Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — H1 2022 Earnings Presentation
23 slides from Ence Energia Y Celulosa Sa's earnings presentation, Jul 27, 2022
Slide 1: 1H22 Results
1H22 Results 18 27th July, 2022 Global ESG score: 91/100
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: 1H22 business highlights
1H22 business highlights Continued strong Free Cash Flow generation and Net Debt reduction €129m free cash flow generation and €112m Net Debt reduction in 1H22. €10m Net Cash position as of June 30 provides full flexibility to seize growth opportunities New dividend policy allows for a 100% pay-
Slide 4: €129m FCF generation and Net Debt reduction in 1H22
€129m FCF generation and 112 Net Debt reduction in 1H22 Net Cash position provides full flexibility to seize growth opportunities Short Cash Flow Statement 1H22 (€m) 17 6 19 13 4 27 175 175 171 158 154 25 40 148 148 129 129 109 EBITDA before Regulatory collar EBITDA Regulatory collar Operating cash
Slide 5: Tight supply continues to drive pulp prices higher
Tight supply continues to drive pulp prices higher Main pulp producers have announced further price hikes up to 1,380 USD/t Avg. annual Pulp Prices Europe Avg. annual BHKP Price Europe Consensus US$/t as of July 2022, in US$/t Sources: - Annual average FOEX gross price in Europe Source: RISI, Hawkin
Slide 6: High operating margins in the Pulp business
High operating margins in the Pulp business Despite the widespread inflation in raw materials and logistics Net pulp price, cash cost and operating margin (€/t) 800 694 €/t 700 600 194 €/t Operating 527 €/t Margin 465 €/t 500 The change in the remuneration 149 €/t 500 €/t 89 €/t parameters applica
Slide 7: 487,000 tons sold in 1H22
487,000 tons sold in 1H22 Differentiated and higher value-added products accounted for 19% of sales Geographical sales breakdown Breakdown by end product Differentiated products % of pulp sales % of pulp sales % of pulp sales 4% Other 19% Europe 96% 29% Specialty Tissue 51% papers vs. 14% in 1H21 vs
Slide 8: High operating cash flow in the Renewable business
High operating cash flow in the Renewable business Underpinned by high energy prices and a better operating performance Pool price + Return on the operations (Ro) + Regulatory Collar Energy Sales Operating cash inflow (€/MWh) (GWh) (€m) 350 +25% x5 300 250 200 71 823 90 150 658 1 100 50 19 0 Dec-17
Slide 9: Leader in sustainability
Leader in sustainability Global ESG score: 1H 2022 Highlights 91/100 Production cost reduction Leadership and differentiation License to operate Risk minimisation Safe & efficient Climate People & Sustainable operations action Values agroforestry Protecting Health and Safety of Committed to mitigate
Slide 10: Defending the legality of Pontevedra concession
Defending the legality of Pontevedra concession Supreme Court ruling announced for October 2022 Update Significance 2 available alternatives On July 2021, the Spanish National Court Pontevedra pulp mill accounts for: Navia 100 has annulled the land concession on which our Pontevedra bio-mill is loca
Slide 11: Ence Adopts A New Returns-Based Framework
Ence Adopts A New Returns-Based Framework Capital allocation priorities clearly defined I. Strong balance sheet: II. Fund organic Investment: Prudent average cycle leverage Drive growth limits per business & technology leadership III. Shareholder remuneration: IV. M&A: Continue to align dividend Dis
Slide 12: Ence Adopts A New Returns-Based Framework
Ence Adopts A New Returns-Based Framework Incorporated into guidance Ence ROCE calculation clearly defined Ence incorporates ROCE into its guidance Group through 1 the cycle ROCE > 10% 1 EBIT ___________________ Avg. 5Y ROCE = Shareholders’ Equity + Net Debt Pulp > 12% 2 ROCE 2 New Projects Renewabl
Slide 13: New dividend policy allows for a 100% pay-out ratio in 1H22
New dividend policy allows for a 100% pay-out ratio in 1H22 €32m second interim dividend to be paid on August 12 Amount based on cash 3 Annual Payments available for distribution Ensuring a leverage of: 1. First interim dividend of gross 0.054 euros per share already paid in May 2.5 x Net Debt / EBI
Slide 14: Group comparable EBITDA +85% up to €109m
Group comparable EBITDA +85% up to €109m Boosted by strong pulp and energy prices Pulp Business EBITDA (€ m) Renewable Business EBITDA (€ m) Attributable Net Income (€ m) 45 +70% 70 79 40 Regulatory 41 collar provision x2 reversal 18 39 1 (195) 1 1H21 1H22 1H21 1 1H22 1H21 1H22 1H21 figures includes
Slide 15: Renewable business EBITDA reached €79m in 1H22
Renewable business EBITDA reached €79m in 1H22 €40m regulatory collar provision reversal in 2Q with no cash flow impact Operating cash inflow and EBITDA bridge (€ m) 90 79 52 40 39 38 Operating Cash inflow Regulatory collar Comparable EBITDA Regullatory collar EBITDA provision before the reversal pr
Slide 16: €10m Net Cash position at the end of the first half
€10m Net Cash position at the end of the first half €430m cash in balance Pulp business net debt as of 30 Jun. 2022 (€ m) Pulp business debt maturity schedule (€ m) €89m of convertible bonds 108 255 Lease contracts 4 €95m of bilateral loans 17 8 €54m of public sector financing 7 278 54 €130m RCF – F
Slide 17: Full flexibility to seize growth opportunities
Full flexibility to seize growth opportunities Modular and adaptable investments with a targeted ROCE >12% Navia Excelente project As Pontes project Differentiated Diversification Diversification into Decarbonization Products into Fluff Recovered Fibers Biomass cogeneration plant + + + + €155m First
Slide 18: Appendix 1: Consolidated P&L
Appendix 1: Consolidated P&L P&L € m 2Q22 2Q21 ∆% 1Q22 ∆% 1H22 1H21 ∆% Revenue from Pulp business 221,5 164,1 35,0% 158,5 39,8% 380,0 287,9 32,0% Revenue from Renewable Energy business 59,4 42,2 41,0% 76,2 (22,0%) 135,6 86,0 57,6% Regulatory collar provision reversal 39,6 - n.s. - n.s. 39,6 - n.s. C
Slide 19: Appendix 2: Consolidated Cash Flow
Appendix 2: Consolidated Cash Flow Cash flow € m 2Q22 2Q21 ∆% 1Q22 ∆% 1H22 1H21 ∆% EBITDA 101,9 42,2 141,6% 46,5 119,4% 148,4 58,9 151,8% Change in working capital 4,9 7,3 (32,6%) (1,5) n.s. 3,4 (23,8) n.s. Maintenance capex (0,3) (3,8) (93,1%) (5,2) (95,0%) (5,5) (7,5) (27,5%) Net interest Payment
Slide 20: 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 21: Alternative Performance Measures (APMs) Pg.2
Alternative Performance Measures (APMs) Pg.2 OPERATING PROFIT PER TONNE OF PULP The operating profit is a yardstick for the operating profit generated by the Pulp business without taking into account asset depreciation and amortisation charges, impairment losses on non-current assets and gains or lo
Slide 22: Alternative Performance Measures (APMs) Pg.3
Alternative Performance Measures (APMs) Pg.3 FREE CASH FLOW Ence reports free cash flow as the sum of its net cash flows from operating activities and its net cash flows from investing activities. Free cash flow provides information about the cash generated by the Group's operating activities that i
Slide 23: Delivering value, delivering commitments
Global ESG score: 91/100 Delivering value Delivering commitments
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