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Ence Energia y Celulosa SA
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Good afternoon, ladies gentlemen. Welcome to the Ence Fourth Quarter 2021 Results Presentation. I now hand over to Mr. Ignacio Colmenares, Executive Chairman and Alfredo Avello, CFO. Gentlemen, please go ahead.
Good afternoon, ladies and gentlemen. Thank you for joining Ence's fourth quarter 2021 results conference call. Our CFO, Alfredo Avello and our Head of IR, Alberto Valdés, are also connected. After the presentation, we will be pleased to answer any questions you may have.
Let's start with slide 3, where we summarize the business highlights in 2021 a year of strong cash flow generation and net debt reduction. Operating cash flow generation before hedges increased to 302 million in 2021. Free cash flow generation and net debt reduction amounted to €76 million even after negative settlements from one of hedges of €106 million, a €21 million reduction in the use of factoring lines and €56 million carry-over CapEx payments from previous years.
No pulp or energy prices hedges have been contracted for 2022. Strong pulp prices have more than offset the temporary inflation in raw materials and logistics boosting the operating margin of the pulp business. Moreover, main pulp producers have announced pulp price increases of up to $1,200 per ton as per March 2022. Industry specialists are further improving the price forecast.
In July and October 2021, the National Court issued 3 rulings that annul the extension of our Pontevedra concession. As a result we recognized in first half 2021 asset impairment charges and provisions for a net amount of €200 million. I'm glad to announce that the Supreme Court has accepted our appeal against the National Court rulings. This decision allow us to be more optimistic, although we must prudently wait for the final resolution which may take several months. Excluding the accounting impact of those rulings annual net income amounted to €10 million after the impact of one-off hedges.
We closed the year with a very strong balance sheet with just €102 million net debt and close to €400 million cash in balance. On December 2021, we agreed to rotate 5 PV assets with a combined capacity of 373 megawatt for an amount of up to €62 million, which we expect to cash in between the fourth quarter of 2022 and the first quarter of 2024.
It is also very important to remember that sustainability has ranked Ence as the leader in sustainability in the global pulp industry. We have approved a new dividend policy based on free cash flow generation and prudent leverage ratios for business. Finally, I am pleased to announce that we will hold the Capital Markets Day on March 17 to share with you our plans for the coming years.
Let's now move to slide 4, which shows our consolidated cash flow statement for 2021. As you can see, EBITDA before hedges reached €213 million in 2021 as a result of strong pulp and energy prices. On top of that, the regulatory collar, which is a difference between the energy market price and its regulated price, which we collect, but it is not included in EBITDA, implied an extra cash inflow of €89 million, lifting the consolidating operating cash flow to over €300 million. As a result, consolidated free cash flow reached €76 million in 2021 even after negative sentiments from one-off hedges of €106 million, a €21 million reduction in the use of factoring lines and a €56 million carryover CapEx payment from previous years.
As you can see in the following slide, number 5, there are no pulp or electricity price hedges contracted for 2022. Those hedges were closed exceptionally in 2020 during the worst month of the pandemic, prior to the sale of a minority stake in our Renewable Energy business. They were made to secure a minimum cash flow generation at a time when pulp prices were at record lows. When the duration of the pandemic was unknown and when we had significant carryover CapEx payments committed for 2021, those hedges had a negative impact of €106 million in 2021. The good news is that they ended at year-end. Since then, we are benefiting fully from strong pulp and energy prices.
Let's move now to slide 6, which shows a strong pulp price recovery in 2022. Gross fixed prices in Europe have been trading at $1,140 per tonne since July 2021. Main pulp producers have announced two price hikes in Europe this year to $1,170 for February and $1,200 for March. Industry specialists are forecasting average prices of over $1,100 per tonne in 2022.
As you can see in the following slide, number 7, strong pulp prices are more than offsetting the temporary inflation in raw materials and logistics, boosting the operating margin of the pulp business by up to €155 per tonne in 2021 and by up to €207 per tonne in the fourth quarter.
