Ence increases its EBITDA by 308% in the first quarter and recovers benefits
Ence consolidates its recovery and return to profit by achieving a net profit of 9.7 million euros in the first three months of the year, thanks to the success of its restructuring and measures to improve costs.
• Annualized EBITDA for the first quarter now exceeds 150 million, which was the objective of the recovery plan of the company results for 2016. The benefit of Ence will be driven above these levels thanks to growth in pulp prices and the strong dollar.
• Ence continues to improve its competitiveness in international markets: the cost of production decreased by 13% compared to the first quarter from the same period of 2014, standing at € 363 / ton.
• The pulp prices show a strong recovery to consolidate in the $ 770 / ton in the first quarter and further increases to $ 810 / ton announced for the second quarter.
• The demand for eucalyptus pulp -the specialty encephalopathies grows 19% in the first quarter and gradually moves to the pulp produced in the Nordic countries with conifers.
• For every 5% revaluation of the dollar -divisa which are referenced operations of the pulp, even in Europe Ence EBITDA increases by more than 20 million euros sector.
The results recorded by Ence in the first quarter of 2015 confirm the recovery of the company and its return to profit after restructuring undertaken to address the losses caused by the electricity reform. In the first three months of this year, the company quadrupled its EBITDA to rise to 34.4 million euros, 308% higher than the same period in 2014 and 66% above the fourth quarter of 2014.
As regards net income for the period January-March 2015, Ence reached a profit of 9.7 million euros, compared with a loss of 14.8 million in the 1st quarter of 2014, thanks to cost-saving measures implemented as well as reducing production costs, rising pulp prices and the favorable evolution of the dollar for the company.
The positive evolution of accounts Ence – Energía y Celulosa in the first quarter leading to annualized to exceed 150 million euros, which was the target set by the company for 2016 EBITDA.
Ignacio de Colmenares, Vice- Chairman and Managing Director of Ence, said that “the data from the beginning of 2015 confirms the good news with which we ended last year and make us optimistic about developments in 2015, year in which they comply with one year before the profit target marked on our results Recovery Plan. In the coming months we will focus our efforts on further improving our costs and maximize the good pulp prices and the dollar exchange rate. ”
The good performance of pulp prices and reduced cash cost (unit cost of production) include the results of the first quarter of 2015. On the other hand, the price of pulp rose to $ 770 / t to end of March driven by increased demand and prices have been announced $ 810 / t in the second quarter. It should be noted that the demand for eucalyptus pulp (which manufactures Ence) grew 19% in the first three months of the year and gradually shifted to the long fiber pulp manufactured in the Nordic countries.
The appreciation of the dollar against the euro, with an exchange rate of 1.13 in the first quarter of 2015, compared to 1.37 in the same period of 2014, has also promoted the improvement of results. An increase in pulp prices 5% or 5% appreciation of the dollar would boost EBITDA Ence in more than 20 million euros.
Significant reduction in the cash cost
Cash cost reduction has had a primary role in improving the results: reduced to 363 € / t in the first quarter, up 13% from € 415 / t in the same period of 2014, and also below of the 391 € / t which ended last year. The goal of ending 2015 with cash cost of 336 € / t lower it to the € 321 / t at the end of 2016, thanks to the many investments being put in place and others that are expected to apply in the production plants is maintained Navia and Pontevedra.
As regards electricity sales in the first quarter, they experienced a 21% increase due to the spectacular increase of 132% of sales of independent biomass plants after the additions of plant 40MW in Huelva and 20MW in Merida, and 30% increase in average revenue per sale of electricity thanks to higher pool prices.
Finally, the cash flow generated from operations stood at 26 million euros. In the first quarter there was an increase in cash levels of 14 million, reaching 97 million in cash, including financial investments. In terms of additional cash liquidity of the company, it has a line of credit with a limit of 90 million euros at the end of the period was fully available.
At the end of the first quarter of 2015 the net financial debt with recourse stood at 159 million euros, 10% less than in the fourth quarter of 2014 thanks to the positive cash flow generation in the first quarter.