ENCE Energía y Celulosa S A : Results 2Q23

1H23 Results 18

27 July 2023

Global ESG

score: 90/100

Disclaimer

The information contained in this presentation has been prepared by Ence Energía y Celulosa, S.A. (hereinafter, "Ence").

This presentation includes data relating to future forecasts. Any data included in this presentation which differ from other data based on historical information, including, in a merely expository manner, those which refer to the financial situation of Ence, its business strategy, estimated investments, management plans, and objectives related to future operations, as well as those which include the words "anticipate", "believe", "estimate", "consider", "expect" and other similar expressions, are data related to future situations and therefore have various inherent risks, both known and unknown, and possess an element of uncertainty, which can lead to the situation and results both of Ence and its sector differing significantly from those expressly or implicitly noted in said data relating to future forecasts.

The aforementioned data relating to future forecasts are based on numerous assumptions regarding the current and future business strategy of Ence and the environment in which it expects to be situated in the future. There is a series of important factors which could cause the situation and results of Ence to differ significantly from what is expounded in the data relating to future forecasts, including fluctuation in the price of wood pulp or wood, seasonal variations in business, regulatory changes to the electricity sector, fluctuation in exchange rates, financial risks, strikes or other kinds of action carried out by the employees of Ence, competition and environmental risks, as well as any other factors described in the document. The data relating to future forecasts solely refer to the date of this presentation without Ence being under any obligation to update or revise any of said data, any of the expectations of Ence, any modification to the conditions or circumstances on which the related data are based, or any other information or data included in this presentation.

The information contained in this document has not been verified by independent experts and, therefore, Ence neither implicitly nor explicitly gives any guarantee on the impartiality, precision, completeness or accuracy of the information, opinions and statements expressed herein.

This document does not constitute an offer or invitation to acquire or subscribe to shares, in accordance with the provisions of Royal Legislative Decree 4/2015, of 23 October, approving the consolidated text of the Securities Market Act. Furthermore, this document does not constitute a purchase, sale or swap offer, nor a request for a purchase, sale or swap offer for securities, or a request for any vote or approval in any other jurisdiction.

The use by ENCE ENERGIA Y CELULOSA, S.A. of any MSCI ESG RESEARCH LLC or its affiliates ("MSCI") data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of ENCE ENERGIA Y CELULOSA, S.A by MSCI. MSCI Services and data are the property of MSCI or its information providers, and are provided "as-is" and without warranty. MSCI names and logos are trademarks or service marks of MSCI.

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Today's presenters

Ignacio de Colmenares

Chairman & CEO

Ence Energía y Celulosa

Alfredo Avello

CFO and Chief Forestry Officer

Ence Energía y Celulosa

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1H23 Results Summary

1. Financial Highlights

• 100 €/t cash cost reduction in 2Q23 vs. 1Q23 partially mitigated a 24% net pulp price decline over the same period
• Accounting (non cash) impact of the updated regulated energy price in 2023 is offset by a higher Ri cashed annually from 2023
• €105m working capital normalization in 1H23 following the return of €85m excess Ro collected in 2022 and the production normalization at Pontevedra.
• €140 m dividend paid in 1H23 against FY2022, based on strong FCF generation and low leverage
• Low leverage position relative to our average cycle EBITDA offers flexibility to seize multiple growth opportunities
• We confirm our leadership in sustainability according to Sustainalytics and Ecovadis

2.	2023 Outlook

• Cash cost improvement to continue in the coming quarters. Cash cost expected to improve below €500/t over 2H23
• 2023 Pulp production expected to normalize at close to 1 million tons
• Pulp price in Europe is expected to bottom out in 3Q23, following its correction in 2Q23
• We expect pulp demand growth to exceed supply growth over the coming years, providing a strong support for an improving pulp price outlook
• €26m estimated positive cash impact in 2023 from the regulated energy price update
• €27m expected positive contribution to EBITDA from pending PV projects sale in 2H23-2024

3. Growth & Diversification Initiatives Update

• First phase of Navia Excelente project on track to continue diversifying our production towards our differentiated pulp products and Fluff pulp, with a target ROCE>12%
• As Pontes project to continue growing and diversifying the business, without increasing the consumption of wood
• Our unique competitive advantage: over 95% of our wood is locally sourced
• 15 biogas projects currently under development, targeting a ROCE>12%
• Working with potential industrial customers in Spain to replace fossil- fuel heating with renewable heating
• New opportunities to monetize carbon credits in the CO2 markets

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1.	1H23 Financial Highlights

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