Edp S.a. · EURONEXT:EDP

Edp — Energias de Portugal — 9M16 Earnings Presentation

29 slides from Edp's earnings presentation, Nov 4, 2016

  1. Slide 1: Results Presentation 9M16

    <5 Results Presentation 9M16 Lisbon, November 4th, 2016

  2. Slide 2: Recurring EBITDA +10% to €2,832m

    Recurring EBITDA +10% to €2,832m including 2% negative impact from ForEx Recurring net profit +17% to €661m Net profit -16% to €615m (non recurring gain on Pecém in 9M15) €2.0bn Tariff Deficit Sales in 9M16 Regulatory receivables down 56% in 9M16 to €1.1bn OPEX/Gross profit improves by 1pp, to 26% i

  3. Slide 3: Strong improvement on recurring EBITDA in all major business areas

    Weight on Recurring Recurring EBITDA EBITDA YoY change  Favourable hydro conditions in 9M16 vs. 9M15 and successful energy management strategy 31% Generation +17%  Number of electricity & gas contracts : +10% YoY (focus on retail/SMEs segments) & Supply  Generation capacity: +1% YoY reflecting +1

  4. Slide 4: Opex IV efficiency programme fully on track

    Weight on Opex Business area Indicator YoY Change Main drivers  9M16 inflation: Portugal +0.5%; Spain: -0.6% 58% Iberia Total Opex +1%  Installed capacity +1%; Number of customers +2%  Natural headcount reduction (-1% YoY)  Total Opex: +8% (no material forex impact) 25% EDPR Core Opex/MW: -5% 

  5. Slide 5: Stable regulated revenues; sustained reduction of regulatory receivables

    Regulated Revenues 2017E (1) Regulatory Receivables in the Portuguese electricity system (€ million) (€bn) 2016E 2017E ∆ Abs. ∆% -0.5 5.2 5.0 4.5 Owned Distribution Activity 1,182 1,199 +17 +1% to other 3.0 creditors 4.0 Last Resort Supply Activity 40 39 -1 - Owned to EDP 2.2 Regulated Revenues 1,22

  6. Slide 6: Financial discipline: strong focus on deleverage

    Avg. Cost of new bonds issued(1)(2) % Avg. bond maturity 6 years 8 years 7 years Financial leverage and financing:  Financial discipline: Strong focus on deleverage -54% commitments for 2017-2020, consistent with a clear 3.6% 3.8% investment-grade credit profile 1.6%  Refinancing deals concentrate

  7. Slide 7: Focused on wind & hydro greenfield projects

    Focused on wind & hydro greenfield projects Capacity additions secured 2016-2018 (1) (GW) Already Online 0.4 3.7 1.2  Hydro Portugal (pumping & storage): 2 plants starting in 1Q17  Wind North America (mostly US): +1.2GW secured of which 0.7 50% under construction 3.1 0.5 1.4 0.2  Hydro & wind Bra

  8. Slide 8: Strong position in retail; focus on customer satisfaction

    Free market Customers Iberia (# in million of contracts) Strong position in retail: key to preserve risk-controlled approach… +10% 5.6 6.2  Focus on customer satisfaction in order to maximize client retention: # claims per client -27% vs. 9M14  Electricity & gas dual offer penetration rate up from

  9. Slide 9: Brazilian Real: best performing currency vs. Euro in 2016 YTD

    Avg. EUR/BRL exchange rate Business environment Impact BRL (depreciation)/appreciation versus Euro Escelsa Regulatory Review: +20% RAB +27%; RoRAB +60 bps to 8.1% -11% Market risks contained (weaker demand, volatile power 4.21 prices): GSF insurance closed in Dec-15 (generation), new 3.96 overcontra

  10. Slide 10: Strategic priorities and 9M16 KPIs

    1  Recurrent EBITDA growth YoY +10% Focused Growth  Avg. installed capacity growth YoY (wind & hydro) +7% 2 Continue Financial  Net debt change vs. Dec-15 -8% Deleveraging  Adjusted Net Debt/EBITDA 3.9x 3  Weight of wind & hydro in electricity production 68% Keep Low Risk Profile  % EBITDA Reg

