ENCE Energía y Celulosa (ENC) Q3 2024 earnings summary

Executive summary

• Consolidated EBITDA reached €52 million in Q3 2024 and €152 million for the first nine months, with free cash flow of €51 million in Q3.

• Group net profit was €14 million in Q3 and €41 million for 9M24, reversing prior year losses.

• Operating margin per ton in Q3 was €190, despite a 20% decline in European hardwood pulp prices from their July peak.

• Two interim dividends totaling €34 million were declared in 2024, implying a 5% yield.

• Net debt stood at €278 million at quarter-end, with a strong liquidity position and low leverage.

Financial highlights

• Group revenues grew 29% year-over-year to €220 million in Q3 2024, with pulp contributing €44 million and renewables €5 million to the increase.

• Pulp business EBITDA was €42 million in Q3, compared to a €61 million loss in Q3 2023; nine-month pulp EBITDA reached €132 million.

• Average net pulp sale price in Q3 was €679/ton, up 42% year-over-year; cash cost increased to €489/ton, mainly due to higher wood costs.

• Renewables EBITDA doubled to €9 million in Q3, driven by higher energy output, lower costs, and regulatory changes.

• Free cash flow in Q3 was €51 million, aided by a €43 million reduction in factoring lines.

Outlook and guidance

• Hardwood pulp prices in China have stabilized after a 24% correction; a recovery is expected in the next 2–3 months, with European prices likely to bottom above $600/ton.

• Advanced pulp products expected to reach 30% of total pulp sales in 2025 and 50% by 2028.

• Recurrent EBITDA in pulp business expected to improve, and renewable business EBITDA to more than double over the next four to five years.

• Fluff pulp production at Navia to start in 2026, targeting higher-margin markets.

• New quarterly update for biomass plant remuneration expected to boost 2024 cash generation by over €60 million.