Ence 3Q19 EBITDA falls -57% vs 3Q18

Ence: Buy cellulose during Chinese New YearWorkers at Ence's cellulose plan in Pontevedra (Spain)

Banc Sabadell | Ence has published bad results for 3Q19, although more or less in line with expectations at the level of Ebitda. Thus sales fell -8.4% vs 3Q18, somewhat better than expected (-11.1% BS expectation and -12.6% consensus) above all because of a greater volume of sales.

Ebitda for the quarter was 34.2 M€, which means a sharp fall vs 3Q18 (-55.7%) which would be in line with expectations (-56.3% BS and -55.6% consensus), even if the margin is slightly lower than expectations (17% vs 17.7% BS and 18.3% consensus) because of poor margins in the renewables division. The better expected performance of cash cost (376 euros/Tn in the quarter vs 380 euros/Tn BS estimate) which has been compensated by greater discounts (34% vs 33% BS estimate. Post tax profits fell -93% vs 3Q18 (in line with expectations) to 2.8 M€.

Despite the results being more or less in line with expectations and the share value having already suffered a -50% fall vs the IBEX in 2019, we would not rule out a negative or moderately negative market reaction as the fall in EBITDA is very significant (-57% vs 3Q18) the renewables division has performed somewhat worse then expected.