The Navigator Company, S.A. ($NVG)

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 Araujo, 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 deterred 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 stability and extreme weather in Portugal created significant hurdles for our production and logistics while rising energy and supply chain costs tested our operational ability. 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 largely 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 Packaging, our gKRAFT brand is driving exceptional growth with sales tonnage at 36% year-on-year. Our PM3 rebuilt 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 affect 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 good 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 logistics costs due to both the exceptional reliance on sea transport as road transport to 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 has 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 set up, as mentioned, to nearly 40% of our EBITDA. A key strength on 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 NextGen EU 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 ASG investments. These projects will make a significant contribution to reducing our future cost price. It should be noted that our industrial performance across our pulp and paper mills improved over the course of the quarter. Mid January and particularly in 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 balance 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 cap. We continue to lead in sustainable finance with 95% of our total debt now index to sustainability indicators. This directly aligns our financial strategy with our environmental performance. In a volatile global rate environment, our balance sheet remains well protected. 64% of our total debt is at fixed rate managed through a combination of direct insurance and strategic interest rates hedging instruments. Despite 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. These provide Navigator the agility to fund our short-term CapEx requirements, namely the conversion of PM3 machine to packaging and new tissue mill in 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 derivative effect of the nonintegrated U.K. tissue business poorly based and convert. A situation that the new tissue mill will address from 2028 onwards. The EBITDA decline was primarily driven by both price decrease in expressers and the temporary production disruption 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 benchmarking that where Navigator continue to lead in uncoated woodfree segment. Regarding volumes and costs, sales volumes were constrained by production eruptions 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 significant pressures seen in 2025. The downward cycle that we began in China last April, finally sign a turnaround in August. And that moment has accelerated significantly since the start of 2026. In Europe, the fixed BHKP index and the first quarter at $1,296 per ton, representing a 16% increase. While this was just below -- 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 moderated 7% increase. However, the market continues to show room for further appreciation supported by recent industry price increase announcements with announced lease price moving from USD 610 per ton in March to USD 630 per tonne following additional increase announced in April. Current market price in China have already moved up to USD 606 per tonne. Turning to European office paper market, the PIX A4-Copy Index, average EUR 925 per ton this quarter. While this is 30% lower than the same period last year, more importantly, it marks the definite event of a downward cycle that persists for 6 consecutive quarters. Even after recent adjustments and pulp market index remain 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 like 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 holding the downward trend of the European benchmark. In the downward cycle at the end of Q2 2025 and Q1 2026, Navigator premium products, which are the majority of our sales did not decrease by the 7 month, and therefore, the price gap of Navigator branded cut size over copy we 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 meaningful of the impact of the growth pace of our value-added portfolio. In contrast, on the lower value products, we lead European market increase with 5% against quarter-over-quarter, but the impact on our net share is is limited to the low share of our total sales, 15%. On Slide 11, we have summarized the main developments in uncoated woodfree. Global demand for printing and writing papers saw a slight decrease of 1.2%. However, uncoated woodfree remains the most resilient rate 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, business remain at healthy order book supported by a strong inflow of export ARPS in supplies -- supply side shifts are also providing support. The discontinuation of production by a leading manufacturer led last year removed 185,000 tons of annual capacity from the market. While no further clause 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 recover towards the end of the quarter as we move past the initial operation and instabilities caused by weather events. Finally, regarding United States, the report 9% decline in the parent consumption. February seems to be largely a satellite site recession. We believe real constraint remains stable, but the figures have been skewed by the anticipated shutdown of a major U.S. plant and the gradual destocking of high 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 part of dynamics. Joao?

