ENCE Energía y Celulosa, S.A.

Good morning, ladies and gentlemen. Welcome to the ENCE 2Q2026 results presentation. I will now hand over to Mr. Ignacio Colmenares, Executive Chairman, and Alfredo Avello, CFO. Gentlemen, please go ahead.

Good morning, good afternoon, and welcome to ENCE's second quarter 2026 results presentation. Thank you for joining us. I'm Ignacio Colmenares, Chairman and CEO And today I'm joined by our CFO, Alfredo Abello, and our Head of Investor Relations, Inés Álvarez. I'm pleased to report that this quarter shows the results of our key strategic initiatives to reposition our product mix and strengthen competitiveness, with PALP returning to positive net profit and marking an inflection point for the company. In this context, let me briefly remind you of the four main objectives of our strategic plan. One, growth in higher margin special parts substituting BSKP. Two, local wood and biomass sourcing. Three, cash cost efficiency. Four, BDA growth in our renewable platform. All these without losing sight of a key short-term priority, delivery. We should progress significantly in the second half of the year thanks to stronger cash generation and lower capex. Slide 4 summarizes the second quarter of 2026. Execution is the core theme. During the quarter, we reduced cash costs significantly. We benefited from positive pulp price momentum. Our special pulp volumes continued to grow, and we made further progress in deploying our biomass-backed renewable energy pipeline. Starting with pulp, European gross BHKP prices continued to improve during the quarter. By the end of June, prices had reached approximately $1,410 per ton. This momentum is expected to continue in the second half of the year. We may see normal seasonal adjustments during the summer slowdown, but we do not expect these to change the underlying trend. At the same time, we have delivered a material improvement in costs. Cash costs stood at 455 per tonne in the second quarter, including an estimated four euro per tonne impact from miners' strikes. This is €33 per tonne below the second quarter of 2025 and €67 per tonne below the first quarter of 2026. On a normalized basis, if we exclude the strike impact in the first quarter, the reduction would be €24 per tonne quarter on quarter. The product mix also continues to move in the right direction. Special pulp substituting solute products represented 34% on sales volume in the first half of 2026, compared with 30% in full year 2025. We aim to increase its weight towards 40% in second half and more than 62% by 2028. In our biomass-backed renewable energy platform, the second quarter also showed Relevant progress. Biomass-to-electricity production reached 254 GWh impacted by the planned annual maintenance shutdowns following severe flooding incidents in the first quarter. Renewable industrial heating advanced with the start of operations of two projects, covering three borders. In addition, we have been awarded a landmark project with an estimated annual production above 350 GWh thermal, currently in the final contractual phase. In Biomethane, on organic development continues to advance, with the first environmental license expected to the second half of 2026. This will be a key milestone to enable construction of our first project. Alongside this, La Galera remains a showcase for non-odor plants. Financially, consolidated EBDA was $27 million in the quarter, up 16% year-on-year, and $26 million above the first quarter. Pulp contributed $23 million, compared with a negative $1 million in the first quarter, and Renewable contributed $5 million. Net profit amounted to 0.5 million, marking a clear inflection point for the company after several quarters affected by market weakness and one-off events. Investments amounted to 33 million in the quarter, including cash out related to the Navia cost reduction and decarbonization project. We reiterate our full year guidance. Cash costs of 468,468 euro per ton a reduction of 15.15 per ton versus 2025, and capex of around 120 million, mostly related to projects already committed in 2025 and highly concentrated in the first half of 2026, 82 million already invested. Net debt stood at 493 million at the end of June, including $69 million from lease contracts according to IFRS 16 with $179 million of cash. The second half of the year should show a deliberating phase supported by better pulp prices, improved competitiveness, and lower growth capex after the first half investment peak.

In short, the second half

quarter confirms the turning point we expected. Higher prices, lower cash costs, a stronger product mix, better MBDA, and visible progress in renewables. In other words, we are delivering on all our strategic KPIs. Let's now look at cost competitiveness on slide six. Our cash cost trajectory remains on track to meet our full-year guidance of €468 per tonne in 2026. The objective is to reduce cash costs by €30 per tonne between 2026 and 2027. This is being achieved through the Efficiency and Competitiveness Plan and the Navia Efficiency and Decarbonization Project. The second quarter shows that this plan is already delivering. Cash cost fell to 455 euro per ton, which is 24 euro per ton below normalized first quarter cash cost and 22 euro per ton below the fourth quarter of 2025. It was achieved despite inflationary pressure in logistics and chemicals due to the Iran conflict. and despite minor strikes related to the corrective dismissal procedures in both fields. The efficiency and competitiveness plan has generated annualized savings capture on already or already in process of 8 million in the first half of 2026. This includes the impact of process re-engineering and digital and AI enabled optimizations, but not yet. the savings from headcount measures nor from the investments in Navia that should start to contribute to cash cost reduction in the second half of the year. On the latter, the Navia efficiency and decarbonization investments have now been completed. These investments should contribute around €8 per tonne on cash cost savings on an annualized basis.

