Ence achieved an EBITDA of 32.7 million in the third quarter of 2016, 25.1% higher than the previous quarter

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  • The cost of production decreased to €355/t, well below €367/t registered in the second quarter, and close to the 4th quarter target, which stood at €350/t.

  • The global pulp demand remains strong, with an increase of 2.8% so far this year, driven by China, with an increase of 12.4%.

  • The energy business had a very favorable evolution in the third quarter, with a volume of generation that nearly doubled the previous quarter.

October 27, 2016. – Ence – Energía y Celulosa achieved an adjusted EBITDA of € 32.7 million in the third quarter of 2016, representing an increase of 25.1% over the previous quarter. This significant improvement resulted in a net profit in July-September period of € 12.9 million compared to the negative result of the previous quarter, which was € 2.6 million. During the first 9 months of the year, net profit stood at Ence € 24.3 million compared to 35.1 million in the same period of 2015.

Ignacio de Colmenares, CEO of Ence, said that “we have achieved a strong increase in EBITDA in the quarter thanks to efficiency improvements that have led us to reduce the cost of production in line with our Strategic Plan.” “Besides, it is to be noted the good performance of our energy business, which doubled the volume of generation in the quarter and increased its revenues by almost 70% thanks to the optimization of our production, which has enabled us to profit of better energy prices.”

Production costs fell in the third quarter to € 355/t, well below the € 367/t in the previous quarter and close to the target of 4ºQ, which stood at €350/t. Behind that decline in costs are investments in improving efficiency and expanding capacity at Ence Navia factory, which have enabled a significant increase in its production capacity to 540,000 tons per year.

The global demand for pulp remains very strong, with an increase of 2.8% so far this year, driven mainly by China, where demand grew 12.4% between January and September. Given the good performance of demand, Ence has announced an increase in the price of pulp in $10/t from October.

In the results for the third quarter also it highlights the positive performance of energy business; in particular, the volume of generation practically doubled in the second quarter, which allowed to, inter alia, an increase of 41% of the average pool price.

The divestment program continues apace. So far this year, Ence have sold 1,031 hectares and earnest money contracts signed by 708 hectares, which will mean an income of € 38 million with estimated capital gain of € 16 million. In the first nine months they have already posted € 9.5 million of capital gains.

Thanks to the strong cash generating capacity of Ence, net debt was reduced by € 7.7 million in respect of the registered late last year position, and stands at € 233.5 million, after dividends amounting to € 24.9 million and € 8.6 million of the share buyback program.