Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — 9M 2020 Earnings Presentation
32 slides from Ence Energia Y Celulosa Sa's earnings presentation, Oct 28, 2020
Slide 1: 9M 2020 Results
9M 2020 Results 18 October 28th, 2020 82 Overall ESG Score
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 9M20: Resilient operating performance in a low price environment
Highlights 9M20 Resilient operating performance in a low price environment Effective measures taken since February 24th against COVID-19 have allowed ENCE to protect its staff and to continue Ence continues operating operating during the pandemic and subsequent virus outbreaks, maintaining full pr
Slide 5: Ence continues operating safely despite COVID-19
Ence continues operating safely despite COVID-19 All ENCE’s activities have been declared essential PEOPLE OPERATIONS LIQUIDITY COVID-19 Prevention Protocol Implementation of Ence´s COVID-19 Use of the € 70 Mn RCF available in Entrance and exit temperature Prevention Protocol in all the supp
Slide 6: Sustainability Plan 2019 - 2023
Sustainability Plan 2019 - 2023 Highlights 3Q20 82 Overall ESG Score Safe and 99% Waste valorised Lower water consumption Industry reference Covid-19 > 40% reduction Emissions eco-efficient AENOR “0 Waste” Pontevedra: -4% Prevention in odour impact < 10 mg /Nm3 in all operations vs. 2019 our biomass
Slide 7: +27% higher renewable energy sales vs. 9M19
+27% higher renewable energy sales vs. 9M19 Despite the difficulties caused by the pandemic New Biomass Plant CIUDAD REAL 50 MW 316 MW 31st MARCH Installed capacity MÉRIDA 20 MW HUELVA 50 MW HUELVA 41 MW CIUDAD REAL 50 MW New Biomass Plant HUELVA 46 MW CIUDAD REAL 31st JANUARY 50 MW CIUDAD REAL 16 M
Slide 8: A regulated business which adds stability to the Group
A regulated business which adds stability to the Group 6% decline in our average sales price compared to a 36% drop in the pool price Average sales price: Pool price + Ro + Regulatory Collar Return on investment (€/MWh) (€ Mn) -5.7% 104.6 98.3 47.6 47.6 49.5 24.0 31.9 58.0 42.3 (2.9) 9M19 9M20 9M19
Slide 9: Renewables pipeline: 405 MW with grid access and locations secured
Renewables pipeline: 405 MW with grid access and locations secured Awaiting upcoming public auctions of the National Renewable Energy Plan CIUDAD REAL 50 MW National Renewable Energy Plan Biomass CIUDAD REAL 25 MW 2020 – 2030 RTB in 3Q21 Biomass Hybridization RTB in 4Q21 Solar PV: +30.1 GW Wind: +22
Slide 10: Further cash cost reduction in 3Q20 to 373 €/t
Further cash cost reduction in 3Q20 to 373 €/t Despite annual maintenance shutdowns at both biomills Pulp Production (t) 1,025,000 Pontevedra biomill +2.2% < 5% production vs. 9M19 742,423 25 days annual shutdown in 3Q20 726,624 (vs. 10 days in 1Q19) -15.1% Energy efficiency improvements imple
Slide 11: 7% higher pulp sales in 9M 2020
7% higher pulp sales in 9M 2020 Increasing the value of the European market and ENCE’s differentiated products Geographical distribution of sales Breakdown by end product Differentiated products % of pulp sales % of pulp sales % of pulp sales 7% Other 10% Europe 93% Tissue 58% 27% Specialties vs. 6%
Slide 12: Pulp demand in 2020: stronger than initially expected
Pulp demand in 2020: stronger than initially expected Producers inventories close to normal levels despite fewer maintenance shutdowns BHKP and BSKP Demand Evolution (YoY) Producers’ Inventories BHKP and BSKP 000’s t In Days (Quarterly average) 2500 65 64 61 2250 Last 10 years average BHKP: +1.1 Mn
Slide 13: Pulp prices in 9M20 remain at their 10-year minimum
Pulp prices in 9M20 remain at their 10-year minimum Ence has hedged the price for 193,200 t at 770 $/t in 2021 Net BHKP Prices China Global Market Pulp Industrial Cash Cost Curve (CIF Europe) 1 $/t $/Mn t 900 800 Last 10 years average BHKP: 627 $/t 700 600 500 400 Current Net Price BHKP China 450 $/
Slide 14: Pulp demand set to outgrow supply over 2020-24
Pulp demand set to outgrow supply over 2020-24 Average annual pulp demand growth of 1.5 Mn t during the last 10 years Expected Annual Increase in Global Market Pulp Supply and Demand (Mn t)1 Mn t 2020 2021 2020-21 2022 2020-22 2023 2020-23 2024 2020-24 ESTIMATED ANNUAL MARKET PULP DEMAND CHANGE (1.0
Slide 15: 9M 2020 Financial Results
9M 2020 Financial Results Driven by lower pulp and energy prices Pulp Business EBITDA (€ Mn) Renewable Energy Business EBITDA (€ Mn) Group Net Income (€ Mn) -91.7% +2.0% 28 85 42 41 -42 7 9M19 9M20 9M19 9M20 9M19 9M20 Pulp Renewable Energy €7 Mn EBITDA in the Pulp business: €42 Mn EBITDA in the Rene
