Ence Energia Y Celulosa Sa · BME:ENC
Ence Energia Y Celulosa Sa — FY2017 Earnings Presentation
30 slides from Ence Energia Y Celulosa Sa's earnings presentation, Feb 21, 2018
Slide 1: FY 2017 Results
FY 2017 Results February 21st 2018
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 FY 2017 Results
Highlights FY 2017 Results Upside potential for Demand: Strong growth fueled by tissue consumption globally & increasing environmental standards pulp prices in Asia Supply: No large capacity increases before 2021 Additional pulp price increases up to $ 1.030 / t for February Outstanding 2017
Slide 5: Strong demand growth
Strong demand growth Fueled by tissue consumption and increasing environmental standards in China Expected BHKP global demand growth in 2018 (Mn t) 2.0 0.1 0.1 Global BHKP demand growth in 2018 0.1 should be driven by all regions 0.2 1.5 Widespread global demand growth based on tissue consumption
Slide 6: No large capacity increases expected in the industry
No large capacity increases expected in the industry Implies a tighter market during the next three years Expected Annual Increase for Global Market Hardwood Supply and Demand (Mn t)1 Mn t 2017 2018 2017-18 2019 2017-19 2020 2017-20 ESTIMATED BHKP DEMAND INCREASE 1.6 2.0 3.6 1.4 5.0 1.4 6.4 CHINA 1.
Slide 7: Upside potential for pulp prices
Upside potential for pulp prices Short and long term RISI´s European Average BHKP Pulp Price Estimates ($/t) as of December Prices Upside potential Market estimates for future pulp prices 1,030 evolved positively along FY2017 1,010 907 905 Additional pulp price increases up to $ 1,030 / t for Februa
Slide 8: Outstanding FY2017 Results
Outstanding FY2017 Results Due to successful Strategic Plan execution and pulp price increase Revenues (€ Mn) Group EBITDA (€ Mn) Group Net Income (€ Mn) + 22% + 72% + 139% 740 605 216 92 126 38 2016 2017 2016 2017 2016 2017 Energy Pulp Energy Pulp 19% revenue growth in the Pulp business 79% EBITDA
Slide 9: Increasing margins in the Pulp Business
Increasing margins in the Pulp Business Cash cost reduction 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: 201 €/t 827 Cash Cost Reduction: 7 €/t 626 357 350 31-dic-16 Avg. 2016 Avg
Slide 10: Improved Energy Business
Improved Energy Business Successful M&A and biomass diversification Energy Business EBITDA (€ Mn) Biomass Diversification + 51% 2015 86 14 5 45 10 2016 62 38 30 2017 43 57 2018e 30 70 2016 M&A Efficiency Effciency improvement 2017 Improvement Forestry biomass Agricultural biomass 33% EBITDA growth
Slide 11: Strong Free Cash Flow and Net Debt reduction
Strong Free Cash Flow and Net Debt reduction Allowing us to speed up Strategic Plan´s pending investments Normalized FCF1 (€ Mn) Net Debt Reduction in FY2017 Lower Leverage than Peers + 52.4% -29.8% x 3.6 147 218 153 3.2 97 0.7 FY 2016 FY 2017 Dec 2016 Dec 2017 Energy Pulp Energy Pulp Peers2 Strong
Slide 12: Speeding up Strategic Plan's pending investments
Speeding up Strategic Plan´s pending investments Navia & Pontevedra Capacity expansions and new Huelva 40 Mw power plant Investment Plan (€ Mn) 1 Next Steps Pulp Energy March 18 30,000 t Pontevedra Navia Pontevedra Huelva PULP 54 52 March 19 40,000 t Pontevedra 45 42 April 19 80,000 t Navia 34 24 16
Slide 13: Forestry Divestment Plan
Forestry Divestment Plan Monetizing 56,500 hectares of non core eucalyptus plantations 56,500 Hectares of Eucalyptus Plantations in Southern Spain with a Book Value of €125 Mn High-Yield 24 25,000 h plantations Months Potential 18-42 upgrades to 7,500 h Months irrigated use Rest of From 36 24,000 h
Slide 14: Maintaining an attractive shareholder remuneration
Maintaining an attractive shareholder remuneration 50% dividend pay-out policy as from 2017 Annual Accrued Dividends (€ Mn) Dividend Policy Dividend €0.10 €0.14 €0.16 €0.19 Per Share 50% €46 Mn €41 Mn 1 Payout €36 Mn FINAL (Proposed)2 €16 Mn €25 Mn 3 INTERIM (Paid) Payments €30 Mn First interim di
Slide 15: Environmental excellence
