Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — H1 2020 Earnings Presentation
32 slides from Ence Energia Y Celulosa Sa's earnings presentation, Jul 29, 2020
Slide 1: 1H 2020 Results
1H 2020 Results 18 July 29th, 2020 80 Overall ESG Score
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 1H20: Strong operating performance in a low price environment
Highlights 1H20 Strong operating performance in a low price environment Effective measures taken Effective measures taken since February 24th against COVID-19 have allowed ENCE to protect its staff and to continue against COVID-19 allow Ence operating during the health crisis to protect its staff
Slide 5: Effective measures taken against COVID-19
Effective measures taken against COVID-19 Allowed ENCE to protect its staff and to continue operating during the health crisis PEOPLE OPERATIONS LIQUIDITY Minimum on-site presence. Implementation of Ence´s COVID-19 Use of the € 70 Mn RCF available in Progressive return as from June. Prevention
Slide 6: Sustainability Plan 2019 – 2023
Sustainability Plan 2019 – 2023 Highlights 1H20 80 Overall ESG Score Safe and Emissions ecologically 99% Waste valorised Lower water consumption vs. 2019 Industry reference Covid-19 -41% vs. 2019 < 10 mg /Nm3 in efficient AENOR “0 Waste” Pontevedra: -5% Prevention Odor Impact in all our biomass Cert
Slide 7: +51% higher renewable energy sales vs. 2Q19
+51% higher renewable energy sales vs. 2Q19 Despite the difficulties caused by the pandemic New Biomass Plant CIUDAD REAL 50 MW 316 MW 31st MARCH Installed capacity MÉRIDA 20 MW HUELVA 50 MW HUELVA 41 MW CIUDAD REAL 50 MW New Biomass Plant HUELVA 46 MW CIUDAD REAL 31st JANUARY 50 MW CIUDAD REAL 16 M
Slide 8: A regulated business which adds stability to the Group
A regulated business which adds stability to the Group 7% decline in our average sales price compared to a 44% drop in the pool price Average sales price: Pool price + Ro + Regulatory Collar Return on investment (€/MWh) (€ Mn) -7.1% 105.5 98.0 31.7 31.7 52.3 24.4 28.4 57.9 45.2 (4.7) 1H19 1H20 1H19
Slide 9: Renewables pipeline: 405 MW with grid access and locations secured
Renewables pipeline: 405 MW with grid access and locations secured Awaiting upcoming public auctions of the National Renewable Energy Plan CIUDAD REAL 50 MW National Renewable Energy Plan Biomass CIUDAD REAL 25 MW 2020 – 2030 RTB in 3Q21 Biomass Hybridization RTB in 4Q21 Solar PV: +30.1 GW Wind: +22
Slide 10: Strong operating improvements in the Pulp business
Strong operating improvements in the Pulp business 12% higher pulp production and 5% lower cash cost in 1H20 Pulp Production (t) +11.9% 1,025,000 Pontevedra biomill 520,617 > 4% production vs. 2Q19 465,344 +14.4% 20,000 t capacity expansion in 1Q19 Annual maintenance shutdown delayed to 3Q20 d
Slide 11: 19% higher pulp sales in 1H 2020
19% higher pulp sales in 1H 2020 Increasing the value of the European market and ENCE’s differentiated products Geographical distribution of sales Breakdown by end product Differentiated products % of pulp sales % of pulp sales % of pulp sales 6% Other 10% Europe 94% Tissue 57% 27% Specialties vs. 6
Slide 12: Slight upturn in pulp producer inventories vs. Dec. 2019
Slight upturn in pulp producer inventories vs. Dec. 2019 Temporary imbalance resulting from worldwide lockdown measures in 2Q20 BHKP and BSKP Demand Evolution (YoY) Producers Inventories BHKP and BSKP 000’s t In Days (Quarter average) 2500 65 2250 2089 59 Last 10 years average BHKP: +1.1 Mn t / year
Slide 13: Pulp prices in 1H20 remain at their 10-year minimum
Pulp prices in 1H20 remain at their 10-year minimum Below the free cash flow break-even of most of the industry Net BHKP Prices China Global Market Pulp Industrial Cash Cost Curve (CIF Europe) 1 $/t $/Mn t 900 800 Last 10 years average BHKP: 636 $/t 700 600 500 400 Current Net Price BHKP China 443 $
Slide 14: Pulp demand set to outgrow supply over 2020-24
Pulp demand set to outgrow supply over 2020-24 Average annual pulp demand growth of 1.5 Mn t during the last 10 years Expected Annual Increase in Global Market Supply and Demand (Mn t)1 Mn t 2020 2021 2020-21 2022 2020-22 2023 2020-23 2024 2020-24 ESTIMATED ANNUAL MARKET PULP DEMAND INCREASE -1.5 1.
