Portugal's Navigator net profit drops 23% in Q1 after lockdowns

LISBON, May 28 (Reuters) - Portugal’s pulp and paper producer Navigator reported on Friday a 23% fall in its first quarter net profit to 23.5 million euros, as demand dropped due to intense coronavirus lockdowns in the main destination countries for its exports.

Navigator said sales fell 16% to 340.8 million euros in the first three months of this year, but they remained almost stable compared to the previous quarter.

The company sells more than 80% of its products to 130 countries on five continents and the rest to domestic clients.

It said in a statement that “the beginning of 2021 continued to be marked by severe adversity with an intense lockdown until the end of the quarter in most of the group’s main markets”, hurting the demand for paper in Europe and the United States.

Navigator said that in 2020 lockdowns in these markets only started to impact economies by the end of the first quarter.

“Despite the uncertain future, the prospects for the next quarter are that there will be an improvement in the pulp, paper and tissue sectors as the (global) economy recovers and vaccination plans are implemented”, Navigator said.

Its EBITDA - earnings before interest, taxes, depreciation and amortisation stood at 70.6 million euros, a drop of 20% from the first quarter last year.

The operating margin - EBITDA/sales - went down to 20.7% in the first quarter versus 22% in the previous quarter and 21.8% in the same quarter of 2020.

Navigator said that “it will continue to act on the variables that are within its reach,” namely in the management of its fixed and variable costs.

Third party supply and service costs fell to 89.4 million euros in the first quarter of 2021, compared with 109.5 million euros a year earlier. (Reporting by Sergio Goncalves; Editing by David Gregorio)