ENCE Aktie

Good morning, ladies and gentlemen. Welcome to the ENCE 2Q 2026 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 Avello; and our Head of Investor Relations, [ Ms. Ynez Alvarez ].

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 pulp 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, higher-margin special pulp substituting BHKP. Two, local wood and biomass sourcing. Three, cash cost efficiency. Four, EBITDA growth in our renewable platform. All this without losing sight of a key source 10 priority, deleveraging 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. 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 tonne. 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 this to change the underlying trend.

At the same time, we have delivered a material improvement in costs. Cash costs stood at EUR 455 per tonne in the second quarter, including an estimated [ EUR 4 per tonne ] impact from minor [ slice ]. This is EUR 33 per tonne below the second quarter of 2025 and EUR 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 will be EUR 24 per tonne quarter-on-quarter.

The product mix also continues to move in the right direction. Special pulp substituting softwood products represented 34% of sales volume in the first half of 2026 compared with 30% in full 2025.

We aim to increase its weight towards 40% in second half and more than 62% by 2028. In our biomass [indiscernible] renewable energy platform, the second quarter also showed relevant progress. Biomass to electricity production reached 154 gigawatt hour 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 fibers]. In addition, we have been awarded a landmark project with an estimated annual production above 350 gigawatt hour 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 projects.

Alongside this, [ Lagalera ] remains a showcase for non [ other ] plants.

Financially, consolidated EBITDA was EUR 27 million in the quarter, up 16% year-on-year and EUR 26 million above the first quarter. Pulp contributed EUR 23 million compared with a negative EUR 1 million in the first quarter, and Renewables contributed EUR 5 million.

Net profit amounted to EUR 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 EUR 33 million in the quarter, including cash out related to the Navia cost reduction and decarbonization projects.

We reiterate our full year guidance. Cash cost of EUR 468 million per tonne, a reduction of EUR 15 per tonne versus 2025 and CapEx of around EUR 120 million, mostly related to projects already committed in 2025 and highly concentrated in the first half of 2026, EUR 82 million already invested.

Net debt stood at EUR 493 million at the end of June, including $69 million from lease contracts according to IFRS 16 with EUR 179 million of cash.

The second half of the year should show a deleveraging phase, supported by better pulp prices, improved competitiveness and lower growth CapEx after the first half investment peak. In short, the second quarter confirms the turning point we expected, higher prices, lower cash costs, a stronger but mix better EBITDA 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 6. Our cash trajectory remains on track to meet our full year guidance of EUR 468 per tonne in 2026. The objective is to reduce cash cost by EUR 30 per tonne between '26 and '27. This is being achieved to the efficiency and competitiveness plan at the Navia and the Navia efficiency and decarbonization project.

The second quarter shows that this plan is already delivering. Cash costs fell to EUR 455 per tonne, which is EUR 24 per tonne below normalized first quarter cash cost and EUR 22 per tonne below the fourth quarter of 2025. This was achieved despite inflationary pressures in logistics and chemicals due to the Iran contracts and despite minor strikes related to the corrective missile procedures in both fields.

The efficiency and competitiveness plan has generated annualized savings captured on already -- or already in process of EUR 8 million in the first half of 2026. This includes the impact of process reengineering and digital and AI-enabled optimizations.

But not yet the savings from head count 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 complete. These investments should contribute around EUR 8 per tonne on cash cost savings on an annualized basis.

Therefore, our message on costs is unchanged, and even stronger than 3 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 pulp 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 have remained 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, timing the market and potentially supporting a near-term recovery in part demand and prices after a period of flat performance.

Third, the structural standard fiber-to-fiber substitution trend continues. Over the last 5 years, global fiber demand increased by around 4 million tons, while high [ wood ] pulp increased by around 6 million tonne of [indiscernible], by around 6 million tons and softwood pulp declined by around 2 million tonne.

As a result, prevent so shutdowns are taking place. These closures should help rebalance the market and support the relative strength of hardwood pulp.

Taking all these 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 8. Our product strategy continues to progress as a key differentiator. Special pulp 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 mix improvement is central to our equity story. These products are designed to substitute higher cost [indiscernible] in multiple applications. and they deliver an average incremental EBITDA margin of around EUR 36 per tonne versus standard BHKP.

ENCE Advanced is our broad range of BHKP substitute pulps with different attributes, higher strength and bleached pulp, low porosity and softness, suitable for hygiene, decor, packaging and other applications.

Our 2028 target is 500,000 tons with an incremental margin above EUR 30 per tonne versus standard BHKP.

ENCE fluff is the other flagship strategic product. ENCE the sole European producer of fluff pulp based on eucalyptus wood competing with [indiscernible]. The 2028 target is 125,000 tonne with an incremental margin above EUR 50 per tonne.

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 softwood does not require any transformation at the clients' production process. They broaden our competitive positioning improve margins and reduce our exposure to standard BHKP pricing.

Slide 9 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 for the BHKP. In this competitive scenario and sales position 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 repositioning strengthens ENCE in two ways. It improves the 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 terawatt hour of renewable thermal energy and to contribute around EUR 30 million to EBITDA, with target ROCE 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 [indiscernible], currently in the final contractual phase. [ Malone ] has partnered with Move to replace fossil fuel boilers at its [indiscernible] 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 decarburization, 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 1 terawatt of biomethane by 2030 and to contribute more than EUR 60 million EBITDA with a target ROE of above 11%. The pipeline is still outstanding. We have 41 plants where grid connection, [ feedstock ] locations and feasibility studies have been completed. Of this, 28 plants are already in the permitting phase, and we expect eight environmental licenses in 2026, 2027 period.

We also continue to assess inorganic opportunity selectively, pursuing only projects that meet our industrial criteria and returned firsthand.

Slide 12 illustrates the maturity of the biomass in pipeline. The full pipeline has an estimated potential capacity of around 4 terawatt, which is 4x our current 2030 target of 1 terawatt hour.

This gives us significant optionality. We currently have one operational plant, 28 projects in advanced permitting and the broader pipeline at different stages of maturity.

The advanced projects have already made material progress. Land options are signed or well advanced, gas [indiscernible] is secured, [ other ] analyses have been completed and feedstock availability is more than 3x plant needs across the pipeline.

It 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 that 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 [ revolution ]. 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 focusing on the P&L, cash 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. Our prices in Europe continue to rise cash cost reduction program has started to show tangible results and the new 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 a usual lag. And the renewals business was affected by a concentration of annual maintenance shutdowns in the biomass electricity business.

In the Pulp business, revenues reached EUR 156 million compared with EUR 146 million in 2Q '25. So in the renewal platforms, revenues basically remained flat reflecting lower production from planned maintenance shutdowns.

At the EBITDA level, the improvement is much clearer. Group EBITDA reached EUR 27 million in the quarter, up 16% year-on-year and EUR 26 million above the first quarter of 2026.

In the Pulp 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 EUR 10 million of energy savings certificates, the so-called [indiscernible]. Compared with a negative EUR 1 million EBITDA recorded in first Q '26, the recovery is significant. It reflects higher pulp prices and our cash cost of EUR 455 per tonne supported by the efficiency and competitiveness plan.

As mentioned by our Chairman, the annualized savings from AI initiatives and process reengineering captured in the first half of the year, amount to EUR 8 million.

The benefits from the Navia efficiency and the conversation investment and the head count measures have not 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 EBITDA level and expected to accelerate as higher pulp prices, lower cash costs and new projects contribute more fully 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 Navia efficiency and the carbonization project.

Let me walk you through the main components of the cash flow bridge. Starting from EUR 27 million of EBITDA, we had EUR 6 million of maintenance CapEx and EUR 10 million of net interest payments. Working capital absorbed 11 million in the quarter, mainly reflecting the higher prices momentum and the inventory buildup, taking 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, investment intensity will be much lower in the second half. At the same time, as Navia project, there are new industrial heating projects and the improved pulp price environment will begin to contribute more visibly to EBITDA and cash generation during the third quarter.

Therefore, although the quarter still shows cash consumption, the direction is consistent with our 2026 message. Our first half investment peak followed by a second half [indiscernible] phase supported by stronger operating cash flow and lower growth CapEx requirements.

Moving now to our financial position on Slide 16. At group level, Net debt stood at EUR 483 million at the end of June with EUR 179 million 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.

The pulp business financial structure remains [indiscernible]. This is important point. which will give us the flexibility to manage the cycle and execute the devaluating objective without covenant pressure.

Debt maturities remain well spread and our funding sources remain diversified between banks and institutional investors, including the marked bond issued earlier this year.

In addition, we have an undrawn revolving credit facility of EUR 130 million.

In the rurals platform, the nature -- financial structure, sorry, also remains long-dated and diversified. We also maintained available liquidity lines include a fully available EUR 20 million RCF.

From here, the priorities are clear: protect liquidity, maintain capital allocation discipline and reduce net debt as the second half [indiscernible] 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 stand-alone 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 operations, the group's cumulative lost 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. Now we recorded only 2 [ other ] minutes maintained excellent performance levels. On point reduced by 60% the [indiscernible] recorded in first half of '25.

Moving to [indiscernible] Products and Ecosystem services. We obtained nine new approvals for specialty pulp under our portfolio, and we have submitted the application for the approval of our fluff pulp under the Nordic [ Swan ] and EU Eco-label schemes.

We continue to make progress in first ship byproducts by one new [indiscernible] clone planned for 2026 and approximately 4,500 hectares of first since research for voluntary [ cabo ] markets.

On responsible supply chain, appreciably 86% of the land we manage and 82% of the wood we source are certified, 100% of our sites assure system certified for sustainable biomass.

We have also expanded our ESG and companies risk assessment to more than 1,400 value chain entities, and we are developing and deploying tools to comply with the EU differentiation regulation ahead of its entry into force.

On positive total impact women represent 25% of total employees and 31% of managerial positions. Internal promotion accounted for 78% of job openings and entertain a 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 their control mechanisms.

In addition, the independent review for anti-bribery management system under ISO 37001 confirmed the robustness and effective operation of the system.

These achievements reforce our leading ESG profile and more importantly, they translate into tangible business advantages, safer operations, lower resource intensity, a strong commercial proposition in special pulp and more resilient local supply chain. With this, let me hand the floor back to our [indiscernible] Chairman for the closing remarks and the Q&A session.

Thank you, Alfredo. I would like now to turn to Slide 19, we set 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 we are paving the way to the accomplishment of our 2028 goals in pulp and 2030 targets in renewables.

I will highlight five key measures. 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 delivering. Cash cost was EUR 455 per tonne in the second quarter, a reduction of EUR 24 per tonne versus normalized first quarter cash cost. The efficiency and competitiveness plan has captured operating process annualized savings of EUR 8 million. And the Navia efficiency and decarbonization project has been completed. We confirm our 2026 cash cost guidance of EUR 468 per tonne, supported in the second half by the initial contribution from the Navia investments and head count 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 BHKP substitute products, supporting an incremental EBITDA margin of around EUR 36 per tonne versus standard BHKP and positioning ENCE as a highly competitive player in the BHKP segment in Europe.

Fourth, the reliable 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 merger project represents more than 350 gigawatt hour thermal peer.

In biomethane, the first environmental license is expected in the second half of 2026. These milestones confirm the depth and quality of the biobank back to renewable platform, which is on track to almost triple EBITDA by 2030.

Fifth, the financial profile should improve in the second half. The quarter already shows a clear operational inflection with consolidated EBITDA of EUR 27 million and the positive net profit. With good pulp prices, a more competitive cost base and lower investment intensity after the first half CapEx, the second half should show cash flow generation and deleveraging.

Putting all of this together, our strategy remains consistent and disciplined. On pulp, we aim to increase sales of special pulp substituting BHKP 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 tonne of EUR 52 per tonne versus 2025 figures. On renewables, the plan is to triple our renewable castor EBITDA while protecting the balance sheet and maintaining capital allocation discipline. Thank you. We now invite your questions.

