Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — H1 2018 Earnings Presentation
30 slides from Ence Energia Y Celulosa Sa's earnings presentation, Jul 25, 2018
Slide 1: 1H 2018 Results
1H 2018 Results July 25th 2018
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: Highlights
Highlights
Slide 4: Highlights 1H 2018 Results
Highlights 1H 2018 Results Pulp prices to Strong global demand continue increasing with a tighter demand Low inventories across the value chain & supply balance No new large capacity increase announcements in the industry Strong 1H18 results 49% EBITDA growth and 60% Net Income growth vs.1H
Slide 5: Market tightness will keep on increasing until at least 2022
Market tightness will keep on increasing until at least 2022 Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t)1 Mn t 2017 2018 2017-18 2019 2017-19 2020 2017-20 2021 2017-21 2022 2017-22 2023 2017-23 2024 2017-24 ESTIMATED BHKP DEMAND INCREASE 1.6 2.0 3.6 1.4 5.0 1.4 6.4 1
Slide 6: Pulp prices to continue increasing
Pulp prices to continue increasing With a tighter supply and demand balance European Hardwood (BHKP) Pulp Prices ($/t) RISI´s Estimates for European Annual Average BHKP ($/t) Dec 2017 RISI Estimates June 2018 RISI Estimates 1,300 1,200 1,050 $/t 1,195 1,100 1,000 1,080 1,038 1,010 900 907 905 800 70
Slide 7: Strong 1H 2018 Results
Strong 1H 2018 Results Thanks to pulp price increases and energy business growth Group Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) + 17% + 49% + 60% 130.8 400.3 341.8 87.9 50.3 31.5 1H17 1H18 1H17 1H18 1H17 1H18 Energy Pulp Energy Pulp Energy Pulp Pulp business: 17% revenue growth Pu
Slide 8: Increasing margins in the Pulp Business
Increasing margins in the Pulp Business FY 2018 Cash Cost forecast of 372 €/t Gross Pulp Price (€/t) vs. Cash Cost (€/t) FY 2018 quarterly Cash Cost Gross Pulp Price Cash Cost Gross Pulp Price Increase: 162 €/t 907 745 Cash Cost Increase: 29 €/t 378 533 €/t 369 370 370 372 400 €/t Spread Spread 345
Slide 9: Higher Energy volumes expected for 2H18
Higher Energy volumes expected for 2H18 €55 Mn annual EBITDA target Energy Business Expected EBITDA (€ Mn) Ongoing Biomass Diversification (%) 2015 86 14 55 17 2016 62 38 18 2017 43 57 11 2018e 30 70 9 Q1 2018 Q2 2018 Q3 2018e Q4 2018e 2018e Forestry biomass Agricultural biomass 5.4% EBITDA growth
Slide 10: Strong Free Cash Flow generation
Strong Free Cash Flow generation Low financial leverage of 0.6 x LTM EBITDA Normalized FCF1 (€ Mn) Net Debt Stable in 1H18 Lower Leverage than Peers + 68% -0.5% x 4.3 81.2 48.3 153.1 152.3 2.6 0.6 1H17 1H18 Dec 2017 1H18 Energy Pulp Peers2 Energy Pulp Strong Normalized Free Cash Flow Net debt stable
Slide 11: Strategic Plan investments on track
Strategic Plan investments on track 99 Mw of new capacity in Energy to achieve €90 Mn EBITDA in 2020 Energy Business Investments Energy Business Investment Plan Summary Total Exp. Annual Expected Capex (€ Mn) Capacity Increase contribution to EBITDA Opening 99 Mw €30 Mn Dec. 2019 115 75 15 2018e 201
Slide 12: Strategic Plan investments on track
Strategic Plan investments on track 80,000 tons capacity expansion in 2Q 2019 prepared Pulp Business Investments Pontevedra Capacity Increase Investment Plan (€ Mn) 30,000 t in March 2018 45 34 24 6 months ramp up Expected EBITDA contribution of 2018e 2019e 2020e €10 Mn at current market prices Navi
Slide 13: Maintaining an attractive shareholder remuneration
Maintaining an attractive shareholder remuneration First interim dividend of 25 Mn€ to be paid on September 12 Annual Accrued Dividends (€ Mn) Dividend Policy Dividend €0.10 €0.14 €0.16 €0.19 Per Share 50% Payout €46 Mn €41 Mn 1 3 €36 Mn €25 Mn Payments 1st INTERIM First interim dividend agreed up
Slide 14: 1H 2018 Results by Business
1H 2018 Results by Business
Slide 15: Pulp Business
Pulp Business Operating performance Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) Avg. Cash Cost (€/t) + 25.5% - 3.7% +8.5% 374.0 480,866 463,121 618 344.5 493 1H17 1H18 1H17 1H18 1H17 1H18 EBITDA (€ Mn) + 60.4% 60% EBITDA growth up to €111 Mn 111 25.5% net pulp price increase 3.7% decrease in
