Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — H1 2015 Earnings Presentation
28 slides from Ence Energia Y Celulosa Sa's earnings presentation, Jul 22, 2015
Slide 1: Ence Energía y Celulosa 1H15 Earnings
Ence Energía y Celulosa 1H15 Earnings July 22nd, 2015
Slide 2: EBITDA & cash generation grow thanks to cash cost reduction and positive prices
EBITDA & CASH GENERATION grow thanks to management efforts on cash cost reduction and a positive price environment Strong conversion of €77 M EBITDA into €78 M Unleveraged Cash Flow from Operations in 1H15 compared to the weak conversion of €6 M EBITDA into €0.3 M Unleveraged Cash Flow from Operatio
Slide 3: Earnings continue improving as expected
Earnings continue improving as expected… Adjusted EBITDA (€M) Net Profit (€M) 85.4 24.6 22.1 1H14 1H15 Note: Adjuted Ebitda includes mainly provisions for management long term bonus plan and payments to consultancy firms (48.6) 1H14 1H15 Ence´s earnings continue its positive evolution during 2015 Co
Slide 4: Reflecting an increasingly strong cash flow generation
… reflecting an increasingly strong cash flow generation… Net Operating Cash Flow (€M) 69.2 2.8 1H14 1H15 Strong net operating cash flow generation, to be complemented by the cash flow arising from the asset disposal program expected in 2H15 Fuente: Ence 4
Slide 5: Benefitting from exchange rate appreciation and higher pulp prices
… and benefitting from the exchange rate appreciation and higher pulp prices… Pulp price evolution BEKP prices ($/t) improved up to $800/t at the $/t €/t $/€ end of June recovering after bottoming down 900 1.6 789 814 794 770 1.367681.37 1.37 793 800 to $724/t last September 2014 800 1.32 1.31 1.33
Slide 6: Expected further reductions in cash cost for year-end
… and expected further reductions in the cash cost for year-end after maintenance shutdowns and implemented investments Cash Cost Evolution (€/t) 414 7.9 10.5 3.0 365 7.0 357 7.5 346 343 4.0 336 336 1.5 2.0 329 325 323 321 321 1H14 1H15 Raw Fix Cost Energy Wood price Target Cash Raw Energy Fix Cost
Slide 7: Hedging policy
Hedging policy Ence has been actively managing its currency exposure during the quarter The Company is implementing a hedging program, currently covering up to 40% of its USD dollar exposure for the coming 12 months 1.6 USD EUR Evolution 1.5 1.4 1.3 1.2 1.1 1 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Tunne
Slide 8: Index
Index 1 1H15 Results 1.1 Pulp Business 1.2 Energy business 2 Cost Cutting Program on track 3 Solid Cash Flow generation and liquidity position 4 Solid market pulp fundamentals Fuente: Ence 8
Slide 9: 1H15 Consolidated Results
1H15 Consolidated Results (€M) 43 270 Forestry 9 Electricity 33 313 Pulp 228 228 8 85 85 77 77 32 46 46 23 22 22 Pulp Business Energy Business Total Sales Cost Adjusted Provisions and EBITDA Amortizations EBIT Interest and taxes Net other non EBITDA recurrent result • 1H15 Adjusted EBITDA reached €8
Slide 10: Managing two ring-fenced business divisions
Managing two ring-fenced business divisions Ence manages two businesses, Pulp and Energy The Pulp Business (Navia & Pontevedra), includes the revenue coming from the PULP cellulose, the electricity production linked to the pulp process as well as forestry The Energy Business (Huelva & Mérida) compri
Slide 11: Index
Index 1 1H15 Results 1.1 Pulp Business 1.2 Energy business 2 Cost Cutting Program on track 3 Solid Cash Flow generation and liquidity position 4 Solid market pulp fundamentals Fuente: Ence 11
Slide 12: Pulp mills increased sales due to higher pulp prices
Pulp mills increased sales due to higher pulp prices … Pulp & Electricity sales at pulp mills (€ M) Our current Northern mills sales increased by 19% from €220 M in 1H14 up to €262 M in 1H15, mainly due to 313 higher pulp prices as well as a more favourable exchange rate 94 Pulp Production was penal
Slide 13: Reduced average cash cost levels
…and reduced average cash cost levels. 414 23 365 30 26 38 29 38 107 75 217 197 Note: figures in €/t 1H14 1H15 Wood Processing cost Personnel Commercial Corporate Costs Cash cost reductions are mainly due to better wood and processing costs Corporate and personnel costs still to be diluted under our
