Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Q4 2023 Earnings Presentation
41 slides from Ence Energia Y Celulosa Sa's earnings presentation, Mar 1, 2024
Slide 1: 4Q23 Results
4Q23 Results 18 1 March 2024 Global ESG score: 90/100
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: Results Summary
Results Summary Growth and 4Q23 Operating Highlights 4Q23 Financial Results 1Q24 Outlook Diversification Projects ▪ Pulp price recovery started in ▪ Ence Advance pulp sales continue 3Q23 and continues into 1Q24 up ▪ Main pulp producers have gaining market share. Aim: to reach to 1,220 GROSS USD/t an
Slide 5: 1. 4Q23 Operating Highlights
1. 4Q23 Operating Highlights 5
Slide 6: Pulp price recovery started in 4Q23 and continues into 1Q24
Pulp price recovery started in 4Q23 and continues into 1Q24 180 cash cost reduction achieved during 2023, down to 455 €/t in 4Q23 Avg. NET Pulp Price & Cash-Cost (€/t) 800 762 750 700 650 578 600 636 522 550 477 500 535 450 484 400 455 350 300 1Q23 2Q23 3Q23 4Q23 1Q24 E Cash - Cost Avg. Net Pulp Pri
Slide 7: Pulp production improved by 15% vs. 3Q23
Pulp production improved by 15% vs. 3Q23 Boosted by the strong performance of both mills Pulp production (,000 tons) Pulp sales (,000 tons) + 15% + 12% Navia Pontevedra 267 253 225 231 273 245 244 99 106 68 217 88 154 163 161 137 1Q23 2Q23 3Q23 4Q23 1Q23 2Q23 3Q23 4Q23 ▪ Production at Navia reached
Slide 8: Ence Advanced pulp sales accounted for 28% of our pulp sales in 4Q23
Ence Advanced pulp sales accounted for 28% of our pulp sales in 4Q23 Lower environmental footprint and enhanced technical properties at a higher margin Ence Advanced Pulp Sales ✓ Aiming to replace softwood pulp % of total pulp sales ✓ Targeting customers with high sustainability standards Minimizing
Slide 9: Acquisition of Sniace forestry assets in 4Q23
Acquisition of Sniace forestry assets in 4Q23 Reinforcing our position as the largest private forest manager in Spain Ence eucalyptus plantations Hectares Annual production and book value 2023: Sniace ✓ Annual production: > 0,3 million m3/year c.15,500 h + 3,400 h ✓ Book value: €155m (€88m land + €6
Slide 10: ENCE: industry leader in sustainability
ENCE: industry leader in sustainability Global ESG score: 2023 Highlights 90/100 Production cost reduction Leadership and differentiation License to operate Risk minimisation Safe & efficient Climate People & Sustainable operations action Values agroforestry Protecting Health and Safety of Committed
Slide 11: 2. 4Q23 Financial Results
2. 4Q23 Financial Results 11
Slide 12: Financial turnaround in 4Q23
Financial turnaround in 4Q23 Driven by the operating margin recovery in the pulp business Group Revenues (€ m) Group EBITDA (€ m) Attributable Net Income (€ m) + €30m + €27m + €27m 3 201 25 171 (2) (24) 3Q23 4Q23 3Q23 4Q23 3Q23 4Q23 + €30m consolidated revenue growth + €27m consolidated EBITDA growt
Slide 13: Consolidated FY 2023 results still affected by the price cycle change
Consolidated FY 2023 results still affected by the price cycle change registered in both the Pulp and the Renewable businesses Group Revenues (€ m) Group EBITDA (€ m) Attributable Net Income (€ m) - 17% - 64% Reversal of 248 Pontevedra 169 impairments 1.003 and provisions 830 89 78 (25) FY 2022 FY 2
Slide 14: Positive FCF in 4Q23
Positive FCF in 4Q23 WC inflow in 4Q23 following a temporary outflow registered in 3Q23 Cash Flow Statement 4Q23 (€m) ▪ Pulp inventory reduction ▪ Sniace Forestry Assets ▪ Factoring normalization in Pulp, acquisition following its temporary drawdown in 3Q ▪ Pontevedra water recovery ▪ Lower sales vo
