Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — H1 2019 Earnings Presentation
29 slides from Ence Energia Y Celulosa Sa's earnings presentation, Jul 31, 2019
Slide 1: 1H 2019 Results
1H 2019 Results 18 July 31st, 2019
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 2019
Highlights 1H 2019 Pulp price stabilization Pulp prices in China are already below higher cash cost producers before increasing Lower pulp supply during 2H 2019 will contribute to reduce producers inventories No new capacity confirmed until 2H 2021 Pulp business 42% EBITDA decline vs. 1H 201
Slide 5: Pulp price stabilization expected before increasing
Pulp price stabilization expected before increasing Pulp prices in China below the cost of less efficient producers European Hardwood (BHKP) Cash Cost (CIF China) Pulp Price Consensus as of July 2019 not including overhead & financial costs1 (RISI, Hawkins Wright, Brian McClay) $/t $/t 1037 926 912
Slide 6: Market related downtime announced for over 1 Mn t in 2H19
Market related downtime announced for over 1 Mn t in 2H19 Only one large capacity increase confirmed for 2H 2021 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 CHANGE 0.5 1
Slide 7: 1H 2019 Results
1H 2019 Results Driven by FX hedging settlements, spot sales and inventory increases Group Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) -3.5% -31.5% -50.4% 135 400 386 50 92 25 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 Renewable Energy Pulp Renewable Energy Pulp Renewable Energy
Slide 8: 1H19 Pulp business cash cost of 396 €/t
1H19 Pulp business cash cost of 396 €/t An increase of 22 €/t vs. 1H18 Cash Cost breakdown €/t Wood cost Conversion costs Commercial and logistic costs Overheads 374 396 €22 Cash Cost increase vs. 1H 2018 mainly 39 31 due to: 31 32 11 €/t wood cost increase 112 116 8 €/t overhead cost increase d
Slide 9: Renewable Energy business EBITDA growth
Renewable Energy business EBITDA growth EBITDA target of around €65 Mn for 2019 Renewable Energy Business EBITDA Expected Renewable Energy EBITDA in 2019 & 2020 €95 - 100 Mn +30.5% New biomass c.€30 Mn power plants €25.7 Mn €65 Mn €19.7Mn €45 Mn 1H 2018 1H 2019 2018 2019e 2020e 30% EBITDA growth dri
Slide 10: Normalized Free Cash Flow & Capex growth
Normalized Free Cash Flow & Capex growth Financial leverage of 1.8x EBITDA after Strategic Plan investments Normalized FCF1 (€ Mn) Growth Capex (€ Mn) Net Debt (€ Mn) -27.4% +92% +52% 87 465 63 157 305 IFRS16 Pulp 82 44.7 IFRS16 Energy 8.4 1H 2018 1H 2019 1H 2018 1H 2019 2018 1H 2019 Renewable Energ
Slide 11: Strategic Plan investments
Strategic Plan investments Lower than anticipated capex in 2019, with Navia’s expansion in October Investments Pontevedra Pulp Renewable Energy Capacity Increase 20,000 t ramp-up phase 265 Navia 130 Capacity Increase 157 80,000 t to be implemented in October 2019 87 New biomass capacity 135 70 Two n
Slide 12: Navia 340k t Swing-Line project - Board decision in 1Q 2020
Navia 340k t Swing-Line project - Board decision in 1Q 2020 Execution depending on pulp market and leverage expectations New Swing-Line Navia 4Q 2019 1Q 2020 4Q 2021 Flexible production Permitting, Strategic Plan Board Initial EPC €450 Mn capex Decision Start-up Date completed Up to 200,000 t or Up
Slide 13: Pontevedra's Biomill legal status
Pontevedra’s Biomill legal status Ence is defending the legality of the concession extension granted until 2073 On January 2016 the National Directorate The 1958 biomill's original concession was extended for 60 years (starting November 8th 2013) by the National Directorate of Coasts of Coasts gra
Slide 14: Excellence in sustainability
