Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — Q3 2017 Earnings Presentation
41 slides from Engie Energia Chile's earnings presentation, September 2017
Slide 1: Presentation to investors 3Q 2017 Results
ENGIE ENERGÍA CHILE S.A. Presentation to investors 3Q 2017 Results
Slide 2: Agenda
AGENDA Snapshots Key messages Looking forward Financial update Addenda Engie Energía Chile - Presentation to Investors – 3Q 2017 2
Slide 3: ENGIE: A Global Energy Player
ENGIE IN A NUTSHELL ENGIE: A GLOBAL ENERGY PLAYER 153,090 Activity in € 69.6 bn € 16 bn of growth A- rated by S&P employees close to 70 revenues in investment over A2 rated by worldwide countries 2016 2016-2018 Moody’s 3 CORE BUSINESSES SUPPORTING A NEW VISION OF ENERGY FOR THE WORLD ELECTRICITY NAT
Slide 4: Engie Energía Chile in a Nutshell
ENGIE ENERGÍA CHILE IN A NUTSHELL ENGIE ENERGÍA CHILE A RELEVANT PLAYER IN THE CHILEAN ENERGY BUSINESS - Leader in northern mining region, 4 th largest electricity generation company in Chile - Capacity contracted under long-term sales agreements; 11.4 years remaining average life - ~2GW gross gener
Slide 5: A Diversified Asset Base to Meet Our Clients' Energy Needs
ENGIE ENERGÍA CHILE IN A NUTSHELL A DIVERSIFIED ASSET BASE TO MEET OUR CLIENTS’ ENERGY NEEDS Technology Coal Chapiquiña (10MW) Diesel/FO 1,971 MW in Natural gas operation & 375 El Aguila I (2MW) Renewables MW in construction P. Camarones (6MW) Diesel Arica (14MW) 2,157 kms HV Diesel Iquique (43MW) t
Slide 6: Two Main Grids Ready for Interconnection
CHILEAN ELECTRICITY INDUSTRY OVERVIEW TWO MAIN GRIDS READY FOR INTERCONNECTION SEN Generation Market Share Clients (SIC + SING) 9M17 (GWh) (% installed capacity Sep-17) Diesel 1% Regulated 11% Renew. 11% Other 17% Gas 10% EECL 33% Tamakaya 9% 5,885 MW Installed capacity SING 14,014 GWh 23,552 MW Ene
Slide 7: Agenda
AGENDA Snapshots Key messages Looking forward Financial update Addenda Engie Energía Chile - Presentation to Investors – 3Q 2017 7
Slide 8: Key Messages
KEY MESSAGES 9-month 2017 results in line with expectations Growth strategy and construction well on track Robust capital structure Dynamic energy transition to secure future growth Engie Energía Chile - Presentation to Investors – 3Q 2017 8
Slide 9: Recent Events
KEY MESSAGES RECENT EVENTS INDUSTRY COMPANY - The SIC-SING interconnection is - PPA with distribution companies in scheduled to begin operations in the SIC will start on January 1, November, 2017 2018, for up to 2 TWh in 2018 and up to 5 TWh starting 2019 - The TEN project, a key part of the TEN pro
Slide 10: 9-Month Results in Line with Expectations
9-MONTH RESULTS IN LINE WITH EXPECTATIONS 9-MONTH RESULTS IN LINE WITH EXPECTATIONS + Operating cost savings CO2 taxes, emission-reduction costs, lower physical sales 9M16 9M17 Variation Operating Revenues (US$ million) 717.9 782.2 +9% EBITDA (US$ million) 218.4 200.5 -8% EBITDA margin (%) 30.4% 25.
