ENCE Energía y Celulosa (ENC) Q3 2025 earnings summary

Executive summary

• Transitioning to a higher-margin, special pulp-focused business, leveraging local wood sourcing and proximity service, with special pulp products accounting for 29% of sales in 9M25, up 7pp year-over-year.

• Renewable energy platform expanding into regulated electricity, industrial heating, biomethane, and renewable fuels, with strong EBITDA and a robust project pipeline.

• Efficiency and competitiveness plan launched, targeting significant cash cost reductions and operational streamlining through process re-engineering and AI.

• BHKP prices reached lows in 3Q25, with two price increases announced for Europe totaling $130/t, of which about €60/t are already reflected in prices; similar increases are seen in China.

• Free cash flow before growth CapEx was €12m in 3Q25, supported by €18m working capital inflow from inventory and receivables reductions.

Financial highlights

• Pulp sales reached 263,000 tons in Q3, up 8% quarter-on-quarter and 13% year-over-year, but average net selling price dropped by €90/t to €452.

• Group revenues fell 6% sequentially to €181m in 3Q25, with a €15m drop in pulp and a €3m increase in renewables.

• 3Q25 EBITDA was €13m, with a net loss of €15m; 3Q25 consolidated net loss: €16.2m vs. €13.4m profit in 3Q24.

• Cash costs declined by €29/t to €459/t in 3Q25, supporting H2 guidance of €466/t.

• Sale of energy savings certificates generated €40m in 9M25.

Outlook and guidance

• Targeting a 50% increase in across-the-cycle pulp EBITDA by 2028, driven by higher-margin products and efficiency.

• By 2030, renewable energy platform aims to more than triple recurrent EBITDA, expanding into new business lines.

• Cash cost guidance for H2 2025 is €466/t, with a temporary Q4 increase expected due to seasonal wood collection costs.

• Special pulp and fluff pulp products expected to reach over 62% of sales by 2028, with significant margin uplift.

• FX hedging policy caps USD/EUR at 1.09 for nearly 50% of expected 2025 pulp sales, mitigating weaker dollar impact.