Higher cash cost in the fourth quarter was mainly due to the non-recurrent wood imports and the rise in logistic cost. We were bringing wood from our plantations in Southern Spain, and we have imported 90,000 tonnes of wood to mitigate the short-term reduction in eucalyptus harvesting capacity, due to the strong demand for
[ph]
Pinewood (00:07:15).
In the first quarter 2022, you should expect higher cash cost than in the fourth quarter as we undertook annual maintenance shutdowns at both bio-mills and chemical and logistic prices have continued to soar.
Let's look now at our pulp sales on slide 8. Our pulp sales amounted to almost 1 million tonnes in 2021. Over 90% of these sales went to the European market where our customers benefit from Ence's unique wide portfolio of sustainable products and shorter delivery times. Our differentiated products accounted for 16% of our pulp sales compared to the 9% in the previous year.
These products are more sustainable, and they are well adapted to replace plastic and softwood pulp. They also give higher margins. Turning to slide number 9, let me now summarize the current status of our Pontevedra concession. In July and October 2021, the National Court issued 3 rulings that annul the extension of our Pontevedra concession. As you remember, we book in first half 2021 asset impairment charges and provisions for a net amount of €200 million, including a €48 million provision to cover the estimated cost of the potential dismantling of the bio-mill and the termination of outstanding contracts.
We have appealed against these rulings to the Supreme Court, which as you know has just accepted one of them. This decision allowed us to be optimistic, although we must prudently wait for the final resolution which may take several months I will now invite Alfredo to review the financial figures in more detail.
Thank you, Ignacio. As you can see in the following slide, number 10, Ence shows very strong underlying operating results in 2021. Our pulp business EBITDA before hedging impacts improved by 6 times year-on-year up to €142 million driven by the strong recovery in pulp prices. Pulp hedges contracted back in 2020 for last year in a very uncertain environment caused by the pandemic had a negative impact of €53 million in this business.
On the other hand, regarding cash on top of the EBITDA figure and not included in it, we had €24 million inflow coming from the regulatory collar, which is fully free to be used without any restriction. Focusing now in our renewable energy business, utility before hedges also increased by 54% year-on-year on a like-for-like basis excluding the Puertollano CSP plant sold in December 2020.
The fixed price electricity contract saying again, back in 2020 had a negative impact of €153 million in this business. On the other hand, as in the pulp business on top of the EBITDA and not included in it, we had a €65 million cash inflow coming from the regulatory collar of this business. Therefore, the total amount of cash inflows coming from the regulatory collar not seen in our EBITDA figure, but that implies an effective cash inflow worth €89 million for 2021. With such a strong operating results, our consolidated net income including the €106 million negative settlements from the one-off hedges was €10 million prior to registering the €200 million related to the Pontevedra provision, finally ending in a net income of €180 – minus €180 million for the year.
As you can see in the following slide number 11, we close 2021 with a very strong financial position. Net debt was reduced down to €102 million, and we finished the year with €387 million cash in balance. Our pulp business closed 2021 with a net cash position of €20 million, including €16 million related to the lease contracts, and a cash balance of €325 million. During 2021 we adjusted down our pulp business balance sheet prepaying €146 million of various of our facilities.
In addition, we successfully refinanced our revolving credit facility, increasing its availability up to €130 million. Also, we extended the maturity of another €80 million of bilateral loans until 2026. All of it, of course, maintaining our non-covenant policy. On the other hand, net debt in the renewable energy business amounted to €121 million at year-end with long term maturities and a cash imbalance of €72 million.
I will now return the lead of this presentation back to our chairman for the final slides.
Thank you, Alfredo. Moving now to slide number 12. I would like to mention the highlights of our sustainability performance. As you know, I believe that company care for the environment, for the staff, for the communities, and with a strong corporate governance are more competitive in the long run. Ence is already at the forefront in sustainable forestry, in the circular economy, in social commitment, in gender equality, and in corporate governance. Our best practices have been recognized by independent agencies such as MSCI, FTSE4Good, or Sustainalytics, which in its latest study ranks Ence as the most sustainable player in the global pulp market.