  11. Slide 11: Results Analysis

    rede Results Analysis

  12. Slide 12: Installed capacity and electricity production

    Installed Capacity Production Breakdown (GW) (TWh) +7% Avg. installed capacity +2% +15% 24.0 24.6 52.7 1% 1% 45.9 2% Other(1) 13% 14% -7% Other(1) 3% 24% Coal 15% -17% 16% CCGT Coal 33% 6% Wind 37% +6% 38% CCGT 5% 34% +21% Hydro & Wind: Hydro & Wind: Wind 32% 68% of production 71% of capacity Hydro

  13. Slide 13: Recurring EBITDA up by 10% YoY

    EBITDA EBIT (€ million) (€ million) • Pecém: €295m • Gas Murcia: €89m Pantanal: €61m • EDPR one-offs: €40m -7% -3% 1,924 1,792 2,991 2,893 Adjustments 424 61 Adjustments 424 61 +10% 2,832 +15% 1,731 Recurring 2,567 Recurring 1,500 9M15 9M16 9M15 9M16 Recurring EBITDA up by 10% YoY, propelled by all

  14. Slide 14: Electricity demand and supply in Iberian market

    Electricity Demand and Supply in Iberian Market (1) (TWh) +0.2%%  Electricity demand: +0.1% in Spain and 0.3% in 224 225 Portugal, following recovery in 3Q16 (+0.6% YoY -9% CCGT 22 20 in Iberia) -38% 30 Coal 48 +51% 42  Hydro production: +51%, hydro coefficient in Hydro 28 Wind 45 48 Portugal 1.66

  15. Slide 15: Generation & Supply Iberia EBITDA

    EBITDA Generation & Supply Iberia (€ million) EBITDA Generation & Supply Iberia: +€112m YoY +15%  Hydro production: +111% YoY: hydro coefficient in Portugal 1.66 in 9M16 vs. 0.78 in 9M15 854 741  Avg. sourcing cost -33% YoY: avg. generation cost -40% YoY due to higher weight of hydro in generation

  16. Slide 16: Regulated networks EBITDA

    EBITDA - Regulated networks Adjusted EBITDA(1) - Regulated networks (€ million) (€ million) Gas Iberia Electricity Spain Electricity Portugal Gas Iberia Electricity Spain Electricity Portugal -8% +4% 810 749 749 721 -39% -5% 33% +33% +1% +1% 9M15 9M16 9M15 9M16  Electricity Portugal: RoRAB at 6.48%

  17. Slide 17: EDPR installed capacity and EBITDA

    EDPR Installed Capacity EDPR EBITDA (GW) (€ million) Europe and Brazil North America Adjusted +14%(1) +13% Avg. installed capacity +8% +6% 847 782 8.9 9.4 40 56% +4% 55% 847 743 44% +8% 45% 9M15 9M16 9M15 9M16  Average installed capacity: +13%; production +20%; Average price per MWh -7%  One offs

  18. Slide 18: EDP Brasil EBITDA

    EDP Brasil EBITDA EDP Brasil Recurring(1) EBITDA (BRL million) (BRL million) Capital Gains Recurring Distribution Hydro Generation & Other Pecém -16% +19% 2.251 1.899 1.621 885 1.367 278 426 244 476 +23% 584 1.621 1.367 +19% 646 -5% 612 9M15 9M16 9M15 9M16  Hydro Generation: penalized in 9M15 by hy

  19. Slide 19: Portugal electricity system regulatory receivables

    Portugal: Electricity System Regulatory Receivables (€bn) Share of total receivables in the system +€85m in the 1H16 -€99m in the 3Q16 5.3 5.2 5.2 -0.1 -0.01 Other 3.0 3.0 78% 4.1 EDP 2.3 2.2 1.1 22% Dec-14 2015 Dec-15 9M16 Sep-16 2016E ERSE Jan/Oct -16(3) Demand(1) (YoY Chg.) +1.1% +0.1% Demand (Yo

  20. Slide 20: Net regulatory receivables: EDP balance sheet

    Net Regulatory Receivables: EDP Balance Sheet (€ million) -€1,390m 2.504 2.477 Portugal (1) 2.315 2.236 1.087 Spain 1.133 Brazil 2 70 187 170 -118 71 Dec-14 Dec-15 Sep-16  Portugal: -€1,103m YTD; -€2,013m from tariff deficit sales, +€910m attributable to EDP  Brazil: -€289m YTD (in BRL terms -R$1,

