ENCE Energía y Celulosa S A : Results 1Q26

About this update from Ence Energia Y Celulosa Sa

1Q26 Results 30 th April 2026 Today's presenters Ignacio de Colmenares Chairman & CEO Ence Energía y Celulosa Alfredo Avello Chief Financial Officer Ence Energía y Celulosa 3 Results Summary 2026 Outlook Europe gross BHKP prices stood at 1,286$/t at the end of 1Q26 (vs. 1,100$/tn by year-end), currently negotiating 1.380$/t and additional 50 $/tn increase up to 1,430 $/tn has been announced last week for May. Ence special pulp continues growing; targeting c.40% vs. 30% in 2025 of total tons sold. Ongoing initiatives to reduce cash cost by 30€/tn in 2026/27, of which 15€/tn in 2026 (468€/tn cash costs guidance). Total annualized savings captured or in implementation process in 1Q2026 of €6m. ▪ +c.€30m Positive cash impact in 1H26 from: (i) the collection of NOLs (c.€21M) (1) and (ii) CAEs (€7m already collected). Strong pipeline development in Renewable Industrial Heating with at least 4 projects to start operations in 2026. The Iranian conflict offers opportunities for European pulp players and for local alternative energy sources. Limited impact expected thanks to strategic mitigants on both business. 1Q26 Operating Highlights In pulp, the quarter was impacted by the Navia strike (€7m, €43/tn at cash cost level). Agreements reached with the unions permit the implementation of the collective dismissals with no further disruptions expected. Excluding it, cash cost would have been 479€/tn in 1Q26, with Navia in its planned shutdown (Mar.'26), vs. 477€/tn in 4Q25 and 510€/tn in 1Q25. The extra costs of the strikes were partially covered through €7m revenues from CAEs (€6m collected in 1Q26 but not included in cash cost). Special pulp products, including initial fluff volumes, accounted for 34% of total pulp volumes sold in 1Q26 (+4 p.p. vs 2025). In renewables, the quarter was significantly affected by extreme weather conditions, which had an impact of 40 GWh in production and nearly c. €6m impact at EBITDA level, the energy generation would have been 303 GWh, excluding the impact of the storms, vs. 277 GWh in 1Q25 and 345 GWh in 4Q25. La Galera has completed its odour elimination program, being a showroom for our pipeline developments. 1Q2026 Financial Results Quarter impacted by one-off events that do not change our full-year guidance (cash cost of 468€/tn). Pulp EBITDA of -€1m, including €7m CAEs, vs. €3m in 4Q25 and €29m 1Q25 (with €30m CAEs). Renewables EBITDA of €3m, including €1m of devex from new businesses developments and c.€6m of impact from extreme weather conditions. Investments amounted to €53m including machinery leasing and €15m for the 2019 Navia's pulp dryer debottlenecking project . Full year capex guidance of €120m maintained, mostly related to projects committed in 2025 and highly concentrated in H1 2026. Net Debt of €462m with €209m in cash. New €200m MARF bond program registered in Jan'26. First issuance of 85M€ with 4y bullet maturity and 410 bps coupon underscores Ence's strong credibility with the financial community. Competitiveness and efficiency plan progressing as expected with savings captured or in implementation process of €6m of annualized impact. Strategic goals 2028 Ence's Special Pulp Centered Business to increase the average across-the-cycle EBITDA by 1,5x vs. only standard BHKP products: Top line: (i) Special pulp sales > 62% in 2028, delivering incremental EBITDA of €22m vs. only standard BHKP, (ii) As Pontes: environmental license granted (3Q25) and €25m PERTE granted (1Q26), (iii) Renewable packaging solutions in 2H27. Ongoing Cash Cost initiatives (30€/tn): (i) Efficiency & Competitiveness Plan to capture average annual savings of 22 €/t cash cost along 2027, (ii) Navia cost reduction and decarbonization project (c. 8 €/t annual savings) with COD in 2Q26. Pontevedra Avanza: -20€/tn cash cost Largest Iberian biomass backboned Renewable Energy Platform, on track to almost triple its EBITDA by 2030 through: Regulated electricity: improved remuneration scheme (2) Biomethane: >1TWh | >€60m EBITDA Renewable Industrial Heating: 2TWh| €30m EBITDA In 2024, the Constitutional Court (STC 11/2024) annulled the limit on offsetting tax losses allowing companies to cash back non applied tax losses. 4 Ministerial Order TED/53/2026. The updated parameters imply an increase of c. €6/MWh in Ro applicable to Magnon's biomass-fuelled electricity generation plants and of €19.5/MWh in the Ro applicable to its cogeneration plant in Lucena. 