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Introduction & Market Context
Ence Energía y Celulosa (BCBA:CELUm) presented its first quarter 2025 results on April 30, revealing a mixed performance amid ongoing strategic transformation efforts. The Spanish pulp and renewable energy company reported consolidated EBITDA of €34 million, slightly below the €35 million achieved in the same period last year. Following the announcement, Ence’s stock dropped 4.5% to €3.22, reflecting investor concerns about the year-over-year declines in both revenue and profit.
The company highlighted a significant rebound in European pulp prices, with Bleached Hardwood Kraft Pulp (BHKP) prices increasing 21% from December 2024 lows to reach 1,218 USD/t in April 2025. This positive trend in pulp prices provides a more favorable backdrop for the company’s operations moving forward.
As shown in the following chart of European pulp price trends:
Quarterly Performance Highlights
Ence’s pulp business EBITDA quadrupled compared to Q4 2024, reaching €28 million in Q1 2025, though this was slightly below the €29 million reported in Q1 2024. The company achieved an 11€/t cash cost reduction compared to the previous quarter, bringing costs down to 510 €/t. However, pulp sales volume decreased by 11% year-over-year to 216,000 tons, while the average net sales price fell by 7% to 558 €/t.
The detailed breakdown of pulp business performance metrics illustrates these trends:
In the renewables segment, EBITDA reached €6 million, representing a 10% decrease from Q1 2024 but a 6% improvement over Q4 2024. Biomass energy volume sold increased by 19% year-over-year to 277 GWh, though costs per MWh also rose slightly by 1%.
On a consolidated basis, Ence reported €34 million in EBITDA and €2 million in attributable net income for Q1 2025, compared to €35 million and €3 million respectively in Q1 2024. Group revenues declined by 8% year-over-year to €187 million.
The following chart shows the consolidated financial performance:
A significant financial highlight was the sale of Energy Saving Certificates for €30 million, which was cashed and registered as other operating revenue in Q1 2025. These certificates were generated through energy efficiency projects equivalent to 191 GWh and certified by AENOR.
Strategic Initiatives
Ence continues to advance its strategic transformation, focusing on higher-margin specialty pulps and diversification into renewable energy. The company reported that its Ence Advanced pulp products accounted for 35% of total pulp sales in Q1 2025, with a goal to reach 50% by 2028. These specialty products command approximately €30/t higher operating margins compared to standard pulp.
The company’s product mix strategy is illustrated in the following chart:
A key growth initiative is the development of Europe’s first fluff pulp line using eucalyptus, which is on track for start-up in Q4 2025. This 125,000-ton capacity line is expected to deliver operating margins approximately €60/t higher than standard pulp. By 2028, Ence aims to have higher-margin pulp sales (including Advanced and Fluff) exceed 60% of total sales.
Beyond pulp, Ence is building a biofertilizer and biomethane platform in Spain, targeting 1 TWh of production by 2030 with an expected contribution of over €60 million to EBITDA. The La Galera plant, part of this initiative, improved its biomethane production by 67% in Q1 2025 compared to Q4 2024.
The company’s biomethane strategy is detailed in this comprehensive overview:
Additionally, Ence is developing a renewable industrial heating business, with a target of 2 TWh of thermal energy supply by 2030 and over €40 million contribution to EBITDA. The company has already started construction of two biomass boilers for Mahou San Miguel, which will supply 85 GWh of biomass thermal energy per year under a 15-year contract.
Financial Position
Ence maintained a strong financial position with €316 million in cash and €331 million in consolidated net debt at the end of Q1 2025. The company generated €20 million in free cash flow before working capital changes and growth capex, though after accounting for an €8 million working capital outflow and €11 million in growth and sustainability capex, the final free cash flow was negative €5 million.
The company’s debt profile shows long-term maturities and no financial covenants in the pulp business:
Forward-Looking Statements
Looking ahead, Ence’s management expressed optimism about the tight pulp supply/demand balance continuing to support pulp prices, despite short-term volatility caused by US-China tariff announcements. The company expects cash cost reductions to continue throughout 2025, along with higher energy production and lower biomass plant operating costs.
Ence also emphasized its sustainability leadership, highlighting achievements such as zero odor minutes at the Navia biofactory, 100% of sites being zero waste certified, and a 4% reduction in direct emissions in 2024 versus 2023. The company’s first carbon-neutral product, Naturcell Zero, is part of its sustainability strategy.
The comprehensive sustainability initiatives are summarized in this overview:
Despite the company’s optimistic outlook and strategic initiatives, the market reaction to the Q1 results was negative, with the stock dropping 4.5% following the announcement. According to available data, the stock is now trading near its 52-week low, though analysts maintain price targets ranging from €4.21 to €5.35, suggesting potential upside from current levels.
Ignacio Colmenares, Executive Chairman, emphasized during the earnings call that "Industry experts continue to forecast an improving price outlook with estimated average hardwood pulp prices of over $1,400 per ton in 2027," and that the company’s higher margin and value-added pulp sales are expected to exceed 60% of total sales by 2028.
Full presentation:
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