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www.e n ce.es 8-Feb 2006 Investors` Presentation
www.ence.es Investors’ Presentation 8-Feb 2006 2 ergy ergy Alcor Holding 10,01 % llulose llulose Retos Op. Op. XXI 10.01 % Caixa Galicia 10.04 % 20,8 % Cajastur 5,77 % Bankinter 5.77 % FreeFree-float 54,14 % listed company company in in Madrid Madrid Stockmarket Stockmarket aa listed … focused focused in in the the forest: forest: … Eucalyptus globulus globulus plantations plantations Eucalyptus … plus plus energy energy & & aa few few linked linked industrial industrial … products products Atalaya 5,01 % Capital increase information Type of the offering Issue price Rights issue (1x3) €/share 20.40 Size of the offering 8,490,000 of new shares, equivalent to € 173,196,000 Rights subscription period 12 November -26 November ¬ € 26.72 previous closing price ¬ € 25.14 as theoretical right value (VTD) ¬ € 1.58 as theoretical share value (VTA) ¬ 1,11 times oversubscription Underwriting commitment 68% of the issue by BBVA & Santander Investment the remaining 32% assumed by principal shareholders ¬ … finally 43% of the capital increase was subscribed by these shareholders New shares quotation 5 December with dealing effects in 6 December ¬ € 0,13 /share 3rd interim dividend to be paid 02.13.06 3 www.ence.es 4 ¨ Offering information ¨ ENCE overview ¨ Strategic guidelines ¨ Pulp overview ¨ M´Bopicuá Project ¨ project impact ENCE´s overview ENCE is # 1 forest company in Southern Europe … … with a solid presence in South America ENCE is the leader in European eucalyptus pulp market & # 2 worldwide producer … eucalyptus is the fastest growing segment & Europe the main market ENCE is also a benchmark for electricity generation with bio fuels … … Spain is the most renewal energy oriented among EC countries high margins vs. peers & active currency risk Hedging Policy covering until 2007 moderate Net Debt & attractive Dividend Policy 5 6 Leading Forest Company ( ENCE´s wood resources in a key geo-strategic position for Globulus ( Eucalyptus Globulus the most efficient fiber for pulp • •180.000 180.000ha. ha.(sep-05) (sep-05)(55% (55%ininSouth SouthAmerica) America) • •Sustainable SustainableForest ForestManagement Management Certification Certification (PEFC+ (PEFC+FSC) FSC) intensive Reforestation Programs with clones • • Nature programs Naturepreservation preservationprograms Ö steady productivity improvements in Euca.Glob.plantations • •Collecting, Collecting,debarking debarking&&chipping chippingcenters centers strategically strategicallylocated locatedininIberia Iberia&&Rio RiodedelalaPlata Plata • •Logistic Logisticterminal terminal++Free Freetax taxarea area over overUruguay Uruguayriver river • •LT Logistic Facilities for logs, chips & biomass LTchip-carriers chip-carriersagreement agreement ( (22xx42.000 42.000m3 m3) ) Ö wood sources flexibility Ö logistic costs savings Ö harvesting yields improvements Ö access to new customers • •Private PrivateRR&&DDCenter Center • •Nurseries Nurseries producing producing1010mill millplants/year plants/year • •Consultancy, Consultancy,servicies servicies&&projects projects for forthe therural ruraldevelopment development Iberia USA Uruguay nothern Europe eriaa 3 ear to Ib /year to Iberi m3/y 660000.0.00000m Far East ENCE is # 1 forest company in Southern Europe with a solid presence in South America 7 Leading Eucalyptus Pulp Manufacturer • •Leader Leaderinineucalyptus eucalyptuspulp pulpwithin within the European Market (50% the European Market (50%ofofworld worldconsumption) consumption) ENCE 21% rest Iberia 24% ``logístics logístics(all-wether (all-wetherterminals) terminals)&&customer-service customer-service `` direct & long term customers relationship direct & long term customers relationship ininallallhigh highquality qualitypaper papersegments segments (Eco (EcoManagement Management&&Audit AuditScheme) Scheme) PONTEVEDRA 380 Kt TCF • • Private PrivateRR&&DDCenter Center: : NAVIA 