1Q26 Highlights 5 Iranian conflict may offer opportunities for European pulp players and alternative local energy sources. Limited impact expected on the back of strategic mitigants. Pulp business Renewable Biomass based Energy Platform Opportunities Positive pricing momentum for European players focused on the local market given the logistics constrains for Asia, LatAm and Middle East. Potential acceleration of Renewable Industrial Heating projects that gain competitiveness and reliability of supply vs. imported gas. Upside on ancillary services revenues due to increasing power prices. Main risks Lime kilns and fossil fuel boilers: raising fuel and power costs. Rising wood and commercial logistics costs due to increasing fuel prices. Chemicals prices: due to supply constrains for certain chemicals and higher electricity prices. Mitigants Self-sufficient production process in terms of electricity, with excess energy sold back to the grid. This excess may benefit from higher pool prices. Gas exposure to be reduced in the near term through Navia's efficiency and decarbonization plan, that includes the replacement of the gas consumption in the lime kiln by pulverized biomass. This investment will be fully operative by mid 2026. Local wood sourced from an average radius of less than 110km. Commercial focus on Europe. FX hedging: 22% of sales of the year hedged at an average tunnel of 1,16 to 1,20 Increasing biomass costs due to rising fuel costs. Fully local sourcing of biomass with an average radius of 145 km. Electricity hedging program in place for 80% of 2Q production. Gas hedging for 72% of needs 6 On track to meet full-year cash costs guidance of 468€/tn Total annualized savings captured or in process of €6m €/tn Competitiveness & Efficiency Plan mainstays: Costs savings of €30m (30€/tn): (i) 22€/tn from headcount reduction, process reengineering and (ii) 8 €/tn from Navia cost reduction and decarbonization plan. 553 526 493 483 468 453 2022 2023 2024 2025 2026E 2027E Cash out of €61m: (i) €26m related to headcount reduction and capex initiatives linked to process reengineering (€24m already provisioned in 2025 accounts), (ii) €35m related to Navia investments. 2-year implementation period with full reflection along 2027 after the complete execution of the Competitiveness & Efficiency Plan. Agreements reached with the union representatives permit the execution of the collective dismissal process with no further disruptions expected. Current status: Navia investments: €12m cash out in 1Q26, start-up of operations expected by the end of 2Q26 Total annualized savings captured or in process in 1Q2026 of €6m. 7 European BHKP prices consolidate the positive path with further room for growth Fiber to fiber substitution and logistics disruption favor European BHKP pulp producers serving the local market Gross Pulp Prices in Europe ( USD/t ) Pulp prices in Europe -Experts consensus ( USD/t ) 2.200 2.000 1.800 1.600 1.400 1.200 1.000 800 600 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24 Sep-24 Nov-24 Jan-25 Mar-25 May-25 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 Mar-26 May-26 Jul-26 Sep-26 Nov-26 Jan-27 Mar-27 400 NBSK EU (gross) BHKP EU (gross) Fluff Europe (gross) BHKP prices ended 1Q26 at 1,286$/tn, vs. 1,100 $/t at 2025 year-end. Currently negotiating 1.380$/t and incremental +50$/tn have been announced last week up to 1,430 $/tn to be implemented in May. BHKP continues to gain share vs. softwood, in particular, eucalyptus pulp demand has grown by 1,3% globally in 2026 YTD in contrast to -6,0% decline in BSKP. Fiber-to-fiber substitution together with capacity closures and shifts to DWP will remain driven demand up. Moreover, logistics disruptions from Iranian conflict favor pricing momentum for regional players such as Ence due to limited availability of overseas products (pulp and paper from Asia, LatAm and Middle East). Source: (1) Historic prices: FOEX, (2) Pulp price forecasts - Average of TTOBMA, Fastmarkets and Hawkins Wright estimates as of Jan.'26, (3) Global Demand data: PPPC (Mar.'26 | YTD data as of Feb.). 8 Ence's special pulp substituting softwood pulp products Ence's special pulp Expected % of total pulp sales volume in 2028 Ence Advanced Solid broad range of BSKP pulp substitute with different attributes (high strength, unbleached HWP, low porosity, softness) and suitable for diverse applications (hygiene, decor, packaging; etc.) 2028 Target: 500k tn with +30€/tn of incremental margin Ence Fluff Ence is the sole European producer of fluff pulp based on eucalyptus wood competing with softwood. 