ENCE Energía y Celulosa (ENC) Q4 2024 earnings summary

Executive summary

• Pulp prices bottomed in Q4 2024, rebounded strongly with multiple price increases for 2025, supported by tight supply-demand and a major Chinese producer's bankruptcy.

• Advanced pulp products accounted for 23% of 2024 sales, delivering higher margins; targets are 30% in 2025 and 50% by 2028.

• Strategic investments in fluff pulp, renewable packaging, and decarbonization projects are underway, with strong expected returns and market interest.

• Diversification into biofertilizer, biomethane, and renewable thermal energy platforms is progressing, targeting significant EBITDA contributions by 2030.

• Maintained low leverage with €321m net debt and €287m cash at year-end, after €34m dividend payments (5% yield).

Financial highlights

• Pulp business EBITDA tripled to €138m in 2024, driven by higher prices and lower costs; group EBITDA rose 85% to €165m, and net income reached €32m.

• Group revenue rose by 6% year-over-year to €876m; consolidated EBITDA nearly doubled.

• Free cash flow before working capital and growth CapEx reached €101m.

• Biomass energy EBITDA rose 50% to €32m, with electricity sales up 23%.

• Dividend payout totaled €34m, yielding 4.9%–5%.

Outlook and guidance

• Further pulp price increases expected in the short term, with industry forecasts above $1,450/ton by 2027.

• Cash cost for pulp expected to fall below €485/t for 2025, with normalization of temporary cost factors.

• Fluff pulp line (125,000 t/year) and packaging solutions to be commissioned in Q4 2025, with significant margin improvements.

• Biofertilizer/biomethane platform aims for 1 TWh production and >€60m EBITDA by 2030; thermal energy business targets 2 TWh and >€40m EBITDA.

• €30m from Energy Saving Certificates to be recognized as revenue in Q1 2025.