ENCE Energía y Celulosa, S.A. (ENC) Q4 FY2025 Earnings Call Transcript & Summary

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.