300 Kt ECF • •chemical chemical&&mechanical mechanicalwood woodprocessing processing • •specific solutions for paper processes specific solutions for paper processes&&products products • •11plywood plywood++22sawmills sawmillsmill millininSpain Spain&&Uruguay Uruguay HUELVA 360 Kt ECF ¬ new uses for globulus timber #1 Aracruz, Brazil #2 Ence, Spain #3 Cenibra, Brazil #4 Votorantim, Brazil #5 Suzano, Brazil TOTAL BEKP MARKET 2.495 1.040 940 900 580 8.980 global market share 28% 12% 10% 10% 6% LatAm 48% rest World 7% • •2º2º largest largestproducer producerworldwide worldwide (12%) (12%) with more with morethan than11mill milltons tons • •33mills millsininSpain SpainEMAS EMASregistered registered Eucalyptus market Eucalyptus market pulp pulp producers producers (H. Wright) European market share sales by destination Tissue Germa plus Amsterdam, ny European 15 other ports & consignments currently working with 50% of Uruguayan wood P/W Coated 32 % 29 % Europe 96% N. America Asia S. America 2% 2% - P/W Uncoated 17 % ENCE is the worldwide benchmark for Eucalyptus Globulus industry Filtre Colour Cigarettes Specialities Multilayer Laminating 1% 2% 3% 4% 5% 7% 8 Strategic position facing Climate Change • •Valorisation biofuels fuels Valorisationasasbio ofofresidues coming fromforest residues comingfrom forest&&industry industry • •164 164MW MWcontinuous powergeneration generation continuouspower `` combining with gas in 4 combining with gas in 4 plants plants • •1.25 1.25mill millMWh/year MWh/yeargenerated generated • •11mill millMWh/year MWh/yearsold soldtotomarket market Priority towards Priority towards Clean & efficient Clean & efficient Industrial & Industrial & Bio fuels valorisation Bio fuels valorisation Processes Processes 95 % come from electricity generation emissions emissions Development Developmentofof emission rights awarded 685.000 t/year 2005/07 Electricity ElectricityGeneration Generation plants plantswith withBiomass Biomass combined combinedwith with Cogeneration Cogenerationwith withGas Gas CO2 EMISSIONS by FUEL others 13% NATURAL GAS 14% BIOMASS 73% CO2 emission-rights surplus to be traded renewable energy Development Developmentofof carbon carbon sinks sinks industrial industrial relocation relocation industrial industrialdevelopments developments ininUruguay Uruguay who look for cost savings who look for cost savings together togetherwith with Emissions reduction Emissions reduction electricity-projects electricity-projects ForestPlantations Plantations Forest integratedinin integrated BiomassCollecting Collecting Biomass processes processes forenergy energyuses uses for + “Offsets” opportunity in Spain Clean Development Mechanism (CDM) opportunity in Uruguay ENCE is also a benchmark for electricity generation with bio fuels 9 Key financials Sales by Activity, 2004 Wood sales to Pulp Division at market conditions mill.€ 197 EBIT by Activity, 2004 Forest Division Forest Products & Services to third parties 9% 159 mill.€ 42 Forest Division 14 mill.€ 18 37 Pulp & Energy Division 322 mill.€ 391 Eucalyptus Pulp+ Pulp+ +Hedging 63% Electricity 8% mill.€ 37 Eucalyptus Pulp 83% 77% mill € 69 mill.€ 48 Forest Products & Services 28% Electricity 9% Pulp & Energy Division 57 2000 2001 2002 2003 2004 0,92 650 0,90 493 0,94 463 1,13 504 1,24 522 Sales 586,5 475,4 468,5 482,8 470,1 470,1 415,8 EBITDA+hedg. 207,8 83,1 80,5 106,8 116,0 113,1 EBIT + hedg. 181,5 47,3 43,0 61,9 68,0 65,6 Net Profit 120,6 27,3 28,7 41,6 48,7 39,4 118,7 105 105%% 83,1 126%% 49,6 126 exch.rate $/€ pulp $/t *2004 *9m´05 1,26 581 *with IAS cyclical profit profile linked to pulp prices, but currency risk 2005-07 hedged ($825 mill <1 $/€) 10 ENCE´s profitability vs peers EBIT 2004 % over sales % net assets € ENCE 14,5 9,6 Störa-Enso UPM-Kymm. 5.7 6.5 4.9 4.7 Net cost of pulp sold, M-Real -1.4 -1.6 $ Weyerhauser 11.7 10.0 Aracruz 30.6 10.5 including contribution of other activities 1,26 $/€ 550 productivity + cost savings in core businesses Wood & Pulp $ / ton 500 450 contribution of Electricity, Forest services & Solid wood products 1,24 $/€ 9m´05 Hedging policy 400 + 394 $/t 350 without hedging 388 $/t higher wood & electricity sales volumes continuous efficiency improvements 0,90 $/€ 300 1995 1996 1997 1998 1999 2000 2001 BR/$ dep. ARACRUZ Dif 16 0 16 61 106 -45 . 