Slide 11: Driven by Long-Term Contracts with Strong Clients
9-MONTH RESULTS IN LINE WITH EXPECTATIONS DRIVEN BY LONG-TERM CONTRACTS WITH STRONG CLIENTS Sound contract portfolio with average remaining life A GROWTH of 11.4 years DRIVING PPA • 2018: Up to 2,016 GWh (230 600 ● Regulated contracts • MW-avg.) 2019-2032: Up to 5,040 ● Unregulated contracts GWh per
Slide 12: Sustaining Relatively Stable Sales Volumes and Prices
9-MONTH RESULTS IN LINE WITH EXPECTATIONS SUSTAINING RELATIVELY STABLE SALES VOLUMES AND PRICES ENERGY SALES AND PRICES Energy sales Prices GWh US$/MWh 2,500 150 2,000 100 1,500 1,000 50 500 - - 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unregulated Regulated Spot Energy+Capacity Price->
Slide 13: Clients' Needs Supplied with Own Generation and Spot Purchases
9-MONTH RESULTS IN LINE WITH EXPECTATIONS CLIENTS’ NEEDS SUPPLIED WITH OWN GENERATION AND SPOT PURCHASES, WELL HEDGED BY OUR OWN INSTALLED CAPACITY Renewables Diesel 10% 1% Coal 57% - Increasing spot purchases due to new coal, gas and renewable efficient capacity additions in the grid Installed Gas
Slide 14: New PPA: Growth and Diversification Engine
GROWTH STRATEGY WELL ON TRACK NEW PPA: GROWTH AND DIVERSIFICATION ENGINE 2018 / 2019 targets Status as of 09-2017 Clients’ Sales (GWh) - Contracted revenue growth REVENUE & EBITDA - More balanced portfolio Distribution Co. PPA (regulated vs. unregulated) GROWTH - Expected EBITDA growth (>80% in 2 ye
Slide 15: Growth Achieved with Healthy Capital Structure
GROWTH STRATEGY WELL ON TRACK GROWTH ACHIEVED WITH HEALTHY CAPITAL STRUCTURE We have met the objectives of our CAPEX financing program: — Investment-grade rating preserved (BBB Stable Outlook by S&P and Fitch) — Dividends lowered to 30% of net income during investment-mode period (2015-2018) — Proce
Slide 16: Dynamic Energy Transition
DYNAMIC ENERGY TRANSITION THE 3 PILLARS GUIDING OUR ENERGY TRANSITION PROCESS Technologic changes Electric mobility 24x7 renewable output in a rapidly changing Need to reduce CO2 emissions & environment Smart grids, digitalization, carbon footprint energy efficiency CLIENTS SUSTAINABILITY PRODUCTIVI
Slide 17: Agenda
AGENDA Snapshots Key messages Looking forward Financial update Addenda Engie Energía Chile - Presentation to Investors – 3Q 2017 17
Slide 18: Strongly Contracted Demand, with More Balanced Portfolio
LOOKING FORWARD: AN INDUSTRY FULL OF OPPORTUNITIES AND CHALLENGES STRONGLY CONTRACTED DEMAND, WITH MORE BALANCED PORTFOLIO MW average CONTRACT RUN-OFF AS OF SEPTEMBER 30, 2017 1,400 1,200 1,000 48% 51% 50% 38% 800 23% 600 400 77% 62% 52% 49% 50% 200 - 2017 2018 2019 2020 2021 Mining & industrial cli
Slide 19: Learning to Live with Intermittent Power Sources
LOOKING FORWARD: AN INDUSTRY FULL OF OPPORTUNITIES AND CHALLENGES LEARNING TO LIVE WITH INTERMITTENT POWER SOURCES AVERAGE HOURLY GENERATION IN THE SING – 9M17 200 2,000 Diesel/Fuel Oil Gas Kelar Gas CTM3 Marginal Cost (US$/MWh) Gross Generation (MWh) 150 Gas U16 1,500 Coal U12/U13 Coal U14/U15 Coal
Slide 20: The SEN: A Larger Market for Engie Energía Chile
LOOKING FORWARD: AN INDUSTRY FULL OF OPPORTUNITIES AND CHALLENTES THE “SEN”: A LARGER MARKET FOR ENGIE ENERGÍA CHILE Coordinator Coordinator through 2016 starting 2017 The interconnection of both grids starting late 2017 will… CDEC - be possible thanks to TEN, a SING project developed by EECL, SING
