Ence Energia Y Celulosa Sa · BME:ENC

Ence Energia Y Celulosa Sa — 9M 2019 Earnings Presentation

29 slides from Ence Energia Y Celulosa Sa's earnings presentation, Oct 30, 2019

  1. Slide 1: 9M 2019 Results

    9M 2019 Results 18 October 30th, 2019

  2. 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

  3. Slide 3: Highlights

    Highlights

  4. Slide 4: Highlights 9M 2019

    Highlights 9M 2019  22 €/t cash cost reduction in 3Q19 vs. 2Q19 Stronger operating  8.2% Pontevedra´s pulp production improvement vs. 2Q19, after 20k t capacity increase in March 2019 performance of the Pulp business in 3Q19  80,000 t annual capacity expansion at Navia biomill in October 2019  C

  5. Slide 5: Net BHKP price in China 180$ below last 10 year average

    Net BHKP price in China 180$ below last 10 year average 45% of global industry cash cost above current net BHKP prices in China Net BHKP Prices China Global Pulp Industry Cash Cost (BHKP & BSKP) $/t $/t 800 Avg. Net Price 30 Mn tons of capacity with an HW China L10Y estimated cash cost above current

  6. Slide 6: 19% yoy pulp demand growth in China during July and August

    19% yoy pulp demand growth in China during July and August Inventories reduction in July and August: 9 days for BSKP and 7 days for BHKP Producers Inventories BHKP & BSKP European & Chinese BHKP Pulp Price Consensus (October 19) Days $/t 70 Net Price (China) Gross Price (Europe) 60 1037 1000 50 42 d

  7. Slide 7: Market related downtime announced for c.1 Mn t in 2H19

    Market related downtime announced for c.1 Mn t in 2H19 No large capacity increase confirmed until 2H 2021 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 CHANGE 0,5 1,5 2,0

  8. Slide 8: 9M 2019 Results Driven by lower pulp prices and FX hedging settlements

    9M 2019 Results Driven by lower pulp prices and FX hedging settlements Group EBITDA (€ Mn) Group EBITDA Ex – FX Hedges (€ Mn) Group Net Income (€ Mn) -27.9% -69.6% -40.8% 214 208 92 127 150 28 9M 2018 9M 2019 9M 2018 9M 2019 9M 2018 9M 2019 Renewable Energy Pulp Renewable Energy Pulp FX Impact Renew

  9. Slide 9: €83 Mn normalized Free Cash Flow & €214 Mn growth capex

    €83 Mn normalized Free Cash Flow & €214 Mn growth capex Financial leverage of 2.5x EBITDA after Strategic Plan investments Normalized FCF1 (€ Mn) Growth Capex (€ Mn) Net Debt (€ Mn) +70.1% IFRS16 Impact -43.4% +68.2% €52.9 Mn 518 147 83 214 305 127 IFRS16 Pulp 44.2 IFRS16 Energy 8.7 9M 2018 9M 2019

  10. Slide 10: Stronger operating performance of the Pulp business in 3Q19

    Stronger operating performance of the Pulp business in 3Q19 22 €/t Cash Cost reduction vs. 2Q19 Gradual reduction of BHKP cash cost of our Cash Cost breakdown Strategic Plan €/t €/t Wood cost Conversion costs Commercial and logistic costs Overheads 372 374 398 376 41 370 37 33 31 31 32 116 367 107 1

  11. Slide 11: New Strategic Plan investments in Pulp subject to financial discipline

    New Strategic Plan investments in Pulp subject to financial discipline Board decision in 1Q 2020 Investment plan to be decided by the board € Mn New Swing line at Navia • The Board will decide on the project execution timing in 1Q 2020, Flexible according to pulp market conditions production and in

  12. Slide 12: Energy business short term: current asset base and new biomass plants

    Energy business short term: current asset base and new biomass plants c.30 Mn € expected EBITDA improvement in 2020 Current Power Plants Portfolio Biomass power plants 170 MW Biomass power plants to start operating by Jan. 2020 96MW MÉRIDA 20 MW Solar thermal power plants 50 MW HUELVA CIUDAD REAL 46

  13. Slide 13: Energy business medium term: 2.1 GW project pipeline

    Energy business medium term: 2.1 GW project pipeline 386 MW with access to the grid Pipeline 280 MW in PV  Access to the grid secured  High irradiation location secured  Environmental authorizations in progress EXTREMADURA 81 MW in Biomass 40 MW  Access to the grid secured  Location secured  A

  14. Slide 14: Pontevedra's Biomill legal status

    Pontevedra’s Biomill legal status Waiting for a first resolution from the National Court 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