I would like to highlight the following achievements in 2021. Firstly, we have been pioneers in Europe in certifying the sustainability of the biomass we use as a fuel, thus ensuring our compliance with the sustainability criteria set out in the RED II Renewable Directive. All of our plants have already been certified. Secondly, 75% of our plants have been certified zero waste, highlighting Ence's important contribution to the circular economy. Thirdly, we have continued to improve all our safety indicators, which are already 10 times better than the average for the industry in Spain. Fourthly, we have continued to reduce the odor of both
[indiscernible]
(00:14:39). And finally, as regards our board of directors, we have increased the percentage of female representation which is now up to almost 40%, and we have increased also the percentage of independent directors.
Turning to slide number 13, let me explain our new dividend policy, which is better adopted to Ence's cash generation profile. Dividend payment will be based on the cash available for distribution, ensuring a prudent leverage ratio of 2.5 times in the pulp business and 5 times in the energy business, assuming average cycle prices and considering CapEx plans and commitments. Ence's annual dividend will be distributed in three payments. The first interim dividend to be agreed at the end of the first semester; the second interim dividend to be agreed at the end of the third quarter; and then the final dividend approved by the AGM. Exceptionally, this year, we will announce the payment of our first interim dividend in April, corresponding to the first quarter 2022 financial results.
Finally, I am pleased to announce that we will hold the Capital Markets Day on March 17 to share with you our plans for the coming years.
To conclude this presentation, I would like to emphasize the following key messages. 2021 was a year of strong free cash flow generation and net debt reduction, despite one-off hedges. No pulp or energy prices – hedges have been contracted for 2022. We close 2021 with a very strong balance sheet with just €120 million net debt in our renewable energy business and €20 million net cash position in our pulp business. We expect free cash flow generation in 2022 to be much stronger, benefiting fully from higher pulp and electricity prices. We had approved a new dividend policy based on cash flow generation and prudent leverage ratios. We announced the payment of a first interim dividend in April. Regarding Pontevedra concession, we are optimistic since the Supreme Court has accepted our appeal. Thank you. We would be pleased to hear any questions you may have.
Ladies and gentlemen, the Q&A session starts now.
[Operator Instructions]
The first question comes from Jaime Escribano from Banco Santander. Please go ahead.
Hello. Good afternoon. So, one question from my side. In the Capital Markets Day, what should we expect? You can anticipate at least the main topics, are you going to announce new investments or the guidance for 2022? Thank you very much.
Thank you, Jaime. On the Capital Markets Day, we will explain you our new strategic plan based on growing on the activities we can grow despite any result on the Pontevedra problem, and we will give you any figures you may need to evaluate the company. Thank you. And we will share with you what we expect from the pulp business on the future and from the energy business on the future.
Okay. Thank you.
Thank you.
Thank you. The next question comes from Edward Bottomley from Berenberg. Please go ahead.
Good afternoon, Ignacio and Alfredo. Thanks for taking my questions. My first question would be pulp and energy prices are currently very elevated, and you mentioned in the presentation, the new estimates for 2022 is $1,100 per tonne over the course of the year. But internally, how do you see this, and how do you expect energy prices to average over the course of the year as well?
Yeah, thank you, Edward. We – let's say today, it's difficult to do a prediction for the full year because many things are happening in the world. Then regarding pulp, as you know, there is an announcement for March of $1,200 that the customers are accepting it without any problem. Today with information we have, and the vision we have for the market, and the logistic constraints and the huge increase in raw materials, well, we see further increases coming after.
