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