2003 2004 depreciation $/€ appreciation $/€ EBIT/ton ENCE 2002 BR/$ dep. 51 74 -23 . 70 162 -92 82 159 -77 135 191 -56 . 11 Key financials Cash Flow, Dividends paid & Capex Net Financial Debt & gearing 200 150 0 81% 100 50 0 -50 63 -18 -55 -200 66 -12 -13 -119 85 -15 -100 56% 88% -172 -14 -79 -96 Land adquisitions MB logistic terminal + expansión in nothern mills Privatization extra-dividend 2001 87 -150 -74 -100 2000 87 46% 87% -200 -59 -100 -150 50% -50 147 2002 2003 *2004 *9m´05 investments during down cycles together with attractive dividend policy Dividend yield ´04: 3,01 % over average share price, after 31% of increase in closing price quarterly payments -258 -250 -297 -300 -278 -316 -333 -350 2000 2001 2002 2003 *2004 *9m´05 moderate net debt vs peers 2,1 S/EBITDA (´05) positive effect of IAS-IFRS new standards www.ence.es 12 ¨ Offering information ¨ ENCE overview ¨ Strategic guidelines ¨ Pulp overview ¨ M´Bopicuá Project ¨ project impact 13 Strategic guidelines towards 2010 eucalyptus eucalyptus globulus globulus ENCE today Pulp Pulp Forest assets Europe Kyoto Assets mill ton 1,0 Energy – Pulp Europe mill MWh 1,2 Europe has 180.000 America Forest assets South America Logistic Terminal & Tax-Free Area 1 4 Confirming … Sawnwood & Plywood … as a qualified bussines Expanding forest & energy assets 3 Pulp Pulp Kyoto Assets Forest assets Europe has 180.000 Forest assets South America 2 eucalyptus eucalyptus globulus globulus Producing pulp in America Logistic Terminal & Tax-Free Area Energy Europe mill MWh 1,2 1,7 mill MWh 0,5 Energy mill ton 1,0 Pulp Europe Strenghing … Globulus Pulp … differentiation Europe America mill ton 0,5 Pulp M´Bopicuá site ENCE 2010 14 Strategic guidelines towards 2010 1 as to … continuous expansion in forest & energy assets support industrial raw-material growth, balance pulp-business volatility, take advantage of Kyoto Protocol, plus adding value through partnerships 2 as to … eucalyptus pulp production in America strengthen cost position, reduce $/€ exposure, support European demand increase, plus entering in the Asian market ¨ intensive reforestation programs with clones & additional land adquisitions ¨ progressive growth of electricity generation assets at the Spanish sites up to maximize Spanish regulation effects ¬ 1st) + 51 Mw at Huelva site (+34%) ¨ Emission Reduction Certificates (carbon sinks + energy efficiency) to be obtained ¨ M´bopicuá project: ¬ CMB´s 500.000 tons eucalyptus pulp line ( +48% ) ¬ EMB subsidiary´s energy recovery & Mw 70 electricity generation capacity (+43%), selling 49% to the market ¬ increase in present chipping / debarking capacity at Logistic Terminal www.ence.es 15 ¨ Offering information ¨ ENCE overview ¨ Strategic guidelines ¨ Pulp overview ¨ M´Bopicuá Project ¨ project impact 16 Eucalyptus market pulp within the paper industry Total pulp market growth over GDP - virgin fibre resists recycle fibber pressure Demand moving towards eucalyptus pulp, to produce high quality paper Asia is showing the strongest growth for eucalyptus but Europe will still be the main market total market pulp Demand 45.000 H. Wright (mar ´05) + 3,7 % p.a. s/´92 40.000 Growth supported on imports 000 t 6.000 Western Europe 5.000 4.000 35.000 ´04 …. mill tons 41.1 + 5.2 % s/´03 30.000 rest of world 3.000 China 15,4 % 2.000 25.000 1.000 eucalyptus pulp Demand 20.000 15.000 21% 10.000 2004 ´08 … mil t 11,6 +7,3 % p,a. s/´04 2006 China 12% Japan 4% 8,1 % 2007 2008 West. Europe 50% 2008 Rest 14% 2006 2004 2002 2000 1998 1996 1994 1992 2005 2.004 ´04 …. mill tons 8.8 + 9,1 % s/´03 0 North America 0 + 6,1 % p.a. s/´92 5.000 5,4 % Eastern Europe an additional market 6,7 % Latiname. 