Slide 21: Recent Game Changers in the Chilean Power Industry
LOOKING FORWARD: AN INDUSTRY FULL OF OPPORTUNITIES AND CHALLENGES RECENT GAME CHANGERS IN THE CHILEAN POWER INDUSTRY More agile, diversified, client-focused approach to face industry change INCREASED TECHNOLOGIC SLOWER PACE IN COMPETITION DISRUPTION DEMAND GROWTH More flexible power auction Lowe
Slide 22: Agenda
AGENDA Snapshots Key messages Looking forward Financial update Addenda Engie Energía Chile - Presentation to Investors – 3Q 2017 22
Slide 23: EBITDA Impacted by CO2 Taxes and Lower Physical Sales
FINANCIAL UPDATE AS EXPECTED, EBITDA IMPACTED BY CO2 TAXES AND LOWER PHYSICAL SALES By main effect In US$ Million +4 (6) +10 (13) 218 Net variation reliquidations Margin (12) Net & provisions variations operating previous Electricity Lower cost years Gas physical 200 reductions Transmission sa
Slide 24: Resilient Net Recurring Income
FINANCIAL UPDATE RESILIENT NET RECURRING INCOME In US$ Millions 261 +2 minority interest (143) (55) Recurring Results Asset sales 69 net of impairments 63 61 +6 +2 (14) +6 minority +15 minority minority +8 interest interest interest Fair Other EBITDA U16 + CTM3 valuation of Net Interest Exp. decre
Slide 25: Strong Cash Flow Generation
FINANCIAL UPDATE STRONG CASH FLOW GENERATION By main effect In US$ Million +21 (15) (237) +58 +28 +8 +396 Loans to Insurance Income TEN recovery Accrued Dividends Taxes Interest + 729 (including var. 40% CTH) Operating deferred financial cash flow cost + var. 470 MTM on CAPEX hedges Net Debt Net Deb
Slide 26: Robust Financial Structure
FINANCIAL UPDATE ROBUST FINANCIAL STRUCTURE NET DEBT/EBITDA ≤ 2.8 X 2.7 Net Debt/EBITDA well below expected peak 2.3 2.0 level of 3.5x during intensive CAPEX period 1.6 1.7 (2017/2018) — Strong cash flow generation Dec 13 Dec 14 Dec 15 Dec 16 Sep 17 — Proceeds from asset sales (TEN) in 2016 MODERATE
Slide 27: Key Take-Aways
FINANCIAL UPDATE KEY TAKE-AWAYS VALUE CREATION FOR OUR STAKEHOLDERS - A US$2 billion 2015-18 investment program will allow EECL to enter the - Important growth in client base and SIC with an excellent PPA portfolio: portfolio diversification – TEN 1,500 MW, 600-km transmission - Efficient capacity g
Slide 28: Agenda
AGENDA Snapshots Key messages Looking forward Financial update Addenda Engie Energía Chile - Presentation to Investors – 3Q 2017 28
Slide 29: Generation and Spot Energy Price History in the SING
FINANCIAL UPDATE GENERATION AND SPOT ENERGY PRICE HISTORY IN THE SING No exposure to hydrologic risk until interconnection is fully operative Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand (bilateral negotiation of prices and supply terms) Maximum demand
Slide 30: Capacity Growth in the SING Driven by IEM Project
ADDENDA CAPACITY GROWTH IN THE SING DRIVEN BY EECL’S IEM PROJECT AND OTHER SOLAR PROJECTS SING – Sep-2017 SING – 2019 5,885 MW 6,519 MW 2,346 MW 19 11% growth 202 1,971 MW 19 202 623 1,405 MW 1,405 MW 623 22 375 22 1,274 MW (new) 248 1,014 MW IEM 962 MW 962 MW (new) 24 24 Solar 1,502 1,165 1,127 1,3
Slide 31: PPA Portfolio Indexation
