Portucel : Consolidated Annual Results for 2015

20160102 - ENG Divulgação Resultados do Ano 2015 Final

1

Highlights for the year 2015 (vs. 2014)

• Turnover up by 5.6% to € 1.6 billion on the strength of higher pulp and paper prices

  
  

• EBITDA up by 18.7% to € 390 million, with EBITDA/Sales margin rising to 24%

  
  

• Group makes progress on strategic development plan. Milestones during the period:

  
  

  • Start-up of new pulp capacity in Cacia, allowing for 20% increase in annual output

    
    

  • Move into tissue business, with acquisition and integration of AMS

    
    

  • Completion and start-up of second tissue machine in Vila Velha de Ródão

    
    

  • Start of construction work on pellets factory in US

    
    

  • Construction and start-up of Luá Nurseries, in Zambézia, allowing operation to move on to large scale forestry planting phase

    
    

• Debt restructured, with better terms and longer maturities

  
  

• Net debt/ Ebitda ratio still at prudent levels, below average for sector

  
  

  Highlights for Q4 2015 (vs. Q3 2015)

  
  

• Paper sales total 425 thousand tons in quarter, setting new record

  
  

• EBITDA stands at € 96 million, due to negative impact of non-recurrent factors (anti-dumping tax and increase in pension fund)

• Payment of € 130 million in December by way of anticipated dividends and distribution of retained earnings

• Group implements new measures to optimise operational efficiency and cut costs

Leading Indicators - IFRS (unaudited)

FY 2015	FY 2014	Change (5) 2015 / 2014
Million euros	1 628.0	1 542.3	5.6%
Total sales
EBITDA (1)	390.0	328.4	18.7%
Operating profits	282.9	218.3	29.6%
Financial results	- 50.3	- 34.2	47.2%
Net earnings	196.4	181.5	8.2%
Cash flow	303.6	291.6	4.1%
Free Cash Flow (2)	81.0	234.2	-65.4%
Capex (6)	152.3	50.3	102.0
Net debt (3)	654.5	273.6	380.9
EBITDA / Sales (%)	24.0%	21.3%	2.7 pp
ROS	12.1%	11.8%	0.3 pp
ROE	14.7%	12.4%	2.3 pp
ROCE	15.7%	12.4%	3.3 pp
Net Debt / EBITDA (4)	1.7	0.8

Q4 2015	Q3 2015
Million euros	423.7	409.4
Total sales
EBITDA (1)	96.0	109.5
Operating profits	75.1	78.1
Financial results	- 5.4	- 27.1
Net earnings	54.5	41.5
Cash flow	75.3	72.9
Free Cash Flow (2)	62.6	- 28.5
Capex	39.2	35.9
Net debt (3)	654.5	587.1
EBITDA / Sales (%)	22.7%	26.7%
ROS	12.9%	10.1%
ROE	17.5%	13.2%
ROCE	16.1%	17.1%
Net Debt / EBITDA (4)	1.7	1.5

Change (5)

Q4 15/Q3 T15

3.5%

-12.3%

-3.7%

-80.2%

31.4%

3.3%

-319.9%

3.2

67.4

-4.1 pp

2.7 pp

4.3 pp

-1.0 pp

1. Operating profits + depreciation + provisions

2. Var. Net debt + dividends + share buyback

3. Interest-bearing net debt - liquid assets

4. EBITDA corresponding to last 12 months

5. Percentage variation corresponds to figures not rounded up/down

6. Capex not including € 41Mln of AMS acquisition

1. ANALYSIS OF RESULTS 2015 vs. 2014

2015 was a landmark year in the history of the Portucel Group, not just because of the launch of the strategic development plan for the new cycle of growth, but also because of the excellent operating performance achieved in its core pulp and paper business. Turnover stood at € 1.6 billion for the period, the highest figure ever recorded, reflecting an increase of approximately € 85.7 million in relation to 2014 up 5.6%, resulting essentially from the increase in pulp and paper prices, caused by the strength of the dollar against the euro. Inclusion of figures for tissue business in the Group's consolidated accounts contributed to the growth recorded. Paper sales accounted for 75% of turnover, with energy representing 12%, pulp 9% and tissue paper approximately 3%.

In the UWF (uncoated woodfree paper) area, the European market registered only a slight reduction in apparent consumption (around 0.3%), and exports grew significantly, supported by the favourable USD exchange rate. Taking advantage of foreign exchange trends, Portucel expanded its sales to USD denominated markets, recording growth of approximately 1.7% in the volume of sales to these markets. The Group's average sales price evolved favourably, rising by approximately 5% over 2014, making it possible to achieve growth of 4.0% in the value of paper sales in 2015, which rose to its highest ever level at above € 1.2 billion. Over the same period, the benchmark index in Europe, PIX A4- Copy B, dropped by 0.6%. In terms of volume, there was a slight reduction of 0.6%, due essentially to efforts to replenish stocks, which had fallen to a very low level, and to the increase in the volume in transit to clients.

Bleached eucalyptus pulp (BEKP) business maintained the positive performance recorded since the start of the year, with prices significantly better than in the same period in 2014. The dollar-denominated price index performed well, with an average price of 784 USD/ton, as compared to 746 USD/ton in the same period in the previous year. Due to the foreign exchange effect, this increase translated into a sharp rise in the price in euros, with the benchmark PIX BHKP index pointing to an average of € 698/ton, up by 25.6% on the same period in the previous year. The upward trend in pulp prices resulted in an increase of 23.2% in the value of sales, despite a reduction of 1.7% in the quantity sold.