8% Northame. 12% Eucalyptus Pulp is the fastest growing segment 40 % for total market pulp 17 ¿Is there room for new capacities ? (mill.tons) 2001 Total market pulp …… 35.8 average annual growth Eucalyptus pulp ……. Demand 2004 41.1 4,7 % H. Wright (mar ´05) assuming just 3% growth 2008(e) dif p.a. 44.4 + 0.8 2008(e) dif p.a. 46,3 +1.3 6.7 8. 8 11. 6 average annual growth 9,4 % 7,3% 21 26 % Eucalyptus vs/total 19 if … 1,9% 3,0% + 0.7 +1.2 Eucalyptus fibre will support new Pulp needs Total pulp market growth rates will probably decelerate by 2004-08, … but how much? In a conservative scenario there is room for almost 700.000 tons per annum of new eucalyptus capacity in the next four years Paper processes modernization will increase eucalyptus consumption in high quality products …while wide forward markets will reduce prices volatility (mill.tons) 2001 Eucalyptus ………. 7.1 average annual growth Capacity Brasil+Chile ………. 4.1 % Brasil+Chile vs/total 57 2004 9,0 8,1 % 6.1 68 Brasil-Chile 2005-2007 2.6 mill. t - 3 new projects Veracel (´05) 0.90 Bahia Sul Mucuri(´07) 0.95 CMPC Santa Fe (´06) 0.78 Brasil & Chile new capacities are supporting growth & North America shutdowns Wood resources will restrict new projects, preserving good utilization rates interest is moving to Uruguay M,Bopicuá will allow ENCE to maintain its leading position www.ence.es 18 ¨ Offering information ¨ ENCE overview ¨ Strategic guidelines ¨ Pulp overview ¨ M´Bopicuá Project ¨ project impact 19 Uruguay: a strategic country ¨ A perfect location for eucalyptus globulus plantations ¨ with a very little pulp & paper industry yet, it does have half a million has. planted, that can provide 2.5 million metric tons of pulp ENCE Forestry Priority Areas under Uruguayan Law EUFORES Is the country with the greatest potential for the development of new eucalyptus pulp projects but also is increasable dependent on electricity imports Ö ENCE already has the wood, wood the logistical infrastructure and has secured an optimum legal & fiscal framework to develop wood-based industry Ö It has received the support of multilateral agencies Inter-American Development Bank (TLM existing loan) plus World Bank (mandate signed & terms under negotiation) 20 M¨Bopicuá: a strategic location an infrastructure ` M´Bopicua Logistic Terminal (TLM), over Uruguay River ( 100 Km far from the Plata River mouth), direct access to Uruguayan & Argentinean road system, that gives flexibility to goods origins, availability of own pier for in/out flows, plus railway connection opportunity close to Eucalyptus plantations & gas-pipelines near urban centers where workers will stay in ` Tax-Free Area (ZFMB), next to TLM, during 30 years, for the mills located (which can be extended to 50 years) TLM M´Bopicuá Logistic Terminal 350 has. present 800.000m3 CHIPPING plant PIER WOOD YARD ZFMB TLM Road (+ future railway) connection M´Bopicuá provides with important logistic advantages for trading / industrial projects, especially in wood 21 M’BOPICUA Project ENCE EUFORES • Plantations • Wood traiding • Debarking/chipping centers • Sawnmill Europe America CMB (Celulosa de M´Bopicuá), an Uruguayan company created in 2002 to promote a pulp mill project based in eucalyptus in that country EMB (Energía de M´Bopicuá), a CMB´s subsidiary, will group recovery & energy assets M´Bopicuá site Enviromental permit (oct.