Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Q4 2016 Earnings Presentation
36 slides from Ence Energia Y Celulosa Sa's earnings presentation, Feb 28, 2017
Slide 1: 4Q 2016 Results
4Q 2016 Results 28 February 2017
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 01 Highlights 4 02 2016-2020 Strategic Plan Delivery 6 03 Resilient Business Model 14 04 4Q 2016 Results 23 05 Closing Remarks 34
Slide 4: 1. Highlights
1. Highlights 4
Slide 5: Highlights
Highlights 2016-2020 Strategic Plan Delivery Resilient Business Model €138 Mn adjusted EBITDA and €38.7 Mn Net Continued growing demand for eucalyptus pulp Income (€36.8 Mn recurrent) despite lower pulp (+7.7% in 2016) prices since 2009 Strong and stable recurrent free cash flow Investment Plan prog
Slide 6: 2. 2016-2020 Strategic Plan Delivery
2. 2016-2020 Strategic Plan Delivery 6
Slide 7: Pulp investment plan progressing to increase EBITDA by 72% in 2020
2016-2020 Strategic Plan delivery Pulp Investment plan progressing to increase Ebitda by 72% in 20201 38% of Current Investment Plan will be completed by 2017 2015-17: €109 Mn 2018-20: €179 Mn 2015-20: €288Mn € Mn Navia 31 36 5 72 82 10 92 €164 Mn Pontevedra 8 12 17 37 30 10 3 44 87 €124 Mn Pulp cap
Slide 8: Pulp Business Strategic Plan Summary
2016-2020 Strategic Plan delivery Pulp Investment plan progressing to increase Ebitda by 72% in 20201 Pulp Business Strategic Plan Summary INITIAL 2015a 2016a 2017e 2018e 2019e 2020e TOTAL Difference PLAN CAPEX (€Mn) 30 37 41 71 82 27 288 338 - 50 Pontevedra (€Mn) 3 7 26 28 37 23 124 173 - 49 Navia
Slide 9: Successful cash cost reduction
2016-2020 Strategic Plan Delivery Successful cash cost reduction Cash Cost Evolution in 2016 Current and Expected Cash Cost Reduction 375.4 405.6 362.7 351.0 340.9 30.6 26.1 24.7 28.1 28.6 20.7 30.2 STRATEGIC PLAN 29.3 359.0 356.7 123.2 117.5 106.2 101.7 339 337 329 325 193.5 190.4 189.8 189.3 1Q16
Slide 10: Energy business growth accelerating
2016-2020 Strategic Plan Delivery Energy business growth accelerating Accretive acquisitions of 32 Mw and new 40 Mw project in Huelva to increase our capacity by 65% Ciudad Real 16 Mw In December 2016, Ence acquired two biomass power plants located in Spain with a combined 12Mw of net capacity cap
Slide 11: Stable and attractive shareholder remuneration maintained
2016-2020 Strategic Plan Delivery Stable and attractive shareholder remuneration maintained 6.6%1 shareholder return in 2016 Per 2016 Shareholder Remuneration €0.15 €0.13 €0.10 €0.14 €0.16 Share €41 Mn €32.7 Mn Cash €38 Mn €36 Mn €8.6 Mn in Buyback Program (4 Buyback €34 Mn program Mn shares) €2
Slide 12: Asset Divestments Program Phase I completed in 2016
2016-2020 Strategic Plan Delivery Asset Divestments Program Phase I completed in 2016 Successful Phase I Non-Core Asset Divestment Program Industrial Assets Energy crops Pontevedra Real Estate € Mn 2015 Divestments 78 Total Proceeds: €32 Mn 4 20 Capital Gains: €12 Mn 39 2 6 50 2016 Divestments:
Slide 13: Low leverage position preserved
2016-2020 Strategic Plan Delivery Low leverage position preserved Net debt reduction in 2016 Solid balance sheet and strong liquidity (€ Mn) 437.7 219.4 121.0 97.7 218.3 316.7 121.7 241.2 - 9.5% 23.2 218.3 195.1 2015 2016 Gross debt Cash Net debt Pulp Business Energy Business Low leverage below peer
Slide 14: 3. Resilient Business Model
3. Resilient Business Model 14
Slide 15: Continued growing demand for Eucalyptus pulp
