Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — 9M 2017 Earnings Presentation
27 slides from Ence Energia Y Celulosa Sa's earnings presentation, Nov 2, 2017
Slide 1: 9M 2017 Results
9M 2017 Results November 2nd 2017
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 3
Slide 4: Highlights
Highlights Positive outlook for pulp prices both in the short and long term Ence has announced an additional pulp price increase up to $ 970 / t for November Short term momentum in Q417 and Q118 supported by the limitation of mixed recovered paper imports in China and the cancellation of 40% of
Slide 5: Positive outlook for pulp prices
Positive outlook for pulp prices Ence has announced another price increase up to 970 $/t in November European BHKP Pulp Prices RISI´s European BHKP Pulp Price Estimates ($/t) 1.200 1.100 1.000 900 1,010 905 800 813 700 600 500 400 1Q17 2Q17 3Q17 4Q17 Avg. 2018 Avg. 2019 Avg. 2020 BHKP ($/t) BHKP (€/
Slide 6: Short term momentum
Short term momentum Supported by the ban of MRP imports in China and the halt at 2.8 Mnt Kerinci mill Virgin pulp demand growth in China underpinned 2016 China´s Fibre Sources: 97.78 Mnt by increasing environmental standards: Other 1% ONP 4% Ban of mixed recovered paper (MRP) imports Imported Mixed
Slide 7: Increased market tightening in the long run
Increased market tightening in the long run No new large project starts expected for next 3 years Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t) 1 Mn t 2017 2018 2019 2020 2017 - 2020 ESTIMATED BHKP DEMAND INCREASE 1,4 1,6 1,4 1,4 5,8 China 1,0 1,1 1,0 1,0 4,1 Other Asi
Slide 8: Outstanding 9M17 Results
Outstanding 9M17 Results Due to successful Strategic Plan execution and pulp price increase Revenues (€/t) Group EBITDA (€ Mn) Group Net Income (€ Mn) + 22.7% + 77.1% + 183% 527 59 148 430 436 83 115 370 21 66 17 33 64 95 9M 2016 9M 2017 9M 2016 9M 2017 9M 2016 9M 2017 Energy Pulp Energy Pulp 18% re
Slide 9: Successful cash cost reduction in the Pulp business
Successful cash cost reduction in the Pulp business Despite wood cost linkage to pulp price performance Gross Pulp Price Increase (€/t) & Cash Cost Reduction (€/t) Gross Pulp Price Cash Cost Gross Pulp Price Increase: 153 €/t 744 591 Cash Cost Reduction: 16 €/t 9 25 362,7 346,7 30-sep-16 9M 2016 Woo
Slide 10: Biomass diversification and M&A in the Energy business
Biomass diversification and M&A in the Energy business Reaching an annualized EBITDA of over €50 Mn in 2017e Energy business EBITDA (€ Mn) Successful M&A Track Record +90% Ciudad Real 16 Mw 7 33 9 Acquisition date: December 2016 17 EV: €34 Mn (€22 Mn Ence stake) Jaen 16 Mw 2016 EBITDA: €5.5 Mn 2017
Slide 11: Strong Free Cash Flow generation of €92 Mn
Strong Free Cash Flow generation of €92 Mn Low leverage position adds comfort to the Strategic Plan´s pending investments Recurrent FCF1 (€ Mn) Net debt reduction in 9M17 Lower leverage than peers +84.7% -15.9% x 3.6 92 218 183 3.6 50 79 195 149 28 22 1.0 13 23 35 9M 2016 9M 2017 Dec. 2016 Sep. 2017
Slide 12: Next steps for the Pulp business
Next steps for the Pulp business 150,000 t capacity expansion in 2018 - 2019 aiming at €22 Mn EBITDA growth 1 70,000 t capacity expansion 80,000 t capacity expansion in Pontevedra between 2018 and 2019 in Navia between 2H18 and 1H19 During 1Q17 maintenance downtime in Pontevedra, we have Between win
Slide 13: Next steps for the Energy business
Next steps for the Energy business New Huelva 40 Mw power plant pushing annualized EBITDA up to €61 Mn New Huelva 40 Mw biomass power plant Low exposure to regulated IRR Our worst case scenario is a regulated IRR of 5.5% from 2020 with an spread of 300 bp EBITDA impact of just €3.8 Mn for our 6 oper
Slide 14: 9M 2017 Results
> 9M 2017 Results 14
Slide 15: Consolidated Key Figures
Consolidated Key Figures Outstanding 9M17 Results due to successful Strategic Plan execution P&L 77% EBITDA growth in 9M17 vs 9M 2016 fueled € Mn 9M17 9M16 % Change by both Pulp and Energy businesses Revenue 527.4 429.7 23% 74% EBITDA growth in the Pulp business driven Pulp Business EBITDA 114.7 66.