´03) Wood - PMB Logistic Tax free area - ZFMB TLM Chemicals Pulp - CMB restricted Financial, Technical & Management risks: medium size mill (enlargeable to 1 million) plus … experience/support of Huelva mill + own R&D/Engin. ECF 500.000 500.000 tons tons 516.000 516.000 MWh MWh Energy - EMB biomass 22 Wood availability for CMB-EMB project CMB - EMB woodchips & bark needs will be supplied at M´Bopicuá by EUFORES through a subsidiary (PMB) at Duty Free Area (existing chipping facilities will be increased ) glóbulus equivalent: 3,1 m3/ton of pulp Wood supply by source (000 m3 ) Assets forested up to Dec ´04 Assets to be forested post Dec ´04 Forward purchases Current purchases to third parties 2008 2009 2010 … 2014 568 1.345 1.495 1.495 300 126 142 600 409 336 600 521 374 600 950 - ¨ limited exposure (25%) to current purchases in the Uruguayan market & Argentina as a secondary source • EUFORES’ forested assets up to the end of 2004 will supply 700,000 m3 per annum of eucalyptus wood - 600,000 to CMB-EMB - as from 2008, with increasing productivity (between 16 and 19.5 m3 per hectare and year) • forward purchases of standing wood underway • 100.000 has. of own plantations in the area will minimize market wood exposure • current restructuration investments with clones on the plantations as they are harvested will improve productivity (but is not consider in CMB-EMB´s costs) • new forestations (6.000 has per year with estimated growth in excess of 21 m3), could fully satisfy CMB-EMB needs from 2014 mill wood needs will be cover on <180 km average distance until 2012 23 ex-mill cost: Uruguay vs. Iberia mills CMB 450 400 ENCE Iberia full capacity scenario 2004 basis, but… several $/€ scenarios 404 $/t 373 $/t 342 $/t 350 $/ton 300 311 $/t 279 $/t 253 $/t 250 200 63 150 65 100 46 50 79 depreciation fix b. deprec. other variable wood (*) 17,5 % of the wood is coming from Uruguay 0 0,9 1,0 1,1 1,2 1,3 $/€ much lower Uruguayan wood cost & higher productivity of mill (*) - debarking & chipping costs are not included in wood costs but in the other items to be comparable with the iberian ENCE´s mills - Wood cost does not include capital cost as in competitors information available 24 cash cost CIF Europe: Uruguay vs. Iberia mills CMB 450 400 ENCE Iberia 2004 basis, but… several $/€ scenarios full capacity scenario 416 $/t 386 $/t 354 $/t 350 322 $/t $/ton 290 $/t 300 239 $/t 250 200 49 Commercial Production 150 100 190 50 0 CIF Europe conditions potential revenues coming from carbon CDMs are not consider 0,9 1,0 1,1 1,2 1,3 $/€ good commercial costs of CMB due to… … logistic facilities plus integrated sales & distribution network in Europe 25 Cash cost CIF: CMB Uruguay vs peers Hawkins Wright source , March 2005 Outlook €/$ 1,35 US $ /ton Brazil ENCE Iberia US Canada World Portugal Finland South East average CMB 84 45 52 128 60 122 158 54 108 206 71 117 266 43 84 144 51 84 79 79 46 46 65 65 fob mill b. depreciation 181 310 320 394 393 279 Commercial cost 61 63 80 23 46 55 190 190 49 49 CASH COSTS cif 242 373 400 417 439 334 239 239 wood other variable costs fix cost b. depreciation weak $ depress cost competitiveness of ENCE´s Iberian mills CMB´s cost will be similar to Brazilian mills 26 M´Bopicuá project financial needs & IRR ¨ M´Bopicuá project financial needs: mill $ ´06 ´07 ´08 total ¬ CMB´s eucalyptus pulp line, plus chemicals ¬ EMB subsidiary´s energy recovery & electricity generation line ¬ EUFORES additional chipping / debarking capacity 35 86 165 286 31 102 181 314 5 11 6 71 199 352 plus deferred expenses + start up …………. working capital ……..………………. 22 622 67 23 712 0 Eucalyptus current pulp prices $/t 853 0 770 700 0 0 0 0 410 540 536 522 524 465 480 390 1H ´05 495 489 458 505 380 IRR 330 05 8,7% 03 01 99 97 95 93 89 87 85 83 16,8% 522 current prices trend: + 0,53 % annual increase 81 79 530 480 470 0 647 580 510 515 0 690 600 91 0 11,0% 18,6% 20,3% 13,0% 15,0% -20% -15% -10% 22,0% 23,6% price var. -5% 0% 5% 10% 15% 20% M´Bopicuá´s IIR will be around 17% taxes free & before financial structure www.ence.es 27 ¨ Offering information ¨ ENCE overview ¨ Strategic guidelines ¨ Pulp overview ¨ M´Bopicuá Project ¨ project impact Impact of M´Bopicuá project on ENCE 1 M´Bopicuá assure ENCE´s cost competitiveness in weak $ scenarios ... nevertheless hedging will be added if possible 2 M´Bopicuá project requires higher equity level: €170 mill. Capital increase 3 dividend payments & equity strengh would be compatible even with new number of shares 4 recurrent capex plus forest & energy over investments financed with cash flows and certain land divestures & partnersips Uruguay 28 29 M´Bopicuá project impact in ENCE´s EBITDA ENCE´04 without hedging (pulp price 521$/ton) M´Bopicuá project: on ´04 basis … … with exchange rate 1,24 $/€ D Total funds needed mill € 574 ENCE without hedging… plus: Ì profits coming from recentchanges in Spanish electricity legal framework (full impact ´06) Ì 51Mw additional power at Huelva … & pulp price 521 $/ton D EBITDA per year mill € 105 … mill.