Resilient Business Model Continued growing demand for Eucalyptus pulp Global Demand for Eucalyptus Pulp (Mn t) +7.7% +8.6% +5.3% +7.5% 23.2 +7.7% global eucalyptus pulp demand 18.8 20.4 21.5 growth in 2016 17.5 9.8 10.0 9.3 9.2 Equivalent to 1.7 Mn tons 8.8 Above 2012 – 2016 CAGR of 7.3% 2012 2013 2
Slide 16: Favorable demand and supply balance expected for 2017
Resilient Business Model Favorable demand and supply balance expected for 2017 Expected Annual Increase for Global Hardwood Supply and Demand (Mn t) Mn t 2017 2018 2019 2017 - 2019 ESTIMATED DEMAND INCREASE 1.5 1.5 1.5 4.5 China 1.1 1.1 1.1 3.3 Other Asia / Africa / Oceania /Middle East 0.3 0.3 0.3
Slide 17: Strong and stable recurrent cash flow generation despite lower pulp prices
Resilient Business Model Strong and stable recurrent cash flow generation despite lower pulp prices Recurrent Free Cash Flow Generation (€Mn) $783/t - 11% Average Pulp Price Decrease Recurrent Free Cash Flow maintained in 2016 despite lower pulp price $697/t Low FCF Breakeven supports Ence - 2% FCF
Slide 18: Wood cost reduction following Ence forest initiatives
Resilient Business Model Wood cost reduction following Ence forest initiatives Wood Cost 75% from landowners and small suppliers -3.6% 66.4 64.4 64.0 Landowners Small suplliers Large suppliers 2015 2016 2017E Wood cost (€/m3) Wood sources 4Q16 Active supply management reducing costs and strengthenin
Slide 19: Ongoing hedging program to mitigate FX volatility
Resilient Business Model Ongoing hedging program to mitigate FX volatility on the Pulp business Dollar/Euro Exchange Rate Evolution Current Hedges $/€1,4 1 - 6 months \ 67% revenues: 1,35 Avg. floor: $ 1.06 € Avg. cap: $ 1.14 € 1,3 6 - 12 months \ 73% revenues: 1,25 Avg. floor: $ 1.08 € 1,2
Slide 20: Solid earnings secured by stable regulation in the Energy business
Resilient Business Model Solid earnings secured by stable regulation in the Energy business Feed in tariffs related to operating costs compensated on a triennial basis € / Mwh € / Mwh 60 60 55.5 55.7 54.2 55 55 50 50.3 50 48.1 46.6 47.0 45 42.2 43.5 45 43.7 40 40 38.2 37.6 36.5 36.8 35 35 30 30 2014
Slide 21: Successful agro waste biomass diversification
Resilient Business Model Successful agro waste biomass diversification Weight of Forestry and Agricultural Waste Supply 2015a 2016a 2017e 14 40 44 56 60 86 Forestry waste (%) Agricultural waste (%) Ence has unique capabilities in diversifying biomass sources among multiple agricultural residues mini
Slide 22: Corporate bond performance reflects improved credit metrics
Resilient Business Model Ence´s corporate bond performance reflects its improved credit metrics Ence Corporate Bond Performance 109 107 105 Strong Ences´s corporate 103 bond performance in 2016, 101 trading at 105.5% at year- 99 end 97 95 oct-15 nov-15 dic-15 ene-16 feb-16 mar-16 abr-16 may-16 jun-1
Slide 23: 4. 4Q2016 Results
> 4. 4Q2016 Results 23
Slide 24: Consolidated Key Figures
Consolidated Key Figures 2016 Results confirm the resilience of Ence´s business model +29.1% EBITDA in 4Q vs 3Q 2016 fueled by both P&L Pulp and Energy businesses € Mn 2016 2015 % Change 15% pulp price decline in 2016 partially offset by: Revenue 605.4 663.9 (8.8%) + 4.3% increase in pulp sales vo
Slide 25: Quarterly Key Figures
Quarterly Key Figures 4Q16 strong performance both in Pulp and Energy businesses Net Revenue (€ Mn) EBITDA (€ Mn) Net Profit (€ Mn) -0.8% -27.8% +25.1% +29.1% -2.2% 177 176 59 +11.7% 25 141 32 15 61 42 14 154 26 144 33 13 117 9 30 13 23 -2 4Q 2015 3Q 2016 4Q 2016 4Q 2015 3Q 2016 4Q 2016 4Q 2015 3Q 2