2028 Target: 125k tn with +60€/tn of incremental margin Standard BHKP >62% Speciality products +36€/tn of incremental EBITDA margin vs only standard BHKP sales Special pulp accounted for 34% of the sales in 1Q2026 (vs. 30% in 2025). We expect to increase its weight up close to 40% in 2026. In 2028, special pulp should stand for more than 62% of the sales contributing with an average extra-margin vs only standard BHKP sales of over 36€/tn. 9 Special pulp positions Ence as the lowest cash cost producer in the BSKP cash cost curve Market pulp production costs by region USD/t 800 Coastal BC 753$/t 700 BSKP Other Asia/Africa 542$/t Japan 566$/t Chile 571$/t Other Europe 663$/t Sweden 673$/t US 674$/t Finland 685$/t Int. West Canada Other World 750$/t 600 BHKP China 507$/t Belgium/France 560$/t Iberia Canada 576$/t 593$/t East Canada 676$/t 500 400 Indonesia 380$/t Brazil 397$/t Chile/Uruguay 433$/t East Europe 481$/t 526$/t East Europe 552$/t Finland 592$/t US 604$/t 300 200 100 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 Source: Hawkins Wright. CIF Europe (December 2025) Mn t In 2028, more than 62% of Ence's sales will come from BSKP substitute products, being Ence the lowest cost player in the BSKP segment 10 Progressive steps in our renewable industrial heating platform in Spain RENEWABLE THERMAL ENERGY BUSINESS Target: 2TWh thermal energy supply by 2030 and c.€30m contribution to EBITDA(*) PROJECT PIPELINE PIPELINE EXPECTED DEPLOYMENT (Operating Plants) 11 projects under negotiation 3 project under advanced negotiations 4 COD & 1 RTB in 2026 1 in operation since 2024 Development and supply of biomass, and the O&M of comprehensive thermal energy solutions based on biomass for industrial applications Plant size: 40 - 160 GWh Prod. Target: 2,000 GWh/yr by 2030 Estimated Capex: €0.1m - €0.2m / GWh ROCE 1 Target: > 11% 2026 5 2027 7 2028 11 2029 13 2030 13 * Target adjusted vs. previous version of €40m due to higher weight of O&M contracts with no capex associated. As of today, 1 contract in operation, 1 contract in start-up phase and 3 projects in construction. Pipeline with a required ROCE 1 >11%. 1 ROCE = EBIT / Equity + Net Debt (including leases) 11 Solid advancements in the implementation of our biomethane platform in Spain Target: >1 TWh of biomethane production by 2030 and over €60m contribution to EBITDA BIOMETHANE BUSINESS PROJECT PIPELINE PIPELINE EXPECTED DEPLOYMENT (Operating Plants) 41 plants: Gas Grid connection, feedstock, locations and feasibility studies completed 25 plants already in their permitting phase with defined diets and over 45% sourcing contracted 9 plants expected RTB in 2026-27 Biofertilizer and biomethane production from the valorisation of local agricultural and livestock biomass, including the associated sustainability certificates Plant size: 50 - 100 GWh Production Target: 1,000 GWh by 2030 Estimated Capex: €0.4m / GWh ROCE 1 Target: > 12% 2026 1 2027 1 2028 4 2029 7 2030 11 La Galera has completed its odour elimination program becoming a showroom for our projects under development 1 ROCE = EBIT / Equity + Net Debt (including leases) 12 Biomethane Pipeline is Highly Mature, with 25 projects in Advanced Stage Operational Advanced Stage Mid Stage Early Stage Total Definition In operations Documentation submitted to the Public Administration almost 2 years ago on average Documentation submitted to the Public Administration less than one year ago on average Documentation ready to be submitted to the Public Administration Basic Engineering process completed Preliminary site analysis Preliminary discussions with PA Initial grid feasibility assessment Ence's Biomethane Pipeline has a potencial capacity of 4TWh. 4x our 2030 current target of 1TWh. Permitting (AAI Submition) ✓ ⌛ Average time in permitting fase 1 year and 8 months ⌛ Average time in permitting fase 3 months ⌛ Ready to be submitted ⌛ Ready to be submitted Option Land Signed ✓ 100% 56% 67% ⌛ Gas Grid Connection 100% 100% 100% 100% Odour analysis 100% 100% 100% 100% Feedstock (>3x our plant needs) 100% 100% 100% 100% Nº of Projects 1 16 9 3 13 42 Total Estimated Capacity 0.045 TWh (1) 1.6 TWh 0.9 TWh 0.3 TWh 1.2 TWh 4 TWh The plant is currently in the process of expanding its capacity from 30 GWh to 45 GWh Achieved ⌛ In Progress Pending 13 1Q26 Financial Results 14 1Q26 impacted by one-off events that do not change our full-year guidance €1m EBITDA and €18m of net losses in 1Q26 Group Revenues (€m) €187m (1) 114 41 135 52 €154m (1) Group EBITDA (€m) Attributable Net Income (€m) €2m (1) 29 6 (4) 6 €35m (5) (13) 1Q2025 1Q2026 (1) €1 3 m 1Q2025 1Q2026 Pulp Renewables -€18m (1) 1Q2025 1Q2026 In 1Q26 financial results have been impacted by Navia planned shutdown, the