Ence Energia Y Celulosa Sa · BME:ENC

Ence Energia Y Celulosa Sa — Q1 2018 Earnings Presentation

28 slides from Ence Energia Y Celulosa Sa's earnings presentation, Apr 25, 2018

  1. Slide 1: Q1 2018 Results

    Q1 2018 Results April 25th 2018

  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 Q1 2018 Results

    Highlights Q1 2018 Results Increasing pulp  Additional pulp price increases up to $ 1,050 / t for April prices with a tight  Strong global demand demand & supply balance  Low inventories across the value chain  No new large capacity announced in the industry Strong 1Q18 results  54% EBITDA grow

  5. Slide 5: Increasing pulp prices

    Increasing pulp prices 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 Mar 2018 RISI Estimates 1.200 1.100 1.000 1,195 900 1,053 995 1,010 800 907 905 700 600 500 400 ene-18 ene-19 ene

  6. Slide 6: No large capacity increases announced in the industry

    No large capacity increases announced in the industry Implies a tighter market during at least the next three years 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 ESTIMATED BHKP DEMAND INCREASE 1.6 2.0 3.6 1.4 5.0 1.4 6.

  7. Slide 7: Strong Q1 2018 Results

    Strong Q1 2018 Results Following pulp price increases Group Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) + 13% + 54% + 115% 196.3 62.9 29.5 174.2 40.8 13.7 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 Energy Pulp Energy Pulp Energy Pulp Pulp business: 15% revenue growth Pulp business: 80% EBITDA gro

  8. Slide 8: Increasing margins in the Pulp Business

    Increasing margins in the Pulp Business Despite higher cash cost Gross Pulp Price (€/t) & Cash Cost (€/t) Gross Pulp Price Cash Cost Gross Pulp Price Increase: 183 €/t 823 Cash Cost Increase: 25 €/t 640 454 €/t 296 €/t Spread Spread 344 369 31-mar-17 Avg. 1Q17 Avg. 1Q18 31-mar-18 9 €/t Cash Cost inc

  9. Slide 9: Active management of Energy production limit

    Active management of Energy production limit €55 Mn EBITDA guidance maintained Energy Business Expected EBITDA (€ Mn) Ongoing Biomass Diversification 2015 86 14 55 2016 62 38 2017 43 57 9 2018e 30 70 Q1 2018 Q2 2018e Q3 2018e Q4 2018e 2018e Forestry biomass Agricultural biomass Lower EBITDA in 1Q18

  10. Slide 10: Strong Free Cash Flow and Net Debt reduction

    Strong Free Cash Flow and Net Debt reduction Reducing financial leverage to 0.5 x LTM EBITDA Normalized FCF1 (€ Mn) Net Debt Reduction in 1Q18 Lower Leverage than Peers + 50% -18% x 5.8 27.3 18.3 2.9 153.1 125.6 0.5 1Q17 1Q18 Dec 2017 1Q18 Energy Pulp Peers2 Energy Pulp Strong Normalized Free Cash F

  11. Slide 11: Strategic Plan investments on track

    Strategic Plan investments on track Pontevedra 30,000 tons capacity expansion successfully executed Pontevedra Investment Plan (€ Mn) Capacity Increase 30,000 t in March 2018 45 34 24 6 months rump up 2018e 2019e 2020e 40,000 t in 2019 Pulp Navia Investment Plan (€ Mn) Capacity Increase 54 42 80,000

  12. Slide 12: Maintaining an attractive shareholder remuneration

    Maintaining an attractive shareholder remuneration Final dividend of €16 Mn paid in April Annual Accrued Dividends (€ Mn) Dividend Policy Dividend €0.10 €0.14 €0.16 €0.19 Per Share 50% €46 Mn €41 Mn 1 Payout €36 Mn FINAL (Paid 12th April) €16 Mn €25 Mn 3 INTERIM (Paid) Payments €30 Mn  First interi