Therefore,

Our message on costs is unchanged and even stronger than three months ago. The 2026 guidance remains, the initiatives are in execution, and the company enters in the second half with a more competitive cost base. Slide 7 looks at the past market. The second quarter consolidated the positive pricing momentum in Europe. Gross BHKP prices increased by 10% during the quarter and by 28% year-to-date, reaching approximately $1,410 per tonne by the end of June. This improvement is not only a short-term price movement. It is supported by several market fundamentals. First, logistics disruptions have led to a clear decoupling between Europe and China. Europe has faced delayed and limited shipments of paper, stronger than expected paper operating rates, and local inventories that remain low compared with 2025. This gives pulp producers additional room to sustain strong prices. Second, imported wood chip prices in China have risen in 2026. tightening the market and potentially supporting a near-term recovery in pulp demand and prices after a period of flat performance. Third, the structural standard fiber-to-fiber substitution trend continues. Over the last five years, global pulp demand increased by around 4 million tons, while hardwood pulp increased by around 6 million tons of saltwood, sorry, by around 6 million tons, and softwood pulp declined by around 2 million tons. As a result, relevant softwood shutdowns are taking place. These closures should help rebalance the market and support the relative strength of hardwood pulp. Taking all this together, even if we see normal seasonal softness during the summer, We expect the market momentum in Europe to remain favorable in the second half of 2026. Moving to slide eight, our product strategy continues to progress as a key differentiator. SpecialPALP accounted for 34% of sales volume in the first half of 2026, compared with 30% in full year 2025. We expect to increase its weight to close to 40% in second half and to exceed 62% by 2028. This next improvement is central to our equity story. These products are designed to substitute higher-cost softwoods in multiple applications, and they deliver an average incremental EBITDA margin of around €36 per ton versus standard BSKP. ENSEY Advanced is our broad range of BSKP substitute pulps with different attributes, higher strength, unbleached pulp, low porosity, and softness, suitable for hygiene, decor, packaging, and other applications. Our 2020 target is 500,000 tons with an incremental margin above 30 euro per ton versus standard BHKB. ENCE Fluff is the other flagship strategic product. ENCE is the sole European producer of fluff pulp based of eucalyptus wood competing with sawdust. The 2028 target is 125,000 tons with an incremental margin above 60 euro per ton. During the quarter, we successfully completed three homologation process and are currently working with 15 customers in the industrial testing phase. The key point is that our special pulp is not merely a premium labor. Customers choose these products for the performance benefits. It's not a filler, but a pure substitute of saltwood that does not require any transformation of the client's production process. They broaden our competitive positioning, improve margins, and reduce our exposure to standard BHKP prices. Slide nine explains why the product strategy and the cost strategy must be viewed together. By 2028, More than 62% of our sales will come from products that compete from BSKP. In this competitive scenario, Ensa is positioned as the lowest cost player. In other words, we are not only lowering the cost of producing pulp, we are also changing what we sell and who we compete against. That is the most important strategic point. This depositioning strengthens ENCE in two ways. It improves resilience in down cycles because our relative cost position is stronger, and it increases operating leverage in up cycles because the product mix carries structurally higher margins. Moving now to the renewable platform, slide 10 focuses on renewable industrial heating. Our 2030 target is to supply 2 TWh of renewable thermal energy and to contribute around 30 million to EBITDA, with target ROCI about 11%. The platform is scaling progressively. We have 11 projects under negotiation, of which five are under advanced negotiations. In 2026, we expect four projects to reach commercial operation, and one additional project to reach ready-to-build. This means that we should end 2026 with five projects in operation, compared with only one at year-end 2025. The most relevant milestone in the quarter was a landmark project awarded in May with Moeve, currently in the final contractual phase. Magnon has partnered with Moeve to replace fossil fuel boilers at its Huelva refinery with biomass boilers. The project is sizable, with expected annual production above 250 gigawatt-hour thermal, representing more than 17% of our 2030 target. This is our first major credential in the oil and gas industry. It shows that biomass-based heat is a credible solution for industrial decarbonization, especially in processes that are difficult to electrify and where customers want to reduce exposure to fossil fuel volatility and CO2 costs. Continuing with slide 11, our biomethane platform continues to advance steadily. Our target is to produce more than one terawatt of biomethane by 2030, and to contribute more than 60 million to a BDA with a target ROCI of above 11%. The pipeline is still outstanding. We have 41 plants where grid connection, feedstock, locations, and feasibility studies have been completed. Of these, 28 plants are already in the permitting phase, and we expect eight environmental licenses in 2026-2027 periods. We also continue to assess inorganic opportunities selectively, pursuing only projects that meet our industrial criteria and return thresholds. Slide 12 illustrates the maturity of the Biomass N pipeline. The full pipeline has an estimated potential capacity of around 4 terawatts which is four times our current 2030 target of 1 TWh. This gives us significant optionality. We currently have one operational plant, 28 projects in advanced permitting, and a broader pipeline at different stages of maturity. The advanced projects have already made material progress. Land options are signed or well-advanced Gas grid connection is secured, odor analyzers have been completed, and feedstock availability is more than three times planned needs across the pipeline. This is important because biomethane is a permitting intensive business. The quality of the pipeline is therefore not only measured by the number of projects, but by the maturity of land, grid, feedstock, and environmental work. In these dimensions, our pipeline is well positioned. The next relevant milestone is the first wave of environmental authorizations. Once obtained, they will allow us to move from development to construction while maintaining strict discipline on returns and leverage. I will now ask Alfredo to summarize our financial position and cash flow evolution. Thank you, Alfredo.

