Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Investor Presentation (April 2024)
38 slides from Ence Energia Y Celulosa Sa's investor presentation, Apr 18, 2024
Slide 1: Investors Presentation
Investors Presentation 18 April 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: Index
Index: 1. Overview 2. Pulp Business a. Market pulp industry b. Positioning and competitive advantages c. Strategic priorities 3. Renewable Business a. Positioning and competitive advantages b. Strategic priorities 3
Slide 4: Overview
aence ENERGIA & CELULOSA.
Slide 5: Ence Group: We are leaders in the circular bioeconomy
Ence Group Main ideas We are leaders in the circular We manage two independent Consistent delivery of EBITDA 1 bioeconomy 2 and complementary businesses 3 and Cash throughout the cycle We are a leading European eucalyptus The Pulp and Renewable businesses The Renewables business pulp producer and th
Slide 6: Leading the circular bioeconomy
Leading the circular bioeconomy 4 activities, 2 businesses, 1 vision Sustainable forestry management Eco-efficient production of special pulp Ence manages close to 70,000 hectares of forest land in the Iberian 1 2 PULP Business We are a leading European eucalyptus pulp producer, with 1.2 Peninsu
Slide 7: Ence Energía y Celulosa: independent and complementary businesses
Pulp and Renewable Energy 2 independent and complementary businesses Ence Energía y Celulosa Navia Pulp business Pontevedra Pontevedra biomill 100% 100% 100% Forestry Navia Ence Assets biomill Renovables Ciudad Real Mérida 51% 1 50% 2 100% 100% Córdoba Jaén Huelva Magnon biomass Magnon Magnon Servic
Slide 8: Consistent delivery of EBITDA and cash throughout the cycle
Consistent delivery of EBITDA and cash throughout the cycle The Renewable business complements the cyclical nature of the Pulp business 2 2015 – 2023 LTM EBITDA per business 2015 – 2023 LTM normalized FCF per business €m €m 350 250 291 200 300 248 200 250 165 216 213 192 144 138 137 200 150 138 75 2
Slide 9: 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 10: Capital allocation priorities
Capital allocation priorities With clear leverage limits and ROCE targets for each business 1) Maintain a strong balance sheet 2) Fund organic investments with prudent leverage limits per with clear ROCE1 targets per business: business: Pulp business: >12% Pulp business Net Debt / EBITDA < 2.5x
Slide 11: Robust corporate governance with a supportive shareholder base
Robust corporate governance with a supportive shareholder base Management remuneration aligned with shareholder interests Shareholding Structure Board of Directors As of Dec. 2023 29.4% D. Juan Luis Arregui Sustainability Audit Nominating & 7.3% D. Victor Urrutia Committee Committee Compensation Cha
Slide 12: ENCE: industry leader in sustainability
ENCE: industry leader in sustainability (Sustainalytics) 4 sustainable priorities 1. Asegurar la sostenibilidad de la madera mediante la certificación 1. Health and safety 1. Ence Advanced pulp FSC/PEFC 1. Sustainable forestry 1. Equality, talent development and certification retention 2. Social lic
Slide 13: Market pulp industry
sence ENERGIA & CELULOSA. 2 Market pulp industry au ————
Slide 14: The global market pulp industry
The global market pulp industry Ence is a leading hardwood pulp producer in Europe with a ~10% European market share Europe 15 17 China North America 1 6 11 29 9 1 5 14 9 Demand Supply 7 1 19 12 2 3 4 1 Demand Supply Demand Supply South America Rest of the 28 World 2 68 Mn t in 2023 13 4 26 1 6 41 M
Slide 15: Hardwood pulp vs. softwood pulp
Hardwood pulp vs. softwood pulp Substitutive materials with an average price spread of c.100 USD/t Hardwood pulp (BHKP) Softwood pulp (BSKP) Most hardwood pulp Substitutive Most softwood pulp Source from eucalyptus wood materials from pine & spruce wood Best suited for products Best suited for highe
Slide 16: Continued market pulp demand growth
Continued market pulp demand growth Boosted by structural megatrends Global market pulp annual demand Est. Breakdown L10Y Avg. Growth Main drivers Mn tons by end use (%) (Mnt / year) 66,4 68,2 64,4 64,6 65,4 61,9 61,3 59,6 Urban growth and 55,7 57,1 54,8 increasing living standards in Tissue & 1,3
Slide 17: Tissue is the fastest growing paper segment
Tissue is the fastest growing paper segment Driven by urban growth and increasing living standards in emerging countries Tissue paper per-capita consumption Tissue annual consumption GROWTH Kg/year Last 10 years (Mn tons) Mn tons 13% of world population 87% 2,0 1,7 1,5 1,4 26 1,3 1,2 1,0 0,9 0,9 0,9