Regarding the offer, the supply coming to the market, well, it's quite limited. You know that Brazil must be selling to their own mills in Asia because we almost don't see them on the market. We expect if there is no any negative announcement, we expect MAPA project to start on the second half of the year and we don't expect year and we don't expect pulp from them in Europe or in Asia during this year with the information we have today. And then the UPM project in Uruguay has been delayed. That would mean that, well, on a strong market with terrible constraints in logistics, we see the offer quite limited.
On top of that, in this first half of the year, many shutdowns, annual shutdowns occurred on the market. And then, well, today our customers are desperate to receive a pulp. That is happening in Europe. That is happening in North Africa, Middle East, Americas, and Asia. And at the same time, in China, as you know, the customer reduced a lot the purchase of pulp on the second half of last year. And today there are very, very limited stocks, and then they are buying, and they are obliged to accept any price. Then we see strong prices for this year.
Regarding the energy, well, it's a – it's very difficult because every day the average expected price for the year, for 2022, the price we already had plus the forward prices for the rest of the year are moving €30 to €40 per megawatt hour every day according to what happens on the gas and to what happens in Ukraine. Then today, our best estimate is that the prices of the energy will be on a range between the €150 and €200 per megawatt hour. Despite today, they are over €200. Thank you, Edward.
Okay. Thank you. So, I guess, based on your answers to that. So, assuming pulp prices of $1,100 per tonne and energy prices of, let's say, €200 per megawatt hour over the course of the year. On my estimate, that means you're likely to generate €340 million in free cash flow this year. Does that figure seem reasonable to you given those two price assumptions? And if so, why do you think shares are trading on a 48% free cash flow yield for 2022?
Yeah, well, in pulp, as you know, we don't give free cash flow guidance in pulp. You have to assume the price you want, and it's a quite easy exercise because our cash cost, our cash cost for the year is going to be on the range of €430. We estimate with these huge raw materials increase in energy prices and so on.
And to transform these EBITDA in free cash flow, well, you have to increase by the collar on the pulp business and the collar on the pulp business range between a minimum of €26 million at the megawatt price of €100 on the average on the year, and €52 million if the price of the energy is at €200 for the year. And regarding the CapEx, well, we have for 2022 carryover payments from last year of €45 million in bulk, €15 million in energy.
We have a regular maintenance and forestry of €20 million in pulp and €5 million in energy, then we have total CapEx payments for this year of €85 million. I think that with that you only have to estimate the price of the pulp where you feel comfortable and you can perfectly calculate the free cash flow for the pulp.
And regarding the energy, well, let's say that a minimum price of €100 per megawatt hour, well, we will have an EBITDA just below €40 million. And on top of that, we will make a cash inflow of €81 million for the collar, which means a free cash flow of almost €120 million. If you go to a price of the energy, an average price for the year €160, the EBITDA will be €95 million. The collar will be €113, which means an operating cash flow of €208 million.
And with today's average price of the energy for the year, the best estimate of today for the market is €200. With €200, well, it's incredible. We have €134 million EBIDTA, €133 million collar, and operating cash flow of €267 million.
Thank you.
Well, I just – you need to have figures, we estimate we are going to produce 1.6 gigawatt hour on the year in energy. And we are going to produce slightly above 1 million tonnes in pulp.
Okay. Thank you very much for the detailed breakdown. I think the very last question for me, so under the new dividend policy, assuming kind of average EBITDA numbers and your current net debt levels, I estimate you could payout to shareholders €400 million of cash
In terms of the special dividend you're talking about announcing in April, should we be expecting then to be anywhere near this kind of magnitude, should we think that probably more likely to be around €50 million to €100 million. Are you giving any expectation around that?
No, no, no. It's an important factor that we should have pointed out. According to the Spanish regulation now in April, we can only pay the net result of the first quarter. You cannot pay more than your net results, then it would mean that this dividend in April would be – could be at a maximum of the net result of the first quarter. And when you were talking about €400 million, well, it is important to say that in this new dividend policy, it is much more linked to the free cash flow generation.