Thank you, Ignacio. Good morning and good afternoon to everybody on the call. I will now walk you through the financial results for the second quarter of 2026, focusing on the P&L, cash flow evolution, financial position, and sustainability highlights before handing back to Ignacio for the closing remarks and the Q&A session. Let me start on slide 14 with an overview of our financial results. As Ignacio has explained, the second quarter marks a clear inflection point. While prices in Europe continue to rise, CASCO's reduction program has started to show tangible results, and the Navi efficiency and decarbonization project was completed during the quarter. At the same time, part of the price improvement is still flowing through the P&L with the usual lag, and the renewal business was affected by a concentration of annual maintenance shutdowns in the biomass to electricity business. In the power business, revenues reached 156 million euros compared with 146 in 2Q25, while in the renewable platforms, revenues basically remained flat, reflecting lower production from plant maintenance shutdowns. At the EVDA level, the improvement is much clearer. Group EVDA reached 27 million in the quarter, up 16% year-on-year, and 26 billion euros above the first quarter of 2026. In Nepal business, EBITDA was 23 million, up 13% year-on-year. It's worth mentioning in this comparison that the second quarter of last year included 10 million euros of energy savings certificates, the so-called CAIS. With the negative 1 million APTA recorded in first year 26, the recovery is significant. It reflects higher power prices and lower tax costs of 455 euros per ton, supported by the efficiency and competitiveness plan. As mentioned by our chairman, the analyzed savings from AI initiatives and process reengineering captured in the first half of the year amount to 8 million euros. The benefits from the NAVE efficiency and decarbonization investment and the HECAL measures have yet to be reflected in the lower cash costs. At the bottom line, net profit returns to positive figures. The key message is that the company is moving in the right direction, with operational recovery already visible at the APDA level and expected to accelerate at higher PAL prices Lower cash costs and new projects contribute more fuel in the second half. Turning to slide 15, free cash flow for the quarter shows a temporary peak in working capital and the final phase of several growth and efficiency investments, including the Navi Efficiency and Decarbonization Project. Let me walk you through the main components of the cash flow bridge, starting from 27 million euros of EBITDA We had $6 million of maintenance capex and $10 million of net interest payments. Working capital absorbed $11 million in the quarter, mainly reflecting the higher prices momentum and the inventory buildup, reflecting also the increase in deliveries to our clients. In addition, strategic growth and efficiency investments, most of which were initiated in previous years, required $27 million cash outflow. The investment intensity will be much lower in the second half. The same time as the NAVYAC project, there are new industrial heating projects and the improved power price environment will begin to contribute more visibly to ABDA and cash generation during the third quarter. Therefore, although the quarter still shows cash consumption, the direction is consistent with our 2026 message. A first half investment peak followed by a second half debilitating phase supported by a stronger operating cash flow and lower growth capex requirements. Moving now to our financial position on slide 16, at good level, net debt stood at 493 million at the end of June, with 179 million euros of cash. This increase, compared with December 25, is mostly explained by the first half investment peak and the temporary working capital cash outflows already described. DePaul Business' financial structure remains covenant-free. This is an important point, which will give us the flexibility to manage the cycle and execute the debilitating objective without covenant pressure. Debt maturities remain well-spread and our funding sources remain diversified between banks and institutional investors including the mark bond issued earlier this year. In addition, we have an undrawn revolving credit facility of 130 million euros. In the revolved platform, the financial structure also remains long-dated and diversified. We also maintain available liquidity lines, including the fully available 20 million euro RCF. From here, The priorities are clear. Protect liquidity, maintain capital allocation discipline, and reduce net debt as the second half task for recovery materializes. Before handing back to Ignacio, let me briefly cover slide 17, which highlights our main sustainability achievements during the second quarter. At ENCE, sustainability is not a standalone topic. It is fully integrated into the way we operate. It strengthens our cost competitiveness supports customer preference, improves access to fiber and biomass, and reinforces our license to operate. Starting with safe and eco-efficient operation, the group's cumulative last-time injury frequency rate in the second quarter stood at 3.32, the best result across our entire historical series. Outdoor performance also remained strong, having recorded only two outdoor minutes, maintaining excellent performance levels. while Pontevedra reduced by 60% the minutes of order recorded in the first half of 2025. Going to buy products and ecosystem services, we obtained nine new approvals for specialty pubs under our portfolio, and we have submitted applications for the approval of our Fluff Pub under the Nordic Swan and EU Ecolabel schemes. We continue to make progress in forestry by-products, by one new eucalyptus clone plant for 2020 seeds and approximately 4,400 hectares of forest sinks registered for voluntary carbon markets. On responsible supply chain, approximately 86% of the land we manage and 82% of the wood we source are certified, and 100% of our site are sure system certified for sustainable biomass. We have also expanded our ESG and compliance risk assessment to more than 1,400 value change entities. And we are developing and deploying tools to comply with the EU deforestation regulation ahead of its entry into force. On positive social impact, women represent 25 of total employees and 31% of managerial positions. Internal promotion accounted for 78% of job openings and then obtained the Top Employer 2026 certification. Finally, on governance, the external audit of our criminal compliance management system under UNE-19601 has been completed, confirming appropriate implementation and operation of the control mechanisms. In addition, the independent review for anti-bribery management system under ISO 37001 confirmed the robustness and effectiveness Operation of the System. These achievements reinforce our leading ESG profile, and more importantly, they translate into tangible business advantages, safer operations, lower resource intensity, a strong commercial proposition in a special part, a more resilient local supply chain. With this, let me hand the floor back to our Secretary Chairman for the closing remarks and the Q&A session.

