Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — H1 2017 Earnings Presentation
28 slides from Ence Energia Y Celulosa Sa's earnings presentation, Jul 26, 2017
Slide 1: 1H 2017 Results
1H 2017 Results 26th July 2017
Slide 2: 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
Slide 3: Highlights
Highlights 3
Slide 4: Highlights
Highlights 65% EBITDA growth and 242% Net Income growth vs. 1H16, with only 1.5% pulp price increase 25 €/t cash cost reduction vs.1H16 to 344.5 €/t 54% higher Energy volume sold vs. 1H16 Strong free cash flow generation which allows a 14% Net Debt reduction (30 Mn€), reducing the Group leverage pos
Slide 5: Solid business model
Solid business model Strong EBITDA and Net Income growth despite incipient pulp price recovery Average Pulp Net Price (€/t) Group EBITDA (€ Mn) Group Net Income (€ Mn) +65.2% + 242% + 1.5% 31.5 87.9 485 492 53.2 9.2 1H 2016 1H 2017 1H2016 1H 2017 1H 2016 1H 2017 Pulp Price recovery will be more EBIT
Slide 6: Successful cash cost reduction
Successful cash cost reduction Focus on reducing cash cost to achieve Strategic Plan targets Cash Cost Evolution in 1H 2017 Cash Cost on track to achieve strategic plan - 6.6% 369.0 STRATEGIC 344.5 405.6 28.3 PLAN 28.4 24.2 29.2 359.0 356.7 120.3 100.2 344.5 339 325 192.0 190.9 1H16 1H17 2014a 2015a
Slide 7: 54% higher Energy volume sold vs 1H16
54% higher Energy volume sold vs 1H16 Following 32 Mw acquisition in December 2016 Energy volume (MWh) EBITDA (€ Mn) Ciudad Real & Jaen 2017 EBITDA Target +53.6% +121% + 35% 18.7 365,786 7.5 238,201 5.5 8.4 1H16 1H17 1H16 1H17 2016a 2017e +54% Energy volume increase +121% EBITDA increase Positive op
Slide 8: Strong Free Cash Flow generation
Strong Free Cash Flow generation 14% Net debt reduction, down to 1.2 x EBITDA Recurrent FCF1 (€ Mn) Net debt reduction in 1Q17 Low leverage below peers +175% -13.9% x 3.2 48.9 3.8 218.3 17.8 188 1.2 1H 2016 1H 2017 Dec. 2016 Jun. 2017 Peers2 Strong Recurrent Free Cash €30Mn Net debt reduction Loweri
Slide 9: Increasing pulp prices
Increasing pulp prices On favorable supply and demand balance European Pulp Prices Global BHKP producer inventories 1200 1100 Days of supply 1000 900 800 43 700 600 500 400 300 200 37 100 0 2012 2013 2014 2015 2016 1H17 May 2016 May 2017 BSKP ($/t) BHKP ($/t) BHKP (€/t) Source: PPPC - W20 Price incr
Slide 10: Favorable demand and supply balance expected
Favorable demand and supply balance expected On continued demand growth and limited supply additions Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t) 1 Mn t 2017 2018 2019 2017 - 2019 ESTIMATED BHKP DEMAND INCREASE 1.4 1.6 1.4 4.4 China 1.0 1.1 1.0 3.1 Other Asia / Africa
Slide 11: Softwood supply and demand will also remain balanced
Softwood supply and demand will also remain balanced On continued demand growth and limited supply additions Expected Annual Increase for Global Market Softwood Supply and Demand (Mn t) 1 Mn t 2017 2018 2019 2017 - 2019 ESTIMATED BSKP DEMAND INCREASE 0.6 0.6 0.6 1.8 China 0.5 0.5 0.5 1.5 Other Asia
Slide 12: Ongoing FX hedging program
Ongoing FX hedging program To mitigate FX volatility on the Pulp business Dollar/Euro Exchange Rate Evolution Current Hedges 1,4 2H17: 68% revenues 1,35 Avg. cap: $ 1.15 € 1,3 Avg. floor: $ 1.08 € 1,25 1H18: 55% revenues: Avg. cap: $ 1.16 € 1,2 Avg. floor: $ 1.08 € $1.15/€ 1,15 2H18 : 46% re
Slide 13: New dividend policy
New dividend policy First interim dividend announced New dividend policy1 applicable as from 2017 Annual payments: 3 50% Two interim dividends: one agreed upon at pay-out the end of the first semester and a second one agreed in November; FY EPS A final dividend to be proposed to the AGM First interi
Slide 14: 2016-2020 Pulp Business Strategic Plan: Next Steps
2016-2020 Pulp Business Strategic Plan: Next Steps Capacity expansion of 70,000 t in Pontevedra and 80,000 t in Navia 70,000 t capacity expansion 80,000 t capacity expansion in Pontevedra in 2018 and 2019 in Navia between 2H18 and 1H19 During 1Q17 shutdown in Pontevedra, we have Between winter 2018
