Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — 9M 2018 Earnings Presentation
32 slides from Ence Energia Y Celulosa Sa's earnings presentation, Nov 5, 2018
Slide 1: 9M 2018 Results
9M 2018 Results November 5, 2018
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
Slide 4: Highlights 9M 2018 Results
Highlights 9M 2018 Results Strong pulp price Strong global demand scenario for the coming years Industry already operating above 90% of its capacity Lack of large capacity increases for the coming years Excellent 9M18 45% EBITDA growth and 54% Net Income growth vs.9M 2017 results driven by p
Slide 5: Market tightness will keep on increasing until at least 2022
Market tightness will keep on increasing until at least 2022 Lead time for new projects close to 3 years Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t)1 Mn t 2017-18 2019 2017-19 2020 2017-20 2021 2017-21 2022 2017-22 2023 2017-23 2024 2017-24 ESTIMATED BHKP DEMAND INCR
Slide 6: Strong pulp price scenario for the coming years
Strong pulp price scenario for the coming years With a tighter supply and demand balance European Hardwood (BHKP) Pulp Prices ($/t) RISI´s Estimates for European Annual Average BHKP ($/t) Dec 2017 RISI Estimates October 2018 RISI Estimates 1.300 1.200 1,050 $/t 1,195 1.100 1,097 1.000 1,045 1,010 90
Slide 7: Excellent 9M 2018 Results
Excellent 9M 2018 Results Driven by pulp price improvement Group Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) + 18% + 45% + 54% 619.7 213.6 527.3 91.7 147.7 59.5 9M17 9M18 9M17 9M18 9M17 9M18 Energy Pulp Energy Pulp Energy Pulp Pulp business: 18% revenue growth Pulp business: 58% EBIT
Slide 8: Increasing margins in the Pulp Business
Increasing margins in the Pulp Business FY 2018 Cash Cost forecast of 380 €/t Gross Pulp Price (€/t) vs. Cash Cost (€/t) FY 2018 quarterly Cash Cost Gross Pulp Price Cash Cost Gross Pulp Price Increase: 168 €/t 867 Cash Cost Increase: 27 €/t 384 699 378 380 376 493 €/t 369 352 €/t Spread Spread 347
Slide 9: Renewable Energy business EBITDA stable
Renewable Energy business EBITDA stable Due to one-off operating incidents Ongoing Biomass Diversification (%) Energy Business EBITDA (€ Mn) 2015 86 14 33 33 2016 62 38 2017 43 57 2018e 30 70 9M17 9M18 Forestry biomass Agricultural biomass Renewable Energy business EBITDA stable vs. 9M17 due to
Slide 10: Strong Free Cash Flow generation
Strong Free Cash Flow generation Low financial leverage of 0.6 x LTM EBITDA Normalized FCF1 (€ Mn) Net Debt Stable in 9M18 Lower Leverage than Peers + 60% + 2% x 3.8 147.2 91.8 2.3 153.1 156.8 0.6 9M17 9M18 Dec 2017 9M18 Energy Pulp Peers2 Energy Pulp Strong Normalized Free Cash Flow Net debt stable
Slide 11: Thermosolar plant acquisition in 4Q18
Thermosolar plant acquisition in 4Q18 First step towards diversification to other renewable technologies Thermosolar Plant Capex (€ Mn) 140 Capacity (Mw) 50 Annual Production (Mw/h) 70,000 Equivalent Production Hours 1,400 Annual EBITDA (€ Mn) 18 Potential Hybridization Capex (€ Mn) 30 Annual Produc
Slide 12: Strategic Plan investments on track
Strategic Plan investments on track 99 MW of new biomass capacity to add € 30 Mn EBITDA from 2020 Energy Business Investments Energy Business Investment Plan Summary Total Exp. Annual Expected Capex (€ Mn) Capacity Increase contribution to EBITDA Opening 99 MW €30 Mn Dec. 2019 255 75 15 2018e 2019e
Slide 13: Strategic Plan investments on track
Strategic Plan investments on track 100,000 tons capacity expansion set for 1H19 Pulp Business Investments Pontevedra Capacity Increase Investment Plan (€ Mn) 30,000 t in March 2018 45 34 Capacity Increase 24 20,000 t in 1Q 2019 Expected EBITDA contribution of 2018e 2019e 2020e €18 Mn at current mar
Slide 14: Maintaining an attractive shareholder remuneration
Maintaining an attractive shareholder remuneration First interim dividend of 25 Mn€ paid in September Annual Accrued Dividends (€ Mn) Dividend Policy Dividend €0.10 €0.14 €0.16 €0.19 Per Share 50% Payout €46 Mn €41 Mn 1 €36 Mn 3 2nd INTERIM (to be agreed in €25 Mn November) Payments First interim
Slide 15: FY2018 EBITDA forecast of €290-300 Mn vs. €300 Mn at 1H18
FY2018 EBITDA forecast of €290-300 Mn vs. €300 Mn at 1H18 Mainly due to biomass energy plants operating one-offs € Mn 300 290 - 300 10 7 290,0 283,0 283,0 FY 2018 EBITDA forecast of €290-300 Mn mainly due to biomass energy plants operating one- offs FY 2019 EBITDA forecast of €340 Mn at constant
Slide 16: 9M 2018 Results by Business
» 9M 2018 Results by Business
Slide 17: Pulp Business: Operating performance
Pulp Business Operating performance Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) Avg. Cash Cost (€/t) + 24.1% - 2.7% +8.0% 374.3 632.1 346.7 509.3 719,901 700,737 9M17 9M18 9M17 9M18 9M17 9M18 EBITDA (€ Mn) 57.9% EBITDA growth up to €181.1 Mn + 57,9% 24.1% net pulp price increase 181.1 2.7% d