Thank you, Alfredo. I would like now to turn to slide 19, which sets out our 2026 outlook and closing remarks before we proceed to the Q&A session. We are focused on execution. The first results of our priority initiatives are now visible, and they are paving the way to the accomplishment of our 2028 goals in PALP and 2030 targets in renewables. I will highlight five key messages. First, the pulp market momentum in Europe remains positive. Normal summer seasonality may occur, but it should not alter the underlying trend. Standard fiber-to-fiber substitution, low European inventories, logistics disruptions, higher wood chip costs in China, and Solid Capacity Closures all support a favorable market environment. Second, the cost reduction program is delivery. Cash cost was €455 per tonne in the second quarter. A reduction of €24 per tonne versus normalized first quarter cash cost. The efficiency and competitiveness plan has captured or put in process analyzed savings of 8 million. And the Navia efficiency and decarbonization project has been completed. We confirm our 2026 cash cost guidance of 468 euro per ton, supported in the second half by the initial contribution from the Navia investments and headcount measures. Third. Our product mix upgrade continues. Special Pulp represented 34% of our sales in the first half of 2026, and we target to increase its weight to close to 40% in second half 2026. By 2028, more than 62% of our sales should come from BSKP substitute products, supporting an incremental EBITDA margin of around €36 per ton versus standard BHKP, and positioning ENCE as a highly competitive player in the BSKP segment in Europe. Fourth, the renewable platform is developing. Renewable industrial heating should end the year with five projects in operation, compared with only one at year-end 2025. And the landmark MERVE project represents more than 350 gigawatt-hour thermal periods. In biomethane, the first environmental license is expected in the second half of 2026. These milestones confirm the depth and quality of the biomass-backed renewable platform, which is on track to almost triple EBDA by 2030. The financial profile should improve in the second half. The quarter already shows a clear operational inflection with consolidated EBITDA of 27 million and a positive net profit. With good PULP prices, a more competitive cost base, and lower investment intensity after the first half CAPEX peak, the second half should show cash flow generation and deliberation. Putting all of this together, our strategy remains consistent and disciplined. On pulp, we aim to increase sales of special pulp substituting BSKP to strengthen local wood and biomass supply and to reduce cash costs. As a result, the year 2028 should give us an incremental EBITDA margin per ton of 52 euro per ton versus 2025 figures. On renewables, the plan is to triple our renewable platform EBDA while protecting the balance sheet and maintaining capital allocation discipline. Thank you. We now invite your questions.

Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press star one on your telephone keypad. You will have the opportunity to ask all the questions that you may have. We kindly ask you to ask only one question at the time to our speakers instead of asking multiple questions at the beginning. Thank you. We just compiled the Q&A roster. Your first question comes from Max Mission from JB Capital. Please go ahead.

Hello. Good afternoon. Thank you very much for the presentation and taking our questions. So I have two questions. I'll start with the first one on the pulp business. Thanks for discussing the improvement in revenue per ton and cash cost per ton in 26 and 27. I was wondering if you could give us more color on profitability and guide us on the overall improvement in cash EBITDA per ton you expect in 26 and 27, like a bridge up until 2028. Thank you.

Yes, thank you very much, Max. I suppose you mean cash cost bridge, not cash bridge, no? Okay.

EBITDA, EBITDA per ton, if possible, like 26, 27, 28. Okay.

Well, as I have mentioned, we have three strategic pillars, and they will allow us to improve our EBITDA per ton by approximately 52 euro per ton, as I mentioned, by 2028 versus 2025, 52. First, our product mix transformations. The substitution of standard BHKP with special pulp products and long fiber pulp substitutes, together with the 125,000 tons flask production. By 2028, these special pulp products will represent over 62% of total sales, and they will deliver an incremental margin versus standard BHKP sales of 36 euros per ton, of which at least 22 euros per tonne and not yet reflected in our P&L. Then, if we compare 2028 versus 2025, it will be 36 euros per tonne by the better products we are developing, competing with BSKP. And out of these 36, 22 are not yet reflected in our P&L.

Second,

Our efficiency and competitiveness plant will contribute an additional €22 per tonne between 26 and 27. We are not yet working on cost reduction in 28. Finally, investment in Navia, the wood yard, and replacement of fuel gas with pulverized biomass. It has already started. Both projects have already started. Adding a further €8 per tonne starting third quarter 2026. Altogether, we'll increase the part by BDA by 52 euros per ton in 2028 versus 2025.

Thank you very much. And the second question is on biomethane plants. You now expect the first legal permit to come in the second half. What makes you more confident? And do you think the recent proposal on phasing in of biogas capacity in Spain can help accelerating the licensing process? Also, if you could just remind us how long it can take between the license and the commissioning of a biomethane plant, please. Thank you.

Yeah, thank you very much. I would like to insist in our unique business model, which is based on the transformation of local agricultural biomass and livestock manure into a biofertilizer and biomethane with multiple benefits and without disturbing the local communities. No other plants. And La Galera is our showcase. And that's very important for the permitting and the development of our sites. We already have a portfolio of 41 biofertilizer and biomethane projects, out of which 28 projects are already in permitting phase, three more than a quarter ago, which already have land and feasibility studies. The pipeline is highly mature. We expect to get around one environmental license in 2026 by the end of the year, several more in 2027, and additional seven in 2028. As we mentioned before, we plan to build the plants with EPC contracts using non-recourse project financing backed by long-term BPAs, like we did in La Galera. The typical construction period is 21 months, including full ramp-up. And for your information, the initially estimated capex is approximately 0.35 million per gigawatt hour. It was, in the last quarter, 0.4, with an estimated average production between 80 and 100 gigawatt hour per plant. The target return on the capital employed is over 12%. Thank you very much. OK, but I would like to insist that despite our Initial goal is to generate over one terawatt per year and to contribute over 60 million to a BDA by 2030. We are developing a platform which could reach over four terawatts per year. And regarding your question, we positively view the recent news on MITECOS push for minimum biomethane quotas before 2035, which will help foster the development of our pipeline.