  21. Slide 21: Net investments

    Net Investments (1) (€ million) Net 1,069 -53% 505 Investments Capex 1,218 -5% 1,160 189 174 Financial investments 852 721 Expansion capex 366 439 Maintenance capex -339 Sale of minority stakes Sale of minority stakes in -829 Asset Rotation in wind farms in US wind and solar capacity in US (Axium) a

  22. Slide 22: Change in net debt: Sep-16 vs. Dec-15

    Change in Net Debt: Sep-16 vs. Dec-15 (€ billion) -€1.4bn 17.4 -0.7 +0.7 +0.2 -0.2 Regulatory 16.0 2.5 Receivables -1.4 1.1 14.9 14.9 Net Debt Free Cash Adj. Net EDP Brasil Dividends Reg. Receivables Net Debt Dec-15 Flow (1) Expansion Capital Increase paid to EDP & Securitiz. Sep-16 Investments (2)

  23. Slide 23: Debt by currency and maturity profile

    EDP consolidated debt by currency: Sep-16 EDP consolidated debt maturity profile as of Sep-16 (%) (€ billion) Commercial Paper Hybrid Bond Avg. Debt Other Subsidiaries EDP SA & EDP Finance BV PLN Maturity(1): 5.0 years USD 2% 4.0 22% 3.5 3.0 2.5 BRL 8% 2.0 68% 1.5 EUR 1.0 0.5 0.0 2016 2017 2018 2019

  24. Slide 24: Financial liquidity and refinancing needs

    Financial liquidity (Sep-16) Refinancing needs 2016-2019  Cash & Equivalents: €1.7bn  4Q16 (Bonds maturing in Dec-16): €0.4bn  Available Credit Lines:  2017: €1.3bn Revolving Credit Facilities €3.8bn Other Credit Lines €0.3bn  2018: €1.5bn Total €4.1bn  2019 €2.1bn TOTAL €5.8bn TOTAL €5.4bn €5

  25. Slide 25: Financial results and associated companies

    Financial Results & Associated Companies: 9M16 vs. 9M15 (€m)  Net interest costs (-13% YoY): -€0.5bn YoY of avg. net debt, avg. cost of debt down from 4.7% in 9M15 to 4.5% in 9M16 +€13m  Revenues on regulatory receivables: lower (651) 89 (22) 36 (638) (48) amount on balance sheet, lower interest r

  26. Slide 26: From EBITDA to net profit

    (€ million) 9M15 9M16 ∆% ∆ Abs. EBITDA 2.991 2.893 -3% -99 Net Depreciations and Increase of installed capacity: EDPR, Pecém, hydro 1.067 1.100 +3% +33 Provisions Portugal EBIT 1.924 1.792 -7% -131 Financial Results & (651) (638) -2% +13 Associated Companies Lower effective tax rate in 9M15 due to o

  27. Slide 27: Adjusted net profit

    Adjusted Net Profit (€ million) Adjustments Recurring -16% 736  Full control Pecém: +€132m 615  Sale of Gas Murcia: +€85m 172  EDPR’s net one-offs: +€33m  BCP impairment: -€17m  Extraordinary energy tax: -€61m +17% 661 564  Sale of Pantanal mini-hydro: +€27m  Sale of Tejo Energia: +€11m  BCP

  28. Slide 28: IR Contacts and Next Events

    IR Contacts Miguel Viana, Head of IR Sónia Pimpão João Machado Maria João Matias Sérgio Tavares Noélia Rocha E-mail: ir@edp.pt Phone: +351 210012834 Visit EDP Website Next Events Site: www.edp.pt Nov 3rd : Release of 9M16 Results Link Results & Presentations: Nov 10th: Roadshow Frankfurt (Haitong) h

  29. Slide 29: Disclaimer

    This document has been prepared by EDP - Energias de Portugal, S.A. (the "Company") solely for use at the presentation to be made on the 29th of July, 2016 and its purpose is merely of informative nature and, as such, it may be amended and supplemented. By attending the meeting where this presentati

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