• With this improved rating, the Moody’s agency expressly recognizes the structural improvements in ENCE’s business model as well as the expectation that pulp prices will remain strong for the next 2-3 years.

28 May 2018.- Moody’s has raised the credit rating of Ence-Energy & Pulp one step from Ba3 to Ba2 with a stable outlook. This improvement is due to structural improvements in ENCE’s business model, as well as Moody’s expectation that pulp prices will remain strong for the next 2-3 years.

During the last 18 months, ENCE has increased its renewable energy business with agroforestry biomass in Spain, which brings stability to the pulp business. In addition, the agency expects pulp prices to continue to be strong for the next 2-3 years due to the strength of demand and the absence of material capacity increases in the period 2019-2021.

Boosting the energy business and reducing cellulose costs

Moody’s expects that the importance of ENCE’s energy business will continue to grow and the expansion will take place without any negative effect on the balance sheet. The successful implementation of two new investment projects in biomass power plants will allow ENCE to exceed its EBITDA target for this business of € 78 million in 2020.

Another factor that supports the company’s resilience is its history of reducing costs in the pulp business, which went from € 423 per ton in the fourth quarter of 2013 to € 369 per ton in the first quarter of 2018, in spite of the substantial increase in pulp prices during this period. This has helped ENCE to continue generating a positive free cash flow, even in the years of low pulp prices such as 2016.