Slide 18: Paper packaging is the best sustainable alternative to plastic packaging
Paper packaging is the best sustainable alternative to plastic packaging A growing opportunity for the pulp and paper industry Food and beverage packaging breakdown by material (%) Sustainable paper packaging examples: IN THE MARKET TODAY: 6% 11% Glass 8% 11% Metal 34% SHORT TERM DEVELOPMENT WINDOW:
Slide 19: No large pulp capacity increases confirmed for 2025 - 2027
No large pulp capacity increases confirmed for 2025 - 2027 Supporting an improving outlook for pulp prices Avg. annual Pulp Prices in Europe Industry specialist consensus (BHKP USD / ton) (BHKP USD / ton) 1400 1.285 1.260 1.240 1.220 1200 1.045 1.037 1.010 1000 860 783 818 746 757 800 697 680 624 75
Slide 20: Pulp business positioning and competitive advantages
2. b Pulp business positioning and competitive advantages 20
Slide 21: A leading European eucalyptus pulp producer
A leading European eucalyptus pulp producer Recognized for the quality, flexibility and sustainability of our pulp production Navia biomill Pontevedra biomill Location: Asturias – Own land Location: Galicia – Public concession until 2073 Installed capacity: 685.000 tons / year Installed capacity: 51
Slide 22: Largest private forest manager in Spain
Largest private forest manager in Spain Pioneers in the clonal reproduction of eucalyptus globulus and its adaptation to climate change Ence eucalyptus plantations Hectares Annual production and book value 2023: Navia Annual production: > 0,3 million m3/year c.20,000 h Book value: €155m (€88m la
Slide 23: Local wood sourcing
Local wood sourcing We benefit from our 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% sourced locally in Spain 73% of supplied wood cer
Slide 24: Growing portfolio of Ence Advanced pulp products with higher margins
Growing portfolio of Ence Advanced pulp products with higher margins 28% of total pulp sales in 4Q23 Quality Cost Sustainability Enhanced technical properties High porosity pulp for filter and coated papers ++ Used as a plastic alternative in packaging for the ++ + food & beverage industry Low
Slide 25: Just-in-time service with 5-7 days delivery
Just-in-time service with 5-7 days delivery Compared to 40 days from LatAm producers Lower logistics costs vs LatAm Protection against rising transport costs Reduced transport related CO2 emissions Ence has a privileged access to the European market with a capilliarized sales force and a top custome
Slide 26: Strategic priorities in the Pulp business
Strategic priorities in the 2. c Pulp business
Slide 27: 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 and permitting phase ROCE target: >12% ROCE target: >12% ROCE target: >12% ENCE ADVANCED PULP FLUFF BLEACHED RECYCLED PULP To develop and sell our
Slide 28: 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 29: Positioning and competitive advantages in Renewables
3. a Positioning and competitive advantages in Renewables 29
Slide 30: Ence is the largest biomass power producer in Spain with 40% market share
Ence is the largest biomass power producer in Spain with 40% market share A regulated business that ensures a minimum 7.4% return for a standard plant Biomass Power Plants Portfolio Biomass regulation ensures a minimum return of 7.4%1 for Operating biomass 2 biomass projects a standard plant power p
Slide 31: Strategic priorities in Renewables
Strategic priorities in 3. b Renewables
Slide 32: Growth and diversification projects in Renewables
Growth and diversification projects in Renewables Biogas, renewable thermal energy, and green fuels Status: 8 plants in engineering and permitting Status: Final bidder in 5 contracts Status: Engineering and permitting +12 plants with location and feasibility + 15 contracts in progress to capture bio
Slide 33: 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 All our biomass power plants are 140 MW sold in 2023 and 233 credit
Slide 34: Thank You!
Thank You! Investor Relations contact details: Email: ir@ence.es Phone: (+34) 91 337 85 53 Alberto Valdes Head of Investor Relations 34
Slide 35: 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 36: 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 37: 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 38: Delivering value, Delivering commitments
Global ESG score: 90/100 Delivering value Delivering commitments
Ence Energía y Celulosa — Investor Presentation (April 2024) on 6ix