Slide 18: Pulp Business: P&L
Pulp Business P&L 9M18 P&L Bridge (€ Mn) Pontevedra´s Includes €18.8 Mn expenses related to the Includes €6.6 Mn dividend Environmental Pact early redemption of the €250 Mn High Yield from the Renewable Energy provision bond in Q2 of which €5.1 Mn are non cash business 6.0 181.1 36.0 139.1 25.6 7.7
Slide 19: Pulp Business: Cash Flow generation
Pulp Business Cash Flow generation 9M18 Cash Flow Bridge (€ Mn) €13.7 Mn payment related to the Dividend collection €38.9 Mn of Strategic Includes contribution of Huelva early redemption of the €250 Mn from the Renewable Plan investments location to the Renewable Energy High Yield bond in Q2 Energy
Slide 20: Ongoing FX hedging program
Ongoing FX hedging program To mitigate FX volatility in the Pulp Business Dollar/Euro Exchange Rate Evolution Current Hedges 1,4 1,35 Q4 18: 63% revenues Avg. cap: $ 1.17€ 1,3 $1.27/€ Avg. floor: $ 1.14 € 1,25 H1 19: 55% revenues 1,2 Avg. cap: $ 1.25 € $1.19/€ 1,15 Avg. floor: $ 1.19 € 1,1 H
Slide 21: Pulp business refinancing
Pulp business refinancing To save €11 Mn interest payment as from 2019 Old High Yield Bond New Convertible Bond 5.375% Conversion Price Interest Rate - €11.4 Mn 7.2635 €/share Annual Interest €250 Mn Payment Maturity Date 1.25% Interest Rate 5 March 2023 €160 Mn Accounted as Equity 1 €14.5 Mn Accoun
Slide 22: Towards a sustainable financing model
Towards a sustainable financing model Enhancing Ence´s commitment with best ESG standards Green financing facilities Ence confirms its Ence is one of the commitment to pioneers in Green Loan (Bankia) environmental sustainability €20 Mn sustainability financing in Spain May Pulp 2018 Sustainable Cred
Slide 23: Pulp Business: Solid balance sheet and strong liquidity
Pulp Business Solid balance sheet and strong liquidity Leverage as of September 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €160 Mn Convertible bond 1 €84 Mn bilateral loans 230 169.8 Leverage: 0.3 x €70 Mn Sustainable RCF fully available 33.0 160.0 60.2 1.2 7.5 22.3 19.7 Gross debt Cash Net debt 2019
Slide 24: Renewable Energy Business: Operating performance
Renewable Energy Business Operating performance Avg. Selling Price (€/MWh) Energy Volume (MWh) Revenues (€ Mn) + 2.7% + 14.3% +14.0% 105.3 108 715,101 107.9 625,892 94.7 9M17 9M18 9M17 9M18 9M17 9M18 EBITDA (€ Mn) 1.4% EBITDA decline - 1.4% 2.7% average selling price change caped by the regulatory
Slide 25: Energy Business: P&L
Energy Business P&L 9M18 P&L Bridge (€ Mn) Includes €6.2 Mn provision for the regulatory collar 32.5 13.1 19.4 6.7 3.2 1.8 9.5 7.7 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 1. Regulatory collar: Adjustment derived from the deviation be
Slide 26: Energy Business: Cash Flow generation
Energy Business Cash Flow generation 9M18 Cash Flow Bridge (€ Mn) Construction of new Huelva 46 Mw and Ciudad Real 46 Mw power plants 4.3 3.0 32.5 5.7 3.5 1.4 18.2 89.1 -67,4 (68.9) (1.4) EBITDA Change in working Maintenance Interest payment Taxes Normalized Free Other Expansion CAPEX Environmental
Slide 27: Energy Business: Solid balance sheet and strong liquidity
Energy Business Solid balance sheet and strong liquidity Leverage as of September 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €158,5 Mn Green Loan & Note (S&P) – Drawn amount €20 Mn RCF – Fully available 156.3 59.7 Leverage: 2.1x 96.6 89.1 14.0 15.1 18.4 18.4 Gross debt Cash Net debt 2019 2020 2021 20
Slide 28: Closing Remarks
> Closing Remarks
Slide 29: Closing Remarks
Closing Remarks Strong pulp price scenario for the coming years Tighter supply and demand balance expected until at least 2022 FY2018 pulp sales forecast of 950,000 t including pulp stock replenishment ahead of next capacity expansions of 100,000 t in 1H 2019 FY2018 EBITDA forecast of €290 - 300 Mn
Slide 30: Alternative Performance Measures (APMs) Pg.1
Alternative Performance Measures (APMs) Pg.1 Ence presents its results in accordance with generally accepted accounting principles, specifically IFRS. In addition, its quarterly earnings report provides certain other complementary metrics that are not defined or specified in IFRS and are used by man
Slide 31: Alternative Performance Measures (APMs) Pg.2
Alternative Performance Measures (APMs) Pg.2 Normalised free cash flow provides a proxy for the cash generated by the company's operating activities before collection of proceeds from asset sales; this cash represents the amount available for investments other than maintenance capex, for shareholder
Slide 32: Delivering value, delivering commitments
Delivering value, delivering commitments
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