Slide 15: 2016-2020 Energy Business Strategic Plan: Next Steps
2016-2020 Energy Business Strategic Plan: Next Steps Low exposure to regulated Return on Investment (Ri) New Huelva 40 Mw biomass power plant Low exposure to regulated Ri Our worst case scenario is an Ri of 5.5% from 2020 with an spread of 300 bp EBITDA impact of just 3.5 Mn€ for our 5 operating pla
Slide 16: 1H 2017 Results
> 1H 2017 Results 16
Slide 17: Consolidated Key Figures
Consolidated Key Figures 1H17 Results confirm Ence´s resilience and Strategic Plan delivery P&L +65% EBITDA in 1H17 vs 1H 2016 fueled by both € Mn 1H17 1H16 % Change Pulp and Energy businesses Revenue 341.8 289.2 18.2% 55% EBITDA growth in the Pulp business driven by: Pulp Business EBITDA 69.2 44.8
Slide 18: Pulp Business
Pulp Business Operating performance Average net pulp price (€/t) Pulp sales volume (t) Cash cost (€/t) +1.5% +7.2% +4.3% -6.6% 480,866 369 485 492 448,643 2017 TARGET 344.5 339 1H16 1H17 1H16 1H17 1H16 1H17 2017E EBITDA (€ Mn) +54.7% EBITDA growth driven by: - €25/t cash cost reduction vs. 1H16 +5
Slide 19: Pulp Business
Pulp Business P&L 1H17 P&L Bridge (€ Mn) Includes €8 Mn€ dividend from the Energy division and - €3.4Mn from FX 69.2 23.3 45.9 7.0 4.6 18.0 9.0 34.5 EBITDA Depreciation and other EBIT Financial expenses Other financial result Taxes Net profit results on fixed assets 19
Slide 20: Pulp Business
Pulp Business Cash Flow generation 2017 Cash Flow Bridge (€ Mn) €12.6 Mn of Strategic Sale of remaining Plan investments 165 hectares agreed in 2016 69.2 11.8 7.4 6.0 2.0 2.5 42.0 10.1 2.5 2.7 WC increase mainly due to pulp price performance 34.5 EBITDA Change in Maintenance Interest Taxes RECURRENT
Slide 21: Pulp Business
Pulp Business Solid balance sheet and strong liquidity Leverage as of June 2017 (€ Mn) Debt maturity calendar (€ Mn) €250 Mn bond 25.4 315.7 151.7 Leverage: €69 Mn bilateral loans 1.4x 250 164.0 20.5 3,3 5.5 8.2 6.1 Gross debt Cash Net debt 2017 2018 2019 2020 2021 >2022 Pulp business leverage at 1.
Slide 22: Energy Business
Energy Business Operating performance Average selling price (€/MWh) Energy volume (MWh) Revenues (€ Mn) +9.6% +53.6% +53.1% 107,6 365.786 58,2 98.2 238.201 38 1H16 1H17 1H16 1H17 1H16 1H17 +76.9% organic EBITDA growth driven by: EBITDA (€ Mn) +18.4% energy volume +120.9% +9.6% average selling pr
Slide 23: Energy Business
Energy Business P&L 1H 2017 P&L Bridge (€ Mn) 18.7 7.9 10.8 3.0 1.9 5.8 0.8 5.0 EBITDA Depreciation and EBIT Financial result Taxes Net profit Minorities Net Profit others Attributable Higher EBITDA expected for 2H17 on higher energy volumes. On track to meet the €45Mn EBITDA target for 2017 23
Slide 24: Energy Business
Energy Business Cash Flow generation 2017 Cash Flow Evolution Bridge (€ Mn) 18.7 4.4 1.9 4.2 0.3 1.3 2.0 8.6 6.9 EBITDA Change in Maintenance Interest payment Taxes RECURRENT Other Expansion FCF 1H17 working capital CAPEX FREE CASH (non cash CAPEX FLOW expenses) 24
Slide 25: Energy Business
Energy Business Solid balance sheet and strong liquidity Leverage as of June 2017 (€ Mn) Debt maturity calendar (€ Mn) €101.3 Mn Outstanding Project Finance 2.1 39.8 €14.4 Mn Bilateral loans related to olive pulp plants 114,2 90.1 acquisition in Dec.16 Leverage: 0.6x 1.1 4.1 3.3 3.3 13.6 13.6 14.5 1
Slide 26: Closing Remarks
> Closing Remarks 26
Slide 27: Closing Remarks
Closing Remarks Solid business model with high EBITDA conversion to FCF Excellent results driven by cash cost reduction and higher volumes Tight pulp demand and supply will support strong prices for the short and medium term Outstanding growth of our Energy business 1H17 Results confirm Ence´s solid
Slide 28: Delivering value, delivering commitments
Delivering value, delivering commitments
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