Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Q1 2023 Earnings Presentation
41 slides from Ence Energia Y Celulosa Sa's earnings presentation, May 9, 2023
Slide 1: 1Q23 Results
1Q23 Results 18 9 May 2023 Global ESG score: 91/100
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: Today's presenters
Today’s presenters Ignacio de Colmenares Alfredo Avello Chairman & CEO CFO and Chief Forestry Officer Ence Energía y Celulosa Ence Energía y Celulosa 3
Slide 4: Ideally positioned for future shareholder value creation
Ideally positioned for future shareholder value creation …delivered strong 1Q23 results… ...has multiple future growth & diversification initiatives …to deliver consistent future cash & income for investors …is leading the industry in Sustainability 4
Slide 5: 1Q23 Highlights
1Q23 Highlights Growth & Diversification 1Q23 Financial Highlights 2023 Outlook Initiatives Update Group Revenue of €296m (up 26% y/y) and 2023 Pulp production expected to “Navia Excelente” investment plan on Group EBITDA of €89m (up 91% y/y) normalize close to 1 million tons track to deliver
Slide 6: Agenda
Agenda 1. 1Q23 Financial Highlights 2. 2023 Outlook 3. Growth & Diversification Initiatives Update 4. Q&A 6
Slide 7: 1Q23 Financial Highlights
1. 1Q23 Financial Highlights 7
Slide 8: 1Q23 Financial Highlights
1Q23 Financial Highlights EBITDA x2 y/y 1 26% Group revenue growth and 91% EBITDA growth y/y to €89m 2 Group LTM ROCE1 rose to 18% 3 The difference between regulated and market energy prices generated cash collection rights amounting to €40m in 1Q23 that will be mostly cashed along 2024 4 New bilate
Slide 9: Strong growth in 1Q23
Strong growth in 1Q23 Driven by pulp and energy prices, pulp production normalization and the first PV project sale Group Revenues (€ m) Group EBITDA (€ m) Attributable Net Income (€ m) +91% 89 30 x2 +26% 296 Boosted by PV project sales of €23m 66 234 47 13 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 Group
Slide 10: Working Capital normalization in 1Q23
Working Capital normalization in 1Q23 Following Pontevedra´s restart and the return of excess Ro collected in 2022 Short Cash Flow Statement 1Q23 (€m) 89 (40) 49 (49) (65) (72) 6 (5) (12) (99) EBITDA Future cash Operating cash Excess Ro Pontevedra´s Other cash Net tax and interest Capex Free Cash Fl
Slide 11: Net debt / EBITDA ratio of 0.4x offers flexibility to seize growth opportunities
Net debt / EBITDA ratio of 0.4x offers flexibility to seize growth opportunities €63m convertible bond amortization and €145m of new bilateral loans in the Pulp business Pulp business net debt as of 31 Mar. 2023 (€ m) Pulp business debt maturity schedule (€ m) €239m of bilateral loans €130m RCF – Fu
Slide 12: A Final FY22 dividend of €70m will be paid on 18 May 2023
A Final FY22 dividend of €70m will be paid on 18 May 2023 Based on strong FCF generation and low leverage Dividend policy Dividend payment against FY2022 results (€m) Amount based on cash 250 0.29 €/sh. available for distribution 200 Ensuring a leverage below: 70 0.29 €/sh. 150 2.5 x Net Debt / EBIT
Slide 13: 1a. Pulp Business
1a. Pulp Business 13
Slide 14: Differentiated & higher value-added products accounted for 15% of sales
Differentiated & higher value-added products accounted for 15% of sales 217,000 tons Pulp sold in 1Q23 Differentiated products Geographical sales breakdown Breakdown by end product % of pulp sales % of pulp sales % of pulp sales 15% 7% Other Europe 93% 29% Specialty vs. 18% in Q122 Tissue 54% papers
Slide 15: Pulp business boosted by Pontevedra's normalization and prices
Pulp business boosted by Pontevedra´s normalization and prices Higher pulp prices offset raw material cost inflation Avg. Europe Pulp price Pulp Sales Pulp EBITDA (US$/t) (€m) (€m) +77% +16% +20% 37 71 71 1,339 191 1,150 159 21 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 16% higher average pulp price in Eur
Slide 16: 1b. Renewables Business
1b.) Renewables Business 16
Slide 17: Contribution of €23m to EBITDA from the first PV project sale in 1Q23
Contribution of €23m to EBITDA from the first PV project sale in 1Q23 Another €27m EBITDA expected from the remaining PV project sales in 2023-24 Portfolio location Jaen 100 MW Granada 133 MW Land √ Grid connexion permit Engineering Huelva 40 MW √ Land Land Grid connexion permit Sevilla 90 MW √ Grid
Slide 18: Renewable business also boosted by a higher regulated energy price
Renewable business also boosted by a higher regulated energy price Regulated energy price at 207 €/MWh in 1H23 Average selling price Renewables Sales Renewables EBITDA (€/MWh) (€m) (€m) +61% +40% x2 107 52 71 240 71 23 PV sale impact 149 76 29 26 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 Higher regulated
Slide 19: Sustainability industry leader
Sustainability industry leader Global ESG score: 1Q23 Highlights 91/100 Production cost reduction Leadership and differentiation License to operate Risk minimisation Safe & efficient Climate People & Sustainable operations action Values agroforestry Protecting Health and Safety Committed to mitigate
Slide 20: 2023 Outlook
2. 2023 Outlook 20
Slide 21: 2023 outlook
2023 outlook 1 Pulp production expected to normalize close to 1 million tons 2 Industry specialists forecast average pulp prices of US$1,060/t in 2023 3 Cash cost expected to improve by 135€/t during 2H23 vs. 1Q23 to below €500/t 4 Regulated energy price 207 €/MWh in 1H23 and 144 €/MWh in 2H23 The d
Slide 22: We expect pulp demand to outgrow supply over 2023-27