Thank you, Fernando. Turning to Slide 12. As just mentioned, the pulp market experienced much of 2025 under severe pressure. However, the turnaround that began last -- late last year has gained significant traction in 2026. Looking deeper into oil 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 ground at the foliation accusations. Furthermore, we've seen swing producers strategically pivot away from BHPP towards dissolving pulp, further reducing available supply. Regional factors also play the role. In Asia, hardwood cheap 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 further broader constraints in several mills output in trade flows. From a historical perspective, the current recovery in sustainable lows of late 2025, which represented the low pulp price levels in recent years, excluding 2020. Current geopolitical tensions, particularly in the Middle East have had 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 continues to gain market share. Its competitive edge and 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 cap 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 remained stable in the line 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 online model and like our fully integrated Iberian operations, the U.K. lacks the margin contributions from primary paper production, which structurally dilutes collated segment results. We are currently streamlining U.K. assets of optimizing locations and exiting unprofitable client grant contracts. This project is on schedule for completion by late 2026 early 2027, aimed at restoring operational efficiency and segment margins. Furthermore, we confirm our strategic tissue expansion this quarter with investment of EUR 115 million in the new 70,000-ton tissue machine at the Aveiro complex scheduled for March 2028 start-up. This project will provide internal real 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 position -- 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 order mitigation and non-blasting amortization 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. While delivering high perceived value and sustainability 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 nonlive range in Spain alongside the preparation for entry into France with the Monsieur 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 60% 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 pulp and 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 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. Commercially, we are achieving this at the capital cost of 5 to 7x lower than greenfield project of a similar capacity. Furthermore, we maintain industrial flexibility to switch between uncoated woodfree and flexible packaging on the selling machine, allowing us to be based on market demand and margins obtained. This conversion transforms PM3 from a mid-tire uncoated woodfree asset into a first quartile competitive fossil packaging machine. As a result, Navigator will become the fourth largest producer of low grammage, flexible package in Europe, perfectly positioned to capture a market objective 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 stability 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 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 the 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 P&G Rebuild is on schedule, and our new tissue capacity in Aveiro is strategically positioned to serve directly part of our engaged general rules 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 more emphasizing, we have a fundamental 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 along. 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 results. 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 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 a lower influx of new capacity in 2026, then 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 the U.S. take effect this quarter, while in the remaining international markets, prices likely to move up in the second quarter by 3% quarter-on-quarter after a 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 the 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 tightly in capital following an initial 350,000 tons reduction by a major player, a second mill closure announced already 2026 will remove another 350,000 tons of value of starting in the second half of this year. Furthermore, scheduled downtime at the primary U.S. mill in Q4 will improve to 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 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 growth 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 some lasting adoption once product benefits are demonstrated to customers. gKRAFT presents an innovation to the global kraft packaging markets with eucalyptus uncoated woodfree fiber and in some products being 100% eucalyptus furnished. This presents numerous advantages to global customers on performance and therefore, operational costs and unique sustainability advantages but can extend somewhat the qualification process. As mentioned before, PM3 conversion project at Setubal site is progressing as planned. Once completed, these investments 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 navigated 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 remainder -- 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 just like to follow up on the uncoated freesheet market. And just to 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 say 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 the European market didn't react to the environment and didn't close capacity. Coating from memory. In 2016, the European uncoated woodfree market had a capacity of only 7 million tons this year, we believe, is 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 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 important 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 an issue, we have found so far to do the same exercise, glue free because we don't find in Europe so far, it might happen in the future. But so far, we don't find any assets 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 woodfree paper machines, 3 of them are not only the largest, but by far, the most competitive uncoated woodfree 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 PIX A4 flexible packaging without losing the capability to swing in between flexible packaging and semi coated free grades in fact, of market demand and mines. 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 shutdowns 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 it is an important driver that is by no means the only driver, an up cycle on pulp prices, which actually we are waiting since middle of last year plus a very significant and severe cost increase in 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 recover to other backlog 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 probably conservative. I think they are balanced in flexible packaging. They are probably oversupplied in other packaging rates, but you dominate packaging much better than ourselves.

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

So the first one is regarding volumes. If you could provide some color in terms of volumes in paper and issue that we 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 begin -- well, you are personalizing the operations. So my question is, when do you expect the process to finish?

Thank you, Antonio, 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 on Q2 for both uncoated woodfree and pulp. Is that correct?

Exactly.

The second question, I'm not sure if you were referring to our tissue process in U.K. or if you're referring to conversion of an eucalyptus regimes to packaging. Can you please clarify.

Sorry, for our U.K. operation and the process that is now on the -- well, where are you trying to become more efficient, U.K. operation, sorry.

Okay. U.K. operations. Very good. As you say understand, we're not providing, we will not provide specific guidance on volumes or gluten 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 will -- on the imported side, we will have more volume available to sell during Q2. Having said that, we have some maintenance shutdowns during Q2, particularly in the Setubal mill and store 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 very sound order book is around about 45 days, which is historically high, a good order book for us in this sector is around 20 to 25 days. We have more or less double, 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 woodfree is what we can say. We expect normally higher sales volume, no issue with demand, but a shutdown this quarter in a large mill and at the same time, no stocks to compensate if everything anything goes from. 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 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 then 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 1 existing site and 1 new site. 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. This one is a process that also involves consultation with employees because, of course, we are going to reduce our workforce part of the synergies that are related to that. And of course, the 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 -- our all 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 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 cost phase, we expect by Q3 to start supplying the U.K. operation roles 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 on 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's also got best-in-class position on the cost curve. Is this not an opportunity now to potentially hold back on pushing price? Enforce 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 -- perhaps elaborate a bit on order book question. So as I mentioned, the 45 days around about 45 days, we have an order book is actually for papers, both uncoated and packaging together. I don't have with me here the precise split, but I don't think it's very different to one or the other. So it's probably slightly more uncoated than in packaging, but the difference is not material -- material. I'm sure that some customers are -- 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 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 credit coverage. We don't sell it is. It's why we have always meaningless bad debts in our books. So from one side, they are limited by the target that the credit insurers give them all the other credit instruments that 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 book 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 campaigns 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 few European tenders that have both the quality, the technology capability and the converting equipment to third 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 you go back to prepandemic, the Asian imports were probably around 30% of the total imports in Europe. Today, Asian imports are over 70%. So Asians are taking a significant step change into the European uncoated woodfree market, mainly and mainly in office papers, I think it's going to be very difficult for them to compete in furlough 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 uncoated woodfree, they are a real threat. And I think Europe needs to wake up for that reality and provide a level playing field with those imports. And by 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 later than 2026, end of 2026. We have a significant cost to behave like we are behaving via our forest sourcing of wood. And as you 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 the forestation they just need to rely on the Indonesian government and their decisions. So EUDR is one area. And the other one is a C-band and C-band unfortunately, is not a uniform view on the industry across Europe, we navigate a very favorable to Bank. However, a C-band mechanism that allows a grace period without losing free allowances for CO2 and with a decrease of allowance a 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 wake up to that. On your second question, it is a choice. It's a choice that we decide and we try to measure each and every time. In the past, we did -- in the past, we have been capturing price increases to benefit from our competitive cost position. To be honest, we didn't saw any effects 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 to be in terms of market share, and we have the responsibility also by leading the market with our market share. And we have the responsibility to behave responsibly vis-a-vis prices and vis-a-vis our customers, but also our suppliers that are charging as our higher price. 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 cost of action for us.

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