Slide 15: Positive FCF in FY 2023 before WC normalization and growth capex
Positive FCF in FY 2023 before WC normalization and growth capex WC outflow in FY 2023 includes the return of €85m from the excess Ro collected in 2022 Cash Flow Statement FY23 (€m) ▪ Includes the return of €85m from the ▪ Pontevedra water recovery excess remuneration collected in 2022 solution foll
Slide 16: Net Debt Change in FY2023 includes €141m dividends against 2022 Results
Net Debt Change in FY2023 includes €141m dividends against 2022 Results Dividend policy based on cash flow generation and leverage limits per business Net Debt Change FY 2023 Dividend policy (€m) 19 8 280 Amount based on cash generated 141 available for distribution Ensuring a leverage below: 142 Ne
Slide 17: Low leverage position vs. our average cycle EBITDA
Low leverage position vs. our average cycle EBITDA Solid cash balance of €345m at 31 Dec. 2023 Pulp business net debt as of 31 Dec. 2023 (€ m) Pulp business debt maturity schedule (€ m) €362m of bilateral loans €130m RCF – Fully available 500 1 Lease contracts €43m of public sector financing €42m IF
Slide 18: 2a. Pulp Business
2a. Pulp Business 18
Slide 19: Pulp business turnaround in 4Q23
Pulp business turnaround in 4Q23 Operating margin recovery up to 67 €/t Avg. NET Sales price Cash Cost Pulp sales volume Pulp EBITDA (€/t) (€/t) (,000 t) (€m) + 10% - 6% + 12% + €25m 71 273 19 522 484 244 477 455 (6) 3Q23 4Q23 3Q23 4Q23 3Q23 4Q23 3Q23 4Q23 45 €/t avg. net pulp price 28 €/t cash cost
Slide 20: Pulp business results in FY 2023 still affected by the price cycle change
Pulp business results in FY 2023 still affected by the price cycle change Pulp prices bottomed out in 3Q23 Avg. NET Sales price Cash Cost Pulp sales volume Pulp EBITDA (€/t) (€/t) (,000 t) (€m) - 24% - 5% + 18% - 66% 138 757 71 553 526 979 578 827 46 FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 FY 2023 F
Slide 21: 2b. Renewables Business
2b.) Renewables Business 21
Slide 22: +52% Renewables EBITDA improvement in 4Q23
+52% Renewables EBITDA improvement in 4Q23 Lower generation was more than offset by higher earnings per MWh in 4Q23 Average earnings per MWh Net operating costs per MWh Energy volume sold Renewables EBITDA (€/MWh) (€/MWh) (GWh) (€m) + 93% + 49% - 44% + 52% 7 274 210 251 4 141 142 141 3Q23 4Q23 3Q23
Slide 23: Renewables business results in FY23 affected by lower power generation
Renewables business results in FY23 affected by lower power generation Mainly linked to extraordinary maintenance shutdowns Average earnings per MWh Net operating costs per MWh Energy volume sold Renewables EBITDA (€/MWh) (€/MWh) (GWh) (€m) + 5% + 28% - 36% 110 -61% Regulatory Collar reversal: 172 1
Slide 24: PV project sales in FY 2023 contributed €27m to EBITDA
PV project sales in FY 2023 contributed €27m to EBITDA Remaining PV projects expected to be sold in 2024 Portfolio location Jaen 100 MW Granada 133 MW Land Grid connection Huelva 40 MW √ permit Engineering Environmental permit Huelva 10 MW Sevilla 90 MW Land Land Grid connection √ Grid connection √
Slide 25: 3. 1Q24 Outlook
3. 1Q24 Outlook 25
Slide 26: 1Q24 Outlook
1Q24 Outlook European pulp prices currently at 1,220 GROSS 1 USD/ton (equivalent to NET 700 USD/ton approx.) Main pulp producers have announced further price 2 Pulp business operating margin should continue improving increases up to 1,300 GROSS USD/ton (equivalent to NET 750 USD/ton approx.) 3 +10 €
