Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — Q1 2019 Earnings Presentation
32 slides from Ence Energia Y Celulosa Sa's earnings presentation, May 7, 2019
Slide 1: Q1 2019 Results
Q1 2019 Results 18 May 7th, 2019
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 1Q19
Highlights 1Q19 2019-2023 Strategic Plan : 2019-2023 Strategic Plan review following the Spanish Administration change of criteria regarding the 60 year extension of Ence’s Pulp sales and EBITDA concession in Pontevedra, granted back in 2016 growth targets maintained Transferring to Navia most o
Slide 5: Pulp business investment plan still up to €725 Mn
Pulp business investment plan still up to € 725 Mn Doubling capacity of the new swing line at Navia New Swing line at Navia Flexible production €450 Mn €30 Mn €75 Mn €30 Mn 20,000 t expansion in Complete 80,000 t 80,000 t adaptation for Up to 200,000 t or Up to 340,000 t Pontevedra expansion in Navi
Slide 6: 2019 – 2023 Strategic Plan review
2019 – 2023 Strategic Plan review Pulp sales and EBITDA growth targets maintained PULP 2018a 2019e 2020e 2021e 2022e 2023e BHKP price ($/t) 1,037.3 1,000 1,050 1,050 1,050 1,050 Exchange rate ($/€) 1.18 1.18 1.20 1.20 1.20 1.20 Implied commercial discount (%) 27.7% 28% 27% 27% 27% 27% Pulp sales (‘0
Slide 7: Stepwise implementation to ensure financial discipline
Stepwise implementation to ensure financial discipline Net Debt / EBITDA < 2.5x after 50% Dividend Pay-Out <2.5x c.60% Net Debt/EBITDA EBITDA Pulp Business improvement Pulp Business EBITDA target €725 Mn Pulp Business Investment € Mn €405 Mn1 in 2023 370 60 335 405 155 725 305 150 170 246 235 190 20
Slide 8: 2023 operating targets: 1.36 Mn T pulp sales and BHKP cash cost of 362 €/t
2023 operating targets 1.36 Mn T pulp sales and BHKP Cash Cost of 362 €/t Gradual growth of pulp sales Gradual reduction of BHKP cash cost ‘000 t €/t BHKP Fluff Dissolving Pulp 1,360 1,240 1,150 100 380 1,095 80 1,020 80 30 60 20 40 372 370 367 1.100 1.180 362 1.020 1.075 1.080 2019 2020 2021 2022 2
Slide 9: Strong pulp price scenario for the coming years
Strong pulp price scenario for the coming years Tighter supply and demand balance expected until at least 2022 European Hardwood (BHKP) Expected Annual Increase for Global Market Pulp Prices Hardwood (BHKP) Supply and Demand 1 $/t Mn t 7.0 1.200 1.150 5,6 1.100 1,058 $/t 4,2 1.050 1.000 2,8 3,2 950
Slide 10: Tighter supply and demand balance expected until at least 2022
Tighter supply and demand balance expected until at least 2022 Minimum lead time for new projects close to 3 years Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t)1 Mn t 2019 2020 2019-20 2021 2019-21 2022 2019-22 2023 2019-23 2024 2019-24 ESTIMATED BHKP DEMAND INCREASE 1
Slide 11: Q1 2019 Results
Q1 2019 Results Marked by FX hedges, spot sales and pulp restocking, as anticipated Group Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) -0.3% -17.3% -41.6% 196.2 195.6 62.9 52.0 29.6 17.3 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Renewable Energy Pulp Renewable Energy Pulp Renewa
Slide 12: 1Q19 Pulp business cash cost of 396 €/t
1Q19 Pulp business cash cost of 396 €/t +13 €/t vs. 4Q18 due to lower fixed cost dilution Cash Cost breakdown €/t Wood cost Conversion costs Commercial and logistic costs Overheads 396 369 383 36 €13 Cash Cost increase vs. Q4 2018 mainly 29 39 31 due to: 32 32 14 €/t higher conversion costs (lower
Slide 13: Renewable Energy business EBITDA growth
Renewable Energy business EBITDA growth €65 Mn EBITDA expected for 2019 Renewable Energy Business EBITDA Expected Renewable Energy EBITDA in 2019 & 2020 +49% New biomass c.€30 Mn powerplants €13.1 Mn €65 Mn €8.8 Mn €45 Mn Q1 2018 Q1 2019 2018 2019e 2020e 49% EBITDA growth driven by: €65 Mn EBITDA ta
Slide 14: Normalized Free Cash Flow & Capex growth
Normalized Free Cash Flow & Capex growth Low financial leverage of 1.4x EBITDA after strategic plan investments Normalized FCF1 (€ Mn) Capex (€ Mn) Net Debt + 36% 5x + 31% 400 305 38.7 86.6 28.4 17.6 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Renewable Energy Pulp Renewable Energy Pulp Renewabl
Slide 15: Strategic Plan investments 2019
