Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — 9M23 Earnings Presentation
39 slides from Ence Energia Y Celulosa Sa's earnings presentation, Oct 31, 2023
Slide 1: 9M23 Results
9M23 Results 18 31 October 2023 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: Today’s presenters
Today’s presenters Ignacio de Colmenares Alfredo Avello Chairman & CEO CFO and Chief Forestry Officer Ence Energía y Celulosa Ence Energía y Celulosa 3
Slide 4: 9M23 Results Summary
9M23 Results Summary 1. 9M23 Highlights 2. 4Q23 Outlook 3. Growth & Diversification Opportunities Pulp prices in Europe bottomed out in 3Q23, Our unique competitive advantage: following a sharp correction in 9M23 >95% of our wood is locally sourced Pulp prices in Europe will continue Pulp di
Slide 5: 1. 9M23 Highlights
1. 9M23 Highlights 5
Slide 6: 9M23 Highlights
9M23 Highlights 1 Pulp prices started to recover in 4Q23 following a sharp correction in 9M23. The main pulp producers 2 152 €/t cash cost reduction in 3Q23 vs. 1Q23 partially mitigated a 37% net pulp price 3 Our differentiated products accounted for 25% of our pulp sales in 3Q23. They offer a have
Slide 7: Pulp price recovery started in 4Q23
Pulp price recovery started in 4Q23 Cash cost will continue to reduce in the coming quarters Avg. NET Pulp Price & Cash-Cost (€/t) 900 846 800 762 694 700 578 600 477 500 400 300 1H22 2H22 1Q23 2Q23 3Q23 4Q23 E 2024 E Cash - Cost Avg. Net Pulp Price Based on pulp price forecasts from RISI, HW, TTO a
Slide 8: We expect pulp demand to exceed supply over 2023-27
We expect pulp demand to exceed supply over 2023-27 Wood availability is limiting competitive pulp capacity additions Market Pulp: Expected Supply and Demand Growth over 2023 - 2027 Main market pulp demand growth drivers: (Mn tons) 10 Expected supply growth includes the following: a) Arauco MAPA 1.5
Slide 9: Our differentiated products accounted for 25% of our pulp sales in 3Q23
Our differentiated products accounted for 25% of our pulp sales in 3Q23 Lower environmental footprint and enhanced technical properties at a higher margin Aiming to replace softwood pulp Targeting customers with high sustainability standards + Minimizing the energy consumption during the refin
Slide 10: 9M23 Consolidated Results
9M23 Consolidated Results Driven by lower pulp and energy prices Group Revenues (€ m) Group EBITDA (€ m) Attributable Net Income (€ m) - 20% - 70% 67 787 208 630 64 -28 9M 22 9M 23 9M 22 9M 23 9M 22 9M 23 Group Revenues - 20% to €630m Group EBITDA - 70% to €64m Group attributable net result: €(28)m
Slide 11: Positive FCF before working capital normalization and growth capex
Positive FCF before working capital normalization and growth capex WC outflow includes the return of €85m from the excess Ro collected in 2022 Short Cash Flow Statement 9M23 (€m) 100 (14) (17) 50 64 (14) (2) 17 0 (85) -50 -100 (41) (40) (150) -150 EBITDA Maintenance Net interest Tax payments Cash Fr
Slide 12: €140m dividend paid in 1H23, against 2022 Results
€140m dividend paid in 1H23, against 2022 Results Based on strong FCF generation and low leverage Dividend policy Dividend payment against FY2022 results (€m) Amount based on cash 250 0.29 €/sh. available for distribution 200 Ensuring a leverage below: 70 150 0.29 €/sh. Net Debt / EBITDA for the Pul
Slide 13: Low leverage position vs. our average cycle EBITDA
Low leverage position vs. our average cycle EBITDA Solid cash balance of €298m at 30 September 2023 Pulp business net debt as of 30 Sept. 2023 (€ m) Pulp business debt maturity schedule (€ m) €357m of bilateral loans €130m RCF – Fully available 441 1 Lease contracts €45m of public sector financing €
Slide 14: 1a. Pulp Business
1a. Pulp Business 14
Slide 15: 705 K tons of pulp sold in 9M23
705 K tons of pulp sold in 9M23 Differentiated & higher value-added products accounted for 18% of pulp sales in 9M23 Differentiated products Geographical sales breakdown Breakdown by end product % of pulp sales % of pulp sales % of pulp sales 8% Other 18% Europe 92% 30% Speciality vs. 18% in 9M22 Ti
Slide 16: Pulp business impacted by the pulp price correction over 9M23
Pulp business impacted by the pulp price correction over 9M23 Pulp price recovery in Europe started in 4Q23 Avg. NET Sales price Pulp Revenues Pulp EBITDA (€/t) (€m) (€m) - 75% - 18% - 17% 71 111 733 554 462 600 28 9M22 9M23 9M22 9M23 9M22 9M23 -18% net average sales pulp price vs. 9M22. Pulp pric
Slide 17: 152 €/t cash cost reduction in 3Q23 vs. 1Q23
152 €/t cash cost reduction in 3Q23 vs. 1Q23 Downward trend to continue in the coming quarters Cash cost (€/t) 800 636 €/t 700 101 €/t 46 €/t 600 535 €/t Extra-costs of the repairs to 590 €/t 51 €/t 28 €/t 484 €/t 500 < 470 €/t the Pontevedra energy turbine, 507 €/t and the new water recovery 400
Slide 18: 1b. Renewables Business
1b.) Renewables Business 18
Slide 19: Renewables results were driven by the regulated energy price update
Renewables results were driven by the regulated energy price update Accounting (non cash) impact in 2023 is offset by a higher Ri cashed annually from 2023 Energy sold Renewables Revenues Renewables EBITDA (GWh) (€m) (€m) - 32% - 28% - 63% 71 96 1.190 236 170 807 36 9M22 9M23 9M22 9M23 9M22 9M23 T
