Ence Energia Y Celulosa Sa · BME:ENC

Ence Energia Y Celulosa Sa — FY2018 Earnings Presentation

30 slides from Ence Energia Y Celulosa Sa's earnings presentation, Feb 27, 2019

  1. Slide 1: FY 2018 Results

    FY 2018 Results February 27, 2019

  2. 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

  3. Slide 3: Highlights

    Highlights

  4. Slide 4: Highlights FY 2018

    Highlights FY 2018 Excellent 2018 results driven  €291 Mn EBITDA (+35% vs. 2017)  €129 Mn Net Income (+41% vs. 2017) by pulp price improvement  €200 Mn Recurrent FCF (+36% vs. 2017)  €67 Mn Dividend payment (+69% vs. 2017) €231 Mn growth capex in the  Thermosolar plant valued at €140 Mn and acq

  5. Slide 5: Tighter supply and demand balance expected until at least 2022

    Tighter supply and demand balance expected until at least 2022 Minimum lead time for new projects 3 years Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t)1 Mn t 2019 2020 2019-20 2021 2019-21 2022 2019-22 2023 2019-23 2024 2019-24 ESTIMATED BHKP DEMAND INCREASE 1.4 1.4 2.

  6. Slide 6: Pulp price improvement is still the scenario for the coming years

    Pulp price improvement is still the scenario for the coming years Due to a tighter supply and demand balance European Hardwood (BHKP) Expected Annual Increase for Global Market Pulp Prices Hardwood (BHKP) Supply and Demand 1 $/t Mn t 7.0 1,200 1,150 1,155 $/t 5.6 1,100 4.2 1,050 1,000 2.8 3.2 950 0.

  7. Slide 7: Excellent FY 2018 Results Driven by pulp price improvement

    Excellent FY 2018 Results Driven by pulp price improvement Group Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) + 12% + 35% + 41% 832 129 740 291 92 216 2017 2018 2017 2018 2017 2018 Renewable Energy Pulp Renewable Energy Pulp Renewable Energy Pulp Pulp business: 14% revenue growth Pulp

  8. Slide 8: Increasing margins in the Pulp Business

    Increasing margins in the Pulp Business FY 2018 Cash Cost of 377 €/t Gross Pulp Price (€/t) vs. Cash Cost (€/t) Gross Pulp Price Cash Cost Gross Pulp Price Increase: 155 €/t 27 €/t Cash Cost increase vs. FY 2017 879  9 €/t due to wood cost increase (linked Cash Cost Increase: 27 €/t to pulp prices)

  9. Slide 9: Renewable Energy business EBITDA stable

    Renewable Energy business EBITDA stable €65 Mn EBITDA expected for 2019 Renewable Energy Business EBITDA Expected Renewable Energy EBITDA in 2019 57.4 €/Mwh + 44% 52.1 Pool price €/MWh €10.5 Mn 46.6 Regulatory €65 Mn Regulated 48.1 collar €/Mwh provision1 price €/Mwh €45 Mn €45 Mn €45 Mn 2017 2018 2

  10. Slide 10: Strong Free Cash Flow generation

    Strong Free Cash Flow generation Low financial leverage of 1x LTM EBITDA after Strategic Plan investments Normalized FCF1 (€ Mn) Capex (€ Mn) Net Debt FY18 + 36% x5 + 99% 305 200 291 2 147 153 62 2017 2018 2017 2018 2017 2018 Renewable Energy Pulp Renewable Energy Pulp Renewable Energy Pulp Strong N

  11. Slide 11: Pulp business Strategic Plan investments

    Pulp business Strategic Plan investments 100,000 tons capacity expansion to be delivered during 1H19 Pulp Business Investments Pontevedra Capacity Increase 20,000 t in 1Q 2019 190 €18 Mn expected annualized EBITDA EFFICIENCY AND GROWTH contribution 1 SUSTAINABILITY Navia Capacity Increase 150 80,000

  12. Slide 12: Renewable Energy business Strategic Plan investments

    Renewable Energy business Strategic Plan investments 96 MW of new biomass capacity to be added during 2019 Renewable Energy Business Investments Thermosolar plant 231 50 MW Thermosolar Power Plant acquired in Dec.18 EFFICIENCY AND GROWTH €18 Mn annual EBITDA expected SUSTAINABILITY 130 228 New bioma

  13. Slide 13: Attractive shareholder remuneration

    Attractive shareholder remuneration Final dividend of 0.054 €/share to be approved by the AGM on March 28 Annual Accrued Dividends (€ Mn) Dividend Policy Dividend €0.10 €0.14 €0.16 €0.19 €0.26 Per Share 50% FINAL dividend to be Payout €13 Mn approved by the AGM on March 28 €46 Mn €41 Mn 1 €36 Mn 3 €