But we should always take into account a prudent leverage, as we have said 2.5 times EBITDA in pulp, 5 times in energy, and that is very important, the commitments and investments we are going to do on the following years. And why do we have so huge cash position on the company, which so low that well, because although today we are optimistic and we think we may win on the Pontevedra case, well, we also may lose. And then in order to recover these EBITDA we are making in Pontevedra maybe we invest in other activities or in another pulp OE
[indiscernible]
(00:28:32) or that is what we are going to explain new on the Capital Markets Day.
But don't think as we are going to distribute €400 million. No, we are a prudent company and we are not going to do such. Thank you
Okay. Thank you very much for your time.
Thank you.
[Operator Instructions]
Thank you. The next question comes from Jaime Escribano from Banco Santander. Please go ahead.
Hi. Good afternoon again. I just wanted to ask you about the Pontevedra case, what would be the next steps and how long do you think it could take the Supreme Court to resolve? Yeah, that would be
[indiscernible]
(00:29:31).
Thank you for your question, Jaime. Well, yesterday, we receive the information from the Supreme Court that they have accepted the appeal on the – on one of the three cases. Normally, in four to six weeks, we should receive the other two informations. Normally, because the three sentences of July last year are the same, normally, the Supreme Court will say the same. Then what we assume is that by mid-April, the three recourses will be accepted.
And then if we copy what happened in this very important sentence of
[indiscernible]
(00:30:16) concession who were dictated in December last year, well, it will take between six and nine months to the Supreme Court to finally decide whether the annulment of the Pontevedra concession is valid or that we'll cancel it.
Okay. And, I mean, as a follow-up question, can you tell us a little bit the similarities of this case and why do you think it can generate – I don't know if the word is jurisprudence, I don't know, jurisprudence for your case. Thank you.
Yeah. Yeah. In order to understand that, I should explain that deeply, the
[indiscernible]
(00:31:06) case and Pontevedra case were the same, but the opposite like on a mirror. A family asked for the extension of the concession, according to the law of 2013. We asked the extension of Pontevedra according to the law of 2013. The government gave us the concession. These gentlemen, they asked for the concession later than us. The government has changed, and the new government denied the concession. These gentlemen appealed to the Audiencia Nacional and the Audiencia Nacional gave them the concession. You know that the City of Pontevedra and others appeal our concession to the Audiencia Nacional and we lost the concession.
Then coming back to
[indiscernible]
(00:32:05) as they win the concession in the Audiencia Nacional it was the government who appealed to the Supreme Court. The Supreme Court accepted the case and has said that this concession is valid. Why it is valid and why it is very similar to our case, because what our lawyers were saying, their lawyers were saying, and what the Supreme Court has said is that for new concessions, if you ask now a new concession, today you have to justify that you cannot do your activity elsewhere. But for the old concessions, the concessions before the law of 1988, you don't need to justify that you cannot do what you have to do in the coastline. And why our lawyers are saying that and why the Supreme Court is saying the same? Because if you take the law and you take the requirement of the law, it is what it says. On new concessions you have to justify, in old concessions you don't have to justify. That's one thing.
And the other thing is very important is that the lawyers have said to the Supreme Court that one of the reasons to accept the case should be that the land where our mill is, was coastal land 80 years ago. But since the administration, the public administration – how do you say
[indiscernible]
(00:34:06)?
Fill.
Fill all these water area with land on the 1950s, build a road, build a railway, build highway separating this land from the sea. The Supreme Court was saying yesterday that they want to study if the coastal law is affecting or not affecting our activity. Thank you, Jamie.
[indiscernible]
(00:34:33).
Sorry, Jamie. Just to add. And it is – what's very important is that yesterday the Supreme Court in his answer was saying that they want to examine all of those things because 5,000 persons are working directly or indirectly in this mill.
And just as a follow-up question, the
[indiscernible]
(00:35:00) case, what is the activity they do? Is it an industrial activity or what is the similarity to your case?