Slide 16: Pulp Business: Operating performance
Pulp Business Operating performance Average net pulp price (€/t) Pulp sales volume (t) Cash cost (€/t) +7.4% +8.4% +4.3% -4.4% 363 509 474 719,901 663,879 347 9M16 9M17 9M16 9M17 9M16 9M17 EBITDA (€ Mn) 74% EBITDA growth driven by: €16/t cash cost reduction vs.9M16 +73.7% 8.4% increase in pulp s
Slide 17: Pulp Business: P&L
Pulp Business P&L 9M17 P&L Bridge (€ Mn) Includes €8 Mn dividend from the Energy division and - €3.5 Mn from FX 114.7 35.5 79.2 10.9 4.5 15.8 18.0 57.1 EBITDA Depreciation and other EBIT Financial expenses Other financial result Taxes Net profit results on fixed assets Negligible P&L impact in 4Q17
Slide 18: Pulp Business: Cash Flow generation
Pulp Business Cash Flow generation 9M17 Cash Flow Bridge (€ Mn) Mainly includes €15.3 Mn of Strategic Sale of remaining commercial rappel and Plan investments 165 hectares regulatory collar agreed in 2016 114.7 17.3 10.8 5.5 6.7 2.0 11 4.3 3.2 79.1 73.8 WC increase mainly due to pulp price performan
Slide 19: Ongoing FX hedging program
Ongoing FX hedging program To mitigate FX volatility on the Pulp business Dollar/Euro Exchange Rate Evolution Current Hedges 1,4 4T17: 68% revenues 1,35 Avg. cap: $ 1.15 € 1,3 Avg. floor: $ 1.09 € 1,25 1H18: 55% revenues: Avg. cap: $ 1.16 € 1,2 Avg. floor: $ 1.08 € $1.15/€ 1,15 2H18 : 46% re
Slide 20: Pulp Business: Solid balance sheet and strong liquidity
Pulp Business Solid balance sheet and strong liquidity Leverage as of September 2017 (€ Mn) Debt maturity calendar (€ Mn) €250 Mn bond 25.4 319.2 170.4 Leverage: €68 Mn bilateral loans 1.0 x €90 Mn RCF fully available 250 148.8 20.5 5.5 8.2 6.1 2.5 Gross debt Cash Net debt 2017 2018 2019 2020 2021 >
Slide 21: Energy Business: Operating performance
Energy Business Operating performance Average selling price (€/MWh) Energy volume (MWh) Revenues (€ Mn) +8.1% +44.4% +47.6% 94.7 105.3 97.4 625,892 64.2 433,523 9M16 9M17 9M16 9M17 9M16 9M17 51.3% strong organic EBITDA growth driven by: EBITDA (€ Mn) 7.4% organic energy volume +89.8% 8.1% averag
Slide 22: Energy Business: P&L
Energy Business P&L 9M17 P&L Bridge (€ Mn) - €2.6 Mn provision from the regulatory collar 33 12.8 20.2 4.6 3.9 1.3 11.7 10.4 EBITDA Depreciation and EBIT Financial result Taxes Net profit Minorities Net Profit others Attributable 22
Slide 23: Energy Business: Cash Flow generation
Energy Business Cash Flow generation 9M17 Cash Flow Bridge (€ Mn) WC increase mainly due to Includes €2.6 Mn from Includes payment of € 28.5 Mn for +44% electricity energy the regulatory collar Cordoba 27 Mw biomass power plant volume sold acquisition in August and another €2.2 Mn related to the con
Slide 24: Energy Business: Solid balance sheet and strong liquidity
Energy Business Solid balance sheet and strong liquidity Leverage as of September 2017 (€ Mn) Debt maturity calendar (€ Mn) €101.3 Mn Outstanding Project Finance 2.3 39.8 €14.3 Mn Bilateral loans related to olive pulp plants acquisition in Dec.16 Leverage: 114.7 80 0.8x 1 4.1 3.3 3.3 13.6 13.6 14.5
Slide 25: Closing Remarks
> Closing Remarks 25
Slide 26: Closing Remarks
Closing Remarks Outstanding 9M17 results due to successful Strategic Plan execution and pulp price increase Over €210 Mn EBITDA expected for FY2017 following last price increases Next steps in the Strategic Plan execution aiming at €33 Mn EBITDA growth €22 Mn1 resulting from 150,000 t capacity inc
Slide 27: Delivering value, delivering commitments
Delivering value, delivering commitments
Ence Energía y Celulosa — 9M 2017 Earnings Presentation on 6ix