[Operator Instructions] Your first question comes from [ Max Mishyn ] from JB Capital.

So I have two questions. I'll start with the first one on the pulp business. Thanks for discussing the improvement in revenue per tonne and cash cost per tonne in '26 and '27 in I was wondering if you could give us more color on profitability and guidance on the overall improvement in cash EBITDA per tonne you expect in '26 and '27, like a bridge up until 2028.

I suppose you mean cash cost bridge, not cash bridge, okay?

EBITDA per tonne, if possible, like '26, '27, '28.

Okay. Well, as I have mentioned, we have a few strategic pillars, and they will allow us to improve our EBITDA by approximately EUR 52 per tonne, as I mentioned, by 2028 versus 2025.

First, our product mix transformation, the substitution of standard BHKP with special pulp products and non-fiber pulp latitudes, together with on flat 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 EUR 36 per tonne, of which at least EUR 22 per tonne are not yet reflected in our P&L.

Then if we compare 2028 versus 2025, it will be EUR 36 per tonne by the better products we are developing, competing with BHKP. And out of this 36, 22 are not yet reflected in our P&L.

Second, our efficiency and competitiveness plan will contribute an additional EUR 22 per tonne between '26 and '27. We are not yet working on cost reduction Finally, investment in Navia, the [ wood ] yard and replacement of fuel gas with pulverized biomass, which has already started, both projects has already started, adding a farther EUR 8 per tonne, starting third quarter 2026. Altogether, we'll increase the pulp EBITDA by EUR 52 per tonne in 2028 versus 2025.

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?

Yes. Thank you very much. I would like to insist in our unique business model, which is based on the transformation of local agriculture biomass and [indiscernible] manure into a bio-fertilizer and biomethane with multiple benefits and without disturbing the local communities, no [ odor ] plants. And [ Lagardera ] is our showcase. That's very important for the permitting and the development of our site.

We already have a portfolio of 41 bio-fertilizer 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 on environmental license in 2026 by the end of the year, seven more in 2027 and additional seven in 2028.

As we mentioned before, we plan to build the plant with [ EPC ] contracts using nonrecourse project financing but by long-term PPAs, like we did in [ Lagalera ]. The typical construction period is 21 months including full ramp-up.

And for your information, the initially estimated CapEx is approximately EUR 0.35 million per gigawatt hour. It was the last quarter 4, with an estimated average production between 80 and 100 gigawatt hour per plant. The target return on the capital employed is over.

Despite our -- but I would like to insist that despite our initial goal is to generate over 1 terawatt per year and to contribute over EUR 60 million to EBITDA by 2030, we are developing a platform which could reach over 4 terawatt per year. And regarding your question, we positively view the recent news on [indiscernible] push for minimum by the same quarter before 2025, which will help foster the development of our pipeline.

Your next question comes from Alvaro Bernal from Alantra Equities.

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 H2. So I mean, if it's the same cash cost as in Q2? And I want to know what doesn't make you be slightly more positive towards H2.

Yes. Thank you very much, Alvaro, the efficiency and competitiveness plan together with Navia cost reduction and decarbonization initiatives should enable to reduce cash cost by EUR 30 per tonne as we have said, between 2026 and 2027, EUR 15 per tonne in '26 and the remaining in '27.

Our leases that in the first half of the year, we have already kept EUR 8 million in annualized savings without including any impact from the collective dismissal program and Navia efficiency and decarbonization investments, yes. 50% of the people who are leaving the company in 2026 left at the end of the quarter the second quarter, and the Navia efficiency and decarbonization project is just starting.

We estimate the cash cost in the range of [ 450 to 460 ] in the second half of the year.

[Operator Instructions] The next question comes from Luis de Toledo from ODDO.

I have one question is regarding the negotiations regarding this [ Landmarc ] heating. I don't know if you could elaborate on the details if your negotiation 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?

Could I ask you to repeat what is the name of the project you are mentioning?

No, then the landmark [indiscernible] project. Yes, 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 really soon. But I was wondering if negotiating the pending details on the negotiation, if you can elaborate why is it taking longer or if it's just a price or the operating model, considering that the customer, it's a large initial customer. And if you could provide any additional details on potentially on the contribution of this important contract.

Yes. Yes. 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 more by us or by [ Move ] has been announced by the [ Andean ] government and where we have a ownership agreement and they cannot disclose more information.

Okay. And the operating model of this is towards our -- the targets, the production targets is not materially different from the other contracts with smaller industrial clients.

No, no, no, it will be very similar things would change a lot is the size of the project.

Next question comes from Cole Hathorn from Jefferies.

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 the 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 million to $50 million a tonne net difference between European and Chinese prices just considering timing lags, contract differences and logistics. And I'm just wondering, do you see that [ rain ] 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.

Yes. Thank you very much for your questions. I will start by answering the first question. As we have mentioned, we plan to invest EUR 120 million in the full year. We have already invested EUR 82 million. As you know, we have invested 67% in pulp, and we still need to invest EUR 7 million more on the second half of the year, and the total amount will be EUR 64 million. And what is important to point out is that in part the investment is 67% already done and [ 3% ] more in the coming quarter.

In renewables, we have invested EUR 15 million and we still need to invest EUR 31 million in the second half of the year, and the total amount will reach EUR 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 the 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 as to move my competitors to the integrated pulp mills, and the dynamics of the market are different.

I strongly believe that the pulp cycle remains in place. European the gross price stands at [ 410 ]. And we have a positive view, and it's based on three pillars.

First, demand remains resilient, and our focus is in Europe. The demand in Europe is good. It's not extraordinarily high, but it's good. is better than it was 1 year ago or 2 years ago. And of that is the 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 penalized paper imports from Asia. And on top of that, fiber-to-fiber substitution keeps adding roughly 1 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 pulp [indiscernible] today. The constraint on new local capacity is good availability. Just for your information, the price of the [ book ] today in China, despite the recent decline on the last month is 17% higher than 1 year ago. and the [ chip ] imported to China are today, 21% higher in price than 1 year ago.

New mills will mostly integrated and will cover China's demand growth. So part import into China will remain stable. And those imports are already 3% year-on-year higher than 1 year ago according to Chinese custom data.

The recent price adjustment in China of $10 has been minor $10. It was 2 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, BHKP capacity is being converted into fluff, [ Suzano ], ENCE to dissolving pulp grades, [indiscernible], lowering BHKP supply.

In parallel, loss-making BHKP 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 of prices, but we don't see any change or how the market is for now and for the rest of the year.

That's helpful. And then 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.

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

No problem. We can revisit that. And then the 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 deleverage on the second half of the year, but we need to deleverage more.

And on absolute terms and rate it to EBITDA, then for sure, the CapEx of 2027 is going to be lower than 2026. But now we have just started on the budget, and I cannot give you a figure. I think till the end of the year, I will not be able to give you a figure.

And then if I can, you've -- there's a $123 million grant from the European climate infrastructure environmental agency. Would you mind just giving a bit of background of how far along is that project into planning? And what would you need to do to release that grant?

You are talking about the [indiscernible] project in [ Wola ]?

Yes, with [ Iberdrola ] yes.

Yes, yes. Yes. Well, again, I have to answer you the same question I answered to Luis. Unfortunately, I have an NDA signed with [ Iberdrola ], and I cannot give you more information.

Next question comes from Manuel Lorente from Santander.

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 2027. So I would like to understand the different moving parts.

To my way of thinking, I should expect that the last sale 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 cost guidance.

So what are you expecting in other categories to, let's say, achieve a similar cash cost that in the second half of the year? Or is just the mix effect from increasing the weight of the specialist products?

Yes, I cannot give you to -- a lot of new information, yes. Our plan is to reduce EUR 15 per tonne this year compared to 2025 and EUR 15 per tonne next year. I can again explain you the EUR 30 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 have already mentioned, and we do see EUR 15 further improvement next year, but I cannot give you more details.

I see. Okay. But those are full year with full year and -- 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 higher cash cost than the traditional, no?

No, no, no, no, maybe EUR 2, EUR 3 per tonne no more. And when we are talking about EUR 36 per tonne of extra margin is absolutely the better price less the larger cash costs, but it is not material.

When we will be producing 120,000 tonne flat yes, it will change because the cost of flat is between EUR 30 and EUR 40 per tonne higher. But the more EUR 30 than EUR 40, but what we are just at. But with the other special products today are -- this year, they are going to be, well, close between 350,000 and 400,000 tonne and it's going to be 500,000 tonne in 2028. There is a very similar cash cost. We've been working a lot on that over the last 3 years, and now we can offer to our customers these products, and they have a similar cost to the standard BHKP 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 of that on that side.

Yes. Unfortunately, I cannot give you a lot of information because, as you know, we are not very -- we are not a significant player in this segment of the market. We sell more in the tissue market and in specialties market.

In printing and writing, we are selling than 8% of what we produce. And then -- 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.

Your next question comes from Alvaro Bernal from [ Alantra ] equities.

Another question from me. 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 looking -- I'm saying this, given the [ Move ] project could be a clear catalyst as to amplifying this business? Is this a reality or not, basically?

No, 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, the paper industry, the food and beverage industry, on the chemical industry they talk about this project and the fact that projects are already working are more important that the potential new project with [ Mode ]. I think it's more important.

Another thing who is supporting the pipeline, well, is the uncertainty on the gas price. Nobody knows when [indiscernible] 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 this year to date, close to EUR 80 per tonne, while 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 deceleration. No, I'm not negative, but I'm not too -- but I am realistic. The 2 previous years, the accelerators have been the purchase. I don't know if we are going to have more puts on 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 they are going to be all the support, 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 [ Moema ], well, it will have a good the percussion in media and in non industry.

But today, you're 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.

Your next question comes from Bruno Bessa from Caixa Banco BPI.

Yes. Just a quick question from my side and focusing on the targeted EBITDA per on improvement for 2028. You mentioned EUR 52 per tonne, 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 volumes sold, if you could share that information.

Well, this EUR 52 per tonne is the operating margin of our EBITDA, and it comes from better prices and better costs. And this EUR 52 is very simple. [ EUR 36 ] is because of product mix and the balance isn't good. EUR 32 is the efficiency and competitiveness plan and EUR 8 is the two projects in Navia who have just started down, then EUR 36, it's the product mix. And yes, the product mix is mainly prices. In the case, as I mentioned, just recently, while we have here specialties, special pulp substituting BHKP and we have flat and flat has a different margin and higher margin. And it's -- that's EUR 52.

No further questions at this time. Presenters, please continue.

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

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

Good morning, ladies and gentlemen. Welcome to the Ence First Q 2026 Results Presentation. I'll 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 First Quarter 2026 Results Presentation. Thank you for joining us. I'm Ignacio Colmenares, Executive Chairman. And today, I'm joined by our CFO, Alfredo Avello; and our Head of IR, Ines Alvarez.

Let me start with the strategic picture and our overall objectives. Our plan remains simple to describe and rests on 4 pillars: growth in higher-margin special pulp substituting BSKP; local wood and biomass sourcing; cash cost efficiency; and EBITDA growth in our Renewables platform, leveraging our position as the largest collector of biomass in the Iberian Peninsula.

Slide 4 summarizes the first quarter of 2026. It shows the progress we continue to make in all pillars of the strategy despite a less-than-brilliant quarter, impacted by several one-off events. Importantly, these events do not change our full year Pulp guidance. We consider that both the market and the company's costs are at an important inflection point that will be visible in future quarters.

The pulp price environment has continued the positive trajectory we saw at the end of 2025. European gross BHKP prices stood at $1,286 per tonne at the end of first quarter '26 compared with $1,100 per tonne at year-end 2025. Major producers have announced further price increases up to $1,430 per ton to be implemented in the short term. Since prices in our contracts are linked to the 2 previous months, we started to benefit from the price increase in the second quarter.

At the same time, we continue to work on the fundamentals of the business, improving our product mix, making progress in our cost reduction initiatives and advancing the Renewables platform.

In our Pulp operations, our pro forma cash cost was EUR 479 per tonne in first quarter with Navia in its planned shutdown and excluding the impact of the Navia strike.

On the product mix, special pulp products, including initial fluff volumes, accounted for 34% of total pulp volumes sold in first quarter '26, plus 13% compared with 2024 -- sorry, compared to 2025 despite the strike. We remain on track to reach 40% for the full year 2026 and to exceed 62% by 2028.

As for our Renewables platform, pro forma energy generation was 303 gigawatt-hour in first quarter '26 compared with 277 gigawatts in first quarter 2025. This figure excludes recent extreme weather conditions in the Iberian Peninsula. This had an impact of 40 gigawatt-hour in production and of around EUR 6 million at EBITDA level. La Galera has completed its odor elimination program and will act as a showcase for our biomethane pipeline developments.

Financially speaking, group consolidated EBITDA was EUR 1 million in first quarter '26. Pulp EBITDA was negative EUR 1 million. Renewables EBITDA was EUR 3 million, including EUR 1 million [ of the rest ] related to new business developments.

Investments amounted to EUR 53 million in the quarter, including machinery leasing of the fluff project and the final payment of EUR 15 million for the 2019 pulp dryer debottlenecking at Navia. Our full year CapEx guidance of EUR 120 million for both businesses remain unchanged.

Net debt stood at EUR 462 million with EUR 209 million in cash. We also continue to act proactively on financing. As a reminder, we registered a new EUR 200 million MARF bond program in January 2026 and completed a first EUR 85 million issuance with a 4-year bullet maturity and a 410 basis points coupon, a clear signal of the reliability of Ence for the investor community. In addition to the EUR 7 million cash already collected in the first quarter, we cashed, in last week, EUR 21 million from the collection of tax losses.

In summary, this was a quarter heavily impacted by one-off events, the Navia strike in Pulp and extreme weather conditions in biomass generation. But none of these changed our full year guidance, nor our strategic trajectory.

Before turning to the pulp market, I would like to address the geopolitical context. On Slide 6, we not only outline why we expect the Iranian conflict to have a limited negative impact on our business, thanks to strategic mitigants in both Pulp and the Renewables platform, but also why the conflict could create opportunities for European pulp players and local energy producers.

In Pulp, our mitigants are structural. We are more than self-sufficient in electricity within our production process with excess energy sold back to the grid, and that excess may benefit from higher pool prices. Our gas exposure will be further reduced in the near term through Navia's efficiency and decarbonization plan, which includes replacing gas consumption in the lime kiln with pulverized biomass and bioethanol captured during the process. This investment will be fully operative by mid-2026. Remember that out of 6 thermal megawatt-hour required per ton of pulp, 5.5 are already self-produced.

We source wood locally with an average radius of less than 110 kilometers. And our commercial focus is in Europe, which accounts for 92% of our pulp sales. In our Renewables platform, we rely on fully local biomass sourcing with an average radius of 145 kilometers. We have an ongoing electricity hedging program for 80% of production and gas hedging for 72% of our needs.

The opportunities are real. In Pulp, the positive pricing momentum favors European players focused on the local market, given the logistics constraints faced by Middle East, Asian and Latin American pulp and paper producers in its exports. In our Renewables platform, we expect an acceleration in our industrial heating pipeline. Biomass is more competitive than gas, and its supply is more reliable, as well as increased revenues from ancillary services due to higher power prices. Biomethane benefits from similar tailwinds.

Let's look at cost competitiveness on Slide 7. Our cash cost trajectory remains on track to meet our full year guidance of around EUR 468 per tonne for 2026. Our competitiveness and efficiency plan aims at cost savings of EUR 30 per tonne: EUR 22 per tonne from headcount reduction, process reengineering and digital and AI-enabled optimization; and EUR 8 per tonne from the Navia cost reduction, decarbonization project.

In terms of progress during the quarter, on the competitiveness and efficiency plan, we captured savings of EUR 6 million on an annualized basis in first quarter. Taken together, these initiatives underpin the EUR 30 per tonne cash cost reduction expected during '26 and '27 with approximately EUR 15 per tonne expected this year in '26, supporting our guidance of around EUR 468 per tonne for the year.

Slide 8 considers the market environment and the continued upward momentum in hardwood pulp pricing. BHKP prices ended first quarter '26 at $1,286 per tonne compared to $1,100 per tonne at the end of '25. Major pulp producers have announced price increases in Europe of up to $1,430, to be implemented in the coming weeks. The expected cost increase in logistics and chemicals, stemming from the Iranian conflict, combined with a tighter paper and board market in Europe, may offer further upside on spreads. We expect a price improvement in the second quarter and third quarter as our pricing structure is indexed to a 2 months trailing reference.

Importantly, BHKP continues to gain share versus softwood. Eucalyptus pulp demand has grown by 1.3% so far in 2026 January and February, in contrast with a 6% decline in BSKP. Fiber-to-fiber substitution, combined with BSKP capacity closures and shifts towards dissolving wood pulp will continue to drive BHKP demand up. Moreover, logistics disruptions linked to the Iranian conflict favor higher prices for regional players such as Ence due to the limited availability of overseas products such as pulp and paper from Asia, Latin America and Middle East.

Overall, the message is clear. The market backdrop supports firmer hardwood pulp pricing in Europe, driven by a combination of favorable demand dynamics, supply constraints and higher fiber costs. That is precisely why our strategy is built around cost, fiber security and growth in special pulp substituting BSKP.

Moving to Slide 9. Our product strategy continues to progress as a key differentiator. Special pulp accounted for 34% of sales volume in first quarter '26 compared with 30% in '25. These products deliver higher margins, approximately EUR 36 per tonne above standard BHKP, since they substitute higher-cost softwood alternatives in multiple applications. We expect this share to increase to 40% in 2026 and to exceed 62% by 2028.

We have a range of special pulp products. Advanced is our solid broad range of BSKP pulp substitutes with different attributes: high strength, unbleached hardwood pulp, low porosity, softness, suitable for diverse applications, including hygiene, decor and packaging. Our '28 target is 500,000 tonnes with an incremental margin of over EUR 30 per tonne versus standard BHKP.

Ence Fluff is another flagship strategic product. Ence is the sole European producer of fluff pulp based on eucalyptus wood competing with more expensive softwood. We are currently in 8 [indiscernible] processes. Our 2028 target is 125,000 tonnes, with an incremental margin of over EUR 60 per tonne. Fluff ramp-up is not just a start-up story. It's a market access story. Qualification takes time. But once approved, volumes tend to be sticky. And the product is anchored in more stable end markets linked to the aging population and improved hygiene habits.

These products are not simply marketing labels. They are an economic lever. When customers use our grades to substitute softwood pulp, they do so for performance reasons. That performance allows pricing discipline, and over time, a structurally higher margin than standard hardwood pulp.

As you can see in Slide 10, our strategic goal is simple. We are not only lowering costs, we are improving what we sell. Together, these moves are designed to reposition Ence as the lowest-cost producer on a BSKP substitute basis. By 2028, more than 62% of Ence's sales will come from BSKP substitute products. Combined with our cash cost reduction programs, this strengthens our relative position on the core in downcycles and increases our operating leverage in upcycles. Due to the effects of both the improved product mix and cost saving initiatives, in 2028, the pulp spread will be EUR 52 per tonne higher than in 2025.

Moving on to Slide 11. Let me now turn to our Renewable Industrial Heating platform in Spain. Our target is to supply 2 terawatt-hour of thermal energy by 2030, contributing around EUR 30 million to EBITDA. We currently have 1 contract in operation, and we are adding 1 more in May and 3 more in the summer, 5 contracts operating at the end of the year. Our pipeline includes 11 projects under negotiation, of which 3 are under advanced negotiation with a required ROCE above 11%.

Continuing with Slide 12, our biomethane platform in Spain continues to advance steadily. Our target is to produce over 1 terawatt-hour of biomethane by 2030 and to contribute more than EUR 60 million to EBITDA with return discipline above 12% ROCE. The pipeline is solid and substantial. Nine plants are expected to reach ready-to-build between '26 and '27, and 25 plants are already in their late permitting phase. In total, we have 41 plants with gas grid connection authorized, feedstock and locations guaranteed.

Slide 13 illustrates the depth and maturity of our biomethane pipeline. Our pipeline has a potential capacity of 4 terawatt-hour, 4x our 2030 current target of 1 terawatt-hour. This underscores the different options open to us and our ability to accelerate or pace development according to market conditions and return discipline.

I'll now ask Alfredo to summarize our financial position.

Thank you, Ignacio, and good afternoon to everyone on the call. I will now walk you through the financial results for the first quarter of 2026 before handing back to our Executive Chairman for the closing remarks and the Q&A session.

Let me start on Slide 15 with an overview of our financial results. As already mentioned, the first quarter of 2026 was, apart from the annual planned shutdown at Navia, marked by 2 one-off events: strike at Navia linked to the ongoing collective dismissal process and the extraordinary spell of extreme weather conditions suffered in the Iberian Peninsula with less rainfall reaching a staggering 2.4x the annual average. In any case, none of these changed our full year guidance given in our last call.

Group consolidated revenues amounted to EUR 154 million in first Q '26 compared to EUR 187 million in first Q '25. In the Pulp business, revenues reached EUR 114 million compared with EUR 135 million in first Q '25. The increase in gross pulp prices was offset by a weaker dollar and by lower sales volumes in the context of the strike. In the Renewables platform, revenues amounted to EUR 41 million compared with EUR 52 million in first Q '25 as a consequence of lower electricity production due to the disruptions caused by the said extraordinary spell of extreme weather conditions.

In the Pulp business, EBITDA amounted to a negative EUR 1 million compared with EUR 29 million in first Q '25, which included EUR 30 million of energy saving certificates, the so-called CAEs. The extra costs from the strike were mostly offset by EUR 7 million of revenues from CAEs, which are not included in our cash cost calculation. In the Renewables business, EBITDA stood at EUR 3 million compared with EUR 6 million in first Q '25 as a result of lower production, lower pool prices, extra costs derived from the extraordinary severe storms, which alone impacted EBITDA by approximately EUR 6 million.

At the bottom line, attributable net income amounted to a loss of EUR 18 million in first Q '26 compared to a positive EUR 2 million in first Q '25. Importantly, as highlighted by our Executive Chairman, these results reflect isolated events and the seasonal planned Navia shutdown.

Looking ahead, the combination of stronger pulp prices, which you need to remember that has a time lag of approximately 2 months prior to flowing into our P&L; the end of the strike in agreement with the unions, and therefore, the permitted execution of our efficiency and competitiveness plan; the start-up of the Navia cost cutting, decarbonization and woodyard debottlenecking project; and the normalization of the devastating weather conditions should drive a significant improvement in the coming quarters.

Turning to the next slide. The quarter ended with a free cash flow cash out of EUR 76 million. Please note that this figure includes EUR 41 million in growth CapEx, a high concentration of carryover CapEx payment in the period, as several strategic projects initiated in previous quarter or years will reach commercial operation by midyear '26.

Let me walk you through the main components of the cash flow, starting from EBITDA. We had EUR 8 million of maintenance CapEx, EUR 7 million of net interest payments and no tax payments during the quarter. This results in a free cash flow before working capital and growth CapEx of approximately a negative EUR 14 million. Working capital absorbed EUR 18 million in the quarter, driven mainly by an increase in Pulp's trade and other receivables and by Renewable Industrial Heating inventories. These are assets that, since we revert to the client at the end of the contract rather than accounting them as assets, are registered as inventories.

