4Q23 Results

1 March 2023

18

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.

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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.

2

Today's presenters

Ignacio de Colmenares

Chairman & CEO

Ence Energía y Celulosa

Alfredo Avello

CFO and Chief Forestry Officer

Ence Energía y Celulosa

3

Results Summary

4Q23 Operating Highlights

4Q23 Financial Results

1Q24 Outlook

Growth and

Diversification Projects

  • Pulp price recovery started in 3Q23 and continues into 1Q24 up to 1,220 GROSS USD/t
    (700 NET USD/ton aprox)
  • Cash cost reduction continued in 4Q23, down to 455 €/t (-180 €/t vs. 1Q23)
  • Pulp production improved by 15% vs. 3Q23 boosted by the strong performance of both mills
  • Ence Advance pulp sales accounted for 28% of total pulp sales in 4Q23
  • Acquisition of Sniace forestry assets in 4Q23
  • Sustainalytics and Ecovadis confirmed our leadership in sustainability in 2023
  • EBITDA turnaround in 4Q23, up to €25m, driven by the operating margin recovery in the pulp business
  • €26m growth and sustainability capex in 4Q23, including Sniace Forestry Assets and Pontevedra water recovery solution
  • €8m Free Cash Flow in 4Q23
  • €280m net debt position (including leases) at 31 Dec. 2023 with a cash balance of €345m
  • Low leverage position vs. our average cycle EBITDA
  • Main pulp producers have announced further price increases of up to 1,300 GROSS USD/ton (750 NET USD/ton aprox.)
  • Pulp business operating margin should continue improving
  • +10 €/MWh remuneration from the operation of biomass power plants proposed for 2024
  • New draft regulation for biomass power plants should align cash generation with accounting
    EBITDA
  • The closing of the sale of the remaining 3 PV projects is scheduled for 2024
  • Ence Advance pulp sales continue gaining market share. Aim: to reach 50% by 2028
  • Navia's project for the production of up to 125,000 tons of Fluff pulp is on track. Commissioning expected in 4Q25.
  • Advancing with the engineering to boost the efficiency and flexibility of Pontevedra biomill
  • 6 biomethane plants now in their engineering and permitting phase
  • Final bidder in 5 contracts to provide renewable thermal energy
  • Advancing with the engineering to
    capture the biogenic CO2 released by our activities

4

1.

4Q23 Operating Highlights

5

Pulp price recovery started in 4Q23 and continues into 1Q24

180 cash cost reduction achieved during 2023, down to 455 €/t in 4Q23

Avg. NET Pulp Price & Cash-Cost (€/t)

800

762

750

700

650

578

600

636

522

550

477

500

535

450

484

455

400

350

300

1Q23

2Q23

3Q23

4Q23

1Q24 E

Cash - Cost

Avg. Net Pulp Price

Continued cash cost reduction in 4Q23, favoured by a higher fixed cost dilution leveraged on a strong production

European pulp prices currently at 1,220 GROSS USD/ton (equivalent to NET 700 USD/ton approx.)

Main pulp producers have announced a further price increase of up to 1,300 GROSS USD/ton

(equivalent to NET 750 USD/ton approx.)

6

Pulp production improved by 15% vs. 3Q23

Boosted by the strong performance of both mills

Pulp production (,000 tons)

Pulp sales (,000 tons)

Navia

Pontevedra

+ 15%

+ 12%

253

267

225

231

273

106

245

244

99

68

88

217

154

137

163

161

1Q23

2Q23

3Q23

4Q23

1Q23

2Q23

3Q23

4Q23

  • Production at Navia reached its highest ever annual level in 2023: 614,000 tons.
  • Our innovative solution to recycle the water from our internal effluent and from the local WWTM is already installed at Pontevedra.
  • The environmental permit to recycle our internal effluent was received in 1Q24.
    1. The concession and the environmental permit to recycle the waste water from the local WWTM are expected in the coming quarters.
  • Annual maintenance shutdowns at both bio-mills were undertaken in 2Q23. Next annual maintenance shutdowns are scheduled for 2Q24 at Navia and 3Q24 at Pontevedra