Strategic Plan investments 2019 100k tons pulp capacity expansion and 96 MW new biomass power plants Investments Pontevedra Capacity Increase 20,000 t in 1Q 2019 Pulp Renewable Energy €18 Mn expected annualized EBITDA 320 contribution 1 Navia 130 Capacity Increase 80,000 t in 2Q 2019 €28 Mn expected
Slide 16: Attractive shareholder remuneration
Attractive shareholder remuneration Final dividend of 0.054 €/share approved by the AGM on March 28th Annual Accrued Dividends (€ Mn) Dividend Policy Dividend €0.10 €0.14 €0.16 €0.19 €0.26 Per Share 50% €63 Mn FINAL dividend Payout €13 Mn approved by the AGM on March 28th €46 Mn €41 Mn 1 €36 Mn 3 €2
Slide 17: Excellence in sustainability
Excellence in sustainability A strategic priority for Ence Promoting Dynamization of Caring Water footprint Circular economy Renewable & Commitment to Promotion of sustainable rural areas for communities reduction promotion sustainable health and equality and energy generation forestry safety divers
Slide 18: Q1 2019 Results by Business
Q1 2019 Results by Business
Slide 19: Pulp Business
Pulp Business 1Q19 marked by FX hedges, spot sales and pulp restocking, as anticipated Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) +0.6% -5.9% EBITDA decreased to €38.9 Mn driven by: 601.4 604.9 €9 Mn negative settlements on FX hedging 232,735 219,104 program. Lower than expected net prices
Slide 20: Pulp Business P&L
Pulp Business P&L Q1 2019 P&L Bridge (€ Mn) € 8,8 Mn negative FX hedging settlements vs. 1Q18 Positive FX effect on receivables 38,9 (14,9) (1,1) (2,1) 1,3 22,9 (5,7) 16,5 EBITDA Depreciation and Pontevedra EBIT Financial expenses Other financial result Taxes Net profit other results on fixed Enviro
Slide 21: Pulp Business Cash flow generation
Pulp Business Cash flow generation Q1 2019 Cash Flow Bridge (€ Mn) Mainly includes €23.9 Mn of Strategic Plan commercial rappel 1 investments 0,1 (3.7) (1.1) 6,1 (18.5) 38,9 (5.4) 0,2 34,1 21,7 16,5 EBITDA Change in Maintenance Financial NORMALIZED Other Expansion Sustainability Divestments FCF Q1 2
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 1,4 1,35 Q2 19: 86% revenues Avg. cap: $ 1.26 € 1,3 $1.26/€ Avg. floor: $ 1.20 € 1,25 H2 19: 68% revenues 1,2 Avg. cap: $ 1.26 € 1,15 $1.19/€ Avg. floor: $ 1.19 € 1,1
Slide 23: Pulp Business Solid balance sheet and strong liquidity
Pulp Business Solid balance sheet and strong liquidity Leverage as of 31 March 2019 (€ Mn) Debt Maturity Calendar (€ Mn) €160 Mn Convertible bond 1 343.4 €150 Mn bilateral loans Leverage: IFRS 16 46,4 164.4 €70 Mn Sustainable RCF fully available 59,9 0.8x impact 179.0 160.0 3,6 6,8 40,8 25,8 Gross d
Slide 24: Renewable Energy Business
Renewable Energy Business Including first full quarter of the Ciudad Real 50 MW solar thermal plant Energy Volume (MWh) Revenues (€ Mn) +8.6% +17.7% 247,184 40 49% EBITDA growth driven by: 227,610 8.6% increase in energy volume sold 34 Increasing contribution from the 50 MW Q1 2018 Q1 2019 solar
Slide 25: Renewable Energy Business P&L
Renewable Energy Business P&L Q1 2019 P&L Bridge (€ Mn) Includes a €0.4 Mn tax credit 13,1 (6.9) 6,2 (4.6) 0,0 (0.8) 1,6 0.8 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 Q1 2019 Cash Flow Bridge (€ Mn) €62.7 Mn investment for the construction of the new Huelva 46 Mw & Ciudad Real 50 Mw power plants (5.8) (1.7) 3.1 13,1 7,3 (1.1) 0,1 5,6 4,5 4,6 4,6 4,6 EBITDA Change in working Maintenance Interest payment Taxes Normaliz
Slide 27: Renewable Energy Business Asset growth upon Strategic Plan execution
Renewable Energy Business Asset growth upon Strategic Plan execution Leverage as of 31 March 2019 (€ Mn) Debt Maturity Calendar (€ Mn) 329.7 IFRS 16 Leverage: €101 Mn solar thermal plant project financing 8,6 3.5 x1 impact 108,5 €220 Mn Energy parent corporate financing €20 Mn RCF – Fully available
Slide 28: Closing Remarks
Closing Remarks
Slide 29: Closing Remarks
Closing Remarks Strong pulp price scenario maintained for the coming years, with tighter supply and demand balance expected until at least 2022 Strategic Plan targets maintained, doubling the capacity of the new swing line at Navia´s biofactory FY2019 Group EBITDA target of c. €300 Mn assuming avg.
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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