Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Q1 2020 Earnings Presentation
32 slides from Ence Energia Y Celulosa Sa's earnings presentation, Apr 29, 2020
Slide 1: Q1 2020 Results
Q1 2020 Results 18 April 29th, 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 1Q 2020
Highlights 1Q 2020 Early preventive measures Early measures taken since February 24th to protect its people and its operations is allowing ENCE to keep its people taken against COVID-19 safe and to operate normally despite spread of COVID-19 allow ENCE to operate All ENCE’s activities have been
Slide 5: Early preventive measures taken against COVID-19 since February 24th
Early preventive measures taken against COVID-19 since February 24th Allowing ENCE to keep its people safe and to operate normally 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 Pre
Slide 6: Sustainability Plan 2019 – 2023 Highlights 1Q20
Sustainability Plan 2019 – 2023 Highlights 1Q20 Secure and Waste -28% YoY Emissions 99% valorised Lower water consumption YoY -44% YoY ecologically Accident < 10 mg /Nm3 in “0 Waste” Pontevedra: -3% Odor Impact in efficient Frequency all our biomass Certification Navia: -12% Pontevedra Index plants
Slide 7: 7% Global pulp demand growth in January and February
7% Global pulp demand growth in January and February Pulp inventories remain close to their 10 year average BHKP and BSKP Demand Evolution (YoY) Producers Inventories BHKP and BSKP 000’s t Days (quarter average) 2.250 65 1.968 59 2.000 Last 10 years average BHKP: +1.1 Mn t / year Last 10 years avera
Slide 8: Higher consumption of tissue and hygiene products in 1Q20
Higher consumption of tissue and hygiene products in 1Q20 Offset the incipient decrease in Printing and Writing Global market pulp demand breakdown by end use 2019 Mn t Printing & Writing Tissue & Hygiene products 15 Mn t / 24% 30 Mn t / 48% Specialties 12 Mn t / 19% Packaging 6 Mn t / 9% Source: En
Slide 9: Pulp prices remained stable in 1Q20, at their lowest levels in the last 10 years
Pulp prices remained stable in 1Q20, at their lowest levels in the last 10 y Price hikes announced in China as from April Net BHKP Prices China Global Market Pulp Industrial Cash Cost Curve (CIF Europe) 1 $/t $/Mn t 900 800 Last 10 years average BHKP: 634 $/t 700 600 500 400 Current Net Price BHKP C
Slide 10: 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 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 INCREASE 0,0 1,5
Slide 11: Strong operating improvement in 1Q20
Strong operating improvement in 1Q20 9% higher pulp production and 4% lower cash cost Pulp Production (t) Pontevedra Biomill +9.4% > 11% production vs. 1Q19 1,060,000 20,000 t capacity expansion in 273,236 1Q19 219,104 Annual maintenance planned for 2Q20 (subject to COVID-19’s evolution) Navia
Slide 12: 25% Higher pulp sales in 1Q20
25% Higher pulp sales in 1Q20 Increasing the value of the European market and ENCE’s differentiated offer Geographical distribution of sales Breakdown by end product Differentiated offer % of pulp sales % of pulp sales % of pulp sales 4% Other 10% Europe 96% 30% Specialties Tissue 53% vs. 6% in 2019
Slide 13: New biomass plants commissioned in 1Q20
New biomass plants commissioned in 1Q20 Increasing installed capacity by 44% up to 316 MW 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 MW
Slide 14: 1Q20 Financial Results
1Q20 Financial Results Driven by lower pulp and energy prices Pulp Business EBITDA (€ Mn) Renewable Energy Business EBITDA (€ Mn) Group Net Income (€ Mn) -86.0% -13.7% 39 13 17 -12 11 5 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 Renewable Energy Pulp €5 Mn EBITDA in the Pulp business: €11 Mn EBITDA in the Renewa
Slide 15: €16 Mn Normalized FCF and €32 Mn carry over payments in 1Q20
€16 Mn Normalized FCF and €32 Mn carry over payments in 1Q20 €281 Mn cash in balance, long term maturities and no covenants Normalized FCF1 (€ Mn) Strategic Plan Capex (€ Mn) Net Debt (€ Mn) +4.1% -59.6% -63.5% 87 513 534 39 Lease contracts 16 32 €55 Mn 2019 1Q20 1Q19 1Q20 1Q19 1Q20 Renewable Energy