Thanks very much. Very clear. Thank you, Max.

Your next question comes from Alvaro Bernal from Alantra Equities. Please go ahead.

Hi. Thank you for taking my question. I have one, if I may. It's regarding the cash cost guidance you have given for H2, 455 per tonne. At the same time, you're seeing you're going to see improvements or contribution from the Navia efficiency and decarbonization kicking in NH2. So, I mean, it is the same cash cost as in Q2. And I want to know what doesn't make you be slightly more positive towards H2. Yeah.

Thank you very much. The Efficiency and Competitiveness Plan, together with NAGIA Cost Reduction and Decarbonization Initiative, should enable to reduce cash costs by 30 euros per tonne, as we have said, between 2026 and 2027, 15 euros per tonne in 2026, and the remaining in 2027. I would like to insist that in the first half of the year, we have already captured 8 million in annualized savings without including any impact from the Collective Dismissal Program, and Navia Efficiency and Decarbonization Investments. 50% of the people who are leaving the company in 2026 left at the end of the second quarter, and the Navia Efficiency and Decarbonization Project is just starting. We estimate a cash cost in the range of $450 to $460 in the second half of the year.

Okay, thank you.

Again, if you would like to ask a question, you may press star, then the number one on your telephone keypad. The next question comes from Luis de Toledo from Otto. Please go ahead.

Good afternoon. Thanks for taking my question and congratulations on the good results of the quarter. I have only one question. It's regarding the negotiations regarding this landmark project in thermal heating. I don't know if you could elaborate on the details if you're negotiating just the price or the operating conditions. considering that it's a very large customer. Is the operating model the one you were planning when you introduced the business model for this area?

Thanks. Could I ask you to repeat what is the name of the project that I'm mentioning?

No, the landmark, the Mueve project. The Mueve project. Just wondering if the negotiation, I mean, you have announced the project, although it has not been signed officially, but I assume you give a lot of credibility of signing it really soon. But I was wondering if the negotiation, the pending details on the negotiation, if you can elaborate why is it taking longer or if it's just the price or the operating model. considering that the customer is a large industrial customer and if you could provide any additional details and potentially on the contribution of this important contract.

Yeah, yeah. Thank you for your question, Luis, but unfortunately we are just now on the contractual phase of the project and I cannot tell you more. It has been announced not by us or by Mervis, it has been announced by the Andalusian government and we have a contractual agreement and I cannot This shows more information.

Okay. And the operating model, as it is, towards the targets, the production targets, is not much really different from the other contracts with the smaller industrial clients?

No, no, no. It will be very similar. Things will change a lot with the size of the project.

Okay. Thank you very much. Thank you, Luis.

Next question comes from Carl Harpen from Jefferies. Please go ahead.

Good afternoon. Two from my side. Just the first one is simple, just trying to understand the total capex costs, just an updated number for the year, just so we can help with our models for both pulp and energy, just kind of a total capex number. And if you can provide anything for 2027, That would be helpful. I understand that that may change if you commission new projects. Then on views on pulp, you sound a lot more optimistic on the European net price differential versus China. And I'm just wondering, how do you see that playing out going forward? You talked about differences between logistics costs. Historically, I always thought it was fair to have, let's say, a $30 to $50 a ton net difference between European and Chinese prices, just considering timing lags, contract differences and logistics. And I'm just wondering, do you see that range kind of expanding into the future or what gives you confidence that the European kind of spot or net prices will be above the Chinese levels? Thank you.

Yeah, thank you very much for your questions. I would start by answering the first question. As we have mentioned, we plan to invest 120 millions in the full year. We have already invested 82 millions. As you know, we have invested 67 in PALP. And we still need to invest 7 million euros more on the second half of the year. And the total amount will be 64. And what is important to point out is that in part the investment is 67 already done and three more in the coming quarter. In renewables, we have invested 15 million and we still need to invest 31 million in the second half of the year. And the total amount will reach 46 million. Regarding your second question, well, I would like to point out that the dynamics of the market in China and in Europe or the States are absolutely different. We are still talking about a commodity. Commodities tend to have similar prices on different markets, but the dynamics are absolutely different. The number of customers in Europe is different to the number of customers in China. It's very concentrated. The main big customers in China are not only paper makers, but they are also today pulp makers. In Europe, our customers only make paper. We don't sell pulp, nor ask to know my competitors to the integrated pulp mills.