7

Ence Advanced pulp sales accounted for 28% of our pulp sales in 4Q23

Lower environmental footprint and enhanced technical properties at a higher margin

+

+

+

+ Others such as

  • Aiming to replace softwood pulp
  • Targeting customers with high sustainability standards
  • Minimizing the energy consumption during the refining process
  • First unbleached hardwood pulp in the market
  • Certified CO2 footprint during the product life cycle
  • Increases tissue softness
  • Low wet-expansion cellulose suitable for decor paper applications
  • Narrow range of porosity
  • Used as a plastic alternative in packaging for the food & beverage industry
  • Low porosity material

, , and

Ence Advanced Pulp Sales

% of total pulp sales

Ence

Advanced:

28%

Standard

BEKP:

72%

We expect Ence Advanced pulp sales to reach c.50% of our pulp production by 2028 (>500,000 t)

8

Acquisition of Sniace forestry assets in 4Q23

Reinforcing our position as the largest private forest manager in Spain

Ence eucalyptus plantations

Hectares

c.15,500 h

N.W region

c.50,000 h

Huelva

Sniace

+ 3,400 h

Annual production and book value 2023:

  • Annual production: > 0,3 million m3/year
  • Book value: €155m (€88m land + €67m standing timber)

Sustainability certification and biodiversity 2023:

  • 84% of the forest land is certified
  • 22% of hectares are dedicated to preserving ecosystems

Carbon sink:

  • Our plantations annually remove >600.000 t of CO2 from the atmosphere

Innovation:

  • Pioneers in the clonal reproduction of eucalyptus globulus
  • Advanced Plant Material Improvement Program to adapt to future climate change and local plague conditions
  • 3 Eucalyptus nurseries in Spain and 12 million improved clones and seedlings produced annually.

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ENCE: industry leader in sustainability

Global ESG score:

2023 Highlights

90/100

Production cost reduction

Safe & efficient operations

Protecting Health and Safety of employees and contractors

  • 83% reduction of FR (Frequency Rate)* in Energy plants vs 2022

Water footprint reduction

  • Water use reduction in Navia and Pontevedra (-6%vs 2022 in both plants)

Advancing towards a circular economy

  • >95% waste recovery rate
  • 100% plants ZERO WASTE certified

Odour reduction (vs 2022)

  • -43% odour minutes in Navia and -34% in Pontevedra

Leadership and differentiation

Climate action

Committed to mitigate climate change

  • 2023 update of the climate risk & opportunities analysis following
    TCFD Recommendations
  • -7%Ence's direct emissions reduction vs 2022

Sustainable products

Differentiated products with higher added value

  • 22% of total sales (2023). Products with higher and growing margins
  • 1st Pulp EPD* published: Encell TCF, Encell ECFand Naturcell
  • 1st Carbon neutral product (Naturcell Zero)

License to operate

People &

Values

Talent as a competitive advantage

  • Great Place to Work certification for the fourth year in a row
  • We offer quality jobs: 94% of contracts were permanent
  • +13% female employees vs 2022

Commitment to communities

Adding value to society:

  • Launch of the Ence Pontevedra 2023 Social Plan, endowed with 3 million euros
  • >300 social, environmental and cultural projects sponsored within the Plan

Risk minimisation

Sustainable agroforestry

Certified supply chain

  • 84% of managed land certified
  • >73% of supplied wood certified
  • >99% wood & biomass suppliers homologated
  • 100% plants SURE System certified (Sustainable biomass)

Corporate governance

  • Approval of Ence's Sustainability Due Diligence Policy, which contains the guiding principles to prevent Human Rights violations and negative environmental impacts along Ence's value chain and pilot project to deploy it throughout the supply chain

*FR: nº of accidents/working hours x 106

*EPD: Environmental Product Declaration

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Ence Energía y Celulosa SA published this content on 01 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 11:59:34 UTC.