ENCE Energía y Celulosa (ENC) Q1 2025 earnings summary

Executive summary

• European hardwood pulp prices rebounded 21% from December, reaching $1,218/ton in April, supporting improved market conditions despite short-term volatility from US-China tariffs.

• Ence Advanced products grew to 35% of pulp sales in Q1, up from 19% a year ago, supporting margins; a new 125 kt fluff pulp line is on track for Q4 start-up.

• Group EBITDA reached €34m in Q1, with net profit of €2.4m, down year-over-year; pulp business EBITDA was €28m, supported by a €30m sale of energy-saving certificates.

• Ongoing projects in biofertilizer, biomethane, and renewable industrial heating target significant EBITDA contributions by 2030.

• Virtually all sales and sourcing are in Europe, providing resilience to trade tariffs and supply chain disruptions.

Financial highlights

• Group revenues declined 8% year-over-year to €187m, with pulp revenues down and renewables up; consolidated EBITDA was €34m, down €1m year-over-year but up €22m sequentially.

• Pulp business EBITDA was €28m, flat year-over-year but four times higher than the previous quarter due to the one-off energy-saving certificates sale.

• Sale of energy-saving certificates contributed €30m to other operating income.

• Net profit was €2.4m, down from €3.4m year-over-year but higher sequentially.

• Free cash flow before working capital and growth CapEx was €20m; working capital outflow of €8m due to inventory build.

Outlook and guidance

• Higher-margin pulp products (Advanced and Fluff) expected to reach 60% of sales by 2028, with the new fluff pulp line starting in Q4.

• Cash cost guidance for 2025 is €485/ton, with further reductions expected as temporary cost issues resolve.

• Renewable business targets: over 1 TWh biomethane/biofertilizer and 2 TWh thermal energy by 2030, contributing €60m and €40m to EBITDA, respectively.

• Ongoing decarbonisation and cost-cutting projects to reduce emissions and improve margins.

• Renewable packaging production to begin in 2025.