Yes. No, it is a house. But on the law, the process to obtain a concession is the same for a swimming pool, for a house, for an industry or for a supermarket. The only thing change is the – those platforms, the terms of the concession. They are longer for house and they are shorter for industry. But the way of obtaining the concession is the same for any kind of utilization of the land.
Okay. Thank you. Very clear.
Thank you.
Thank you. The next question comes from Manuel Lorente from Mirabaud. Please go ahead.
Hi, good afternoon. I perfectly understand that at this stage you want to be prudent regarding free cash flow generation for the full year, given the uncertainty that is surrounding us and in the context that the number looks pretty heavy, so to speak. If we just want to concentrate in the first quarter, I believe that you have plenty of visibility on the first quarter, because of the
[indiscernible]
(00:36:34) at Europe you're pricing on the pulp business and the daily evolution on the pulp price, right? And due to the fact that the best indication
[indiscernible]
(00:36:50) was this year is what we have just reported on the fourth quarter last year, where you have a cheaper free cash flow of €77 million with an EBITDA – reported EBITDA of €21 million, assuming that EBITDA for this first quarter may be slightly below or below the €79 million ex-that hedged, that as we believe on the range of €50 million to €60 million, is that fair assumption free cash flow generation above €100 million for the first quarter. That should be a good proxy for the different moving parts of your earnings?
Well, we don't give free cash flow guidance, but all the assumptions you have made are correct.
Okay. Okay. So – and just a follow-up, assuming these, let's say, extremely positive tailwinds from the regulatory callout, what are your expectations going forward on these mechanisms? We have
[indiscernible]
(00:38:29) on a daily basis that the government is talking about the different
[indiscernible]
(00:38:24) source to see how the situation will evolve. Today, we were – refrain that there might be an issue with the gas price not
[indiscernible]
(00:38:37) take anything into consideration for the calculation of the tool. Anyway, we are a little bit lost in this regulation issue, and anything that you can share with us regarding this topic will be very appreciated?
Yeah, Manuel, we have very low visibility, because some conversations were between the ministry and the renewables associations three weeks ago, and that was on the press, and you can – you could read how are the government wanted to reduce by €2 billion the price of the energy only in the wind, solar, biomass, cogeneration and hydro. Well, but the government want to have a deal, they don't want to have problems with the renewables, because we need to grow in renewables and they want a stable regime. Well – and the negotiations were going I would say pretty well because at the end while we were close to an agreement between €350 million and €400 million for the whole sector, then for us it was very limited.
After this war between Russia and Ukraine, well the negotiations have been stopped, and I think that we have to look that more with an European perspective than a Spanish perspective, because everybody is suffering today the huge prices of the gas, then today I have very limited vision of what can happen.
I see. And just continue with the free cash flow story for this year, as you were perfectly saying, and I perfectly understand it is very difficult to put a number, right, but looks like there is a very positive momentum on free cash flow from the company this year
[indiscernible]
(00:40:53) the backdrop that we are seeing at this stage. So this very positive – was expected, very positive free cash flow generation might be a trigger for any, let's say, more proactive resolution on Pontevedra in the sense that speed up the investment in order to move production or move facilities
[indiscernible]
(00:41:29) look like you are having extra money in the pocket this year or were you expecting probably several quarters ago?
No, no, I would say that regarding the pulp business and what happened with Pontevedra where we have to wait, as I was saying before, till probably the end of the year in order to know what happens at the end. Well, that our base case is to defend Pontevedra continuity and where we have ideas to diversify and expand Navia. We'll explain that view on the Capital Markets Day. And we also want as you know to grow in energy.
But to-date I don't see a huge investment in pulp, because what we think is that we will continue defending Pontevedra.
Okay. And just my final question, I don't know if I have hear it properly, but €430 million cash cost is the best guess for this year? And if that is correct, what is phasing between the different quarter or semesters?