We expect pulp demand to outgrow supply over 2023-27 Prices expected to normalize along 2023 and 2024 before rising materially again as from 2025 Market Pulp Expected Supply and Demand Growth over 2023 - 2027 Main market pulp demand growth drivers (Mn tons) China reopening and the displacement of
Slide 23: Cash cost expected to improve by 135 €/t during 2H23 vs. 1Q23
Cash cost expected to improve by 135 €/t during 2H23 vs. 1Q23 to <€500/t Raw material costs have started to moderate Cash cost (€/t) 800 Pontevedra´s extra-costs 700 636 €/t associated with the new 600 46 €/t 135 €/t water recovery solution < 500 €/t together with repair works in 590 €/t 500 its e
Slide 24: Biomass regulation ensures a minimum return of 7.4%
Biomass regulation ensures a minimum return of 7.4%1 Biomass plants sell their output at a regulated price Regulated price (€/MWh) Regulatory price + Return on the operations (Ro) 350 300 1H23 250 200 150 Cash + 100 Cash collection rights 50 0 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Market
Slide 25: New methodology proposed for the regulatory collar calculation
New methodology proposed for the regulatory collar calculation The regulatory collar generated under the new methodology in 2023 will be cashed in 2024 Regulatory Collar EBITDA impact in 1Q23 The proposed methodology would be applicable to our biomass generation and (Pulp + Renewables) gas cogener
Slide 26: Growth & Diversification Initiatives Update
3. Growth & Diversification Initiatives Update 26
Slide 27: Navia Excelente investment plan
Navia Excelente investment plan Modular investments adaptable to the cycle with a targeted ROCE1 >12% DIFFERENTIATED PRODUCTS FLUFF DECARBONIZATION R&D for plastic substitution and To diversify Navia product range into Use of lignin to replace natural gas in improvement of the eco-efficiency and Flu
Slide 28: As Pontes project
As Pontes project Growth and diversification opportunity without increasing the consumption of wood Ence continues to make progress on the project it is studying to launch in the town of As Pontes in Galicia. The first phase of the project consists of a line for the production of bleached mixed
Slide 29: Ence Biogas: a new business based on the circular bioeconomy
Ence Biogas: a new business based on the circular bioeconomy 15 projects now under development with a targeted ROCE1 >12% Ence has incorporated a new subsidiary in 2022, Ence Biogas, for the development and operation of biomethane plants. Biomethane These plants will recycle local organic waste
Slide 30: Other growth opportunities in Renewables
Other growth opportunities in Renewables Biomass plants, industrial heating and PV projects Biomass Energy Industrial Heating PV Projects 100 MW sold in 1Q23 with an €23m Biomass has a great potential to help Developed 3 projects with a combined EBITDA contribution decarbonize the industry cap
Slide 31: Largest private forest manager in Spain
Largest private forest manager in Spain… …offers additional growth opportunities in the voluntary CO2 markets >600,000 tons of CO2 is removed annually from the atmosphere and yield other environmental benefits: biodiversity promotion, water cycle regulation and soil protection Part of our manage
Slide 32: Ideally positioned for future shareholder value creation
Ideally positioned for future shareholder value creation …delivered strong 1Q23 results… ...has multiple future growth & diversification initiatives …to deliver consistent future cash & income for investors …is leading the industry in Sustainability 32
Slide 33: Thank You!
Thank You! Investor Relations contact details: Email: ir@ence.es Phone: (+34) 91 337 85 53 Alberto Valdes Head of Investor Relations 33
Slide 34: Appendix
5. Appendix 34
Slide 35: Group Financial Review: Short P&L
Group Financial Review Short P&L 1Q23 1Q22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Total revenue 190,8 106,6 (1,4) 296,1 158,5 76,2 (0,6) 234,1 Other income 4,8 1,3 (0,3) 5,8 3,9 1,3 (0,3) 5,0 Foreign exchange hedging operations results (0,9)
Slide 36: Group Financial Review: Short Cash Flow
Group Financial Review Short Cash Flow 1Q23 1Q22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Consolidated profit/(loss) for the period before tax 18,5 40,1 0,4 59,0 8,3 11,3 0,3 19,8 Depreciation and amortisation 15,5 8,8 (0,4) 24,0 11,2 10,0 (0,3
Slide 37: Group Financial Review: Short Balance Sheet
Group Financial Review Short Balance Sheet Mar-23 Dec-22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Intangible assets 15,6 34,6 (12,6) 37,6 15,6 35,0 (12,7) 37,9 Property, plant and equipment 599,3 382,3 (8,3) 973,3 603,4 389,0 (8,5) 983,9 Biolog
Slide 38: 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 39: Alternative Performance Measures (APMs) Pg.2
Alternative Performance Measures (APMs) Pg.2 It provides a comparable measure of the business’s profitability and is measured as the difference between the average sales price per tonne, calculated by dividing revenue from the sale of pulp by the number of tonnes sold, and the cash cost. NET FINANCE
Slide 40: Alternative Performance Measures (APMs) Pg.3
Alternative Performance Measures (APMs) Pg.3 NORMALISED FREE CASH FLOW Normalised FCF is the sum of EBITDA, the change in working capital, maintenance capex, net interest payments and income tax payments. It provides a proxy for the cash generated by the Company's operating activities before collect
Slide 41: Delivering value, delivering commitments
Global ESG score: 91/100 Delivering value Delivering commitments
Ence Energía y Celulosa — Q1 2023 Earnings Presentation on 6ix