Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — FY2019 Earnings Presentation
33 slides from Ence Energia Y Celulosa Sa's earnings presentation, Feb 27, 2020
Slide 1: FY 2019 Results
FY 2019 Results 18 February 27th, 2020
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 FY 2019
Highlights FY 2019 2.3 Mn t pulp demand growth in 2019 (15% YoY increase in 4Q19) Pulp demand improvement Pulp producers inventories already close to normalized levels in 4Q19 Pulp prices bottoming out in 1Q20, turning from their minimum for the last 10 years reached in 4Q19 Pulp demand is s
Slide 5: Pulp demand improvement in 4Q19
Pulp demand improvement in 4Q19 Pulp producers inventories already close to normalized levels BHKP Demand Evolution (YoY) Producers Inventories BHKP & BSKP 000’s t Days (quarter average) 2.000 65 1.750 1.620 Last 10 years average BHKP: 41 days 59 58 60 Last 10 years average BSKP: 29 days 1.500 54 55
Slide 6: Pulp prices bottoming out in 1Q20
Pulp prices bottoming out in 1Q20 From their 10 year lows reached in 4Q19 Net BHKP Prices China Global Market Pulp Industrial Cash Cost Curve (CIF Europe) 1 $/t $/Mn t 900 800 Last 10 years average BHKP: 640 $/t 700 600 500 400 Current Net Price BHKP China 464 $/t 300 200 100 0 Hardwood (BHKP) Softw
Slide 7: Pulp demand set to outgrow supply over 2020-24
Pulp demand set to outgrow supply over 2020-24 Structural pulp demand growth of 1.5 Mn t per year and only 2 new projects confirmed Expected Annual Increase for Global Market Supply and Demand (Mn t)1 Mn t 2020 2021 2019-21 2022 2019-22 2023 2019-23 2024 2019-24 ESTIMATED ANNUAL MARKET PULP DEMAND I
Slide 8: FY 2019 Results
FY 2019 Results Driven by lower pulp prices, FX settlements and capacity expansions Pulp Business EBITDA (€ Mn) Renewable Energy Business EBITDA (€ Mn) Group Net Income (€ Mn) +14.5% -92.9% -69.4% 52 129 246 45 75 9 2018 2019 2018 2019 2018 2019 Renewable Energy Pulp 69.4% EBITDA decrease in the Pul
Slide 9: Sustainability Plan 2019 – 2023
Sustainability Plan 2019 – 2023 FY2019 Highlights Secure and ecologically Expansion projects and construction of new plants were all completed 99.3% Certification efficient without any serious accidents. Value of waste “Residue 0” operations Sustainable agro-forestry 85% Patrimonial area certified F
Slide 10: Strategic Plan Investments of €263 Mn in FY2019
Strategic Plan Investments of €263 Mn in FY2019 100k t pulp capacity expansions and two new biomass plants (96 MW) Normalized FCF1 (€ Mn) Growth Capex (€ Mn) Net Debt (€ Mn) +68.2% IFRS16 Impact -31.5% -10.7% €52.3 Mn 513 200 291 263 305 137 IFRS16 Pulp 43.7 IFRS16 Energy 8.6 2018 2019 2018 2019 201
Slide 11: Pulp capacity expansion successfully operating in 1Q20
Pulp capacity expansion successfully operating in 1Q20 Higher volumes and lower cash cost expected in FY2020 Pulp Sales Evolution (t) Pontevedra Biomill 1,060,000 947,466 910,499 20,000 t capacity expansion in 1Q19 > 3% production rate vs. January and February 2019 Next annual maintenance shut
Slide 12: 2020 sale agreements with a better commercial mix
2020 sale agreements with a better commercial mix Increasing value of the European market and ENCE’s differentiated offer Sales to the European market Differentiated offer Tons % of pulp sales 1,000,000 12% 726,000 6% 2019 2020 2019 2020 EXPECTED EXPECTED Source: Ence Source: Ence 38% increase of ex
Slide 13: New biomass plants commissioned in 1Q20
New biomass plants commissioned in 1Q20 To boost renewable energy generation by >50% in FY2020 New Biomass Plant CIUDAD REAL 50 MW 316 MW Installed capacity MÉRIDA 20 MW HUELVA 50 MW HUELVA 41 MW CIUDAD REAL 50 MW CIUDAD REAL New Biomass Plant HUELVA 46 MW 50 MW CIUDAD REAL 16 MW JAÉN 16 MW HUELVA 4
Slide 14: Renewable energy pipeline: 405 MW with grid access and locations
Renewable energy pipeline: 405 MW with grid access and locations Laying the foundations for future growth ROE Pipeline target 240 MW in PV Access to the grid secured High irradiation locations 7.9% Environmental authorizations in progress 140 MW in Biomass Access to the grid secured Locati
Slide 15: Board postpones pending investments in the Pulp business
Board postpones pending investments in the Pulp business To focus on the cost optimization program launched in 2019 Investments pending in the pulp business € Mn Adaptation to Fluff at Navia New Swing line at Navia Flexible production €40 - 50 Mn €450 Mn Process adaptation to produce Up to 200,000 t
