Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Investor Presentation (December 2024)
40 slides from Ence Energia Y Celulosa Sa's investor presentation, Dec 18, 2024
Slide 1: Investors Presentation
Investors Presentation 18 December 2024 Global ESG score: 93/100
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. Diversification and efficiency projects 3. Renewable Business a. Positioning and competitive advantages b. Growth and diversification projects 3
Slide 4: Overview
aence ENERGIA & CELULOSA.
Slide 5: Ence Group: We are leaders in the circular bioeconomy
Ence Group Main investment 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 prod
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: group structure
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% Córdoba Jaén Huelva Magnon biomass Magnon Magnon Servicios E
Slide 8: Consistent delivery of EBITDA and cash flow throughout the cycle
Consistent delivery of EBITDA and cash flow 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
Slide 9: Solid balance sheet and a strong liquidity position
Solid balance sheet and a strong liquidity position Long-term financings and without covenants in the Pulp business Pulp business net debt as of 30 Sep. 2024 (€ m) Pulp business debt maturity schedule (€ m) €279m of bilateral loans €130m RCF – Fully available 440 1 Lease contracts €37m of public sec
Slide 10: Clear growth and diversification strategy
Clear growth and diversification strategy Into other biomass renewable energies and higher margin pulp products Growth and diversification projects in Biomass Renewable Energy: Diversification, efficiency and growth projects in Pulp: Iberian Biogenic Eucalyptus Biomass into CO2 Pulp Biomethane Ponte
Slide 11: 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 12: 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 Sep. 2024 29.4% D. Juan Luis Arregui Sustainability Audit Nominating & 8.8% D. Victor Urrutia Committee Committee Compensation Cha
Slide 13: 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 14: Market pulp industry
sence ENERGIA & CELULOSA. 2 Market pulp industry au A
Slide 15: 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 18 China North America 1 6 12 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 33 World 3 68 Mn t in 2023 13 4 30 1 8 41 M
Slide 16: Hardwood pulp vs. softwood pulp
Hardwood pulp vs. softwood pulp Substitutive materials with an increasing price spread 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 higher with high
Slide 17: 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 18: 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 19: 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 20: No large pulp capacity increases in Latam during 2025-2027
No large pulp capacity increases in Latam during 2025 - 2027 Supporting an improving outlook for pulp prices Avg. annual Pulp Prices in Europe European Pulp Futures Prices (BHKP USD / ton) (BHKP USD / ton) 1400 1.285 1.260 1.230 1.150 1200 1.045 1.037 1.010 1000 860 783 818 746 757 800 697 680 624 7
Slide 21: Pulp business positioning and competitive advantages
2. b Pulp business positioning and competitive advantages 21
Slide 22: 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 23: 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 24: 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 25: Growing portfolio of Ence Advanced pulp products with higher margins
Growing portfolio of Ence Advanced pulp products with higher margins 22% of total pulp sales in 9M24. Aim to reach 50% by 2028 Quality Cost Sustainability Enhanced technical properties High porosity pulp for filter and coated papers ++ Used as a plastic alternative in packaging for the ++ + food
Slide 26: 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 capillarized sales force and a top customer
Slide 27: Ence's Pulp sales breakdown
Ence’s Pulp sales breakdown Focus on Europe and on growing segments with our own portfolio of higher margin pulp products Geographical breakdown of sales Breakdown by end product Higher margin pulp products % of pulp sales % of pulp sales % of pulp sales +79% vs. 2020 Europe 93% Tissue & 22% 29% Pac
Slide 28: Diversification and efficiency projects in the Pulp business
Diversification and 2. c efficiency projects in the Pulp business
Slide 29: Diversification projects in the Pulp business
Diversification projects in the Pulp business Aimed at significantly increasing our Pulp business average cycle EBITDA over the next 5 years Status: On track Status: On track Status: Engineering and permitting ROCE1 target: >15% ROCE1 target: >15% ENCE ADVANCED PULP ENCE FLUFF ENCE RENEWABLE PACKAGI
Slide 30: Efficiency and growth projects in the Pulp business
Efficiency and growth projects in the Pulp business Aimed at significantly increasing our Pulp business average cycle EBITDA over the next 5 years Status: Engineering and permitting Status: Engineering and permitting Status: Engineering and permitting ROCE1 target: >15% ROCE1 target: >12% ROCE1 targ
Slide 31: Positioning and competitive advantages in Renewables
3. a Positioning and competitive advantages in Renewables 31
Slide 32: Ence is the leading biomass collector and transformer in Spain
Ence is the leading biomass collector and transformer in Spain A unique platform for growth and diversification into new biomass renewable energies We are the leading biomass collector and transformer in Spain. Each year we manage over 2 Mn tons of agricultural and forestry biomass We draw exclu
Slide 33: Ence is the largest biomass power producer in Spain
Ence is the largest biomass power producer in Spain A regulated business that ensures a minimum 7.4%1 return for a standard plant Biomass Power Plants Portfolio Operating biomass 2 biomass projects Through our subsidiary Magnon Green Energy, we currently power plants 100 MW operate 8 biomass power
Slide 34: Growth and diversification projects in Renewables
Growth and diversification 3. b projects in Renewables
Slide 35: Biomethane business and pipeline status
Growth and diversification projects in Renewables Aimed at more tan doubling our Renewables EBITDA over the next 5 years BIOMETHANE BUSINESS Working on 37 biomethane projects in Spain Biomethane generation from the recycling of local agricultural and livestock biomass, including the associated susta
Slide 36: Biomass thermal energy and pipeline status
Growth and diversification projects in Renewables Aimed at more tan doubling our Renewables EBITDA over the next 5 years BIOMASS THERMAL ENERGY 1 renewable thermal energy contract in operation and 14 projects under negotiation RENEWABLE THERMAL ENERGY PIPELINE STATUS Development and operation of com
Slide 37: 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 38: 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 39: 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 40: Delivering value, delivering commitments
Global ESG score: 93/100 Delivering value Delivering commitments
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