Q3 2024 Ence Energia y Celulosa SA Earnings Call Transcript
Key Points
- ENCE Energia y Celulosa SA (STU:ENCA) reported a strong operating margin of EUR190 per tonne in the third quarter.
- Pulp production in Pontevedra increased by 36% compared to the same quarter last year, despite challenges such as maintenance shutdowns and severe drought.
- The company's Renewable business EBITDA doubled to EUR9 million in the third quarter, driven by normalized energy output and lower operating costs.
- ENCE Advanced pulp sales accounted for 22% of total pulp sales, delivering higher margins and expected to reach 30% of total sales next year.
- The company maintains a strong liquidity position with consolidated liquidity of EUR332 million and no covenants in the pulp business.
- Hardwood pulp prices in Europe declined by over 20% from their peak, impacting revenue.
- An incident in Navia's co-generation turbine led to temporary higher energy purchases, resulting in an extra cost of EUR1.7 million in the third quarter.
- Extra costs of approximately EUR6 million are expected in the fourth quarter 2024 and EUR5 million in the first quarter 2025 due to the turbine incident.
- The average net selling price of pulp decreased by EUR49 per tonne compared to the previous quarter.
- Cash costs increased slightly to EUR489 per tonne, mainly due to higher wood costs.
Good morning, ladies and gentlemen. Welcome to the Ence Third Quarter 2024 Results Presentation. I will now hand the call over to Mr. Ignacio Colmenares, Executive Chairman; and Alfredo Avello, CFO. Gentlemen, please go ahead.
Good afternoon, ladies, and gentlemen. Thank you for joining Ence's third quarter 2024 results conference call. Our CFO, Alfredo Avello; and our Head of IR, Alberto Valdes, are also connected to this call. After the presentation, we will be pleased to answer any questions you may have.
I would like to start with the main highlights of the quarter on slide 6. We (technical difficulty) a strong operating margin of EUR190 per tonne in the quarter. Hardwood pulp prices in Europe declined by over 20% from their peak in July, driven by pulp destocking in China and the start of new capacity additions. European hardwood pulp reached a gross price of $1,160 per tonne in October, equivalent to a net price of around USD650 per
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