Ence Energía y Celulosa recorded a loss of €190m in 2021, as a result of the €200m provisions made in the first half of 2021 in compliance with accounting regulations, following the rulings of the National Court on the extraordinary extension of the concession of its Pontevedra biofactory.
Had it not been for the accounting impact of these rulings, the group would have returned to profit in 2021, with a net attributable profit of €10m, despite the large negative settlements for hedges of €106m, contracted a year earlier in an environment of significant uncertainty marked by COVID 19, hedges that ended in December 2021.
In this context and despite the aforementioned hedge settlements, Ence generated €76m of free cash flow, which enabled it to reduce its net debt by the same amount, which stood at €102m, concentrated in its renewable energy business and with no net debt in the pulp business.
The company ended the year with a cash balance of €397m after having repaid €198m of debt, reduced the use of its working capital financing facilities by €56m and paid €71m in investments.
Pulp prices recovered sharply in 2021 from $680 gross per tonne to the current $1,145. Major pulp producers have announced further increases to USD 1,200 per tonne by March.
This strength in pulp prices more than offset raw material and logistics cost inflation, boosting operating profit in the pulp business before hedging to €141m for the full year, up from €14m in 2020.
On the other hand, the company is currently awaiting the Supreme Court’s decision on the admission of the cassation appeals related to the extraordinary extension of its Pontevedra concession.
In the Renewable Energy business, operating income before hedging amounted to €71m for the full year, compared to a comparable €42m in the previous year.
In December 2021 Ence reached an agreement for the rotation of five photovoltaic assets with a combined capacity of 373 MW for up to €62m, which will be materialised as the administrative processing of each of these assets is completed, expected between the fourth quarter of 2022 and the first quarter of 2024.
In 2022, once the aforementioned hedges have been completed, the company is benefiting from the current market context, with strong demand and prices in its two businesses, from a solid financial position marked by strong cash generation.
Finally, Ence’s Board of Directors has agreed a new shareholder remuneration policy. From this year, 2022, the main guideline for this policy will be the cash generation of the company and its subsidiaries, maintaining a prudent level of indebtedness for the type of activity carried out by the company and in accordance with its legal and contractual obligations. These remuneration criteria will make it possible to link Ence’s economic performance with the remuneration to be received by shareholders, in line with principles of sustainability, profitability and financial prudence.
In addition, the company has announced the possible payment, on an extraordinary basis, of an interim dividend on account of the 2022 profit after the close of the first quarter.