Slide 27: 4. Growth and diversification projects
4. Growth and diversification projects 27
Slide 28: Our unique competitive advantage: over 95% of our wood is locally sourced
Our unique competitive advantage: over 95% of our wood is locally sourced We benefit from close access to eucalyptus plantations around our biomills Eucalyptus plantations surface in N.W. Spain Main figures (FY2023): GALICIA Navia CANTABRIA ✓ 3 million m3 of wood purchased 400.000 h 40.000 h ✓ 96% s
Slide 29: Growth and diversification projects in the Pulp business
Growth and diversification projects in the Pulp business Without increasing the consumption of wood Status: On track Status: On track Status: Engineering phase ROCE target: >12% ROCE target: >12% ROCE target: >12% ENCE ADVANCED PULP FLUFF BLEACHED RECYCLED PULP To develop and sell our differentiated
Slide 30: Pontevedra Avanza
Pontevedra Avanza Project to boost the efficiency and flexibility of Pontevedra biomill ▪ Project to boost the efficiency and flexibility of Pontevedra biomill: ✓ Reduce its cash-cost by 50 €/ton ✓ Improve its flexibility to use different species of eucalyptus ✓ Continue moving from standard pulp to
Slide 31: Growth and diversification projects in Renewables
Growth and diversification projects in Renewables Biogas, renewable thermal energy, and green fuels Status: 6 plants in engineering and permitting Status: Final bidder in 5 contracts Status: Engineering and permitting ROCE target: >12% ROCE target: >11% to capture biogenic CO2 BIOGAS RENEWABLE THERM
Slide 32: Other growth and diversification opportunities in Renewables
Other growth and diversification opportunities in Renewables Biomass Supply, ancillary services, sale of PV projects and carbon credits BIOMASS SUPPLY ANCILLARY SERVICES SALE OF PV PROJECTS CARBON CREDITS Registering and selling CO2 Biomass supply services in Iberia All our biomass power plants are
Slide 33: Closing Remarks
Closing Remarks Growth and 4Q23 Operating Highlights 4Q23 Financial Results 1Q24 Outlook Diversification Projects ▪ Pulp price recovery started in ▪ Ence Advance pulp sales continue 3Q23 and continues into 1Q24 up ▪ Main pulp producers have gaining market share. Aim: to reach to 1,220 GROSS USD/t an
Slide 34: 5. Appendix
5. Appendix 34
Slide 35: Group Financial Review: P&L 2023
Group Financial Review P&L 2023 2023 2022 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Total revenue 623.2 209.1 (2.7) 829.6 712.9 294.3 (3.8) 1,003.4 Other income 28.9 5.2 (1.2) 32.8 20.5 4.3 (1.2) 23.6 Foreign exchange hedging operations results
Slide 36: Group Financial Review: Cash Flow Statement 2023
Group Financial Review Cash Flow Statement 2023 2023 2022 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Consolidated profit/(loss) for the period before tax (33.9) (0.9) 1.6 (33.2) 239.8 12.2 1.6 253.6 Depreciation and amortisation 64.4 39.1 (1.6) 1
Slide 37: Group Financial Review: Balance Sheet 2023
Group Financial Review Balance Sheet 2023 Dec-23 Dec-22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Intangible assets 17.7 33.7 (12.1) 39.3 15.6 35.0 (12.7) 37.9 Property, plant and equipment 617.5 379.0 (7.5) 989.0 603.4 389.0 (8.5) 983.9 Biologi
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: 90/100 Delivering value Delivering commitments
Ence Energía y Celulosa — Q4 2023 Earnings Presentation on 6ix