Excellence in sustainability A strategic priority for Ence Renewable & Promoting Dynamization of Caring Water footprint Circular economy Commitment to Promotion of sustainable sustainable rural areas for communities reduction promotion energy health and equality and forestry generation safety divers
Slide 15: 1H 2019 Results by Business
1H 2019 Results by Business
Slide 16: Pulp Business
Pulp Business 1H19 impacted by pulp prices, volumes & FX hedges, as anticipated Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) EBITDA decreased to €66.6 Mn due to: -4.5% -5.4% €14.7 Mn negative settlements from FX 617.9 hedging program vs. positive €5.2 Mn in 592.4 463,121 437,950 1H18 Lower th
Slide 17: Pulp Business P&L
Pulp Business P&L 1H 2019 P&L Bridge (€ Mn) €14.7 Mn negative FX hedging settlements vs. €5.2 Mn positive settlements in 1H18 Positive FX effect on receivables 66.6 29.3 2.1 4.1 0.6 35.2 7.8 23.8 EBITDA Depreciation and Pontevedra EBIT Financial expenses Other financial result Taxes Net profit other
Slide 18: Pulp Business Cash flow generation
Pulp Business Cash flow generation 1H 2019 Cash Flow Bridge (€ Mn) €70.3 Mn of Strategic Plan 8.3 investments 9.2 1.4 5.1 5.0 66.6 42.6 58.5 -18.2 11.8 4.5 EBITDA Change in Maintenance Financial Taxes NORMALIZED Other Expansion Sustainability Divestments FCF working capital CAPEX charges/payments FC
Slide 19: 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 19: 91% revenues Avg. cap: $ 1.26 € 1,3 Avg. floor: $ 1.19 € $1.26/€ 1,25 H1 20: 66% revenues 1,2 Avg. cap: $ 1.22 € $1.19/€ 1,15 Avg. floor: $ 1.16 € 1,1
Slide 20: Pulp Business Solid balance sheet and strong liquidity
Pulp Business Solid balance sheet and strong liquidity Leverage as of 30th June 2019 (€ Mn) Debt Maturity Calendar (€ Mn) €160 Mn Convertible bond 1 345.0 €150 Mn bilateral loans Leverage: 71.9 IFRS16 44.7 111.8 1.2x €70 Mn Sustainable RCF fully available impact 233.2 160.0 6.2 6.6 40.8 25.7 Gross d
Slide 21: Renewable Energy Business
Renewable Energy Business Including the contribution of Ciudad Real 50 MW solar thermal plant Energy Volume (MWh) Revenues (€ Mn) +7.8% +17.5% 482,580 447,469 80.8 30.5% EBITDA growth driven by: 68.8 7.8% increase in energy volume sold 1H 2018 1H 2019 1H 2018 1H 2019 Increasing contribution from
Slide 22: Renewable Energy Business P&L
Renewable Energy Business P&L 1H 2019 P&L Bridge (€ Mn) 25.7 13.9 11.8 8.9 0.3 1.2 1.4 2.6 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 22
Slide 23: Renewable Energy Business Cash flow generation
Renewable Energy Business Cash flow generation 1H 2019 Cash Flow Bridge (€ Mn) €86.8 Mn investment for the construction of the new Huelva 46 Mw & Ciudad Real 50 Mw power plants 4.9 3.4 6.8 1.2 0.2 25.7 25,7 27,2 20,4 20,2 20.2 20,2 EBITDA Change in working Maintenance Interest payment Taxes Normaliz
Slide 24: Renewable Energy Business Asset growth upon Strategic Plan execution
Renewable Energy Business Asset growth upon Strategic Plan execution Leverage as of June 30th 2019 (€ Mn) Debt Maturity Calendar (€ Mn) 325.2 IFRS16 Leverage: €107 Mn solar thermal plant project financing 8.4 3.9 x1 impact 93,6 €220 Mn Energy parent corporate financing €20 Mn RCF – Fully available 2
Slide 25: Closing Remarks
Closing Remarks
Slide 26: Closing Remarks
Closing Remarks Pulp price stabilization expected, before increasing Tight supply and demand balance expected until at least 2022 Renewable Energy Business will start up its two new biomass power plants in December, improving annualized EBITDA by around €30 Mn and up to €95 - 100 Mn Pulp Business ma
Slide 27: 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 28: 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
Slide 29: Delivering value Delivering commitments
Delivering value Delivering commitments
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