  14. Slide 14: Excellence in sustainability

    Excellence in sustainability 2018 Highlights Promoting sustainable forestry Dynamization of rural areas Caring for communities  85% certified (FSC/PEFC) wood, up from 24% in  Value creation for suppliers: almost €182 Mn in  Ence works to be perceived as a responsible and 2011 wood purchases and o

  15. Slide 15: Excellence in sustainability

    Excellence in sustainability 2018 Highlights Water footprint reduction Circular economy promotion Transparency and integrity  ↓10% water use reduction in Pontevedra vs 2016  Circular model for cellulose production: our  Certified Management system for criminal compliance and ongoing project aimed

  16. Slide 16: FY 2018 Results by Business

    FY 2018 Results by Business

  17. Slide 17: Pulp Business Operating performance

    Pulp Business Operating performance Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) + 20.2% - 2.9% 635.1 975,302 947,466 528.2 44% EBITDA growth up to €245.6 Mn  20.2% net pulp price increase  2.9% decrease in pulp sales despite 1% 2017 2018 2017 2018 increase in pulp production due to inventories

  18. Slide 18: Pulp Business P&L

    Pulp Business P&L 2018 P&L Bridge (€ Mn) Includes mark to market of forestry Provision for the Provision related to Includes €18.8 Mn expenses related Includes €6.6 Mn plantations in southern Spain cancellation of no longer Ence´s Environmental to the early redemption of the dividend from the follow

  19. Slide 19: Pulp Business Cash flow generation

    Pulp Business Cash flow generation 2018 Cash Flow Bridge (€ Mn) €13.7 Mn payment related to the Dividend collection from Equity contribution of €78 Mn €62.4 Mn of Strategic Plan early redemption of the €250 Mn the Renewable Energy to the Renewable Energy investments High Yield bond in Q2 business Bu

  20. Slide 20: Ongoing FX hedging program

    Ongoing FX hedging program To mitigate FX volatility in the Pulp Business Dollar/Euro Exchange Rate Evolution Current Hedges 1.4 1.35 H1 19: 63% revenues  Avg. cap: $ 1.24 € 1.3  Avg. floor: $ 1.17 € $1.25/€ 1.25 H2 19: 63% revenues 1.2  Avg. cap: $ 1.26 € 1.15  Avg. floor: $ 1.18 € $1.17/€ 1.1

  21. Slide 21: Pulp Business Solid balance sheet and strong liquidity

    Pulp Business Solid balance sheet and strong liquidity Leverage as of December 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €160 Mn Convertible bond 1 €149 Mn bilateral loans Leverage: 72.3 2981 150.4 0.6 x €70 Mn Sustainable RCF fully available 160.0 147.6 1.2 7.4 41.4 26.3 Gross debt Cash Net debt 20

  22. Slide 22: Renewable Energy Business Operating performance

    Renewable Energy Business Operating performance Energy Volume (MWh) Revenues (€ Mn) +4.5% +4.4% 923,935 138.9 2018 EBITDA stable  2.1% decline in average selling price caped 884,149 133 by the regulatory collar 1  4.5% increase in energy volume sold 2017 2018 2017 2018  Increasing contribution fr

  23. Slide 23: Renewable Energy Business P&L

    Renewable Energy Business P&L 2018 P&L Bridge (€ Mn) Includes €10.5 Mn provision for the regulatory collar1 45.3 19.5 25.8 10.4 3.7 2.5 11.6 9.1 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 1. Regulatory collar: Adjustment derived from th

  24. Slide 24: Renewable Energy Business Cash flow generation

    Renewable Energy Business Cash flow generation 2018 Cash Flow Bridge (€ Mn) €124.8 Mn net cash outflow related with the 50 MW thermosolar plant acquisition and €103 Mn investment for the construction of new Huelva 46 Mw and Ciudad Real 50 Mw power plants 4.5 4.3 10 1.0 2.1 45.3 45.3 45.5 35.5 33.4 3

  25. Slide 25: Renewable Energy Business Solid balance sheet and strong liquidity

    Renewable Energy Business Solid balance sheet and strong liquidity Leverage as of December 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €139 Mn Thermosolar bridge loan €218 Mn Energy parent corporate financing €20 Mn RCF – Fully available 357.6 200.5 Leverage: 2.5x1 139 157.2 140.3 14.4 17.4 26.4 26.4

  26. Slide 26: Closing Remarks

    Closing Remarks

  27. Slide 27: Closing Remarks

    Closing Remarks Strong pulp price scenario maintained for the coming years Tighter supply and demand balance expected until at least 2022 FY2019 pulp sales forecast of more than 1 Mn t, with capacity expansions of 100,000 t during 1H 2019 and EBITDA target of €275 Mn at 1,050$/t and 1.20 $/€, despit

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: Delivering value, delivering commitments

    Delivering value, delivering commitments

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