Slide 16: €50 Mn Normalized FCF and €62 Mn carry-over payments in 9M20
€50 Mn Normalized FCF and €62 Mn carry-over payments in 9M20 No covenants, long-term maturities and €360 Mn cash in balance Normalized FCF1 (€ Mn) Strategic Plan payments (€ Mn) Net Debt (€ Mn) -39.5% -70.9% +8.5% 556 Lease 83 213 513 contracts €54Mn 50 62 2019 9M20 9M19 9M20 9M19 9M20 Renewable Ene
Slide 17: Pontevedra's biomill legal status
Pontevedra’s biomill legal status The first resolution of 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 18: 9M 2020 Results by Business
9M 2020 Results by Business
Slide 19: Pulp Business: 9M 2020 results driven by lower pulp prices
Pulp Business 9M 2020 results driven by lower pulp prices Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) -25.9% +7.4% 756,258 549 704,306 91.7% EBITDA decrease vs. 9M19: 407 Resulted from the 26% drop in the average sales price. 9M19 9M20 9M19 9M20 Partially offset by 7% higher sales and 3% low
Slide 20: Pulp Business P&L
Pulp Business P&L 9M20 P&L Bridge (€ Mn) €9.8 Mn negative FX hedging settlements 7.1 (48.7) (41.2) (45.5) (3.8) 13.5 (8.9) (0.3) EBITDA Depreciation and other Pontevedra EBIT Financial expenses Other financial result Taxes Net result results on fixed assets Environmental Pact provisions 20
Slide 21: Pulp Business Cash flow generation
Pulp Business Cash flow generation 9M20 Cash Flow Bridge (€ Mn) 2019 Strategic Plan carry over payments (9.3) 16.5 (5.2) (1.0) 7.1 0.0 9.0 (39.5) (30.8) 0.7 EBITDA Change in Maintenance Financial Taxes NORMALIZED Other Strategic Plan Divestments FCF working capital CAPEX charges/payments FCF collect
Slide 22: Ongoing FX hedging program
Ongoing FX hedging program To mitigate FX volatility in the Pulp Business Dollar/Euro Exchange Rate Evolution Current Hedges 1,40 Q4 2020: 66% revenues 1,35 Avg. cap: $ 1.19 € Avg. floor: $ 1.13 € 1,30 Q1 2021: 58% revenues 1,25 Avg. cap: $ 1.17 € Avg. floor: $ 1.09 € 1,20 Q2 2021: 50% reven
Slide 23: Pulp Business: High liquidity and long-term financing without covenants
Pulp Business High liquidity and long-term financing without covenants Leverage as of September 30th 2020 (€ Mn) Debt Maturity Calendar (€ Mn) €152 Mn Convertible bond 1 317.6 €253 Mn Bilateral loans 1.7 Lease 587.8 €68 Mn Public sector financing 70.0 contracts 45.1 237.3 €70 Mn RCF 8.1 €45 Mn IFRS1
Slide 24: Renewable Energy Business
Renewable Energy Business Higher contribution of new biomass power plants offset lower electricity prices Energy Volume (MWh) Average sale price (€/MWh) 2.0% EBITDA increase was driven by: +27.3% -5.7% 27.3% higher energy sales from new biomass power plants commissioned in 997,115 1 1.9 1Q20 102.7
Slide 25: Renewable Energy Business P&L
Renewable Energy Business P&L 9M20 P&L Bridge (€ Mn) (33.6) 42.4 8.8 (11.8) 0.8 (2.3) (3.5) (1.3) EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Attributable Profit others 25
Slide 26: Renewable Energy Business Cash flow generation
Renewable Energy Business Cash flow generation 9M20 Cash Flow Bridge (€ Mn) €22 Mn non cash income Strategic Plan (3.9) related to the Regulatory Collar carry-over payments 1 10.5 (8.6) 0.8 (16.3) 42.4 41.2 (22.7) 2.2 EBITDA Change in working Maintenance Interest payment Taxes Normalized Free Other
Slide 27: Renewable Energy Business: Long-term green financing and high liquidity
Renewable Energy Business Long-term green financing and high liquidity Leverage as of September 30th 2020 (€ Mn) Debt Maturity Calendar (€ Mn) 328.2 Leverage: Lease 3.9 x €96 Mn solar thermal plant project financing 8.7 contracts 122.4 €224 Mn Energy parent corporate financing €20 Mn RCF – Fully ava
Slide 28: Closing Remarks
Closing Remarks
Slide 29: Closing Remarks: Resilient operating performance in a low price environment
Closing Remarks Resilient operating performance in a low price environment All our activities have been declared essential and we continue operating safely Good operating performance of the Pulp business following the 100,000 t capacity increase carried out in 2019 2020 Expected Pulp production
Slide 30: 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 31: 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 32: Delivering value, delivering commitments
82 Overall ESG Score Delivering value Delivering commitments
ENCE Energía y Celulosa — 9M 2020 Earnings Presentation on 6ix