  15. Slide 15: 9M 2019 Results by Business

    9M 2019 Results by Business

  16. Slide 16: Pulp Business: 9M 2019 impacted by pulp prices and FX hedges

    Pulp Business 9M 2019 impacted by pulp prices and FX hedges Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) -13.1% +0.5% 632 EBITDA decreased to €85 Mn due to: 549 700,737 704,306  13% lower net prices with 20% of sales outside Europe at spot prices  €23.5 Mn negative settlements from FX 9M 2018 9

  17. Slide 17: Pulp Business P&L

    Pulp Business P&L 9M 2019 P&L Bridge (€ Mn) €23.5 Mn negative FX hedging settlements vs. €5.3 Mn positive settlements in 9M18 85.0 46.5 3.2 6.4 2.3 35.3 7.5 23.7 EBITDA Depreciation and Pontevedra EBIT Financial expenses Other financial result Taxes Net profit other results on fixed Environmental Pa

  18. Slide 18: Pulp Business Cash flow generation

    Pulp Business Cash flow generation 9M 2019 Cash Flow Bridge (€ Mn) €111.9 Mn of Strategic Plan investments 5.0 15.7 2.5 6.6 8.1 85.0 93.3 65.2 34.0 18.6 4.6 EBITDA Change in Maintenance Financial Taxes NORMALIZED Other Expansion Sustainability Divestments FCF working capital CAPEX charges/payments F

  19. Slide 19: 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 Q4 2019: 93% revenues  Avg. cap: $ 1.26 € 1,3  Avg. floor: $ 1.18 € $1.26/€ 1,25 H1 2020: 76% revenues 1,2  Avg. cap: $ 1.22 € 1,15 $1.18/€  Avg. floor: $ 1.16 €

  20. Slide 20: Pulp Business Financial debt and liquidity

    Pulp Business Financial debt and liquidity Leverage as of September, 30th (€ Mn) Debt Maturity Calendar (€ Mn) Leverage: €160 Mn Convertible bond 1 1.8x 392.3 €198 Mn bilateral loans IFRS16 44.2 120.0 €70 Mn Sustainable RCF fully available 115.9 impact 272.3 160.0 4.4 6.6 45.8 25.7 Gross debt Cash N

  21. Slide 21: Renewable Energy Business

    Renewable Energy Business Including the contribution of Ciudad Real 50 MW solar thermal plant Energy Volume (MWh) Revenues (€ Mn) +9.5% +19.2% 783,334 715,101 129 27.7% EBITDA growth driven by: 108 9M 2018 9M 2019 Increasing contribution from the 50 MW 9M 2018 9M 2019 solar thermal plant acquired in

  22. Slide 22: Renewable Energy Business P&L

    Renewable Energy Business P&L 9M 2019 P&L Bridge (€ Mn) 41.6 20.9 20.6 12.5 1.6 2.3 4.2 6.5 EBITDA Depreciation and EBIT Financial Expenses Taxes Net profit Minorities Net Profit others Attributable 22

  23. Slide 23: Renewable Energy Business Cash flow generation

    Renewable Energy Business Cash flow generation 9M 2019 Cash Flow Bridge (€ Mn) €101.7 Mn investment for the construction of the new Huelva 46 Mw & Ciudad Real 50 Mw power plants 10.1 5.8 41.6 7.4 1.5 31,5 0.1 25,7 18,3 18,2 18.1 18,1 95.6 82.0 6.1 EBITDA Change in working Maintenance Interest paymen

  24. Slide 24: Renewable Energy Business Asset growth upon Strategic Plan execution

    Renewable Energy Business Asset growth upon Strategic Plan execution Leverage as of September 30th, 2019 (€ Mn) Debt Maturity Calendar (€ Mn) 332.7 Leverage: IFRS16 8.7 4.3 x1 €107 Mn solar thermal plant project financing impact 86.6 €253 Mn Energy parent corporate financing €20 Mn RCF – Fully avail

  25. Slide 25: Closing Remarks

    Closing Remarks

  26. Slide 26: Closing Remarks

    Closing Remarks Stronger operating performance of the Pulp business in Q3 Focus on cost reduction Pulp Business 2019 operating targets: Pulp Sales 2019E Cash Cost 2019E (€/t) $/€ 2H 2019E (Including FX Hedges) 970,000 388 1.19 80k t Navia capacity expansion in October, to improve 2020 pulp volumes N

  27. Slide 27: 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

  28. Slide 28: 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

  29. Slide 29: Delivering value Delivering commitments

    Delivering value Delivering commitments

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