Ence Energía y Celulosa reported a consolidated net profit of €247 million in 2022 – compared to the negative €190 million recorded in 2021 – following the rulings handed down on 7 February by the Supreme Court, which confirmed the validity of the extension of the concession for the company’s biofactory in Pontevedra until 2073.
Following the outcome of these rulings, the group has reversed €169m of the impairments and provisions recorded in the pulp business in the 2021 financial statements as a result of the rulings of the National Court, handed down in that year. As a result, in the fourth quarter the group’s net profit amounted to €180m, compared to €2m in the same period of the previous year.
Strong pulp prices and good operating results also boosted the company’s profit.
PULP AND RENEWABLE ENERGY
Ence’s biofactory in Pontevedra resumed its activity during the month of November, after being suspended for four months due to the drop in the flow of the river Lérez (which supplies this facility). The new solution that the company has developed for temporary drought situations facilitated this return to operation, while repair work was carried out on the water collection infrastructure.
In any case, strong pulp prices and the improvement in the exchange rate boosted the operating margin of the business, mitigating the effect of the suspension of activity in Pontevedra and offsetting the inflation in the cost of raw materials. As a result, the operating profit of the pulp business reached €27m in the fourth quarter and rose to €138m in 2022 as a whole.
On the other hand, the operating profit of the Renewable Energy business reached €13m in the fourth quarter, bringing the cumulative figure for the year to €110m.
NEW BUSINESS OPPORTUNITIES
The group’s strong balance sheet gives it the flexibility to take advantage of growth opportunities.
In the pulp business, Ence continues to make progress in the “Navia Excelente” project to boost the sale of its differentiated products, diversify its production towards fluff pulp for absorbent hygiene products and decarbonise the plant with a reduction of 50,000 tonnes of CO2 per year. This project involves an estimated investment of more than €105m over the period 2023-2025.
In addition, in 2022 it was announced that the company is analysing a new project in the A Coruña town of As Pontes for the production of mixed bleached fibre from recovered paper and cardboard and virgin fibre produced by Ence. The first phase of the project consists of a 100,000 tonnes per year line that could be operational in 2026, with an initial estimated investment of €125m.
In the Renewable Energy business, Ence is developing a portfolio of 140 MW in biomass through its subsidiary Magnon Green Energy, in addition to 673 MW of photovoltaic. The sale of 373 MW of these photovoltaic MW was agreed in 2021 for an amount of up to €62 million, as its administrative processing is completed in 2023 and 2024.
Ence also launched a new subsidiary in 2022 to develop and operate biomethane and fertiliser production plants using organic waste. This is a new line of activity based on the circular bioeconomy that already supports its two main businesses and has a high growth potential in Spain. Ence Biogas already has a portfolio of nine projects under development in Spain with a combined capacity to supply 560 GWh of biomethane per year.
Ence’s forestry management is an important carbon sink and offers new opportunities for growth in the voluntary carbon market. The company has already registered its first CO2 capture projects, which it plans to expand in the coming years.
Ence continues to be the leading company in sustainability in the pulp sector worldwide according to the latest rating of Sustainalytics, which in 2022 has reiterated its overall score of Ence’s environmental, social and corporate governance performance at 91/100.
Finally, the Board of the company has agreed to distribute an exceptional dividend on account of the results of 2022 in the amount of 70 M€, equivalent to 0.29 euros gross per share, which will be paid on 16 March and which is in addition to the 67 M€ distributed during the year.
