed to offset rising production costs.

A new variable cost reduction program is expected to generate approximately €28 million in recurring annual savings from 2027 onwards, supporting future profitability.

The company also maintained its strong sustainability leadership, receiving:

·      CDP “A” rating for Supplier Engagement, while retaining A List status for Climate Change and Forests.

·      Recognition from Sustainalytics as a 2025 ESG Industry Top-Rated Company.

Outlook

Navigator expects market conditions during the second half of 2026 to remain influenced by geopolitical uncertainty, volatile energy markets, global trade tensions and macroeconomic challenges.

Nevertheless, the company anticipates continued pricing momentum across its Paper, Packaging and Tissue businesses following recently implemented price increases, while demand for Tissue and sustainable packaging solutions is expected to remain positive.

Management also expects the benefits of its extensive modernization program and operational efficiency initiatives to become increasingly visible as major projects are completed and production normalizes. Combined with the new cost-reduction program expected to deliver recurring annual savings from 2027, these initiatives are intended to strengthen Navigator’s competitiveness, improve margins and support sustainable long-te