€ 21 on ´04 prices/costs basis Uruguay tons 500.000 EBITDA increase trough M´Bopicuá Proforma EBITDA (mill €) Including aditional volume effects in Eufores Ö substantially lower cost per ton of Iberia & Uruguay mix mill € 373 Proforma EBITDA (€) /ton mill € 304 287 mill € 229 mill € 208 + 21 €/t mill € 202 mill € 175 224 mill € 162 235 215 200 198 163 171 Iberia tons 1.024.000 mill € 131 mill € 154 258 245 mill € 248 mill € 94 132 106 128 + 45 €/t 92 mill € 110 mill € 73 mill € 62 61 mill € 41 0,90 1,00 1,10 1,20 1,30 $/€ 0,90 1,00 1,10 1,20 1,30 Ö proforma EBITDA: at 1,24 $/€ rate & 521 $/ton mill € 186 + 65% s/ EBITDA´04 hedging included M´Bopicuá will assure ENCE´s cost competitiveness in weak $ scenarios 30 M´Bopicuá project financing (I) Proforma 9m´05 Dec.31st 2004 Balance sheet under IRFS (unaudited) mill € 557 K y o t o A s s e t s cap. grants + provisions + deferred tax liabilities Net Financial Debt over: mill €167 mill € 133 EBITDA …. 2,45 2,10 Equity …. 0,62 without hedging fair value 0,68 Forest Div. Fix assets mill € 383 Net Financial Debt mill € 277 ST Hedging fare value + Net Working capital Energy Fix assets mill € 174 Pulp Fix assets mill € 91 LT Hedging fare value + general fix assets mill € 191 Net Financial Debt mill € 277 Equity mill € 450 Equity mill € 598 M´Bopicuá project mill € 574 in ´04 basis without hedging program ´05/´07 fair value after tax mill € 148 ENCE has a good financial base … …..but M´Bopicuá project requieres higher equity level 31 M´Bopicuá project financing (II) funds to be carried out along ´06/´08 IFC/BBVA (mill $ 200) + ICO (mill $ 100) in ´04 basis mill € 242 22 CMB-EMB (*) mill € 556 in ´04 basis Net Financial Debt mill € 278 Dec.31st 2004 CMB-EMB Equity mill € 278 Net Financial Debt mill € 277 33% capital increase mill € 170 11 (*) exluding EUFORES additional investments at Duty Free Area Equity mill € 450 proforma balance sheet Net Financial Debt mill € 668 ¨ 3/4 of M´Bopicuá financial requirements will be cover by capital increase plus IFC/BBVA + ICO specific LT financing ¨ confortable debt ratios could be kept through: … managing Kyoto assets expansion together with : Ö partnerships on them Ö plus southern iberian land divestures Ö net profits after dividends paid Equity mill € 620 ¨ but also a new global financial dress is needed for new times: Ö current M/S T corporate debt reestructuring to mach maturity of new projects Conclusions ENCE is # 1 forest company in Southern Europe … … with a solid presence in South America ENCE current position ENCE is the leader in European eucalyptus pulp market & # 2 worldwide producer … eucalyptus is the fastest growing segment & Europe the main market ENCE is also a benchmark for electricity generation with bio fuels … … Spain is the most renewal energy oriented among EC countries high margins vs. peers & active currency risk Hedging Policy covering until 2007 moderate Net Debt & attractive Dividend Policy higher pulp capacity (+50%), stronger market position & access to the Far East M´Bopicuá attractive IRR plus optimum tax/legal frame & world Bank support project important EBITDA / ton improvement (lower wood cost & sale/ distribution advantages) plus direct reduction of currency risk exposure Kyoto assets higher electricity generation capacity (+75%) & … … benefits from Spanish Electricity Regulatory Frame evolution strong impact of R&D policy on land productivity & operational costs Rigths opportunity on all kind of Kyoto Protocol Flexibility Mechanism 32
