ENCE Energia y Celulosa S.A.

Committed capex (€295 million) for 2019 mainly includes €75 million for the expansion of the company's pulp mill capacity at Navia and €130 million for construction of biomass plants in Huleva (46 megawatts) and Puertollano (50 megawatts). Out of the €615 capex plan for the energy business until 2023, €140 million is already invested, in December 2018, for the acquisition of a 50 MW solar thermal plant in Puertollano (Ciudad Real). Heavy investments are likely to benefit the company in the medium term, but undermine cash flows in the short-to-medium term. In 2019, we expect negative free operating cash flow (FOCF) and funds from operations (FFO) to debt to exceed 20%. Although we expect credit metrics to weaken in 2019,

... will undermine cash flows in the short term.Although ENCE Energia y Celulosa S.A. plans to expand its capacity in pulp (725 million) and renewable energy (615 million) over 2019-2023, it has not committed to any growth capex beyond 2019, as its expansion plan remains subject to market conditions. Committed capex (295 million) for 2019 mainly includes 75 million for the expansion of the company's pulp mill capacity at Navia and 130 million for construction of biomass plants in Huleva (46 megawatts) and Puertollano (50 megawatts). Out of the 615 capex plan for the energy business until 2023, 140 million is already invested, in December 2018, for the acquisition of a 50 MW solar thermal plant in Puertollano (Ciudad Real). Heavy investments are likely to benefit the company in the medium term, but undermine cash flows in the short-to-medium term. In 2019, we expect negative free operating cash flow (FOCF) and funds from operations (FFO) to debt...

Full Report