Yeah. Today, again, if the energy prices who are pushing up the cost of chemicals and the cost of freight rates stay where they are, well, I think that we are going to be maximum €435 million. We see a very high cash cost on the first quarter. On the first quarter, we see even €480 million, €485 million. It is due that we only – on top of the soaring prices of energy and chemicals and freight rates, we have the effect of the shutdowns of both mills and this effect is roughly €60 per tonne. And then, while we expect on the second, third and fourth quarter to be around €230 million, yeah that's what we expect.
Thank you.
With the prices of the chemicals and the energy and the fuel at the level where they are today. And as it is something who is not only happening to us, well, you have to take into account that €50 of cost increase if you pass this €50 to dollar and you put that on a gross price or net price is roughly $90 would mean that out of the $1,200 of today there are $90 justified by the increase of the costs. That is why we think that the price should continue going up to compensate this terrible cost increase we are suffering not Ence, but all the industry.
Thank you.
Thank you.
[Operator Instructions]
The next question comes from João Pinto from JB Capital. Please go ahead.
Hi. Good morning, everyone. Just a follow-up on Pontevedra. If the Coastal Law finally does not apply, what will be the limit for the compensation lifetime?
Well, the Coastal Law is more limited than the ranking of any land who belongs to the state. Then it will be the minimum of 2,073 as a minimum. Yeah.
Thank you.
Thank you. The next question comes from Luis de Toledo from ODDO BHF. Please go ahead.
Hey. Good afternoon. My question relates to the forestry. This rising cost you referred to the increase cost in filings because of pine versus eucalyptus debate, and you're referring to those initiatives there. I would like to know, I mean, if you think this is something sustainable as construction demand recovers or it's something specific to your region, to your company? Or I mean if you believe that it's something that should be sustainable or we should only expect it in the first half or maybe only this year? Thank you.
Thank you. Yeah. The price of wood panels doubled in 2021, not only Spain, worldwide. And that's why the demand of pine has increased a lot last year, and this is still very, very strong. The harvesting capacity as many, many activities in the agriculture are limited by the human resources limitation and then well as they are paying anything for the pine, well they are harvesting pines instead of eucalyptus, and we are a bit on a shortage of eucalyptus.
Well, despite I recognize a terrible cash cost in the first quarter – on the first quarter, well, we see our cost of wood is going to be lower than on the fourth quarter last year, then what we are doing is starting to work. We decided on the fourth quarter last year that it was better despite the huge prices of the pulp to lose some tonnes, and we lost almost 15,000 tonnes on the fourth quarter, in order to dump hot the eucalyptus market, because once the prices go up, it will be very difficult to reduce them when the demand of the pine will be reduced. Then we decided to lose a bit of volume and to accept not working at 100% capacity on the fourth quarter, that was not the case on the first case, we have plenty of stocks now because we had the annual shutdowns. We imported last year. Well, we may import this year. We will see, we have the opportunity to import, we will decide that later on the year. We were moving wood from
[indiscernible]
(00:48:25) to Galicia which is extremely expensive. We may continue doing such. And we are increasing the capacity of harvesting, we invest on the second half of last year and beginning of this year all morning to buy harvesting machines and to train people and to have more teams harvesting for us.
And that's an increase on harvesting just above 100,000 tonnes this year and 2 times more on annual basis from January next year. And we will continue doing those things. Then we are doing things to limit the damages. We don't want to increase a lot of the price of the eucalyptus because it would be difficult to decrease later and then the price of eucalyptus has increased very slightly.
But we see that with all these scarcity of raw materials and people living more at home, travelling less, they will continue expanding money – spending money in their house, in their kitchens, changing the furniture, and then we expect the price of the panel to continue very high, and the price of the pine high, then we see that all these period with high prices of the wood both pine and eucalyptus will continue the full year. That's our expectation.
Thank you very much.
Ladies and gentlemen, there are no further questions in the conference call. I give back the floor to Mr. Ignacio Colmenares and Mr. Alfredo Avello. Thank you.
Thank you very much. Ladies and gentlemen, I look forward to meeting you on March 17 in our Capital Markets Day. Thank you.
Thank you.