Slide 26: Pulp Business: Operating performance
Pulp Business Operating performance Average selling pulp price (€/t) Pulp sales volume (t) Cash cost (€/t) -14.9% +4.3% -0.6% +4.3% +4.3% 546 464 923,408 885,280 359 357 EXPECTED CASH COST 339 2015 2016 2015 2016 2015 2016 2017E Adjusted EBITDA (€ Mn) 14.9% pulp price decline in 2016 partially offse
Slide 27: Pulp Business: P&L
Pulp Business P&L 2016 P&L Bridge (€ Mn) €9.9 Mn negative one-off €16.3 Mn capital from Huelva industrial gains from the asset assets reclassification to divestment program fixed assets 16.3 9.9 104.0 8.6 48.9 62% improved 95.4 financial result after 2015 refinancing 52.9 14.4 1.6 8.7 28.2 Adjusted
Slide 28: Pulp Business: Cash Flow generation
Pulp Business Cash Flow generation 2016 Cash Flow Bridge (€ Mn) €41.4 Mn Collection from asset divestments €43.3 Mn of Strategic Plan investments 104.0 0.8 7.2 21.1 41.4 35.8 13.3 61.5 10.5 7.5 49.2 Adjusted Change in Taxes Maintenance Interest RECURRENT Other non Disposals Expansion Environmental F
Slide 29: Pulp Business: Solid balance sheet and strong liquidity
Pulp Business Solid balance sheet and strong liquidity Leverage as of Dec 16 (€ Mn) Debt maturity calendar (€ Mn) €250 Mn bond 25.4 Leverage: 316.8 121.7 1.9x €70 Mn bilateral loans 250 195.1 20.5 5.5 5.5 8.2 6.1 Gross debt Cash Net debt 2017 2018 2019 2020 2021 > 2021 Pulp business leverage at 1.9x
Slide 30: Energy Business: Operating performance
Energy Business Operating performance Average selling price (€/MWh) Energy volume (MWh) Revenues (€ Mn) -7.1% -1.1% +2.1% 104 97 97 96 615,397 628,386 2015 2016 2015 2016 2015 2016 7.1% lower average selling price due to lower pool prices, partially Adjusted EBITDA (€ Mn) mitigated through our hedgi
Slide 31: Energy Business: P&L
Energy Business P&L 2016 P&L Bridge (€ Mn) €3.9 Mn of non-recurrent expenses include €2.8 Mn one- off provision on HU 41 MW 56.5% higher depreciation charges following the business split in 2015 34.0 3.9 Lower financial expenses vs. 30.2 10.3 2015, which included €15 Mn from refinancing one-offs 19.
Slide 32: Energy Business: Cash Flow generation
Energy Business Cash Flow generation 2016 Cash Flow Evolution Bridge (€ Mn) Positive working capital after €28.8 Mn collection of pending receivables from the Electricity System €22.5 Mn capex for the acquisition of 2 power plants with 26.3 1.1 a combined installed capacity of 5.9 32 MW in December
Slide 33: Energy Business: Solid balance sheet and strong liquidity
Energy Business Solid balance sheet and strong liquidity Leverage as of Dec 2016 (€ Mn) Debt maturity calendar (€ Mn) €106 Mn Outstanding project Finance 2.1 39.8 €15 Mn Bilateral loans 121.0 Leverage: 97.8 0.7x 1.1 1.1 4.1 3.3 3.3 13.6 13.6 14.5 12.8 13.4 23.2 Gross debt Cash Net debt 2017 2018 201
Slide 34: 5. Closing Remarks
> 5. Closing Remarks 34
Slide 35: Closing Remarks
Closing Remarks 2016 Results confirm the resilience of Ence’s business model Strategic Plan is on track: we are already delivering results in Navia & Pontevedra Cash cost reduction evolves favorably to an average of €339/t in 2017 Positive market environment expected with tight supply & demand balan
Slide 36: Delivering value, delivering commitments
Delivering value, delivering commitments
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