Slide 15: 1H 2020 Financial Results
1H 2020 Financial Results Driven by lower pulp and energy prices Pulp Business EBITDA (€ Mn) Renewable Energy Business EBITDA (€ Mn) Group Net Income (€ Mn) -86.7% +4.7% 67 27 25 26 -25 9 1H19 1H20 1H19 1H20 1H19 1H20 Pulp Renewable Energy €9 Mn EBITDA in the Pulp business: €27 Mn EBITDA in the Rene
Slide 16: €29 Mn Normalized FCF and €42 Mn carry-over payments in 1H20
€29 Mn Normalized FCF and €42 Mn carry-over payments in 1H20 €342 Mn cash in balance, long-term debt maturities and no covenants Normalized FCF1 (€ Mn) Strategic Plan Capex (€ Mn) Net Debt (€ Mn) -54.2% -75.8% +5.3% 540 69 513 172 Lease contracts €55 Mn 29 42 2019 1H20 1H19 1H20 1H19 1H20 Renewable
Slide 17: Pontevedra's biomill legal status
Pontevedra’s biomill legal status The first resolution of the National Court is expected in the coming months On January 2016 the National Directorate The 1958 biomill's original concession was extended for 60 years (starting November 8 th 2013) by the National Directorate of of Coasts granted the
Slide 18: 1H 2020 Results by Business
1H 2020 Results by Business
Slide 19: Pulp Business: 1H 2020 results driven by lower pulp prices
Pulp Business 1H 2020 results driven by lower pulp prices Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) -29.3% +18.7% 590 519,820 437,950 418 86.7% EBITDA decrease vs. 1H19: Resulted from the 29% drop in the average 1H19 1H20 1H19 1H20 sales price. Partially offset by 19% higher sales and 5% A
Slide 20: Pulp Business P&L
Pulp Business P&L 1H20 P&L Bridge (€ Mn) €9.5 Mn negative FX hedging settlements 8.9 (33.8) (24.3) (27.5) (2.5) 8.0 (5.4) 0.5 EBITDA Depreciation and other Pontevedra EBIT Financial expenses Other financial result Taxes Net result results on fixed assets Environmental Pact provisions 20
Slide 21: Pulp Business Cash flow generation
Pulp Business Cash flow generation 1H20 Cash Flow Bridge (€ Mn) 2019 Strategic Plan carry over payments (6.7) 13.2 0.0 (2.4) 1.8 13.1 (30.8) 8.9 EBITDA Change in Maintenance Financial Taxes NORMALIZED Other Strategic Plan Divestments FCF working capital CAPEX charges/payments FCF collection/payments
Slide 22: Ongoing FX hedging program
Ongoing FX hedging program To mitigate FX volatility in the Pulp Business Dollar/Euro Exchange Rate Evolution Current Hedges 1,40 Q3 2020: 84% revenues 1,35 Avg. cap: $ 1.20 € Avg. floor: $ 1.14 € 1,30 Q4 2020: 63% revenues 1,25 Avg. cap: $ 1.19 € Avg. floor: $ 1.13 € 1,20 Q1 2021: 53% reven
Slide 23: Pulp Business: High liquidity and long-term financing without covenants
Pulp Business High liquidity and long-term financing without covenants Leverage as of June 30th 2020 (€ Mn) Debt Maturity Calendar (€ Mn) €152 Mn Convertible bond 1 313.8 556.0 €226 Mn Bilateral loans 1.7 Lease €62 Mn Public sector financing 45.7 234 70.0 contracts €70 Mn RCF 8.1 €46 Mn IFRS16 82.2
Slide 24: Renewable Energy Business
Renewable Energy Business Higher contribution of new biomass power plants offset lower electricity prices Energy Volume (MWh) Average sale price (€/MWh) 4.7% EBITDA increase was driven by: +27.0% -7.1% 27.0% higher energy sales from new biomass power plants commissioned in 612,945 1 3.8 1Q20 101.7
Slide 25: Renewable Energy Business P&L
Renewable Energy Business P&L 1H20 P&L Bridge (€ Mn) (22.1) 26.9 4.7 (7.7) 0.8 (2.2) (2.9) (0.7) EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Attributable Profit others 25
Slide 26: Renewable Energy Business Cash flow generation
Renewable Energy Business Cash flow generation 1H20 Cash Flow Bridge (€ Mn) €15 Mn non cash income Strategic Plan (2.4) related to the Regulatory Collar carry-over payments 1 (2.4) (7.3) 1.0 26.9 (10.3) 15.7 (8.5) (5.3) EBITDA Change in working Maintenance Interest payment Taxes Normalized Free Othe
Slide 27: Renewable Energy Business: Long-term green financing and high liquidity
Renewable Energy Business Long-term green financing and high liquidity Leverage as of June 30th 2020 (€ Mn) Debt Maturity Calendar (€ Mn) 326.6 Leverage: Lease 4.1 x €97 Mn solar thermal plant project financing contracts 8.9 108.3 €220 Mn Energy parent corporate financing €20 Mn RCF – Fully availabl
Slide 28: Closing Remarks
Closing Remarks
Slide 29: Closing Remarks: Strong operating improvement in 1H20 despite COVID-19
Closing Remarks Strong operating improvement in 1H20 despite COVID-19 Effective measures taken since February 24th against COVID-19 allow ENCE to keep its people safe and to continue operating during the health crisis Strong operating improvement in the Pulp business following the 100,000 t capa
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
80 Overall ESG Score Delivering value Delivering commitments
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