By Sergio Goncalves
LISBON (Reuters) - Portuguese pulp and paper producer Navigator on Tuesday reported a 39% slump in fourth-quarter net profit, as declining demand and lower prices knocked sales lower than a year earlier.
The company netted a profit of 74.2 million euros between October and December, down from 122 million euros a year ago.
Navigator, which sells more than 80% of its output overseas in as many as 130 countries, said its sales fell 23.3% in the fourth quarter from a year ago to 492.7 million euros, but were up 2% from the third quarter.
The company said in a statement that its paper sales fell 12% from the fourth quarter of 2022 to 322,000 metric tons, but were up 17% from the previous quarter.
European pulp and paper producers struggled with higher costs, falling demand and customer destocking, which cut into profits during 2023.
Navigator said that, in the paper segment, "order books are expected to improve in the first quarter", in line with a trend observed since September, while the crisis in the Suez Canal is contributing to increased delivery times from mills to distributors of cargo coming from Asia.
"Despite the current context of an economic slowdown and extreme uncertainty, it is predictable that the upturn in demand, the reduction of supply in Europe and the severe pressure on costs will help reverse the downward course of paper prices in Europe and in certain international markets," it said.
Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 32.2% to 125 million euros, while its EBITDA margin, a measure of profitability, dropped to 25.4% in the fourth quarter compared to 28.7% a year ago.
For the whole year, net profit fell 30% to 274.9 million euros while, but was "still 29% higher than the average for the past five years". Its EBITDA dropped 32% to 501.5 million euros.