Slide 16: Pontevedra's Biomill legal status
Pontevedra’s Biomill legal status A first resolution from the National Court is expected in the coming months On January 2016 the National Directorate The 1958 biomill's original concession was extended for 60 years (starting November 8 th 2013) by the National Directorate of of Coasts granted the
Slide 17: FY 2019 Results by Business
FY 2019 Results by Business
Slide 18: Pulp Business
Pulp Business FY 2019 Results driven by lower pulp prices, FX settlements and capacity expansions Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) -17.7% -3.9% 635 947,466 910,499 EBITDA decreased to €75 Mn, of which: 523 42% is attributable to lower average selling prices, due to PIX evolution and
Slide 19: Pulp Business P&L
Pulp Business P&L FY 2019 P&L Bridge (€ Mn) €30.0 Mn negative FX hedging settlements vs. €3.7 Mn positive settlements in 2018 75.2 60.8 4.0 8.8 10.4 1.4 0.3 2.6 EBITDA Depreciation and Pontevedra EBIT Financial expenses Other financial result Taxes Net profit other results on fixed Environmental Pac
Slide 20: Pulp Business Cash flow generation
Pulp Business Cash flow generation FY 2019 Cash Flow Bridge (€ Mn) Factoring use of €74.4 Mn vs. €49.3 Mn at Equity contribution of €35 Mn to the €141.1 Mn of Strategic Plan investments 31 Dec. 2018 Renewable Energy Business with no effect on consolidated figures 49.8 21.0 4.8 7.5 25.6 91.6 75.2 104
Slide 21: 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 Q1 2020: 79% revenues 1,35 Avg. cap: $ 1.23 € Avg. floor: $ 1.16 € 1,3 Q2 2020: 82% revenues 1,25 Avg. cap: $ 1.20 € $1.21/€ Avg. floor: $ 1.16 € 1,2 Q3 2020: 76%
Slide 22: Pulp Business long term financing and ample liquidity
Pulp Business Long term financing without maintenance covenants and ample liquidity Leverage as of December, 31st (€ Mn) Debt Maturity Calendar (€ Mn) 227.5 Leverage: €151 Mn Convertible bond 1 1.1 4.1x 411.5 €217 Mn bilateral loans IFRS16 43.7 105.8 impact €44 Mn IFRS16 75.9 305.7 €70 Mn Sustainabl
Slide 23: Renewable Energy Business
Renewable Energy Business Including the contribution of Ciudad Real 50 MW solar thermal plant Energy Volume (MWh) Revenues (€ Mn) +13.3% +20.9% 14.5% EBITDA growth was driven by: 1,047,163 923,935 168 Increasing contribution from the 50 MW 139 solar thermal plant acquired in December 2018 13.3% in
Slide 24: Renewable Energy Business P&L
Renewable Energy Business P&L FY 2019 P&L Bridge (€ Mn) Includes a provision of €6.7 Mn related to the regulatory collar 51.8 29.7 22.1 13.9 0.2 2.3 5.3 7.6 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 24
Slide 25: Renewable Energy Business Cash flow generation
Renewable Energy Business Cash flow generation FY 2019 Cash Flow Bridge (€ Mn) Factoring use of €26.3 Mn at 31 Dec. 2019 Includes the payment of a €6.3 Mn earn out €121.5 Mn of Strategic Plan investments related to the solar thermal plan acquisition in It includes €14.4 Mn from the transfer of power
Slide 26: Renewable Energy Business long term green financing
Renewable Energy Business Long term green financing and ample liquidity Leverage as of December 31st, 2019 (€ Mn) Debt Maturity Calendar (€ Mn) 327.9 Leverage: IFRS16 4.0 x1 €101 Mn solar thermal plant project financing 8.6 impact 120.9 €218 Mn Energy parent corporate financing €20 Mn RCF – Fully av
Slide 27: Closing Remarks
Closing Remarks
Slide 28: Closing Remarks
Closing Remarks 2019 has been a transitional year with sizable investments in both businesses 17% higher pulp sales and 6% lower cash cost expected in FY2020 2020 Expected Pulp Sales (t) 2020 Expected Cash Cost (€/t) FX average floor ($/€) 1,060,000 372 1,15 Increasing value of the European market a
Slide 29: Annex
Annex
Slide 30: Renewable Energy Business EBITDA Bridge 4Q18 vs. 4Q19
Renewable Energy Business EBITDA Bridge 4Q18 vs. 4Q19 (€ Mn) 13.2 €/Mwh of lower average sale price in 4Q19 vs. 4Q18 1 Regulatory collar provision of €4.4 Mn in 4Q19 vs. €4.3 Mn in 4Q18 2.2 3.5 0.1 1.1 12.8 10.3 EBITDA 4Q18 Solar thermal plan Lower average sale Regulatory collar Higher biomass EBITD
Slide 31: 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 32: 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 33: Delivering value Delivering commitments
Delivering value Delivering commitments
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