ADDENDA PPA PORTFOLIO INDEXATION Monthly tariff indexation for all PPAs except distribution companies (EMEL ~20% of our electricity sales) Overall indexation applicable to electricity and capacity sales (as of September 2017) Distribution company PPA tariffs fixed for 6-month periods starting April
Slide 32: Energy Supply Curve
ADDENDA ENERGY SUPPLY CURVE 120 Average monomic price US$/MWh US$109/MWh 100 80 Average fuel & electricity purchase cost: US$66/MWh 60 Diesel 40 U13 U12 CTA CTH Spot purchases CTM2 U15 CTM3 U14 U16 CTM1 20 Firm capacity 0 overcosts ToP Regas Renewables Coal 1,440 GWh Spot 2,452 GWh Coal 2,080 GWh LN
Slide 33: Transmisora Eléctrica del Norte S.A. TEN (Page 1 of 2)
ADDENDA TRANSMISORA ELÉCTRICA DEL NORTE S.A. “TEN” (PAGE 1 OF 2) Infrastructure – Regulated ~US$0.9bn investment, 50%-owned by EECL - Double circuit, 500 kV, alternate - Regulated revenues on “national current (HVAC), 1,500 MW, 600- assets” + contractual toll on km long transmission line “dedicated
Slide 34: Transmisora Eléctrica del Norte S.A. TEN (Page 2 of 2)
ADDENDA TRANSMISORA ELÉCTRICA DEL NORTE S.A. “TEN” (PAGE 2 OF 2) Infrastructure – Regulated ~US$0.9bn investment, 50%-owned by EECL VI Indexation TEN’s annual revenues: (in USD millions In MUSD @ Oct In CLP to In USD to at Sept.30, 2017 FX rates) 2013 FX Rates Chile CPI US CPI AVI (VI annuity): 74.5
Slide 35: Infraestructura Energética Mejillones IEM
ADDENDA INFRAESTRUCTURA ENERGETICA MEJILLONES. “IEM” Thermal contracted + port US$1.0bn investment, within schedule and budget - 375MWe gross capacity => - Developed to supply SIC 337MWe net base-load capacity distribution companies - Turnkey EPC contracts: - Pulverized coal-fired power plant - IEM
Slide 36: Copper Industry
ADDENDA COPPER INDUSTRY US¢/lb Copper production in the SING ('000 tons) (1) Copper price LME (US¢/lb) Electricity demand GWh GWh 4,500 500 2,000 4,000 450 1,800 3,500 400 1,600 3,000 350 1,400 300 2,500 1,200 250 1,000 2,000 3,141 3,203 3,170 3,421 3,799 3,767 3,826 4,087 3,876 3,981 3,959 3,721 3,
Slide 37: Ownership Structure
ADDENDA OWNERSHIP STRUCTURE Pension funds Local institutions Foreign institutions Individuals 52.76% 24.64% 15.39% 6.72% 0.49% ENGIE ENERGÍA CHILE S.A. Inversiones Punta de Red Eléctrica Chile Rieles Ltda. (“EECL”) S.A. 40% 50% Central Central Gasoducto Edelnor Transmisora Termoeléctrica Termoeléctr
Slide 38: EECL Organizational Structure
ADDENDA EECL ORGANIZATIONAL STRUCTURE Shareholders’ assembly Functional committees: Committee - Business Board of directors - Generation of directors - Transmission - Learning - Employability CEO - Risk & insurance - People, IT, processes - Steering Committees: - TEN Internal auditor - IEM People, I
Slide 39: Share Price Evolution
ADDENDA SHARE PRICE EVOLUTION 150 EECL IPSA September 30, 2017: EECL: CLP 1,379 140 IPSA: 5,342 130 September 30, 2016: EECL: CLP 1,029 120 IPSA: 4,015 110 100 90 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 (*) EECL share price including dividend distribution
Slide 40: For More Information About Engie Energia Chile
FOR MORE INFORMATION ABOUT ENGIE ENERGIA CHILE Engie Energía Chile - Presentation to Investors – 3Q 2017 40 40
Slide 41: Disclaimer
Disclaimer Forward-Looking statements This presentation may contain certain forward-looking statements and information relating to Engie Energía Chile S.A. (“EECL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan