Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Galp Energia — FY2007 Earnings Presentation
25 slides from Galp Energia, Sgps S.a. Class B's earnings presentation, Mar 6, 2008
Slide 1: Full Year 2007 Results
FULL YEAR 2007 RESULTS Lisbon, 6 March 2008
Slide 2: Disclaimer
DISCLAIMER Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expres
Slide 3: Market Overview
MARKET OVERVIEW © galp energia
Slide 4: Constant upward Brent during 2007
CONSTANT UPWARD BRENT DURING 2007 Brent price (Usd/bbl) Rotterdam Cracking (Usd/bbl) Avg. 2007 72.5 Usd/bbl 10 100 Avg. 2007 2007 4.5 Usd/bbl 90 8 80 6 70 Avg. 2006 4 65.1 Usd/bbl 2007 60 2 2006 Avg. 2006 3.3 Usd/bbl 2006 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun J
Slide 5: Highlights
HIGHLIGHTS Orn energia
Slide 6: Adjusted EPS of €0.50, up 11% on USD and pro-forma basis
ADJUSTED EPS OF €0.50, UP 11% ON USD AND PRO-FORMA BASIS Replacement Cost IFRS Adjusted1 2006 2 2007 % Ch. € Million 2006 2 2007 % Ch. 12,193 12,560 3.0% Turnover 12,090 12,557 3.9% 928 1,289 38.9% EBITDA 886 891 0.5% 643 1,011 57.4% EBIT 616 621 0.7% 40 60 48.3% Associates 40 60 48.3% 479 777 62.0%
Slide 7: 2007 adjusted EBITDA reached €891 million
2007 ADJUSTED EBITDA REACHED €891 MILLION • E&P and G&P with a positive incremental contribution to EBITDA, but barely enough to compensate the negative impact of R&M division Pro forma replacement cost adjusted EBITDA (M€) 106 886 24 891 (125) 2006 E&P R&M 1 G&P 2007 YoY +106% (23%) +11% +1% 1 R&M
Slide 8: Business Overview
BUSINESS OVERVIEW © galp energia
Slide 9: BBLT main contributor to production growth in 2007
BBLT MAIN CONTRIBUTOR TO PRODUCTION GROWTH IN 2007 • Annual net entitlement production increased 72% YoY • Production decreased QoQ due to delays in BBLT drilling activities, expected to be solved at the end of 2Q08 Net Entitlement Production by Field (million bbl) (9%) TL 72% (27%) BBLT 4.6 1.3 1.1
Slide 10: 2007 refining margin down 6% YoY on euro basis
2007 REFINING MARGIN DOWN 6% YoY ON EURO BASIS • Refining margins impacted by Usd devaluation and high crude prices which enlarged energy costs due to consumption and losses levels • Porto and Sines outages hurt operational performance, dragging capacity utilization rate down to 78.4%, mainly in 4Q0
Slide 11: Time lag effect impact
TIME LAG EFFECT IMPACT Diesel Price Example (Usd/ton) Main Considerations Market price Price reference (avg 2 previous weeks) • 2007 effect of 67.4 M€, and Q4 of Contractual price 27.5 M€ Areas represent negative time lag • 2006 effect was 9.4 M€ positive, effect under an increase price due to brent
Slide 12: Positive contribution from Galp direct customers
POSITIVE CONTRIBUTION FROM GALP DIRECT CUSTOMERS • Cover ratio of refining throughput increased from 68% to 72% in 2007 • Reduction in exports caused by a drop in production, mainly in 4Q • Strong contribution from the wholesale segment in Portugal and Spain compensated decrease in retail volumes Mi
Slide 13: Natural gas volumes up by 17% in 2007
NATURAL GAS VOLUMES UP BY 17% IN 2007 • The portuguese market, excluding the electrical segment, grew by 7% in 2007 • 4Q07 volumes up 62% YoY, benefiting from lack of hydro capacity in Iberia • Trading segment benefited from higher availability of gas volumes (end of build-up period), hence posting