Growth and efficiency CapEx amounted up to EUR 41 million in the quarter. This figure includes the final payment of EUR 15 million for the Navia 2019 pulp dryer debottlenecking project, CapEx associated with the Navia cash cost reduction and woodyard debottlenecking project, As Pontes engineering development expenses, and the Renewable Industrial Heating CapEx linked to the Mahou and Lactalis projects. Although first Q '26 is marked by a high concentration tail of CapEx payments, we have a clear target of deleveraging the company and a committed focus in continuing adjusting down our CapEx obligations in the coming quarter. All in all, free cash flow for the quarter stood at negative EUR 76 million.

It is important to stress that the Navia cost reduction, decarbonization and woodyard debottlenecking project, as well as the Mahou and Lactalis Renewable Industrial Heating projects are all expected to enter into operation in the second and third quarter this year and starting to contribute to EBITDA and cash flow in the second half of '26.

In addition, as our Chairman mentioned, we are receiving a positive cash flow -- cash inflow of approximately EUR 30 million in the year, EUR 21 million from the collection of non-applied tax losses already cashed in during the second -- during the first quarter -- sorry, during the second quarter from the Spanish Inland Revenue Service, and the rest from energy saving certificates, the so-called CAEs, of which EUR 6 million have already been collected in the first quarter.

Moving to our financial position on Slide 17. We closed first quarter '26 with a solid and well-structured balance sheet. Consolidated net debt stood at EUR 462 million at the end of March with EUR 209 million in cash across both businesses. Let me break this down by business. In the Pulp business, gross debt amounted to EUR 498 million, including EUR 63 million of IFRS 16 lease contracts, with EUR 158 million in cash, resulting in a net debt of EUR 340 million.

The Pulp business' financial debt remains covenant-free and enjoys some great liquidity, well-diversified financial sources between institutional investors and banks, long-term maturities and no covenants. Maturities are also well spread with no significant concentration in any given year. Also backing our balance sheet, we have fully available EUR 130 million RCF.

As a key highlight, in January 26, we registered the new EUR 200 million MARF bond program and successfully completed a first issuance of EUR 85 million with a 4-year bullet maturity in 2030 and 410 basis points coupon. This transaction extends our average debt maturity, diversifies our funding sources and represents a clear signal of the confidence of the investor community in Ence's credit profile.

In the Renewables business, gross debt stood at EUR 173 million, including EUR 5 million of IFRS 16 lease contracts, with EUR 51 million in cash, resulting in a net debt of EUR 122 million. The financial structure is also well diversified with comfortable long-dated maturities and a fully available EUR 20 million revolving credit facility.

Overall, we have a strong liquidity, long-term maturities and no covenants in the Pulp business, which provide us with the flexibility to execute our deleveraging objectives without any constraints.

Before handing back to our Executive Chairman, let me briefly comment on Slide 18, which summarizes our main sustainability highlights for the first quarter '26. Sustainability is not a side topic at Ence. It is fully embedded in how we operate, and it directly enhances our cost competitiveness, our commercial positioning and our license to operate.

On safe and eco-finance operations -- eco-efficient operations, sorry, our cumulative lost time injury frequency rate stood at 2.54 in the first quarter, the best result across our entire historical series. At Navia, we recorded no odor minutes, maintaining our '25 historic record. And we achieved a new historical low in specific water consumption. 100% of our pulp and energy plants are zero waste certified. And on climate action, direct Scope 1 emissions at Navia were reduced by 10% in '25 -- sorry, by 10% in '25 versus '24.

On byproducts and ecosystem services, we obtained 6 new approvals for specialty pulps under our special -- our Ence special products portfolio. And we have submitted the application for the approval of our fluff pulp under the Nordic Swan and EU Ecolabel schemes. Special pulp products substituting softwood now represent 34% of our sales.

Recycled fiber project at As Pontes has been awarded EUR 25 million under the Industrial Decarbonisation PERTE program, reinforcing our commitment to circularity. We also continue to make progress in forestry bioproducts with a new eucalyptus clone planned for '26 and over 4,300 hectares of CO2 forest sinks registered in the voluntary carbon market schemes.

On responsible supply chain, approximately 88% of the land we manage and 84% of the wood we source are certified. And 100% of our sites are SURE System certified for sustainable biomass.

On positive social impact, 30% of our managerial positions are held by women. 41% of job openings have been filled with internal promotions. We continue to advance in the allocation of EUR 3 million to 240 social and environmental projects under the sixth edition of the Pontevedra Social Plan. And we have launched 4 talent programs across Navia, Pontevedra, Magnon and corporate functions.

Finally, the External Criminal Compliance audit has been completed with results indicating that the level of implementation and operation of our control mechanisms is more than adequate with no nonconformities or observations identified. These achievements are not only reflected in our leading ESG ratings, EcoVadis Platinum, among the top 1% and MSCI ESG rating [indiscernible] excellence and our inclusion in the FTSE4Good Index, but also translate into tangible cost and commercial advantages.

With this, I hand the floor back to our Executive Chairman for the closing remarks.

Thank you, Alfredo. Let's finally look at Slide 20 with the outlook for 2026 and some closing remarks before inviting your questions. It is true that it has not been a great quarter because of the impact of several [ one ] events. However, putting all these together, our strategy remains consistent and disciplined: to increase sales of special pulp substituting BSKP; to strengthen local wood and biomass supply; to reduce cash costs; and to expand our Renewables platform EBITDA, while protecting the balance sheet and maintaining capital allocation discipline.

To summarize the quarter and the outlook for 2026, I wish to highlight 5 key messages. First, the pulp market continues to improve. We have announced $1,430 per tonne from May. The positive outlook is supported by fiber-to-fiber substitution, rising production costs in the context of the Iranian conflict, and scarcity, driven by logistics disruptions on Middle East, Asian and Latin American pulp and paper imports into Europe. We are already benefiting from the better prices in the second quarter.

Second, we have strategic mitigants to absorb geopolitical volatility. In Pulp, we are not only self-sufficient in electricity, we also export energy to the grid. We have local wood sourcing. And we are regionally focused on Europe in Renewables and local biomass sourcing. In both businesses, the conflict may offer opportunities: higher pulp prices and spreads in Europe due to limited overseas supply, energy surplus sold at higher pool prices, the acceleration of the Renewables pipeline, and higher revenue from ancillary services.

Third, the quarter was impacted by one-off events, but our full year guidance is unchanged. Ongoing cash cost initiatives are expected to reduce cash cost by EUR 30 per tonne over the '26 and '27 period. EUR 15 per tonne on savings are targeted in 2026, supporting our cash cost guidance of around EUR 468 per tonne for 2026.

Fourth, our mix upgrade continues. Special pulp substituting BSKP accounted for 34% of sales volumes in first quarter '26 and is expected to reach close to 40% in 2026. By 2028, over 62% of our sales will compete against BSKP, positioning Ence as the lowest-cost producers in the BSKP cash cost curve. Together with Pontevedra Avanza, we expect these initiatives to increase the average across-the-cycle EBITDA by 1.5x from 2028 onwards.

Fifth, the Renewables platform continues to grow and diversify. Leveraging in our solid pipeline potential, we are building the largest Iberian biomass backbone renewable energy platform, combining regulated biomass electricity, renewable industrial heating, biomethane and renewable fuels, and we are on track to almost triple its contribution to EBITDA by 2030. The execution of these projects will be adapted and aligned to our cash flow generation to maintain a prudent across-the-cycle leverage and an attractive shareholder remuneration.

Thank you. We now invite your questions.

[Operator Instructions] We have your first question comes from Inigo Recio with GVC Gaesco.

In the context of significant investments ahead, how do you expect CapEx to evolve? And what deleveraging measures you plan to implement?

Yes. Thank you very much. We ended the quarter, as you know, with EUR 462 million net debt, EUR 340 million in Pulp business and EUR 121 million in the Renewable business. We have a strong liquidity, which amounted to EUR 157 million in the Pulp business and EUR 51 million in the renewable business. And besides, as you know, we have undrawn revolving credit facilities for an amount of EUR 130 million in the Pulp business and EUR 20 million in the Renewable business. Said that, we are conscious that we have to deleverage. We don't have a problem, but we have to deleverage. As you know, in the second quarter, we have cashed already EUR 21 million from tax losses.

Due to its cyclical nature, the Pulp business is financed with covenants-free debt and long-term maturities, as Alfredo has explained before. Our balance sheet and the expected cash flow generation should allow us to reach our growth and diversification goals, whilst maintaining a prudent leverage and an attractive shareholder remuneration. The timing of our investments could be adapted to our cash flow generation through the cycle, as it has been always happening in the past.

Net debt in euros will remain almost flat up to fourth quarter '26 when it should be reduced. The company is fully committed towards deleveraging. No major new investments should occur prior to 2028 to allow the business to consolidate, a stronger cash generation profile on the back of the results of the efficiency and competitiveness plan and Navia decarbonization initiative and the improved product mix in the context of a positive price environment, as we have described. In 2028, once cash generation reaches a run rate level and leverage is normalized, initial works of Pontevedra should start.

The last 12 months' net debt-to-EBITDA ratio is affected by the low pulp prices and strikes in fourth quarter '25 and first quarter '26. Nevertheless, investment discipline, pulp prices and delivery on cash cost saving initiatives are expected to normalize the ratio by the end of the year. We maintain our target average cycle EBITDA ratio of below 2.5x in the Pulp business, below 4.5x in the Renewable business.

Regarding CapEx, we maintain our 2026 guidance of EUR 120 million. CapEx in first quarter '26 amounted to EUR 53 million, and it will go down to EUR 28 million in second quarter '26. In the second half of the year, we expect to invest the remaining EUR 39 million, allocated almost evenly between the 2 quarters. We should note that the majority of cash outflows will take place in the first half of the year due to: first, payments related to growth investments scheduled for competition during the first half such as the industrial heating project and the Navia cost reduction, decarbonization and woodyard debottlenecking projects; two, the $15 million payment related to the 2019 Navia expansion was made in the first quarter; and three, the maintenance shutdown in Navia in first quarter.

In 2026, Pulp business CapEx will be EUR 74 million, of which EUR 23 million are related to annual recurrent maintenance of both factories and forestry activities that are capitalized, whereas the remaining corresponds to investment projects from previous year with significant impact on the group's profitability, as an example, fluff or Navia decarbonization. Navia cost reduction, decarbonization and woodyard debottlenecking, EUR 14 million already paid in first quarter, EUR 3 million to be paid in second quarter. Closing payments of Navia '29 (sic) [ '19 ] pulp dryer debottlenecking project, EUR 15 million already paid. Fluff, EUR 1 million paid in first quarter and EUR 6 million to be paid in second quarter.

Going now to Renewable business, in 2026, EUR 46 million, out of which EUR 17 million are related to 2026 maintenance or new initiatives, very limited, and the remaining are carryover investments from the previous years. Renewable Industrial Heating, EUR 5 million cash-out in first quarter and EUR 14 million expected in second quarter.

In 2027, CapEx should be around half of the 2026 level. The main items will be recurring maintenance of approximately EUR 35 million in total in the full perimeter and no more than -- sorry, EUR 35 million in total and no more than EUR 30 million in renewable packaging and biomethane projects. The pipeline of industrial heat projects should continue to grow, supported by 30 programs, and therefore, with limited equity returns.

Is there any other question?

[Operator Instructions] As of the moment, there are no further questions. Please continue.

Good, gentlemen. If there are no further questions, we will stop now. You know that you can call either Ines, Alfredo or myself [indiscernible] if you have further questions, and we shall meet in 3 months' time with better results on the second quarter. Thank you, and good afternoon.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning, ladies and gentlemen. Welcome to the ENCE's Fourth Quarter 2025 Results Presentation. I will now hand over to Mr. Ignacio Colmenares, Executive Chairman and CEO, and Alfredo Avello, CFO. Gentlemen, please go ahead.

Good morning, good afternoon, and welcome to ENCE's fourth quarter and full year 2025 results presentation. Thank you for joining us. I am Ignacio Colmenares, Executive Chairman. And today, I'm joined by our CFO, Alfredo Avello, and our Head of IR, Ines Alvarez.

Let me start with the strategic picture of our overall objectives. Our plan is simple to describe and rests on four pillars. First, growth in higher-margin Special Pulp substituting BSKP. Second, local wood and biomass sourcing. Third, cash-cost efficiency. And fourth, renewables EBITDA growth, leveraging our position as the largest collector and manager of biomass in the Iberian Peninsula.

Slide 4 summarizes the year 2025 and the fourth quarter. It captures the progress we are making on all pillars of the strategy. The pulp price environment was challenging for much of the year, but we saw a clear turning point at the end of the fourth quarter. At the same time, we kept moving the business forward. We improved our cash cost, increased the share of Special Pulp substituting BSKP and continue to increase the Renewables platform to deliver stronger results.

In our Pulp operations, we delivered cash cost of EUR 477 per tonne in fourth quarter and EUR 483 per tonne in 2025, our lowest cash cost since 2022 despite the impact of the Pontevedra strike. The cash cost improvement reflects structural actions in wood, logistics and harvesting, process optimization and productivity, combined with tighter operational execution and a continuous improvement culture. On product mix, Special Pulp substituting BSKP reached 30% of total volumes sold in 2025, up 7 percentage points year-on-year with a margin uplift of EUR 37 3-7 per tonne versus standard BSKP. The increase in Special Pulp substituting BSKP volumes was a result of targeted customers' programs, product development and qualification work and our ability to tailor fiber properties to end-use requirements. We are positioning ENCE as a solutions provider rather than a standard commodity supplier.

We also took a strategic step into fluff, becoming the only non-BSKP producer in Europe. We started the ramp-up in fourth quarter '25 with 125,000 tonnes of capacity. On Renewables, biomass-to-electricity generation increased by 6% year-on-year to over 1.2 terawatt hour, and renewable industrial heating secured three landmark contracts in 2025. I would also like to highlight that Magnon's’ biomass to regulated electricity business has posted an EBITDA of EUR 10 million for 2 consecutive quarters, third and fourth quarters, leading to an annualized EBITDA of EUR 40 million to be increased by an additional EUR 10 million with the update of the regulatory parameters, which came into force in January 2026.

In Biomethane, La Galera delivered a 27% increase in annual production through operating initiatives and not through CapEx, reinforcing the value of operational know-how and the scalability of this platform with 42 projects in the pipeline, of which, 25 are under permitting phase, late permitting phase.

Financially speaking, the group's consolidated EBITDA was EUR 83 million in 2025 and EUR 13 million in the fourth quarter '25. Pulp EBITDA was EUR 56 million and Renewables EBITDA was EUR 27 million. Magnon's’ alone EUR 32 million. Alfredo will explain this in more detail.

We also acted proactively on financing. We registered a new EUR 200 million MARF bond program in January 2026 and completed a first EUR 85 million issuance with a 4-year bullet maturity and a 410 basis points coupon refinancing all debt maturity in 2026 in the Pulp business. In 2026, we see a more constructive market setup versus mid-2025, supported by firmer price momentum and a more balanced supply response. Operationally, we expect further progress on competitiveness with a structurally improved cash cost profile and guidance of EUR 468 per tonne for 2026 cash cost, alongside continued mix upgrade towards close to 40% of Special Pulp substituting BSKP.

In Renewables, the updated remuneration parameters for 2026-2028 support a higher regulated electricity run rate. We expect several industrial heating projects to reach start-up during 2026 and the biomethane pipeline will continue to advance. Putting it all together, these numbers show why the plant matters, local wood supply, special pulp mix upgrade, cash cost reduction and renewables EBITDA growth executed with capital discipline and balance sheet resilience.

Our priorities for profitable growth are clear: expand ENCE, Special Pulp substituting BSKP, reduce cash costs and convert our renewables pipeline in contracted long-duration cash flows. Slide 6 considers gross pulp prices in Europe and the market context behind the recent move up in hardwood pricing. The market has been tightening since the end of last year. The year-end PIX BHKP benchmark in Europe closed around $1,100 per tonne. The average in 2025 was $1,086 per tonne. Gross prices. Since last December, main producers have announced several price increases of up to $1,330 per tonne gross. Importantly, this pricing momentum is being supported by a solid demand and a supply side that is constrained, particularly in Indonesia. The Indonesian government -- the Indonesian government revoked forestry permits for 22 pulp wood plantations in West and North Samarinda with potential long-term annual losses of 4 million to 8 million tonne of wood chips, equivalent to 1 million to 4 million tons of BHKP.

From an operational standpoint, weather-related disruptions in Indonesia have also reduced short-term pulp availability and made fiber procurement more difficult. These disruptions are not happening in isolation. Analysts estimate that the broader set of disruptions across the value chain could lift demand for market pulp by approximately 650,000 tonnes in 2026. In addition to demand already strengthened by fiber-to-fiber substitution and increased standards of living. At the same time, higher fiber costs are flowing through the system. Wood chip prices in China increased once the extent of the Indonesian damage was assessed and Eucalyptus wood chip prices rebounded in early February to recent November highs after a 21% spike since July due to heavy rains affecting harvesting.

Overall, the message is clear. The market backdrop supports firmer hardwood pulp pricing, driven by a combination of solid demand, supply constraints and higher fiber costs. That is precisely why our strategy is built around cost, cybersecurity and disciplined growth in Special Pulp substituting BSKP.

Continuing with Slide 7, our product strategy is progressing well as a key differentiator. In 2025, Special Pulp substituting BSKP accounted for 30% of sales volume compared with 23% in 2024. These products delivered higher margin, EUR 37, 3-7 per tonne above standard BHKP in 2025 as they substitute higher cost softwood alternatives in multiple applications. These products are not a marketing label. They are an economical lever. When customers use our grades to substitute softwood pulp, they do so for performance reasons. That performance allows pricing discipline and over time, a structurally higher margin than standard hardwood pulp.

We are also achieving our goals on fluff. In the fourth quarter, we started the ramp-up of our first 125,000 tonne Eucalyptus fluff pulp line substituting BSKP fluff. This is strategic because fluff typically trades at a meaningful premium versus standard hardwood pulp, and we expect it to generate even greater margins as volumes ramp. The priority now is product homologation. We are making progress on 8 different processes. Fluff ramp-up is not just a start-up story. It's a market access story. Qualification takes time. But once approved, volumes tend to be sticky and the product can remain in more stable demand end markets linked to the aging population and improved hygiene habits worldwide.

Looking forward, our mix ambitions are clear. We expect Special Pulp substituting BSKP to increase towards close to 40% in 2026 and to exceed 62% by 2028, supporting a structurally higher margin profile. As the Special Pulp substituting BSKP rises, our exposure to pure BHKP pricing decreases. ENCE's position in the global cash cost curve improves and the business becomes more resilient through the cycle.

Let me turn now to cash costs and competitiveness in Slide 8. In 2025, cash cost was EUR 483 or EUR 478 per tonne, excluding the impact of the fourth quarter strike in Pontevedra and improved meaningfully compared to the 2022 PIX. This was the result of tangible actions, local wood sourcing and process optimization as well as operational improvements. We are not stopping there. We are focusing clearly on further reductions. Ongoing initiatives are expected to reduce cash cost by additionally EUR 30 per tonne during 2026 and 2027, with 2026 cash cost guidance at EUR 468 per tonne. This EUR 30 per tonne improvement is mainly based on the combination of our Efficiency & Competitiveness plan that accounts for EUR 22 per tonne and the Navia cost reduction and decarbonization initiative that accounts for the remaining EUR 8 per tonne.

On the Efficiency & Competitive plan, we aim to deliver an average annual saving of around EUR 22 per tonne to be implemented between 2026 and 2027 through process reengineering, operational streamlining and digital and AI-enabled optimization. The work streams are very practical and execution-driven. 15%, 1-5 headcount rationalization, improving yield and consumption ratios across wood, chemicals and energy, rising reliability by cutting unplanned downtime, strengthening procurement and contracting discipline on key inputs and services and simplifying the organization. Specifically, agreements have been reached regarding corrective dismissal procedures. In total, 141 costs will be amortized through voluntary departures, early retirements and reallocation to other growing business units within the group.

On Navia, remember that we are executing a dedicated cost reduction and decarbonization program. The project was launched in first quarter 2025, and we expect commercial operation in second quarter 2026, achieving roughly EUR 8 per tonne of annual savings in the second half of 2026. Taken together, these initiatives underpin the expected EUR 30 per tonne cash cost reduction over 2026 and 2027 with approximately EUR 15 per tonne targeted in 2026, supporting our guidance of around EUR 468 per tonne cash cost.

As you can see in Slide 9, our strategic goal is simple. We are not only lowering costs. We are improving what we sell. Together, these moves are designed to place ENCE as the most competitive producer on a BSKP substitute basis and to improve earnings quality throughout the cycle. Our cash cost reduction programs, not only lower our cash cost base, but also strengthened our relative position on the curve in down cycles and increase our operating leverage in up cycles.

As regards -- monetization in Slide 10, we completed the sale of Energy Saving Certificates, CAEs for a net amount of EUR 40 million in 2025, fully cash in. We also expect to register and cash additional CAEs in 2026, amounting approximately EUR 10 million, of which EUR 6 million are cash in the first quarter of 2026. We treat CAEs as value realization from operational excellence rather than a substitute for the underlying strategy. They support cash generation, but we do not build a business plan around them. Strategy is designed to be repeatable and resilient. One-offs may help in specific years, but the pillars, local wood supply, product mix, cost and diversification drive the long-term trajectory.

Let me now turn to Renewables in Slide 11, which is the second strategic engine of the group. Regulated biomass electricity provides a stable earning base, and we have a regulatory tailwind. Recent updated remuneration parameters starting in January 2026, improved remuneration for biomass-to-electricity and cogeneration. For our portfolio, this translates into an incremental run rate EBITDA of around EUR 10 million, taking the regulated electricity run rate closer to EUR 50 million. Having said that, please note that we experienced extraordinary and constant heavy rains in the Iberian Peninsula in late January and early February 2026. This affected the quality of the biomass and challenged our operations. Everything has come back to normal and is going well now.

Continuing with Slides 12 and 13. Beyond regulated electricity, we are scanning through business verticals. First, renewable industrial heating. Our target is 2 terawatt hour of thermal energy supply by 2030 and the contribution of over EUR 40 million to EBITDA. Today, we have 1 contract in operation, 1 in start-up and 3 projects in construction with a disciplined pipeline and required returns of above 11% ROCE. As a result, we expect 4 industrial heating plants to start operations this year.

Second, biomethane. We continue to build a biomethane platform in Spain, which will produce more than 1 terawatt hour of biomethane by 2030 and contribute over EUR 60 million to EBITDA with return discipline above 12% ROCE. This pipeline is substantial with 25 projects already in the late permitting phase and the total pipeline of 42 projects. Biomethane leverages on long-term BPAs. Over time, this creates an infrastructure-like business vertical with scalability returns. All these are long duration infrastructure-like businesses anchored in local biomass supply chains, precisely where we have solid structural advantages.

I will now ask Alfred to summarize our financial position.

Thank you, Ignacio, and hello, everyone. When looking at 2025, you will see two realities at the same time. First, the headline EBITDA is lower year-on-year because 2024 benefited from a much stronger pulp price environment. Second, the delivery of our strategic targets continued. We increased the weight of our Special Pulp. We launched our first fluff line. We continue to cut cash cost, and we kept building our renewable biomass backbone growth platform.

