Q3 2024 Ence Energia y Celulosa SA Earnings Call Transcript

Oct 30, 2024 / 03:00PM GMT

Release Date Price: €2.8 (-0.36%)

Transcript

Key Points

Positve

ENCE Energia y Celulosa SA (STU:ENCA) reported a strong operating margin of EUR190 per tonne in the third quarter.
Pulp production in Pontevedra increased by 36% compared to the same quarter last year, despite challenges such as maintenance shutdowns and severe drought.
The company's Renewable business EBITDA doubled to EUR9 million in the third quarter, driven by normalized energy output and lower operating costs.
ENCE Advanced pulp sales accounted for 22% of total pulp sales, delivering higher margins and expected to reach 30% of total sales next year.
The company maintains a strong liquidity position with consolidated liquidity of EUR332 million and no covenants in the pulp business.

Negative

Hardwood pulp prices in Europe declined by over 20% from their peak, impacting revenue.
An incident in Navia's co-generation turbine led to temporary higher energy purchases, resulting in an extra cost of EUR1.7 million in the third quarter.
Extra costs of approximately EUR6 million are expected in the fourth quarter 2024 and EUR5 million in the first quarter 2025 due to the turbine incident.
The average net selling price of pulp decreased by EUR49 per tonne compared to the previous quarter.
Cash costs increased slightly to EUR489 per tonne, mainly due to higher wood costs.

Operator

Good morning, ladies and gentlemen. Welcome to the Ence Third Quarter 2024 Results Presentation. I will now hand the call over to Mr. Ignacio Colmenares, Executive Chairman; and Alfredo Avello, CFO. Gentlemen, please go ahead.

Ignacio de Colmenares Brunet

Ence Energia y Celulosa SA - Executive Chairman of the Board, Chief Executive Officer

Good afternoon, ladies, and gentlemen. Thank you for joining Ence's third quarter 2024 results conference call. Our CFO, Alfredo Avello; and our Head of IR, Alberto Valdes, are also connected to this call. After the presentation, we will be pleased to answer any questions you may have.

I would like to start with the main highlights of the quarter on slide 6. We (technical difficulty) a strong operating margin of EUR190 per tonne in the quarter. Hardwood pulp prices in Europe declined by over 20% from their peak in July, driven by pulp destocking in China and the start of new capacity additions. European hardwood pulp reached a gross price of $1,160 per tonne in October, equivalent to a net price of around USD650 per

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