• The results are reduced by 41%, affected by exchange differences and the increase in cellulose inventories in the face of the stoppage of the Navia biofactory, which will be longer than usual to increase its capacity by 80,000 tons.
• The EBITDA of the Renewable Energy business increased by 49% due to the better operating performance of the biomass plants and the incorporation of the Puertollano solar thermal plant.
• The company freezes the investments of its Strategic Plan in its plant in Pontevedra and will concentrate them in Navia, given the legal uncertainty caused by the change of criteria of DG Costas over the extension of Ence-Pontevedra.
• Ence confirms that there is no other site technically or economically viable in the north-west of Spain to relocate the Pontevedra biofactory if it disappears.
Ence – Energía y Celulosa achieved a net profit in the first quarter of € 17.3 million (-41%). It should be noted that the EBITDA of the Renewable Energy business improved by 49% to reach € 13 million. The EBITDA of the Pulp business decreased by 28% to € 39 million. As anticipated, this quarter has been affected by the increase in inventories to serve customers in the face of the planned shutdown at the Navia biofactory in the second quarter, due to the opposite effect in the exchange rate settlements and a higher percentage of sales in the spot market outside of Europe.
The outlook for the short fiber pulp market continues to be very favorable due to the continued growth in demand and the absence of large capacity increases during the coming years. The first confirmed project -from Arauco in Chile-, will not be operational until the second half of 2021, which suggests a recovery in the price of pulp in coming months.
Construction has continued on two new biomass plants with a total capacity of 96 MW, which will start operating at the end of the year and will increase the EBITDA of the Energy business by € 30 million year. In the pulp business, the efficiency improvement planned in the Pontevedra biofactory was carried out, followed by the expansion of 80,000 tons in Navia during the second quarter.
Free cash generation improved by 36% to € 39 million, which has partially financed investments in the Strategic Plan that have reached € 87 million. The ratio of Net Debt to EBITDA of the Group stands at 1.4 times at the end of the quarter, with a leverage of 0.8 times in the Pulp business and 3.5 times in the Renewable Energy business.
In view of the legal uncertainty generated by the change of criteria of the DG of Costs in relation to the extension of the Ence-Pontevedra concession, the company has decided to freeze all uncommitted investments in this plant and initiate the necessary engineering works to concentrate investments in the Navia biofactory, maintaining the objectives of the Strategic Plan 2019 – 2023.
The board of directors of Ence ratifies that there is no other viable site neither economically nor technically in Galicia to relocate the Pontevedra plant in the event that it disappears.
Check here the results video presentation of Ignacio Colmenares, President of Ence