strikes linked to the ongoing collective dismissal processes and the extreme weather conditions suffered in the Iberian Peninsula. In 4Q25, pulp revenues amounted to €114m vs. €135m in 1Q25 and €131m in 4Q25. The increase in gross prices (+12% YoY and +12% QoQ) have been offset by weaker FX (-12% YoY and -1% QoQ) and lower sale volumes in the context of the strike ( -4% YoY and -15% QoQ). Agreements reached with the unions permit the implementation of the collective dismissal process with no further disruption expected. As per the renewables business, revenues amounted to €41m vs €52m in 1Q2025 and €57m in 4Q25 due to lower electricity production (-5% YoY and -24% QoQ) as a consequence of the disruptions caused by the extreme weather conditions. At EBITDA level: In the pulp business the extra costs from the strike were partially offset by energy saving certificates (not included in cash cost). In 1Q26, the pulp EBITDA amounted to -€1m vs. €29m in 1Q25 (including €30m CAEs) and €3m in 4Q25. In the renewables business, EBITDA amounted to €3m vs €6m in 1Q25 and €10m in 4Q25 as a result of the lower production, lower pool and extra costs derived from the storms that have impacted the EBITDA by c. €6m. 15 Including consolidation adjustments Cash out of €76m in the quarter Significant concentration of Capex in 1Q26 as projects COD is expected by mid-year Cash Flow Statement 1Q2026 (€m) Increase in pulp's trade and other receivables Includes renewable Industrial Heating inventories (assets that revert to client at the end of the contract) Full-year capex guidance of €120m maintained. High concentration in 1Q26 due to significant carry-overs from 2025 (including €15m last payment from the 2019 pulp dryer debottlenecking project) Navia cash cost reduction and decarbonization project As Pontes engineering devex Renewable Industrial Heating capex (Mahou project) Navia cost reduction and decarbonization project as well as Mahou and Lactalis projects are expected to enter into operation by mid-year. 16 Strong liquidity, long term maturities and no covenants in the Pulp Business €462m consolidated net debt at the end of 1Q 2026. Pulp business net debt as of March 31, 2026 (€ m) (1) Pulp business debt maturity schedule (€ m) €250m of bilateral loans (3) €130m RCF - Fully availab le MARF Bonds 85 M€ 435 63 340 158 New €200m MARF bond program registered in Jan'26. First issuance of €85m with 4y bullet maturity (2030) and 410 bps coupon. 498 (2) Lease contracts (IFRS 16) €23m of public sector financing €63m IFRS16 €79m commercial paper program Gross debt Cash Net debt 37 29 77 113 42 58 93 0 81 31 40 116 27 85 24 36 61 2026 2027 2028 2029 2030 Following Renewables business net debt as of March 31, 2026 (€ m) Renewables business debt maturity schedule (€ m) 173 (2) 167 122 51 5 Lease contracts (IFRS 16) €158m Magnon corporate financing €5m IFRS 16 €20m RCF - Fully available €14m La Galera project finance 115 11 16 13 13 1 0 2 1 1 12 9 104 1 1 0 1 10 11 11 14 7 Gross debt Cash Net debt 1 Pulp business financial debt is covenant free 2026 2027 2028 2029 2030 Following 2 Includes debt related to upfront fees 3 Includes €85m from the bond issuance (maturity in 2030) 17 ENCE: industry leader in sustainability Highlights Q1 2026 Safe and Eco-efficient operations Bioproducts & ecosystem services Responsible supply chain Positive social impact For operational cost reduction Potential for topline To become preferred To grant business Protecting Health and Safety of employees and contractors The Group's cumulative LTIFR in Q1 stood at 2.54, the best result across the entire historical series. Odour reduction At Navia, no odour minutes recorded, maintaining 2025 historic record. Water consumption reduction Historical record in Navia with lowest specific water consumption (m 3 /tAD). Advancing towards a circular economy Pioneering projects for the valorization of ash improvement Higher margin special Pulp products with higher added value: 6 new approvals for speciality pulps under the Ence Advanced portfolio. Application submitted for the approval of fluff pulp under the Nordic Swan and EU Ecolabel schemes 34% of sales from special Pulp products with higher margins and growing demand. Recycled Fiber - As Pontes Award of €24.7 million under the Industrial Decarbonisation PERTE programme . This circular economy project will develop a pioneering facility to produce bleached supplier Certified Supply chain ≈ 88% of managed land certified. ≈ 84% of Wood certified. 