And the dynamics of the market are different. I strongly believe that the PALP cycle remains in place.

European BHGP gross price stands at 410, and we have a positive view, and it's based on three pillars.

First, BHGP demand remains resilient, and our focus is on Europe.

The demand in Europe is good. It's not extraordinarily high, but it's good. It's better than it was one year ago or two years ago. And two of that is that European port inventories are below the historical average while consumption is holding up. Our European clients are placing larger orders as logistics disruptions originated by the Middle East conflict penalize paper imports from Asia. And on top of that, fiber-to-fiber substitution keeps adding roughly one million tons of structural BHKP demand every year. Second, China demand is also strong, growing, and one thing which is very important and everybody has to keep in mind is that they will keep importing the same volume of pubs than today. The constraint on new local capacity is wood availability. Just for your information, the price of the wood today in China, despite a recent decline on the last month, is 17% higher than one year ago. Cheap imports to China are today 21% higher in price than one year ago. New meals will mostly be integrated and will cover China's demand growth. So part imports into China will remain stable. And those imports are already 3% year on year higher than one year ago, according to Chinese custom data. The recent price adjustment in China of $10 has been minor. It's $10. It was two weeks ago, and it was flat last week. And prices today are stable. And third, on the supply side, the market is rebalancing. On top of this fiber-to-fiber, BHCP capacity is being converted into FLAS, Susano, ENFE. and to Dissolving Pulp Grades , lowering BHKP supply. In parallel, loss-making BSKP capacity is being closed. Therefore, we see no pressure in the market today besides the seasonal summer slowdown. There is, no doubt, a summer slowdown. It may affect $10, $15 prices, but we don't see any change on how the market is. and for the rest of the year.

Thank you, that's helpful. Maybe just to add to your response, I mean, there's going to be a difference in logistics costs from even the Latam players shipping to China versus Europe. Would you mind just giving us a rough estimate of how much more expensive it is to kind of ship to Europe and then kind of the inland volumes? I think it's just useful context to have.

Yeah, we can call you and we can put that on the website because I don't have the information now.

No problem. We can revisit that. And then the one follow-up was 2027 CAPEX. You were very clear on the 2026 numbers. Is there any kind of initial range you can provide for 2027 as you're doing your initial planning for CAPEX?

No, there is only a criteria. An important criteria is we have to reduce CAPEX because we want to deliver it. We're going to deliver it on the second half of the year, but we need to deliver it more. And on absolute terms and related to EBDA. Then, for sure, the capex of 2027 is going to be lower than 2026, but now we have just started on the budget and they cannot give you a figure. I think at the end of the year, I will not be able to give you a figure.

And then... If I can, there's a 123 million grant from the European Climate Infrastructure Environmental Agency. Would you mind just giving a bit of background of, you know, how far along is that project into planning and, you know, what would you need to do to release that grant?

You are talking about the Invesanor project in Huelva?

Yes, with Iberdrola, yes.

Yeah, yeah, yeah. Well, again, I have to answer you the same question I answered to Luis Toledo. Unfortunately, I have an NDA signed with Iberdrola, and I cannot give you more information.

I understand. Thank you.

Thank you.

Your next question comes from Manuel Lorente from Santander. Please go ahead.

Hi, good afternoon. My first question is probably a follow up on the cash cost indications. Assuming the 455 for the second half of the year, you have a similar number for the full year of 2027. So I would like to understand the different moving parts To my way of thinking, I should expect that the last tail of the competitiveness and efficiency plan to kick in, plus some extra savings from Pontevedra's efficiency plan, that will probably move a little bit south the expected Cascos Caidan. What are you expecting in other categories to, let's say, achieve a similar task cost that in the second half of the year, or is just the mixed effect from increasing the weight of the specialist products?

Yeah, I cannot give you a lot of new information. Our plan is to reduce 15 euros per tonne this year compared to 2025. and further 15 euros per tonne next year. I can again explain to you the 30 euros per tonne, how the IT is splitted between the efficiency projects and the Navia efficiency project. We think that this year we are going to be on the range I already mentioned, and we do see 15 euros further improvement next year. But I cannot give you more details.

I see.

Okay. But those are full year with full year, but we already have recovered, sorry, we already have worked a significant part of that improvement in the first half.

That is full year to full year. I prefer to be prudent and to deliver and to be bullish.