Slide 14: Adjusted EBITDA reached €891 million
ADJUSTED EBITDA REACHED €891 MILLION • Increase in crude prices off-sets impact of lower production in 4Q07 • Rising trend in crude prices with a negative impact on R&M performance in 4Q07 due to time-lag effect (pricing mechanism revised in January 2008). Lower level of volumes processed also contr
Slide 15: Financial Overview
FINANCIAL OVERVIEW © galp energia
Slide 16: Adjusted EPS of €0.50, up 11% on USD and pro-forma basis
ADJUSTED EPS OF €0.50, UP 11% ON USD AND PRO-FORMA BASIS Replacement Cost IFRS 1 Adjusted 2006 2 2007 % Ch. € Million 2006 2 2007 % Ch. 12,193 12,560 3.0% Turnover 12,090 12,557 3.9% 928 1,289 38.9% EBITDA 886 891 0.5% 643 1,011 57.4% EBIT 616 621 0.7% 40 60 48.3% Associates 40 60 48.3% 479 777 62.0
Slide 17: Operational cashflow generation led to net debt reduction
OPERATIONAL CASHFLOW GENERATION LED TO NET DEBT REDUCTION 2006 (M€) 2007 (M€) 305 1,703 1,398 Unbundling 153 Dividends 964 976 811 1,049 Dividends Operations Operations Capex Capex 485 Sources Uses Sources Uses Net debt reduction 17 Full Year 2007 results
Slide 18: Stronger capital structure
STRONGER CAPITAL STRUCTURE Balance Sheet Items (M€) Dec. 2006 Dec. 2007 Ch. Fixed Assets 2,413 2,584 170 Strategic Stock 453 566 114 Other assets (liabilities) (149) (170) (20) Working Capital 207 180 (27) Net Debt 887 734 (153) Equity 2,037 2,426 390 Capital Employed 2,924 3,160 237 Debt to Equity
Slide 19: Dividend proposal of €0.32 per share
DIVIDEND PROPOSAL OF €0.32 PER SHARE 2007 Dividend Dividend proposal of €0.32 2 to be approved in next AGM, on May 6 Target 50% 63% 50% €0.152 already paid on November 7, 2007 Galp policy 2007 dividend proposal1 €0.168 to be paid Payout from adjusted net profit before May 31 1 Incorporates a YoY div
Slide 20: 2007 Results Presentation Appendix: Additional Disclosure
2007 RESULTS PRESENTATION APPENDIX ADDITIONAL DISCLOSURE
Slide 21: New information to be disclosed from 1Q08 onwards
NEW INFORMATION TO BE DISCLOSED FROM 1Q08 ONWARDS To be disclosed Rationale REFINING • Refineries’ operating cash • Understand profitability & costs of Refining and Marketing MARKETING divisions GAS • EBIT NG Wholesale and Retail • Track dynamics of Gas & • EBIT NG Infrastructure and Power divisions
Slide 22: 2007 Results Presentation Appendix: IRP Reallocation
2007 RESULTS PRESENTATION APPENDIX IRP REALLOCATION
Slide 23: Basis of presentation – recent changes
BASIS OF PRESENTATION – RECENT CHANGES • In the third quarter of 2007 the method of accounting for IRP, tax on oil revenues payable in Angola, was changed. In order to better specify the nature of costs, this tax – formerly accounted for under other operating costs – was entered as an income tax ite
Slide 24: Changes in 2006 profit and loss
CHANGES IN 2006 PROFIT AND LOSS 4Q06 4Q06 2006 M€ Change Former Actual Actual IRP (10) +10 0 0 Adjusted EBIT 148 +10 158 686 Taxes (1) (10) (11) (203) Adjusted Net 94 0 94 468 income E&P Adjusted 18 27 66 EBIT IRP reallocation 24 Full Year 2007 results
Slide 25: Investor Relations
Investor Relations Tiago Villas-Boas Tel.: +351 21 724 08 66 Fax: +351 21 724 29 65 E-mail: tiagovb@galpenergia.com Website: www.galpenergia.com