Slide 20: PV project sales in 9M23 contributed €27m to EBITDA
PV project sales in 9M23 contributed €27m to EBITDA Another €23m EBITDA expected from the remaining PV project sales in 2024 Portfolio location Jaen 100 MW Granada 133 MW Land Grid connection √ permit Huelva 40 MW Engineering Environmental permit Sevilla 90 MW Land Grid connection √ permit Engineeri
Slide 21: ENCE: industry leader in sustainability
ENCE: industry leader in sustainability Global ESG score: 3Q23 Highlights 90/100 Production cost reduction Leadership and differentiation License to operate Risk minimisation Safe & efficient Climate People & Sustainable operations action Values agroforestry Protecting Health and Safety Committed to
Slide 22: 2. 4Q23 Outlook
2. 4Q23 Outlook 22
Slide 23: 4Q23 Outlook
4Q23 Outlook Pulp prices in Europe will continue their Cash cost reductions will continue in the 1 recovery in 4Q23. Main pulp producers have announced several price increases, up to 980 gross USD/t from November 2 coming quarters. Expected cash cost below 470 €/t in 4Q23 Lower renewable energy outp
Slide 24: 3. Growth & Diversification Opportunities
3. Growth & Diversification Opportunities 24
Slide 25: Our unique competitive advantage: over 95% of our wood is locally sourced
Our unique competitive advantage: over 95% of our wood is locally sourced We benefit from our close access to eucalyptus plantations around our biomills Eucalyptus plantations surface in N.W. Spain Main figures (FY2022): GALICIA Navia CANTABRIA 2.8 million m3 of wood purchased in 2022 400.000 h 40
Slide 26: Acquisition of Sniace forestry assets in 4Q23
Acquisition of Sniace forestry assets in 4Q23 Reinforcing our position as the largest private forest manager in Spain Ence eucalyptus plantations Hectares Annual production and book value 2022: Sinace Annual production: 0,4 million m3/year c.15,500 h + 3,400 h Book value: €144m (€84m land + €60m
Slide 27: Growth and diversification opportunities in the Pulp business
Growth and diversification opportunities in the Pulp business Without increasing the consumption of wood Status: On track Status: Approved Status: Engineering phase ROCE target: >12% ROCE target: >12% ROCE target: >12% DIFFERENTIATED PRODUCTS FLUFF BLEACHED RECYCLED PULP To develop and sell our diff
Slide 28: Ence Biogas
Growth and diversification opportunities in Renewables Ence Biogas Ence Biogas Biomethane Ence incorporated a new subsidiary in 2022, for the development and operation of biomethane plants. These plants will recycle local organic waste into biomethane, attracting the associated sustainability ce
Slide 29: Biomass Supply, Biomass Power and Renewable Industrial Heating
Other growth and diversification opportunities in Renewables Biomass Supply, Biomass Power and Renewable Industrial Heating Biomass Supply Biomass Power Renewable Industrial Heating We are the largest agro-forestry biomass We are working with potential industrial We have developed 3 projects w
Slide 30: PV Projects, Carbon Credits and Green Fuels
Other growth and diversification opportunities in Renewables PV projects, Carbon Credits and Green Fuels PV Projects Carbon Credits Green Fuels 140 MW sold in 9M23 with an €27m >500 hectares already registered with Biomass power is the only source of EBITDA contribution Spanish Climate Change
Slide 31: Closing Remarks
Closing Remarks 1. 9M23 Highlights 2. 4Q23 Outlook 3. Growth & Diversification Opportunities Pulp prices in Europe bottomed out in 3Q23, Our unique competitive advantage: following a sharp correction in 9M23 >95% of our wood is locally sourced Pulp prices in Europe will continue Pulp diversi
Slide 32: Appendix
5. Appendix 32
Slide 33: Group Financial Review: Short P&L
Group Financial Review Short P&L 9M23 9M22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Total revenue 462,3 169,6 (2,2) 629,6 553,8 235,8 (2,5) 787,1 Other income 21,9 4,1 (0,9) 25,1 15,9 6,0 (0,8) 21,1 Foreign exchange hedging operations results (
Slide 34: Group Financial Review: Short Cash Flow
Group Financial Review Short Cash Flow 9M23 9M22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Consolidated profit/(loss) for the period before tax (37,6) (2,0) 1,2 (38,5) 68,9 11,1 1,3 81,3 Depreciation and amortisation 47,6 28,4 (1,2) 74,7 36,7 35
Slide 35: Group Financial Review: Short Balance Sheet
Group Financial Review Short Balance Sheet Sep-23 Dec-22 Figures in € m Pulp Renewables Adjustments Consolidated Pulp Renewables Adjustments Consolidated Intangible assets 16,8 34,0 (12,3) 38,6 15,6 35,0 (12,7) 37,9 Property, plant and equipment 609,4 370,8 (7,7) 972,5 603,4 389,0 (8,5) 983,9 Biolog
Slide 36: 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 37: 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 38: 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 39: Delivering value, Delivering commitments
Global ESG score: 90/100 Delivering value Delivering commitments