Okay, so let's try to ask in a different way. That is the, let's say, increasing way of specialist products imply a higher cash cost than the traditional, no?

No, no, no, no, no. Maybe two, three euros per ton, no more. And when we are talking about 36 euro per ton of extra margin is absolutely the better price less the larger cash cost. But it is not material. When we will be producing 120,000 tons Fluff, yes, it will change because the cost of fluff is between 30 and 40 euros per ton higher. More 30 than 40, but we are just starting now. But with the other special products, this year they are going to be close to between 350 and 400,000 tons, and it's going to be 500,000 tons in 2028. There is a very similar cash cost. We've been working a lot on that in the last three years. And now we can offer to our customers these products, and they have a similar cost to the standard BSQP we already produce.

Okay, great. And then one question on the demand side. You mentioned that demand in Europe has been, to some extent, supportive. I've been told that A significant part of that positive performance is related to the unexpected bounce back on the printing and writing segment. Can you give us an indication of what is happening on that category? This is just a pure recovery from very low levels or there has been any shift on the supply-demand balance on that side?

Unfortunately, I cannot give you a lot of information because, as you know, we are not a significant player in this segment of the market. We sell more in the tissue market and in specialities market. In printing and writing, we are selling less than 8% of what we produce. But we haven't noticed anything I think that what all our customers are noticing in Europe is that there is less imports of paper from Asia, and therefore they are working better than last year.

Okay, great. Thank you.

Thank you very much.

Your next question comes from Alvaro Bernal from Alantra Equities. Please go ahead.

Hi, thank you for taking another question from me. It's just going back to the industrial heating platform. We're seeing a decent ramp up in the amount of projects. And I would ask if you can shed a bit more light on the dynamics of how this is working, if it's because the fact of installing and giving a credential on previous projects can even accelerate the platform above your current expectations? Is this a possibility or not? I'm saying this given the Moeve project could be a clear catalyst as to amplifying this business. Is this a reality or not, basically?

No, I don't think so. I think that the fact that we are going to have five projects working at the end of this year, the fact that our two main competitors are going to have One or two projects working also at the end of the year. Well, in all the meetings of the industry, of the paper industry, of the food and beverage industry, of the chemical industry, they talk about this project. And the fact that projects are already working are more important than the potential new project with Moeve. I think it's more important. Another thing who is supporting the pipeline, well, is the uncertainty on the gas price. Nobody knows when Olmus is going to be open, but the fact is that the prices of the gas are high now for the full year, and at these crazy prices of the gas, and with prices of the CO2 today close to 80 euros per ton, well, it is cheaper to buy steam produced with biomass.

So, Would you say you're seeing an acceleration in the demand for these services?

Well, not acceleration. No, I'm not negative, but I am realistic. You know, the two previous years, the accelerators have been the purpose. I don't know if we are going to have more purpose in the future. And I think that the uncertainty on the gas and the fact that the projects are already working and the customers are happy are going to balance The fact that there is no more purchase for the time being. Maybe there are going to be all the supports, but today no more purchase. I think we will continue growing at the pace we have been working, we have been growing in now. Well, once we will sign the project of MOEME, it will have a good repercussion in medias and in non-industry. But today already, when you go to any meeting of the paper industry, as I mentioned before, the chemical industry, the food and beverage industry, They are talking about these projects already.

Okay.

Understood. Thank you.

Thank you.

Your next question comes from Bruno Beza from CaixaBank BPI. Please go ahead.

Good afternoon. Just a quick question from my side and focusing on the target, the BTA per tone improvement for 2028. You mentioned 52 euros per tone against 2025. Just trying to understand here what are the building blocks behind this particularly in terms of net selling prices and in terms of volume sold. If you could share that information. Thank you very much.

Well, this 52 euros per ton is the operative margin or EBITDA. And it comes from better prices and better costs. And this 52 is very simple. 36 is because of product mix. And the balance is on costs. 22 is the efficiency and competitiveness plan. And 8 is the two projects in Navia who have just started now. Then 36, it's the product mix. And yes, the product mix is mainly spices. In the case, as I mentioned just recently, well, we have here specialities, special pulp substituting BSKP, and we have FLAS, and FLAS has a different margin, a higher margin. And Well, that's the 52.

There are no further questions at this time.

Presenters, please continue.

Thank you.

Well gentlemen, if there is no further questions, I hope to meet you with better results. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Please wait. The conference will begin shortly.