Ence Energia Y Celulosa Sa · BME:ENC

Ence Energia Y Celulosa Sa — Q1 2014 Earnings Presentation

27 slides from Ence Energia Y Celulosa Sa's earnings presentation, May 6, 2014

  1. Slide 1: Ence Energía y Celulosa 1Q14 Results

    Ence Energía y Celulosa 1Q14 Results May 6th, 2014

  2. Slide 2: Index

    Index A Ence regular EBITDA under current regulatory framework B 1Q14 summary results C A conceptual approach to reshape EBITDA by 2016 Fuente: Ence 2

  3. Slide 3: Index

    Index A Ence regular EBITDA under current regulatory framework B 1Q14 summary results C A conceptual approach to reshape EBITDA by 2016 Fuente: Ence 3

  4. Slide 4: 1Q14 results are not representative of Ence's EBITDA generation capacity

    1Q14 results are not representative of Ence´s EBITDA generation capacity Non-recurrent factors affecting 1Q14 performance 1 Electricity market price at an extraordinary low level of €26/MWh, well below the €49/MWh taken by legislation as standard in Spain to calculate fixed tariffs  Depressed reven

  5. Slide 5: Annualized 1Q14 results at normalized pool prices

    Annualized 1Q14 results at normalized pool prices (a) Based on cash cost & pulp prices in Based on adjusted EBITDA 1Q14 (b) March (c) 7.0 7.0 19.9 x4 15.5 88.6 90.3 81.6 78.9 6.7 13.7 20.4 Adj EBITDA Non EBITDA Annualized Merida Total EBITDA Navia EBITDA EBITDA EBITDA Total 1Q14 recurring 1Q14 net o

  6. Slide 6: Weak EBITDA due to extraordinary pool prices

    Weak EBITDA due to extraordinary pool prices… EBITDA 1Q14 with normalized pool prices x4 0.6 81.6 2.0 1.0 3.1 19.8 20.4 13.7 Reported Impact of Impact of Extracost EBITDA Non Recurrent Annualized Adj EBITDA pool prices lower for energy 1Q14 at recurring EBITDA EBITDA 1Q14 (a) electricity crops norma

  7. Slide 7: Huelva 50 MW showing good performance despite regulatory impact

    … with Huelva 50 MW showing a good performance is spite of regulatory impact and low pool prices… Annualized EBITDA of Huelva 50 MW 0.3 0.3 19.9 1.7 1.1 EBITDA in Impact due Impact due Normalized Annualized March to low pool to lower EBITDA in EBITDA prices (a) sales (b) March (a) calculated with a

  8. Slide 8: Improving cash cost of Navia and Pontevedra mills in March

    ... improving cash cost of Navia and Pontevedra mills in March… Improved cash cost in Navia and Pontevedra Cash cost of Navia and Pontevedra (average) through better management of power installations and reduction 388 386 371 373 in chemicals and overheads 356 354 351 335 334 1Q13 2Q13 3Q13 4Q13 1Q1

  9. Slide 9: Huelva mill is struggling to achieve profitability

    … although Huelva mill is struggling to achieve profitability €5.5 M of EBITDA losses related to Huelva pulp mill in 1Q14, additional to a €2.6 M Cash cost of Huelva impairment in pulp & wood inventories 544 509 492 488 486 467 449 415 411 1Q13 2Q13 3Q13 4Q13 1Q14 Jan-14 Feb-14 Mar-14 Mar-14 (*) Str

  10. Slide 10: Index

    Index A Ence regular EBITDA under current regulatory framework B 1Q14 summary results C A conceptual approach to reshape EBITDA by 2016 Fuente: Ence 10

  11. Slide 11: 1Q14 results

    1Q14 results Fall in operating results due to: 1 • Worst production figures in pulp and energy • Impact of the energy reform • Extraordinary depressed pool prices 2 Stable pulp market Weak performance in 1Q14 3 Cash cost starting to decrease in March A tough situation in Huelva due to regulatory cha

  12. Slide 12: Breakdown of 1Q14 P&L

    Breakdown of 1Q14 P&L €M 5 35 131 172 0 158 14 10 10 13 4 13 14 21 2 1 Pulp Energy Forestry Total Sales Cost EBITDA (adj) Non recurrent EBITDA Total Provisions EBIT Interest and Net result amortization taxes  Net result in 1Q14 stands at -€14 M vs +€ 13 M in 1Q13  13% decrease in pulp sales in 1Q1

  13. Slide 13: Negative mill's operating performance

    1 Negative mill’s operating performance… Pulp sales ( € M) Pulp production (000t) Pulp sales (000t) -6% -5% -13% 319 151 312 131 301 298 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 Average price (€/ton) Production per plant (tons) -7% -8% -14% +4% 125,486 117,321 97,084 96,352 100,042 479 83,576 443 1Q13 1Q14 1Q1