Environmental excellence Improving all environmental parameters beyond highest regulatory standards Wood Certification Odorous Impact Double-Certified entries in Navia 85% Pontevedra Navia Double-Certified entries in Pontevedra 77% 45% 73% Wood Purchases Odorous Impact Index Odorous Impact Index Due
Slide 16: FY 2017 Results by Business
FY 2017 Results by Business
Slide 17: Pulp Business: Operating performance
Pulp Business Operating performance Avg. Net Pulp Price (€/t) Pulp Sales Volume (t) Avg. Cash Cost (€/t) + 13.7% + 5.6% -2.0% 357 528 975,302 464 923,408 350 2016 2017 2016 2017 2016 2017 EBITDA (€ Mn) 79% EBITDA growth driven by: + 78.8% 13.7% net pulp price recovery in 2017 5.6% increase in pu
Slide 18: Pulp Business: P&L
Pulp Business P&L 2017 P&L Bridge (€ Mn) 170.6 Includes €8 Mn dividend from the Energy division and - €4.3 Mn from FX 49.2 121.4 14.2 3.7 18.0 24.3 86.6 EBITDA Depreciation and other EBIT Financial expenses Other financial result Taxes Net profit results on fixed assets 18
Slide 19: Pulp Business: Cash Flow generation
Pulp Business Cash Flow generation 2017 Cash Flow Bridge (€ Mn) 0.3 Mainly includes commercial €21.5 Mn of Strategic Plan Sale of remaining rappel and investments 170.6 18.9 165 hectares regulatory collar agreed in 2016 13.0 14.5 12.5 15.7 5.8 3.4 128.0 118.9 Higher payables and lower stocks offset
Slide 20: 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 1H18: 50% revenues Avg. cap: $ 1.17€ 1,3 Avg. floor: $ 1.10 € 1,25 2H18: 50% revenues 1,2 $1.16/€ Avg. cap: $ 1.16 € 1,15 Avg. floor: $ 1.11 € 1,1 1T19 : 23%
Slide 21: Pulp Business: Solid balance sheet and strong liquidity
Pulp Business Solid balance sheet and strong liquidity Leverage as of December 2017 (€ Mn) Debt Maturity Calendar (€ Mn) 12.0 €250 Mn bond Leverage: €47 Mn bilateral loans 293.8 173.7 0.7 x 250 €90 Mn RCF fully available 120.1 20.5 5.5 5.5 3.4 Gross debt Cash Net debt 2018 2019 2020 2021 >2021 Pulp
Slide 22: Energy Business: Operating performance
Energy Business Operating performance Avg. Selling Price (€/MWh) Energy Volume (MWh) Revenues (€ Mn) +0.2% +40.7% +38.6% 106 133 106 884,149 96 628,386 2016 2017 2016 2017 2016 2017 EBITDA (€ Mn) 17.9% strong organic EBITDA growth driven by: +50.7% 1% organic energy volume 10% biomass cost reduc
Slide 23: Energy Business: P&L
Energy Business P&L 2017 P&L Bridge (€ Mn) - €4.2 Mn provision from the regulatory collar 45.4 17.1 - €1.5 Mn refinancing expenses - €3.6 Mn former IRS cancellation 28.3 7.6 3.7 1.9 1.9 15.1 13.2 EBITDA Depreciation and EBIT Financial Other Fnancial Taxes Net profit Minorities Net Profit others Expe
Slide 24: Energy Business: Cash Flow generation
Energy Business Cash Flow generation 2017 Cash Flow Bridge (€ Mn) WC increase mainly due to +41% electricity energy volume sold Includes €4.2 Mn from the Includes payment of € 28.5 Mn for regulatory collar Cordoba 27 Mw biomass power facility acquired in August and another €11.6 45.4 7.1 3.9 Mn main
Slide 25: Energy Business: Solid balance sheet and strong liquidity
Energy Business Solid balance sheet and strong liquidity Leverage as of December 2017 (€ Mn) Debt Maturity Calendar (€ Mn) €140 Mn - Drawn €60 Mn for Huelva 40 MW– Undrawn 136.3 103.2 Leverage: €20 Mn RCF – Fully available 91.0 0.7x 33.0 14.0 14.0 14.0 7.0 Gross debt Cash Net debt 2018 2019 2020 202
Slide 26: Closing Remarks
> Closing Remarks
Slide 27: Closing Remarks
Closing Remarks Upside potential from pulp prices and Strategic Plan delivery 2018 Results should beat 2017 across the board Speeding up our Strategic Plan investments to meet 2020 targets Maintaining an attractive shareholder remuneration (50% dividend pay-out) and a low leverage ratio to ensure St
Slide 28: 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 29: Alternative Performance Measures (APMs) Pg.2
Alternative Performance Measures (APMs) Pg.2 MAINTENANCE, EFFICIENCY & GROWTH AND ENVIRONMENTAL CAPEX Ence provides the breakdown of its capital expenditure related cash outflows for each of its business units in its quarterly earnings report, distinguishing between maintenance, efficiency & growth
Slide 30: Delivering value, delivering commitments
Delivering value, delivering commitments
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