With that in mind, let's start with the income statement on Slide 15, where you can see the headline figures for the year and for the fourth quarter. At group level, revenues reached EUR 747 million in 2025. Pulp revenues were EUR 544 million and Renewable revenues were EUR 206 million. The variation in revenues year-on-year is explained by the lower net pulp price compared to the previous year, partially offset by higher contribution from our Renewables platform despite its also lower prices year-on-year.

Moving to profitability. Consolidated EBITDA was EUR 83 million in 2025, including EUR 13 million generated in the fourth quarter, 6% higher than that of the fourth quarter '24. To put that in context, 2024 delivered EUR 164 million EBITDA beating the year-on-year delta essentially, the pulp pricing cycle, partially mitigated by our cost and product mix actions and by significant value capture initiatives such as the monetization of energy efficiency certificates. Let me now unpack pulp first because that's where the cycle is most visible.

In Pulp, EBITDA was EUR 56 million in 2025 compared to EUR 138 million in 2024. The main driver is the net pulp price environment, reference price for short fiber pulp averaged USD 186 (sic) [ 1,086] per tonne in 2025 compared to USD 1,236 in 2024. In the fourth quarter, the average was around $1,070 and the European PIX gross price closed the year around EUR 1,100. But the bottom point is not just where the average was, but what the end of the year trajectory is. Producers have already announced price increases into '26, reaching up to USD 1,330, reflecting a tightening supply-demand balance. Now while the price cycle is exogenous, the mix and costs are not, and '25 is a year where we will make clear measurable progress on both.

First, regarding mix, our Special Pulp that substitute more expensive long fiber pulp accounted for 32% of sales in fourth quarter '25 versus 24% in fourth quarter '24. This Special Pulp generates an incremental margin of around EUR 37 per tonne versus standard pulp. Second, in the fourth quarter, we started up with customer qualification processes for our first fluff pulp line with capacity of up to 125,000 tonnes. Third, cash cost in the fourth quarter was EUR 477 per ton versus EUR 521 in the same period last year, including the December Pontevedra price strike. Beyond the EBITDA line, you can see how the cycle flows through the net income. As a result, pulp business recorded a net loss of EUR 42 million in '25, including a provision related to our efficiency and competitiveness plan of EUR 24 million.

On Renewables, in '25, energy sales volumes increased by over 6% to 1.2 gigas and the fourth quarter production rose almost 10% versus the same quarter of last year. Revenue also increased by around 5% up to EUR 206 million for the full year. EBITDA was EUR 27 million in '25, up 4% year-on-year and EUR 10 million in the fourth quarter, including approximately EUR 1 million of development and ramp-up costs for growth platforms, Biomethane and Renewable Industrial Heating. The base biomass into regulated electricity business showed a solid performance, reaching EUR 20 million EBITDA in the second half '25 before increasing its run rate average up to the 40s, and additionally, the recent remuneration updated will increase it up by approximately EUR 10 million per year for a target production of 1.4 gigas. Below EBITDA, Renewables reported a net loss of EUR 15 million for the year, including a specific impairment charge on a PV development project, partially offset by tax credits.

Turning now to Slide 16. Let's enter into cash flow. In 2025, we achieved a positive free cash flow before working capital variation and growth and efficiency CapEx of EUR 12 million, while executing EUR 59 million of growth and efficiency CapEx and maintaining our asset base. Let me walk you through the underlying dynamics. In the Pulp business, operating cash flow was EUR 55 million in '25 versus EUR 87 million in '24, consistent with the lower price environment. In the fourth quarter, operating cash flow was EUR 16 million, up from EUR 9 million in the fourth quarter '24, showing the benefit of improved cash cost and Special Pulp mix.

In the Renewable business, operating cash flow in our accounts was EUR 9 million before the EUR 14 million of CapEx related to the Industrial Heating business that are registered as inventory changes rather than in the CapEx line since the assets will be finally acquired by the customer. Working capital improved in this business by EUR 11 million due to lower IRs level in the set lower price environment. Regarding CapEx, total investment was EUR 114 million versus EUR 125 million guidance and of which EUR 59 million are strategic, namely in the Pulp business, we're including the new fluff line on the Navia cash cost reduction and decarbonization project and the Renewables, the Industrial Heating and the Biomethane development.

Regarding cash flow, importantly, for '26, following the Constitutional Court decision on the limitation of tax loss offset, we expect a cash refund of roughly EUR 23 million related to activated tax losses. This is a tangible cash relevant item expected for first half '26.

Turning now to Slide 17. The message is straightforward: Strong liquidity, long-term maturities, covenant free in the Pulp business and a capital structure that supports strategic execution. At the end of '25, consolidated net debt was EUR 378 million compared with EUR 321 million at December '24, primarily explained by our investment program and by working capital movements. Importantly, we closed the year with EUR 241 million of cash on the balance sheet, which provides optionality. It allows us to proceed with CapEx, absorb working capital swings and still remain in control of the balance sheet. We also actively managed market risk that could otherwise translated into balance sheet volatility. On FX, we maintained rolling hedging policy to reduce the impact of euro-dollar volatility on pulp results. In 2025, that policy delivered EUR 8.4 million of positive settlements.

For 2026, we have hedged a nominal amount of EUR 80 million -- $80 million, sorry, with an average cap around $1.19 and a floor around $1.16 per Euro. On energy price risk inside Renewables, we also use hedges designed to replicate the regulated methodology aiming to stabilize returns. In 2025, hedges cover around 60% of biomass generation and hedge settlements offset the deviation between the market prices and the regulators' estimate. If you look at the maturity schedule on the right of the slide, the key takeaway is that maturities are spread overtime, reducing refinancing cliffs. Together with the fully available EUR 150 million revolving credit facilities, this provides a liquidity buffer that is meaningful relative to the volatility of commodity markets.

Also, at the beginning of 2026, as our Executive Chairman has said, we have registered at the MARF a EUR 200 million 4-year bullet bond program with the aim of continuing with the diversification of our financial sources. Our first issuance was successfully launched, placed and oversubscribed in February, ending at EUR 85 million with a fixed coupon of 110 basis points maturing in 2030 and fully absorbing all the financing needs for the whole year '26. This is a clear signal from the investor community of the reliability and resiliency of our company even in the low part of the cycle.

Now after covering the financial and balance sheet performance, I want to step back and show you how our sustainability leadership reinforces competitiveness and protect returns in Slide 18. ENCEs' view is pragmatic. Sustainability is a tool to be more competitive and to capture returns. Let me make the connection explicit. Each pillar links to value creation and each reduces a category of risk. First, the efficiency operations. This is about operational stability and cost. In 4Q '25, we achieved historic performance of 0 odour minutes reached in Navia, and we also achieved a historical record for the lowest specific water consumption. We maintained 100% zero waste certification across our pulp and energy sites.

In Pontevedra, our water recovery system completed its third year of operating, improving resiliency to drop risk. These are operational KPIs, but they translate into fewer disruption, lower compliance risk and a stronger social license. Second, by products and ecosystem services. This is about top line potential and strategic positioning. You have already seen that 32% of our sales in fourth quarter '25 came from Special Pulp, substituting more expensive BSKP with higher margins and growing demand. In the quarter, we achieved 3 new sustainability certification for fluff pulp, reinforcing market access and customer preference. On forestry byproducts and ecosystem services, we continue to improve plant material, including the development of new Eucalyptus clones better adapted to climate change, and we also expanded the registration of forest carbon sinks over 4,300 hectares. This is about building long-term asset base with increasing optionality and monetization pathways while maintaining biodiversity and responsible management.

Third, responsible supply chain. This is about being the preferred counterparty. 100% of sites certified under the SURE System for sustainable biomass. In 4Q '25, we deployed a new third-party due diligence procedure to reduce risks related to human rights and environmental impacts along the supply chain, and we also obtained PEFC certification for biomass trading. These measures reduce reputational and compliant risk. Fourth, positive social impact is about talent and community stability, which is again a risk and return topic. Our safety performance is well above sector benchmarks, as you can see in the slide.

On talent, 30% of managerial positions are held by women and 41% of jobs opening were fulfilled through internal promotion. This is a sign of organizational strength. On community engagement, we launched a new addition of the Pontevedra social plan, supporting 240 initiatives in the rural communities, we provided more than 950 technical advisory sessions to forest owner and delivered a new addition of forestry machinery training. These actions strengthen the ecosystem in which we operate and reduce long-term operational risk.

As said, ENCE sustainability leadership is not about scoring well on ESG frameworks. It is about increasing returns and lowering risks. Now let me hand back a bit of the presentation to our Executive Chairman for the closing remarks.

Thank you, Alfredo. Let us finally look at Slide 20 with the outlook for 2026 and some closing remarks before inviting your questions.

Putting all of this together, our strategy is consistent and disciplined. One, increase volumes of special pulp substituting BSKP; two, local wood supply; three, reduce cash costs; and four, expand Renewables platform EBITDA while protecting the balance sheet and maintaining capital allocation discipline.

To summarize the year and the setup for 2026, I wish to highlight four messages, each one, part of our strategy. First, the pulp market is improving, but we are not waiting for the cycle. We are positioning ENCE to perform throughout the cycle. Hardwood price momentum strengthened in early 2026. Demand is solid and the supply side is temporarily constrained, including the Indonesian fiber disruption, we discussed. That supports a more constructive pricing environment versus 2025.

Second, our mix upgrade continues. We expect special pulp substituting BSKP to increase volume to close to 40% in 2026. Key priorities will be with the flat ramp-up and continued qualification work. Our objective is to deliver structurally higher margins by substituting softwood pulp. Over 62% of our sales will compete against BSKP by 2028, positioning ENCE as the lowest cost producer in the BSKP cash cost curve.

Third, we are following a clear operational plan for improved competitiveness. We are reducing cash cost to around EUR 468 per tonne for 2026, supported by our Efficiency & Competitiveness plan and the Navia cash cost reduction initiative, and we remain focused on execution.

Fourth, the Renewables platform continues its diversification, pushing for growth, more than tripling its contribution by 2030. The operational improvements in second half of 2025 and the updated regulatory parameters support a higher run rate for the regulated electricity business. We expect 4 industrial heating projects to start up during 2026. Our Biomethane pipeline will continue to advance. Thank you. We now invite your questions.

[Operator Instructions] Your first question comes from the line of Alvaro Bernal from Alantra.

I have a couple. The first one is regarding the Biomethane platform. I've seen you've pushed back targets over a year. If you can give us more color on what problems you're encountering here and what makes you comfortable with meeting your current targets?

And the second one is a quick one, is just about the commercial discounts that have been agreed this year. If you can give us some disclosure regarding this? It would be very helpful.

Yes. Thank you very much. Yes. Regarding our biomethane platform, we have 8 plants who have almost what we call in Spanish, the [Foreign Language]. Everything has been done, everything. Now is the administration has to move. Some are in Catalonia, some are in Aragon, some are in Castilla y León. But the fact is it is not moving. The administration is going very, very slowly. None of these 8 projects have social opposition. We expect them to be ready to build by mid-2026 or on the second half of 2026. And then we will start construction, I would say, one of them, not at the same time, to be prudent. And we think that we will start construction by the end of the year, but not before. That's the vision we have today, and that's what we have reflected on the presentation in Slide 13. If things move quicker, well, we will go faster.

Regarding your other questions, yes, it's interesting to talk about discounts. European gross pulp prices closed the year at $1,100, as you know, and the discounts last year were on the range of 48% to 49%. There were a deficit from the discounts in the negotiations for 2026. Those negotiations were between December and January, and I would say that in general terms, BHKP has been sold by the market at an average discount of 53% to 54%, by two reasons, you will see in our figures a lower discount. This 40% special pulp substituting BSKP we are selling is sold at a higher price and then it diminishes the discount. And secondly, the less standard BSKP pulp we have, the better prices we get because what we are changing is, let's say, the worst customers, the worst destinations with this special pulp. And that is why we think this year, as I told you, we are going to -- we will see between 51% and 52% discount for ENCE.