Slide 16: Pulp Business
Pulp Business P&L 1H18 P&L Bridge (€ Mn) Includes €18.8 Mn expenses related to the Includes €6.6 Mn early redemption of the €250 Mn High Yield dividend from the Energy 111.1 bond in Q2 of which €5.1 Mn are non cash business in Q2 23.5 87.6 24.3 7.9 16.3 54.9 EBITDA Depreciation and other EBIT Financ
Slide 17: Pulp Business
Pulp Business Cash Flow generation 1H18 Cash Flow Bridge (€ Mn) €13.7 Mn payment related to the early redemption €22.9 Mn of Strategic Includes sale of Huelva location of the €250 Mn High Yield bond in Q2, including Plan investments to the Energy business for €2.5 €7Mn redemption premium and €6.7Mn
Slide 18: 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 H2 18: 59% revenues Avg. cap: $ 1.17€ 1.3 Avg. floor: $ 1.14 € 1.25 H1 19: 59% revenues 1.2 $1.17/€ Avg. cap: $ 1.26 € 1.15 Avg. floor: $ 1.20 € $1.14/€ 1.1 Q
Slide 19: Pulp business refinancing
Pulp business refinancing To save €11 Mn interest payment as from 2019 Old High Yield Bond New Convertible Bond 5.375% Conversion Price Interest Rate - €11.4 Mn 7.2635 €/share Annual Interest €250 Mn Payment Maturity Date 1.25% Interest Rate 5 March 2023 €160 Mn Accounted as Equity 1 €14.5 Mn Accoun
Slide 20: Towards a sustainable financing model
Towards a sustainable financing model Enhancing Ence´s commitment with best ESG standards Green Loan (Bankia) Ence confirms its Ence is one of the €20 Mn commitment to pioneers in sustainability Pulp environmental May sustainability financing in Spain 2018 Sustainable Credit Line €70 Mn Interest rat
Slide 21: Pulp Business
Pulp Business Solid balance sheet and strong liquidity Leverage as of June 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €160 Mn Convertible bond 1 €84.8 Mn bilateral loans 33.0 230.4 145.9 Leverage: 0.4 x €70 Mn Sustainable RCF fully available 160 84.5 1.1 1.2 7.5 19.7 22.3 Gross debt Cash Net debt 201
Slide 22: Energy Business
Energy Business Operating performance Avg. Selling Price (€/MWh) Energy Volume (MWh) Revenues (€ Mn) + 0.5% + 22.3% +18.2% 107.6 108.2 447,485 365,786 68.9 58.2 1H17 1H18 1H17 1H18 1H17 1H18 EBITDA (€ Mn) 5.4% EBITDA growth + 5.4% 0.5% average selling price change 22.3% increase in energy volume
Slide 23: Energy Business
Energy Business P&L 1H18 P&L Bridge (€ Mn) - €1.5 Mn provision for the regulatory collar 19.7 8.7 11.0 4.7 1.6 1.0 4.7 3.7 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 1. Regulatory collar: Adjustment derived from the deviation between th
Slide 24: Energy Business
Energy Business Cash Flow generation 1H18 Cash Flow Bridge (€ Mn) Includes €1.5 Mn from the Construction of new Huelva regulatory collar and other 46 Mw and Ciudad Real 46 non cash expenses Mw power plants 0.6 2.8 19.7 4.9 0.8 3.0 10.5 57.8 -44.3 EBITDA Change in working Maintenance Interest payment
Slide 25: Energy Business
Energy Business Solid balance sheet and strong liquidity Leverage as of June 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €158,5 Mn Green Loan & Note (S&P) – Drawn amount €20 Mn RCF – Fully available 155.1 87.3 Leverage: 89.1 1.5x 67.8 18.4 18.4 3.5 14.0 15.1 Gross debt Cash Net debt 2018 2019 2020 202
Slide 26: Closing Remarks
> Closing Remarks
Slide 27: Closing Remarks
Closing Remarks Increasing pulp prices Tighter supply and demand balance expected until at least 2022 Expected 2018 EBITDA above €300 Mn Maintaining an attractive shareholder remuneration (50% dividend pay-out) and a low leverage ratio to ensure Strategic Plan pending investments New Strategic Plan
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
Slide 29: Alternative Performance Measures (APMs) Pg.2
Alternative Performance Measures (APMs) Pg.2 MAINTENANCE, EFFICIENCY & GROWTH AND ENVIRONMENTAL CAPEX Ence provides the breakdown of its capital expenditure related cash outflows for each of its business units in its quarterly earnings report, distinguishing between maintenance, efficiency & growth
Slide 30: Delivering value, delivering commitments
Delivering value, delivering commitments
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