100% sites SURE System certified (Sustainable biomass). Supply chain supervision ESG risk assessment of > 600 value-chain entities, carried out in line with the Third-Party Due Diligence Procedure. Development and deployment of tools to comply with EUDR Regulation against deforestation in preparation for its entry sustainability Talent as a competitive advantage 25.2% female employees. 30.2% female in managerial positions. 41% job openings filled with internal promotion. Creating positive social impact in local communities Progress in the allocation of €3 million to 240 social and environmental projects under the he 6th edition of Ence's Pontevedra Social Plan 2025. and limestone sludge in the mining and cement sectors 100% sites ZERO WASTE certified (Pulp and Energy Plants) Committed to climate change action - 10% reduction in direct emissions (Scope 1 -EU ETS) at Navia in 2025 compared to 2024, through the replacement of fossil fuels with pulverised biomass. recycled fibre from recovered paper and cardboard and will be self-supplied with renewable energy. Forestry bioproducts and ecosystem services Improved plant material, better adapted to climate change: 1 new Eucalyptus clone planned for 2026. >4,300 ha of forest sinks registered in different schemes for voluntary carbon markets. into force at the end of the year. Promoting professional development in rural communities Four Talent Programmes launched across Navia, Pontevedra, Magnon and Corporate functions. System Governance External Criminal Compliance audit completed with results indicating that the level of implementation and operation of the control mechanisms is adequate, with no non-conformities or observations identified. 18 2026 Outlook and Closing Remarks 19 Closing Remarks and 2026 Outlook Positive outlook for gross BHKP prices in Europe on the back of (i) fiber to fiber substitution, (ii) rising production costs in the context of the Iranian conflict, (iii) offer scarcity due to logistics disruptions for Asian LatAm and Middle East imports to Europe. Currently negotiating 1,380$/tn, an incremental increase of 50$/tn has been announced last week. The Iranian conflict may offer opportunities in both businesses: (i) pulp - rising prices in Europe due to limited supply from overseas areas and energy surplus sold to the grid at higher prices; (ii) renewables - acceleration of the pipeline as alternative local and reliable energy sources, increasing revenue of ancillary services due to higher pool prices. Moreover, Ence counts with strategic mitigants to soften the potential impact of the Iranian conflict: electricity self-sufficiency, local wood and biomass sourcing, supply and commercial regional focus on Europe and gas hedging. Quarter impacted by one-off events that do not change our full year cash costs and capex guidance. Agreements reached with the union representatives permit the execution of collective dismissal process with no further disruptions expected. Ongoing cash costs initiatives, including the Efficiency & Competitiveness Plan and Navia cost reduction and decarbonization plan, are expected to reduce cash costs by 30€/tn in 2026/27 period. 15€/tn savings should be captured in 2026 leading to a cash cost guidance of 468€/tn for the year. Total annualized savings captured or in process in 1Q26 of €6m. 2028 Ence's Special Pulp Centered Business to increase the average across-the-cycle EBITDA by 1,5x vs. only standard BHKP products: Top line: (i) Higher-margin special pulp sales to exceed 62% of 2028 volumes, delivering incremental EBITDA of €22m vs. only standard BHKP, (ii) As Pontes €25m PERTE grant awarded, (iii) Renewable packaging solutions to start up in 2H27. Ongoing cash costs initiatives (30€/tn): (i) Efficiency & Competitiveness Plan to capture annual savings of c. 22 €/t cash cost from 2027 and (ii) Navia decarbonization and cost reduction project (c. 8 €/t savings) Pontevedra Avanza: integral capex plan to trigger 20€/t savings. Higher-margin special pulp products targeted to substitute more expensive BSKP alternatives, are positioning Ence as the cheapest producer cost wise vs. BSKP producers. In 2026, these products should account for close to 40% of the sales volumes (vs. 30% in 2025) We are building the largest Iberian biomass backboned Renewable Energy Platform , including Biomass to Regulated Electricity + Renewable Industrial Heating + Biomethane + Renewable Fuels, and it is on track to almost triple its EBITDA by 2030. The execution of these projects will be adapted and aligned to our cash flow generation, to maintain a prudent across-the-cycle leverage. 20 Attention : This is an excerpt of the original content. 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