And your next question comes from the line of Cole Hathorn from Jefferies.

You've got a lot of moving parts impacting your cash flows in 2026. And I was just wondering if you could just remind us all nicely the key moving items? So you've got the benefit from your tax losses, you've got various other items. Would you mind just listing the cash flow impacts and then also giving us some color of how you think about CapEx in 2026?

Yes. Let me give you a rough figure, and then Alfredo can go on more detail. As extraordinary incomes, we have, as you mentioned, the EUR 23 million of taxes. We think we are going to collect that quite soon. As extraordinary outflows, we have redundancies. I estimate we are going to have a cash out of between EUR 12 million and EUR 14 million, EUR 15 million this year. As another extraordinary income, we have CAEs, I think a minimum of EUR 10 million during the year. And then you have the CapEx. Regarding CapEx, Alfredo will go in details. Well, we are talking about EUR 74 million from the Pulp business and EUR 46 million on the Renewable business. And maybe, Alfredo, you can give the breakdown.

Yes. I have to say that most of it comes from things already made or for things that are almost finished, like in the Pulp business, the EUR 74 million that Ignacio was talking about, you include -- remember, the co-generation turbine and Navia we have approved in the past, there's like EUR 5 million there. We have the end payments of the Navia 80 investment that we made also in the past that accounts for EUR 16 million. You have the fluff for around EUR 8 million, and you have the rest of the Navia reduction cost and decarbonization project for around EUR 18 million. So you have all those extraordinary on that part.

Regarding the Renewable, we are including, as Ignacio was saying the starting payments of maybe one of the biomethane plant. We have the biomass trading expansion, and we have the Renewable Industrial Heating. All those projects that Ignacio talked about are all CO2 ones -- sorry, all those projects go in the line of EUR 19 million. And we are also starting the CO2 development. We are expecting a CapEx of around EUR 7 million in this item. So most of it are kind of either growth or expansion projects that will start up in '26 or we're starting to invest in them for future cash flows. But the extraordinary things are the ones that Ignacio has mentioned before.

Yes. What is important is out of the EUR 74 million in Pulp business, EUR 14 million are maintenance. We have to add the EUR 5 million of the repair of the turbine who failed last year at Navia. And as Alfredo was saying, we have outstanding payments of the old project of [ Navia 80 ] who was performed a few years ago. And then we have for growth and for efficiency on the Pulp business, EUR 35 million. And regarding Renewables, well, out of EUR 46 million, EUR 10 million are maintenance and EUR 36 million are for growing.

That's clear. And then if I follow up with the shift to more specialty grades of pulp, moving the product mix to 30% this year and 40% next year, it's a big movement in your mix of pulp sales, and congratulations for doing it so quickly. I'm just trying to understand one of the key benefits for that is when the softwood pulp price is at a substantial premium to hardwood. How do you think about it now that the gap has narrowed with hardwood rising, particularly in China off its lows and kind of narrowing in Europe? Will there be any challenges getting people to switch down to the specialty grades?

No, we don't see this challenged today. Now it's 5 years. We are selling the special pulp. We have problems to keep this, let's say, EUR 36 per tonne extra margin when the gap between softwood and hardwood is lower than EUR 150. When this gap is above EUR 150, well, we share the benefits with the customers and we get this EUR 36 per tonne on average. No, we don't see a problem today. And the vision we have is that, well, the gap will continue this year and on the future, yes. Yes, we see less and less offer in BSKP.

And then maybe just following up on the cash costs initiative. You've been very clear, and it's a helpful slide from the outside in to see the cash cost development down EUR 15 a tonne this year and then EUR 15 a tonne next year. But I suppose there have been some extraordinary impacts from strikes in the fourth quarter, a little bit of strikes in Q1, and now that's all resolved and behind you. Are you comfortable with delivering those cash cost numbers? Or are you confident on that delivery and there's upside?

Yes, absolutely. We have checked the number once the strike was finished and before preparing for this conference. And the impact of the strike in Navia between January and February has been EUR 5 million. very similar to the strike we had in Pontevedra, another EUR 5 million. EUR 5 million of Pontevedra Avanza in 2025. The EUR 5 million of Navia is on the first -- will be on the first quarter of 2026. And when we say EUR 468 is included all the extra costs we have during the strike.

That's clear. And then that's all your own internal help actions that are delivering that. I'm just wondering if there's also any benefit from lower wood costs? I mean we're seeing some slightly lower wood costs in the Nordics -- well, not slightly lower. We're seeing lower wood costs in the Nordics. And I'm just wondering if there are any -- there's any downward pressure on wood costs in the Iberian Peninsula?

No, unfortunately not. We -- in this decrease of EUR 15 per tonne for this year, we see a slight reduction on the cost of the wood, not on the price of the wood. We will continue doing what we did last year is to reduce the cost of the transport and to reduce the cost of the harvesting. But at the end, we will keep the prices we are paying to the forest owners. We are reducing logistics. We are reducing harvesting, and we are keeping the price of the wood. Then there is a very slight reduction coming from the sites in the [indiscernible].

There are no further questions at this time. I will now hand the call back to Mr. Ignacio Colmenares for any closing remarks.

Well, thank you very much, all of you, for your attention and your questions. We are in contact. Any doubt you have, you can contact Ines, Alfredo or myself, and we will meet soon at the end of first quarter. Thank you very much, and good afternoon and good evening.

Thank you. Bye-bye.

This concludes today's call. Thank you for participating. You may all disconnect.

Good afternoon, ladies and gentlemen. Welcome to the ENCE Q3 2025 Results Presentation. I will now hand over to Mr. Ignacio Colmenares, Executive Chairman and CEO; and Alfredo Avello, CFO. Gentlemen, please go ahead.

Good afternoon, everyone, and thank you for joining ENCE's Third Quarter 2025 Results Presentation. Let me please start this presentation pointing out that, firstly, ENCE's Pulp division is firmly evolving towards a higher-margin Special Pulp Centered business, substituting more expensive BSKP alternatives based on local wood sourcing and proximity service.

And secondly, our local biomass backboned renewable energy platform continues its development, transforming the biomass nearby collected into a diversified range of energies, including regulated renewable electricity, industrial renewable fitting, biomethane and renewable fuels with solid recurrent EBITDA and tangible pipelines under execution.

Today, I'm joined by our CFO, Alfredo Avello; and our IR Director, Ines Alvarez. I will begin with a brief overview of the quarter and our strategic process. Alfredo will then take you through the financials, and I'll return with the closing remarks. On Page 4, you can find the main highlights of the quarter. BHKP prices hit lows in third quarter. Since then, price increase announcements were made by the main producers for a total gross of $130 per tonne in Europe, of which $60 per tonne are already recognized in the PIX.

In third quarter, we continued our discipline in cash cost reduction with an improvement of EUR 29 per tonne quarter-on-quarter. Cash cost savings were mainly driven by operational efficiencies and the positive contribution from the energy revenues after the successful ramp-up of Navia's turbine in June. Reinforcing our commitment towards efficiency and competitiveness, ENCE has launched an efficiency and competitiveness plan based on 2 main pillars.

Firstly, process reengineering and AI initiatives; and secondly, streamline of the operations through an orderly reduction of FTEs. The full plan will generate potential annual savings of EUR 22 per tonne at cash cost level and will require a cash-out of approximately EUR 23 million, resulting in a net present value of EUR 200 million. The plan will be implemented in the next 24 months.

The Navia decarbonization plan and Pontevedra Avanza will continue in parallel. ENCE's higher-margin special pulp products accounted for 29% of the sales volumes year-to-date, 30% higher than in the first 9 months of 2024, delivering an incremental margin of EUR 32 per tonne over the remaining 51% of standard BHKP.

Despite low pulp prices, free cash flow before growth CapEx amounted to EUR 12 million compared to a cash consumption of EUR 13 million in the previous quarter, solidly supported by the optimization of the working capital that has fully neutralized the increase of the first half of the year.

Our investment approach remains disciplined, prioritizing long-term value creation and cost effectiveness, implementing a clear strategy for both businesses in this new growth phase. By 2028, ENCE aims to increase its across-the-cycle EBITDA by 50% in pulp on the back of higher-margin special products, operational efficiency and cash cost focus, Pontevedra Avanza, As Pontes projects and renewable packaging solutions.

And by 2030, our diversified renewable energy biomass backboned platform is on track to more than triple its recurring EBITDA, growing in renewable industrial heating and biomethane businesses prior to entering the renewable fuel business. Moving to Slide 6, you can see that gross BHKP prices bottomed at $1,000 per tonne in August.

Since then, 2 price increase announcements were made for a total of gross $130 per tonne in Europe, of which $60 are already reflected in the fixed pulp as well as $30 tonne net in China. The demand backdrop remains supportive with global demand 7% up to August and a widening gap versus softwood pulp. The recent U.S. tariff redemptions for pulp imports and the planned maintenance shutdowns among large Latin American producers in fourth quarter should consolidate the positive price trend into year-end.

Continuing with our FX policy in Slide 7, we've hedged nearly half of our 2025 pulp sales with an average cap at $1.09 per euro. In this quarter, FX hedging has resulted in a positive inflow of EUR 4 million and should add another EUR 3 million in the fourth quarter, assuming a euro-dollar exchange rate of 1.16. Turning to Slide 8; I would like to review with you the Efficiency & Competitiveness plan launched in third quarter.

It is a 24 -- sorry, 24 months program to streamline our operations based on process reengineering and AI-enabled initiatives across procurement, maintenance, industrial operations, safety and quality. The plan targets approximately EUR 22 per tonne of cash cost savings by the end of 2027, with a cash out of around EUR 23 million to be deployed in the same 2 years, yielding an estimated net present value of EUR 200 million and 1-year payback.

Projects have been launched in both businesses and negotiations with Labor representatives are on track. The ultimate goal is to strengthen ENCE's competitive positioning while securing a stable and constructive employment relations framework. Turning to Slide 9; our higher-margin ENCE Advanced portfolio continues to expand. In the first 9 months, special products represented 29% of pulp volumes, an increase of 30% compared to the first 9 months of 2024 and delivering EUR 33 per tonne operating margin premium versus the remaining 61% standard BHKP.

The improvement of the mix is central to our strategy of substituting higher cost softwood grades in targeted applications. Continuing with our higher-margin product portfolio in Slide 10, our first 125,000 tonnes fluff line has started its production in the fourth quarter and is already in product homologation phase. As a reminder, fluff is a value-added niche with a gross price gap of around $900 per tonne versus standard BHKP, where ENCE will be the one and only European fluff manufacturer with cheaper hardwood sourcing.

Just for your information, as of today, more than 90% of worldwide fluff pulp is softwood. Our fluff pulp should account for more than 12% of sales volume by 2028. and we expect a structural extra margin of roughly EUR 60 per tonne versus standard BHKP at across-the-cycle prices. This is on top of the 50% of the higher margin ENCE Advanced product sales. Special pulp will account to 62% of total sales by 2028.

Moving to Slide 11; let's look at the global cost curve and ENCE's positioning. Leveraging on the 62% ENCE higher-margin special pulp mix forecasted for 2028, we are repositioning the company within the cash cost curve. At the second half '25 cash cost guidance of EUR 466 per tonne equivalent to $545 per tonne, ENCE stands as a top quartile producer compared to global BSKP ones that deliver an average cash cost of $678 per tonne.

Continuing with the Energy Saving Certificates on Slide 12, we have cashed in the EUR 10 million recorded in the second quarter of the year. To-date, in 2025, we have sold Energy Certificates for a total amount of EUR 40 million, fully cashed in. Also, we are working on generating additional certificates for approximately EUR 4 million that should be recorded by year-end.

