Ence is investing €127 million in boosting its competitiveness and regenerating profits



Ence is investing €127 million in boosting its competitiveness and regenerating profits

  • Ence’s adjusted EBITDA totalled €24.6 million in the first semester.
  • Net loss for the period – without considering the non-recurring write-offs as a result of the electricity reform – was €16.2 million vis-à-vis the losses of €14.8 million reported in the first quarter of 2014.

  • In the semester, Ence reported non-recurring losses of €32.4 million for write-offs arising from the new electricity regulation. Net loss for the period was €48.6 million.

  • After the write-offs recognised and the plan deployed by the Company to reduce operating costs and reinforce competitiveness, Ence considers that the fall in profits has bottomed out.

  • The Company brought forward by six months the start-up of its Merida 20 MW biomass generation plant, whose forecast annual EBITDA amounted to €7 million.

30 July 2014.- In the first semester of the year, Ence – Energía y Celulosa absorbed net non-recurring losses of €32.4 million as a result of the entry into force of the electricity reform with retroactive effect. In this connection, the Company recognised write-offs for asset impairment amounting to €32 million and reduced sales of €6.1 million in 2013. Net of this non-recurring impact, losses for the semester amounted to €16.2 million vis-à-vis the loss of €14.8 million reported in the first quarter of 2014.

The impact of the electricity reform, the abnormally low wholesale electricity market prices until May and the reduction in pulp sales generated net losses for Ence of €48.6 million in the first semester as compared with profit of €30.3 million in the first half of last year.

Ignacio de Colmenares, Vice-Chairman and CEO of Ence, stated that “our recovery plan has already begun to yield results. The cost reduction measures and investments implemented will enable us to increase our EBITDA by €79 million between 2014 and 2015, to €169 million in 2016, thereby recovering the level of profits prior to the change in electricity regulations.”

In this connection, Ence implemented a significant part of the cost saving measures and the efficiency improvement investments envisaged in its 2014-2016 Competitiveness Recovery Plan, which envisages investment of €127 million.

Ence’s electricity sales fell 44% on the first semester of this year, representing a reduction in earnings of €55 million. The elimination of the bonus, the reduction of premiums for cogeneration and renewable energy facilities and the low pool prices until May explain this fall.

Pulp sales are down 15% as a consequence of the decline in production and in volumes sold, and of the reduction of 11% in selling prices due to a fall in prices of 5% in dollars/ton and a 4% depreciation of the dollar.

Adjusted EBITDA stood at €24.6 million vis-à-vis the €98.2 million in the first semester 2013. Corporate net financial debt stood at €125 million in the first semester after absorbing the investments in the Merida plant. The debt without recourse ratio with respect to EBITDA in the last twelve months was 2.6.

It is necessary to highlight the entry into service of the Merida 20 MW biomass plant six month’s in advance of the forecast schedule, and which came into line on 31 March. This facility will contribute an annual estimated EBITDA of €7 million with production of 130 million kWh/year.