  13. Slide 13: Q1 2018 Results by Business

    » Q1 2018 Results by Business

  14. Slide 14: Pulp Business: Operating performance

    Pulp Business Operating performance Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) Avg. Cash Cost (€/t) + 29.2% - 5.4% +7.5% 369 601 344 466 246,139 232,735 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 EBITDA (€ Mn) 80% EBITDA growth up to €54 Mn + 79.6%  29.2% net pulp price increase 54  5.4% decrease in pulp

  15. Slide 15: Pulp Business: P&L

    Pulp Business P&L 1Q18 P&L Bridge (€ Mn) 54.1 12.7 3.4 0.2 41.4 9.7 28.2 EBITDA Depreciation and other EBIT Financial expenses Other financial result Taxes Net profit results on fixed assets 15

  16. Slide 16: Pulp Business: Cash Flow generation

    Pulp Business Cash Flow generation 1Q18 Cash Flow Bridge (€ Mn) Lower factoring for €15.5 Mn due to a calendar effect that will be compensated in next €8.1 Mn of Strategic Plan Mainly includes commercial Price adjustment quarters investments rappel and on last year land regulatory collar sales 54.1

  17. Slide 17: 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 Q2 18: 50% revenues  Avg. cap: $ 1.16€ 1,3  Avg. floor: $ 1.08 € 1,25 H2 18: 50% revenues 1,2 $1.16/€  Avg. cap: $ 1.16 € 1,15  Avg. floor: $ 1.11 € 1,1 H1 19: 50

  18. Slide 18: Pulp Business: Solid balance sheet and strong liquidity

    Pulp Business Solid balance sheet and strong liquidity Leverage as of March 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €250 Mn HY bond 5.9 €160 Mn Convertible bond 1 460.2 361.9 Leverage: 24.7 0.5 x €65.5 Mn bilateral loans 250 €90 Mn RCF fully available 160 20.5 98.3 5.5 5.5 3.4 Gross debt Cash Net

  19. 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

  20. Slide 20: Energy Business: Operating performance

    Energy Business Operating performance Avg. Selling Price (€/MWh) Energy Volume (MWh) Revenues (€ Mn) -9.1% +7.8% +1.2% 113.3 227,610 34.0 102.9 33.6 211,045 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 EBITDA (€ Mn) 18% EBITDA decline -17.6%  9.1% average selling price reduction  7.8% increase in energy volume s

  21. Slide 21: Energy Business: P&L

    Energy Business P&L 1Q18 P&L Bridge (€ Mn) - €1.1 Mn provision for the regulatory collar 8.8 4.2 4.6 2.3 0.6 0.3 1.7 1.4 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 1. Regulatory collar: Adjustment derived from the deviation between the

  22. Slide 22: Energy Business: Cash Flow generation

    Energy Business Cash Flow generation 1Q18 Cash Flow Bridge (€ Mn) Includes €1.1Mn for the regulatory collar and Construction of new Huelva other non cash expenses 40 Mw power plant 8.8 1.9 1.8 3.7 0.3 8.4 1.1 4.4 (0.4) EBITDA Change in working Maintenance Interest payment Taxes Normalized Free Other

  23. Slide 23: Energy Business: Solid balance sheet and strong liquidity

    Energy Business Solid balance sheet and strong liquidity Leverage as of March 2018 (€ Mn) Debt Maturity Calendar (€ Mn) €147 Mn - Drawn €53 Mn for Huelva 40 MW– Undrawn 144.4 117.1 Leverage: €20 Mn RCF – Fully available 91.0 0.6x 27.3 17.0 18.0 14.0 7.0 Gross debt Cash Net debt 2018 2019 2020 2021 >

  24. Slide 24: Closing Remarks

    > Closing Remarks

  25. Slide 25: Closing Remarks

    Closing Remarks Increasing pulp prices Tight supply and demand balance expected for the next 3 years 2018 EBITDA above €300 Mn, at current market conditions Maintaining an attractive shareholder remuneration (50% dividend pay-out) and a low leverage ratio to ensure Strategic Plan pending investments

  26. Slide 26: 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

  27. Slide 27: 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

  28. Slide 28: Delivering value, delivering commitments

    Delivering value, delivering commitments

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