Slide 16: Pontevedra’s Biomill legal status
Pontevedra’s Biomill legal status A first resolution from the National Court could be delayed due to COVID-19 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: Q1 2020 Results by Business
Q1 2020 Results by Business
Slide 18: Pulp Business
Pulp Business 1Q20 Results driven by lower pulp prices Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) -30.9% +24.7% 273,236 605 €15.2 Mn EBITDA improvement vs. 4Q19 219,104 418 86.0% EBITDA decrease vs. 1Q19: 1Q19 1Q20 1Q19 1Q20 Resulting from the 31% drop in the average Avg. Cash Cost (€/t) EBIT
Slide 19: Pulp Business P&L
Pulp Business P&L 1Q20 P&L Bridge (€ Mn) €4.5 Mn negative FX hedging settlements 5.4 16.4 10.4 12.2 1.3 3.4 2.6 1.0 EBITDA Depreciation and Pontevedra EBIT Financial expenses Other financial result Taxes Net profit other results on fixed Environmental Pact assets provisions 19
Slide 20: Pulp Business Cash flow generation
Pulp Business Cash flow generation 1Q20 Cash Flow Bridge (€ Mn) 2019 Strategic Plan carry over payments 3.8 6.8 3.3 1.8 0.0 24.4 5.4 6.7 (13.9) 0.4 EBITDA Change in Maintenance Financial Taxes NORMALIZED Other Strategic Plan Divestments FCF working capital CAPEX charges/payments FCF collection/payme
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 Q2 2020: 89% revenues 1,35 Avg. cap: $ 1.20 € Avg. floor: $ 1.16 € 1,3 Q3 2020: 80% revenues 1,25 Avg. cap: $ 1.20 € Avg. floor: $ 1.14 € 1,2 Q4 2020: 62% revenues
Slide 22: Pulp Business High liquidity and long term financing without covenants
Pulp Business High liquidity and long term financing without covenants Leverage as of March 31st 2020 (€ Mn) Debt Maturity Calendar (€ Mn) €151 Mn Convertible bond 1 298.6 Leverage: 7.8x €215 Mn bilateral loans 1.6 482.1 €46 Mn IFRS16 Lease 70.0 contracts 45.8 156.1 €70 Mn RCF 326.0 75.8 102.7 151.2
Slide 23: Renewable Energy Business
Renewable Energy Business 1Q20 Results driven by lower electricity prices Energy Volume (MWh) Average sale price (€/MWh) 1 13.7% EBITDA decrease was driven by: +4.5% -10.6% 10.6% lower comparable average sale price (YoY) 11.1 -0.4% 258,436 Partially offset by lower costs and 5% 247,233 higher en
Slide 24: Renewable Energy Business EBITDA Bridge 1Q20 vs. 1Q19
Renewable Energy Business EBITDA Bridge 1Q20 vs. 1Q19 (€ Mn) 11.5 €/Mwh lower comparable average sale price in 1Q20 vs. 1Q19 3.0 0.9 2.4 0.3 13.1 11.3 EBITDA 1Q19 Lower pool + Ro + Repowering of CR16MW HU41MW turbine Lower costs and higher EBITDA 1Q20 R.Collar in 1Q20 breakdown in Mar.2020 energy sa
Slide 25: Renewable Energy Business P&L
Renewable Energy Business P&L 1Q20 P&L Bridge (€ Mn) 10.6 11.3 0.8 3.6 2.1 2.3 0.7 0.2 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 25
Slide 26: Renewable Energy Business Cash flow generation
Renewable Energy Business Cash flow generation 1Q20 Cash Flow Bridge (€ Mn) €4.1 Mn non cash income related to Strategic Plan the Regulatory Collar carry-over payments 1 1.5 1.4 0.7 1.2 2.9 11.3 8.9 7.2 1 (1.2) EBITDA Change in working Maintenance CAPEX Interest payment Taxes Normalized Free Other c
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 March 31st 2020 (€ Mn) Debt Maturity Calendar (€ Mn) 332.4 Leverage: Lease 4.2 x €101 Mn solar thermal plant project financing 9.2 contracts 124.5 €222 Mn Energy parent corporate financing €20 Mn RCF – Fully availa
Slide 28: Closing Remarks
Closing Remarks
Slide 29: Closing Remarks: Strong operating improvement despite COVID-19
Closing Remarks Strong operating improvement despite COVID-19 Early preventive measures taken are allowing us to keep our people safe and to operate normally despite spread of COVID-19 All ENCE’s activities have been declared essential Strong order backlog should allow us to switch from P&W to
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
Delivering value Delivering commitments
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