Slide 14: Index
Index 1 1H15 Results 1.1 Pulp Business 1.2 Energy business 2 Cost Cutting Program on track 3 Solid Cash Flow generation and liquidity position 4 Solid market pulp fundamentals Fuente: Ence 14
Slide 15: Energy business continues to significantly increase sales
Energy business continues to significantly increase sales after additions of new biomass power plants… Energy production (MWh) Energy Sales (€M) 43 22 275,771 153,481 1H14 1H15 1H14 1H15 Energy production increased by 80% from 1H14 to 1H15 due to the contribution of the new Average pool price (€/MWh
Slide 16: Reflecting a higher EBITDA contribution
…reflecting a higher EBITDA contribution Energy EBITDA (€M) 15 6 1H14 1H15 Energy EBITDA strongly increased after new plant additions compared to 1H14, pushed by a 10% increased of the average income from €141/MWh to €156/MWh 2H15 EBITDA should improve since 1H15 is penalized by a 40 day-stop to com
Slide 17: Index
Index 1 1H15 Results 1.1 Pulp Business 1.2 Energy business 2 Cost Cutting Program on track 3 Solid Cash Flow generation and liquidity position 4 Solid market pulp fundamentals Fuente: Ence 17
Slide 18: Successful execution of efficiency investments and capacity increase in Navia
Successful execution of efficiency investments and capacity increase in Navia Northern Mills Investment Program ( €M) Annual Expected Savings (€M) €8.7/t €7.1/t 3.4 10.0 2.5 13.5 11.9 21.2 €2.5/t 1.0 5.0 5.0 0.6 4.3 8.0 6.0 4.0 1.8 1H15(*) 2H15 2016 2017 2015 2016 2017 Navia PB4 Navia (Capacity incr
Slide 19: Index
Index 1 1H15 Results 1.1 Pulp Business 1.2 Energy business 2 Cost Cutting Program on track 3 Solid Cash Flow generation and liquidity position 4 Solid market pulp fundamentals Fuente: Ence 19
Slide 20: Solid cash flow generation recouping turn-around proceeds
Solid Cash flow generation recouping turn-around proceeds… Cash flow evolution (€M) 2.8 9.3 3.7 8.1 15.4 4.5 77 78 58 EBITDA 1H15 Change in working Maintenance and Taxes Provisions and Unleveraged Interest expenses Payments Leveraged capital efficiency capex others cash flow related to cash flow fro
Slide 21: Enhancing liquidity position and reducing net debt
…positively enhancing the liquidity position and reducing its net debt… Liquidity position (€M) Net corporate financial debt evolution (€M) 90 9 191 178 92 159 150 Cash Financial Undrawn RCF Liquidity 4Q14 1Q15 2Q15 investments • Ence maintains a strong liquidity, reducing its net corporate debt pos
Slide 22: Through an asset disposal program
… through an asset disposal program 76 17 59 Assets available for sale Pending payments Cash flow at book value related to Huelva generation related to shutdown Huelva assets Ence has sold 64 hectares of former irrigated energy crops for €2.0 M and has signed promissory contracts for additional 393
Slide 23: Index
Index 1 1H15 Results 1.1 Pulp Business 1.2 Energy business 2 Cost Cutting Program on track 3 Solid Cash Flow generation and liquidity position 4 Solid market pulp fundamentals Fuente: Ence 23
Slide 24: Pulp prices continue their recovery above $800/t due to strong demand
Pulp prices continue their recovery, rising to above 800$/t levels, due to strong demand and low inventories The new supply announced by Maranhao (1.5 Mt), Montes del Plata (1.3 Mt) and Oji (0.4 Mt) will be offset as demand is expected to maintain a growth trend above Per-capita consumption of tissu
Slide 25: Summary (I)
Summary (I) … 1 Competitiveness Recovery Plan is on track 90% of the Competitiveness Recovery Plan has been achieved The 2-year-payback investments implemented and visible Both the Navia 4-Year-Payback Investment program, and its increase in capacity, has been implemented as scheduled 2 Our €150 M a
Slide 26: Summary (II)
Summary (II) 5 Pulp prices remain strong at $810/t level with some room to improve pushed by the strong demand 6 Currency Hedging Program being implemented ensuring the benefit of additional strengthening of the USD dollar 7 Energy projects facilities successfully restructured, ensuring a complete r
Slide 27: 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 28: Fuente: Ence
Wence ENERGIA & CELULOSA
Ence Energía y Celulosa — H1 2015 Earnings Presentation on 6ix