Let's move now to our local biomass backboned renewable energy platform in Slide 13, talking about La Galera, our Tarragona biomethane plant. As you know, we acquired the plant in December '24. Well, La Galera is now on track to increase its annual production by 20% without CapEx, just by applying ENCE industrial standards. On top of that, others will be completely eliminated by year-end.

As guided, we will continue upgrading the plant to increase its annual biomethane output up to 50-gigawatt hour, and we'll launch our first biofertilizer production unit in 2026. These initiatives should be fully completed by 2027. Turning the page to Slide 14. We would like to update you on our solid and tangible biomethane pipeline. We have 38 projects with locations secured and feasibility studies completed.

18 of these projects are already at a late permitting phase and its biomass is secured. The projects will carry a ROCE of over 12%, and we aim to deliver over 1 terawatt hour by 2030. This should yield over EUR 60 million in incremental EBITDA. Nobody in Spain has ENCE experience in biomass procurement, small rural projects development and digestion know-how. Continuing with our Renewable Industrial Heating Solutions in Page 15. We will reach 2-terawatt hour of thermal energy with EUR 40 million incremental EBITDA contribution also by 2030. To achieve this target, we already have 1 plant in operation since 2024, 1 contract in its start-up phase and 3 projects under construction.

On top of that, we are currently negotiating 10 projects, and we expect to close at least one of them during the fourth quarter, having another project ready to build before year-end. Continuing with Renewable Industrial Heating business, I would like to explain to you its key achievements of the quarter on Slide 16. On top of the ongoing plant construction at Mahou facilities, we have started the construction of 2 plants for a well-known French Dairy group located in Andalucia and Castilla La Mancha.

These 15-year term projects will start its operations during the second quarter of 2026 and will have an estimated combined production of approximately 85-gigawatt hour. In addition, we have gained another O&M contract for 8-megawatt ready-to-operate plant for a Food and Beverage company located in España Rural that is in ramp-up phase and should be fully operational within fourth quarter 2025. Alfredo?

Thank you, Ignacio. Let me start with our Special Pulp Centered business in Slide 18. In the third quarter, pulp sales rose up to 263,000 tonnes, plus 8% quarter-on-quarter, while the average net selling price decreased by around EUR 90 per tonne down to EUR 452. Crucially, cash costs declined by EUR 29 per tonne down to EUR 459, driven primarily by lower wood costs and operational leverage. This sequential step-down supports our second half cash cost guidance of EUR 466 per tonne.

Pulp EBITDA accounted for EUR 4 million in Q3. The third quarter includes approximately EUR 8 million of insurance proceeds related to the Navia turbine fully cashed in during the period, but no additional revenues from the Energy Savings Certificates. Turning now to our Renewables Business Backboned platform in Slide 19.

Biomass to electricity volumes increased up to 315 gigawatts hour in Q3, plus 4% quarter-on-quarter with lower operating costs per megawatt hour following several maintenance interventions in the first half, operational leverage and lower biomass input costs. Revenues per megawatt hour were 2% higher versus Q2, resulting in an EBITDA of EUR 9 million in our biomass to electricity business vertical, offset by around EUR 1 million from the rest of the business verticals currently in ramp-up process.

The final platform EBITDA was EUR 8 million versus EUR 3 million from the previous quarter. Let me now guide you through the consolidated P&L figures on Slide 20. Group revenues declined by EUR 11 million compared to the previous quarter. The growth in renewable energy business has partially offset a EUR 15 million decline in the Pulp business derived from the depressed pricing environment.

EBITDA declined to EUR 13 million in 2Q despite the improvement in operating costs in both businesses, ending in a bottom-line showing EUR 15 million losses. In this context, our main focus is to align operational expenditure, investment cadence and cost discipline to capitalize on cycle turn from day 1. Turning to Slide 21; free cash flow before growth CapEx was EUR 12 million in Q3 despite low pulp prices.

Working capital contributed with a positive EUR 18 million, fully reversing the first half build. Growth and efficiency CapEx totaled EUR 17 million in the quarter, including the fluff project, Navia decarbonization and cost reduction initiatives, renewable packaging development and the ramp-up of our biomethane and renewable thermal energy projects. All in all, free cash flow for the period was negative by EUR 8 million. Slide 22 highlights our solid financial position.

Consolidated net debt stood at EUR 367 million, supported by a strong EUR 265 million cash position. Importantly, both our Pulp and Renewable business have fully available revolving credit facilities for a total amount of EUR 150 million, and our Pulp segment is covenant free. This high liquidity position ensures the strengthening of the company along the different cycles.

As you've heard me say before, maturities are well distributed across several years, and we benefit from a flexible capital structure that provide us with optionality and growth room. Finally, on Slide 23, let me go through ENCE's sustainability performance indicators, a core pillar of our profitable long-term strategy. We are rated Platinum top 1% by Ecovadis, confirming our position at the forefront of industrial sustainability.

Key milestones include our accident rates remain 4x lower than the industry average, and we completed the Pontevedra shutdown with no severe incidents. Navia recorded 0 odor minutes during the 3 quarters '25. 100% of our sites are zero waste certified, 2 new sustainability certifications for our fluff pulp products.

Our forestry operations include 4,200 hectares with CO2 sinking rights officially registered in an OECC voluntary as well as improved plant material adapted to climate change. 100% sites SURE System certified, confirming the sustainable origin of our biomass. Promotion of professional development in rural communities with 750 technical advice sessions with forestry owners and forestry machine training programs.

Let me please now return the floor to our Executive Chairman for his closing remarks.

Thanks, Alfredo. Let me please conclude the presentation with some closing remarks. Firstly, price increases announcements of gross $130 per tonne in Europe should consolidate on the coming weeks on the back of U.S. tariff redemption for pulp imports, good demand, wide gap with softwood and significant annual maintenance shutdowns announced for the fourth quarter.

Secondly, we are firmly committed to cash cost reduction that should target EUR 466 per tonne for the second half of the year. Thirdly, our ENCE Special Pulp Centered business should increase the average across-the-cycle EBITDA by 50% through top line and cash cost initiatives by 2028.

On the top line front, I would like to highlight our product mix upgrade towards higher-margin special pulp products that substitute more expensive BSKP, reaching 62% of total sales by 2028 that should contribute with an incremental EBITDA for approximately EUR 22 million. From the cash cost side, the levers are the ongoing competitiveness plant, EUR 22 million; Navia's decarbonization and cost reduction projects, EUR 8 million as well as Pontevedra Avanza, EUR 20 million.

On the growth side, the As Pontes project got its Environmental Integral License in third quarter 2025, and we foresee the start of renewable packaging solutions plant in '26. Both projects will further increase our results. Fourthly and finally, we are building the largest biomass backboned renewable energy platform in Iberia, including biomass to regulated electricity, renewable industrial heating, biomethane and renewable fuels.

And it is on track to more than triple its EBITDA by 2030. The execution of all these projects will be adapted and aligned to our cash flow generation to maintain a prudent across-the-cycle leverage and an attractive shareholders' remuneration. In Pulp, no one of all these projects require more wood, a [ scarce ] resource worldwide.

Thank you for your attention. We will be pleased to hear any questions you may have.

[Operator Instructions] And your first question comes from the line of Alvaro Lenze.

The first one is on the expected cash cost. You're guiding for EUR 466 for the second half. If my math is not wrong, that implies an increase from EUR 459 in Q3 to around EUR 473 in Q4. I just wanted to understand why do you expect cash cost to go up?

Yes. In winter, normally, collection of wood is more expensive. It's more difficult due to weather conditions. And these bad weather conditions at the North Atlantic also normally make a pressure on prices of the freight. And as we are prudent, that's why we expect a slight increase -- a slight temporary increase due to weather conditions.

Okay. My second question is, if you could please try to clarify a little bit of what's going on with the net prices and the discount because you mentioned that the weight of differentiated products, which have a premium keeps going up, but the discount is also going up quite significantly this quarter is about 49%.

I understand that the discounts tend to go up in the industry, but I do not think that competitors are having this discount, let alone if we could make the numbers of what the actual discount is in the normal BHKP product that you're selling, it will be probably above 50%. So it's like we should expect the discount to narrow at some point or to stabilize, thanks to the change in mix, just to understand the dynamics there.

Yes. Third quarter has been the worst quarter on the year with the lowest prices. And when the fixed price is at [ 1,000 ] and you are at the lowest moment, it's absolutely impossible to sell the full volume of standard BHKP at this price. Then you have to accept spot orders who have a huge discount in Europe and in the Mediterranean.

What I recommend is that you wait for other competitors to publish their results and you will see what is their net price and what is our net price. And that's where you are going to see the big interest of these special products.

If we take the average price of this 61% of standard BHKP we have sold on the 9 first months and you compare with the average price of the special products we have sold on these first 9 months, 29%, corrected by the extra costs they have, we have this EUR 33 per tonne of more margin, and that is like that. The problem is that the standard products on the third quarter have been sold at very low prices due to a very tough market.

Okay. And my last question would be on the cost saving plan. I think it's very welcome. And I just wanted to know first, why now what has changed? Why do you see -- why not do this a year ago or something because you have been struggling with high cash costs for quite some time now.

And then it also strikes me as very cheap 1-year payback is very good payback for a restructuring plan. So I wanted to know what the mix is from the savings? How much of the savings are coming from layoffs? And why is the plan so cheap?

Yes. I have to start apologizing, but I cannot now disclose a lot of details because we are just on the middle of the negotiation with the unions, and I don't want to disclose my cards. Why now? Well, it has been the fourth quarter, the fourth quarter, one after the other, where prices have been declining and where EBITDA has been declining.

According to the Spanish law, you can launch a restructuring plan by economical causes while the more clear, only if you have 3 quarters of turnover and results going down. Then we prepare everything during the second quarter, and we have launched the negotiations during the third quarter. And we are now on the middle of the negotiations. As you know, the 2 mills where we produce pulp in Navia and Pontevedra are very heavily unionized.

It's very difficult to reduce employees there. It's almost impossible. We've been -- it has not been possible. But now we have a strong opportunity because law wise, now our position is very solid. And that is why they have accepted negotiations and we are negotiating. We are negotiating at Navia, and we are going to start negotiations next week with Pontevedra and with the unions representing the forest activities and the administrative activities.

Sorry. Out of the total layoffs we are planning, 10% can go out immediately, but the balance, we need to invest. We are going to rationalize the control rooms we have in our pulp mills. We have to invest in loops to do that possible. We are putting automation and artificial vision in quality control, and we have several other plans. That's why we have small investments to do all that, but it's small investments.

And that's the way we can reduce the number of employees we have. That's going to take 2 years because we need some investments. And we have ways to do that with a good agreement with the unions, and that's what we are working on, okay? On top of that, because the EUR 20 million -- EUR 22 per tonne saving is not because of layoffs. On top of that, we started now one year to do strong reengineering of all the activities subcontracted at ENCE.

It's all the movements of biomass and pulp inside the mills. It's all the industrial training. It's all the movement and sales of byproducts. It's all the medical service. And well, we finished by summer all the reengineering has been very tough, and we had -- we did that very carefully in order to have good results. And now we are starting to see the first savings, and these savings will continue over the next 12 months.

[Operator Instructions] And I'm showing no further questions at this time. I would like to turn it back to Mr. Ignacio Colmenares for closing remarks.

Well, I thank you very much for attending our call. I hope to give you more details about these strong plans. We are now working on it and to give you good results about the cash cost and that you will able to see the prices going up at the next call at the beginning of next year. Thank you very much.

Thank you.

Thank you. And ladies and gentlemen, this now concludes our presentation. Thank you all for attending. You may now disconnect.