  14. Slide 14: Lower energy generation due to energy reform and lower pool prices

    …and lower energy generation due to the energy reform and 1 lower pool prices Energy metrics Spanish pool prices -24% -25% 51 478,132 131 49 98 48 47 -46% 45 decrease 364,047 in 1Q14 43 sales to €35M 1Q13 1Q14 1Q13 1Q14 Average 2011-2013 Electricity sales (MWh) Average electricity income ( €/MWh) 1Q

  15. Slide 15: Stable pulp market in terms of prices and inventories

    2 Stable pulp market in terms of prices and inventories… Pulp price evolution $/t €/t Analyst pulp prices forecast ($/t) 900 875 789 814 794 770 768 839 850 794 597 623 597 800 806 567 561 789 787 746 769 750 760 734 733 700 715 650 600 2013 2014 2015 2016 Dispersión Media 1Q13 2Q13 3Q13 4Q13 1Q14 S

  16. Slide 16: Pulp trends set to continue in 2014 despite new capacity

    2 … which are set to continue in 2014 despite of new expected capacity  Demand growth has been stronger than capacity growth Chinese demand thanks to strong evolution in emergent markets and 15.6 delays in new capacity 14.5 13.5  Eldorado mill (1.5 Mt) started operations in November 11.6 2012 with

  17. Slide 17: Cash cost starting to decrease in March

    3 Cash cost starting to decrease in March along with a tough situation in Huelva due to regulatory changes 430 Evolution of cash cost (€/t) 51.1 410 390 13.8 9.8 370 7.0 1.3 3.5 350 3.5 25.7 330 409 310 359 358 358 290 -€ 1/t 270 250 Cash Cost 1Q13 Wood cost Chemical & Energy revenues Energy cost Fi

  18. Slide 18: Anticipated start-up of Merida 20MW biomass power plant

    4 Anticipated start-up of Merida 20MW biomass power plant  Merida 20MW power plant started operations at the beginning of April, 6 months in advance of guidance (October 2014)  Annual EBITDA will be close to 7 M€ assuming full impact of current regulatory proposal for new tariffs Fuente: Ence 18

  19. Slide 19: Solid financial situation with no relevant maturities in the short term

    5 Solid financial situation with no relevant maturities in the short term Cash flow evolution (€M) 10 -7 -9 -9 -9 3.2 16.6 4.9 -18 10.4 8.5 EBITDA 1Q14 Change in working Investment in pulp Provisions Other Unleveraged cash flow Interest expenses Leveraged cash flow capital business from operations f

  20. Slide 20: Index

    Index A Ence regular EBITDA under current regulatory framework B 1Q14 summary results C A conceptual approach to reshape EBITDA by 2016 Fuente: Ence 20

  21. Slide 21: 2014–2015 Recovery plan of competitiveness

    2014 – 2015 Recovery plan of competitiveness Increase in Capex expected 2016 2014 -2015 EBITDA 1 Measures of cost management (no investment) +€28 M (*) - 2 Investments in efficiency (2-4 years payback) +€21 M €47 M 3 Restructuring the mix of production +€30 M €80 M +€79 M €127 M (*) €12M are related

  22. Slide 22: Measures of cost management

    Measures of cost management 1. Reduction of wood & biomass cost of supply  3.5€/m3 price cut announced in April for standing Cost management (€M) timber & traders purchases, starting in Spanish & 3.6 Portugal northern regions (150kt/month)  Execution of industrial projects to reduce wood 4.5 yield

  23. Slide 23: Efficiency investment measures

    2014 – 2015 Recovery plan of competitiveness: efficiency investment measures… Capex breakdown by year (€M) 18  2 years payback investments: 47 • Engineering projects 29 completed • Main equipment contracted 2014 2015 Total +€17 M • 100% implemented in 2014 expected Capex breakdown by payback ( €M)

  24. Slide 24: Extending the production organically

    …that may also extend the production organically… Theoretical Net Utilization 2013 Increase in nominal production rate production production production in 2016 Navia 512.0 93% 502.2 477.0 +25.2 Pontevedra 444.0 93% 435.2 417.2 +18.0 Note: figures in thousand tons; capacity of mills adjusted by impro

  25. Slide 25: Offsetting the impact of the regulatory changes

    …offsetting the impact of the regulatory changes 30 21 28 169 90 Annual EBITDA Cost cutting Efficiency Production EBITDA proforma with normalized investments restructuring competitiveness pool prices (*) plan (*) (*) based on March 2014 pulp price of €439/t Fuente: Ence 25

  26. Slide 26: Disclaimer

    Disclaimer The information contained in this presentation has been prepared by Ence Energía y Celulosa, S.A. (hereinafter, "Ence"). This presentation includes data relating to future forecasts. Any data included in this presentation which differ from other data based on historical information, inclu

  27. Slide 27: Ence Energía y Celulosa 1Q14 Results

    Ence Energía y Celulosa 1Q14 Results May 6th, 2014

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