Enel SpA · MIL:ENEL
Enel SpA — H1 2005 Earnings Presentation
36 slides from Enel SpA's earnings presentation, Sep 8, 2005
Slide 1: 2005 Interim Results
2005 Interim Results Rome, 8 September 2005 0
Slide 2: Agenda
Agenda 1. Strategic framework 2. 2005 interim results 3. Strategic update 4. Dividends 5. Questions & Answers 1
Slide 3: Strategic framework to date
Strategic framework to date Focus on core • Wind: sale of c.63% stake to Weather Investments closed on activities August 11, 2005 achieved • Terna: Antitrust decision on August 5, 2005 for the sale of c.30% stake to CDP(1) Efficiency • Outperformed all efficiency targets actions • Re-powering progra
Slide 4: Agenda
Agenda 1. Strategic framework 2. 2005 interim results 3. Strategic update 4. Dividends 5. Questions & Answers 3
Slide 5: 2005 interim results - Highlights
2005 interim results - Highlights Results 1H05/1H04 • Revenues at 17 €bn(1) • +12.6% • EBITDA at 4.2 €bn(2) • +3.1% • Net ordinary income at c.1.6 €bn(2) • +6.3% • Net debt at 16.2 €bn (3) • -8.4 €bn Excellent performance on key indicators (1) Including effect of the Single Buyer’s activities follow
Slide 6: EBITDA
EBITDA (€ mn) 4,888 -484 +126 4,530 Capital gain on Terna 812 328 Capital gain disposal on Terna disposal +3.1% 4,076 4,202 1H04 Capital gains Business 1H05 on Terna improvement disposal 5
Slide 7: EBITDA by division
EBITDA by division (€ mn) +402 -211 -65 4,202 4,076 114 179 Services and Holding(1) 1,699 1,910 Network & Sales 2,389 Generation & 1,987 Energy Mgmt 1H04 GEM Networks & Services and 1H05 Sales Holding(1) (1) Net of intercompany 6
Slide 8: Net debt evolution
Net debt evolution (€ mn) Up 171 mn December 31, Cash Flow Capex Extraordinary Dividends, June 30, 2004 from Activities Interests and 2005 operations Taxes Continuing operations -16,247 Net Operating Cash Flow: +2,277 Discontinued operations -8,438 -1,560 +834 -24,514 +3,837 -3,282 -24,685 7
Slide 9: Pro-forma Balance Sheet
Pro-forma1 Balance Sheet Highlights 1H05 actual 1H05 pro-forma • Net Debt (€ bn) • 24.7 • 12.1 • Net Equity (€ bn) • 19.4 • 19.1 • Debt to Equity Ratio • 1.27 • 0.63 • WACC • 5.1% • 5.7% • “Shadow Rating” • A+ • AA Opportunity to optimize financial structure (1) The pro-forma balance sheet assumes 2
Slide 10: Agenda
Agenda 1. Strategic framework 2. 2005 interim results 3. Strategic update 4. Dividends 5. Questions & Answers 9
Slide 11: Full year 2005 overview
Full year 2005 overview • Expected EBITDA: slight increase on 2004(1) Financials • Estimated Debt to equity Ratio around 0.7 • Growing net income • GEM – Market share and volumes better than expected Operations • N&S – Efficiency Programs ahead of targets (2005 cash cost per customer lower than €122
Slide 12: Efficiency: GEM – Conversion to clean coal
Efficiency: GEM – Conversion to clean coal Status Schedule • Authorization already obtained • All three units operational by Torre- • Construction started on 1st unit 2008: valdaliga • 750 workers employed at 9 one unit by 2H07 nord present 9 two units by 2008 • 50% of investments already assigned •
Slide 13: Efficiency: GEM – Conversion to clean coal
Efficiency: GEM – Conversion to clean coal Enel and the Kyoto Protocol Requirements mn ton/year 55 45 45 Enel allowances NAP according to NAPs(1) as of February 05 2005 2006 2007 • Italian NAP (2005-2007) to be defined soon Enel’s • Implementing balancing actions for the outer years (2008-12) positi
Slide 14: Efficiency: N&S – Electricity cash cost per customer
Efficiency: N&S – Electricity cash cost per customer 150 Cash cost - €/customer 136 Old targets 129 127 New targets(1) 125 Opex 99 122 122 118 115 89 110 83 80 Capex 51 36 32 30 2002 2003 2004 2005 2006 2007 2008 2009 Full year 2005 cash cost per customer ahead of our target (1) Targets stated on Ma
Slide 15: Growth: Italian market
Growth: Italian market • Confirmed €1.1 bn to be invested in 5 years • IRR of Italian projects >20% Renewables • Net seller of green certificates starting from 2006 • Target: 20% market share and 4 million customers by 2009 • 5,000 new clients per week through marketing efforts Gas • Acquisitions pr
Slide 16: Growth: international market
Growth: international market • 0.6 € bn investment plan - >10% IRR Renewables • Consolidate our position in Europe and Americas • Expand our worldwide leadership in geothermal • Integrate and extract synergies from Slovenske Elektrarne Consolidation of existing • Strengthen our presence in Spain thr
Slide 17: Agenda
Agenda 1. Strategic framework 2. 2005 interim results 3. Strategic update 4. Dividends 5. Questions & Answers 16
Slide 18: Dividends: Enel roadshow proposition
Dividends: Enel 4 roadshow proposition • Dividend of 36€c per share on 2004 results 2005 • Additional dividend of 17-20€c per share from capital gains on Terna disposal to be paid in late 2005 • Sustain dividends in excess of 36€c through: On-going strong ordinary income performance and dividend
Slide 19: Dividends: future policy
Dividends: future policy (DPS - €c) 2005 vs 2004 +16.6% ≥ 42 ≥ 42 36 On results 2004 2005 2007 Paid in 2005 2006 2008 Stable 100% payout of growing ordinary income Dividend paid in two instalments per year 18
Slide 20: Agenda
Agenda 1. Strategic framework 2. 2005 interim results 3. Strategic update 4. Dividends 5. Questions & Answers 19
Slide 21: Annexes
Annexes 20
Slide 22: Income statement
Income statement (€mn) 1H2005 1H2004 % change Operating Revenues 16,805 14,918 12.6% Operating Costs 12,275 10,030 22.4% EBITDA 4,530 4,888 -7.3% % of Revenues 27% 33% - EBIT 3,414 3,813 -10.5% % of Revenues 20% 26% - 21
Slide 23: From EBIT to EPS
From EBIT to EPS (€mn) 1H2005 1H2004 % change EBIT 3,414 3,813 -10.5% Net Financial Charges (349) (390) -10.5% EBT 3,065 3,423 -10.5% Income Taxes 1,114 1,084 2.8% Net Income Continued 1,951 2,339 - Net Income Discontinued 55 84 -34.5% Net Income 2,006 2,423 -17.2% EPS (Euro) 0.33 0.40 -17.5% 22
Slide 24: Balance sheet
Balance sheet (€mn) June 30, December 31, % Change 2005 2004 Net Financial Debt 24,685 24,514 0.7% of which continued 16,247 of which discontinued 8,438 Shareholders' Equity 19,417 19,066 1.8% of which minorities 1,448 1,113 30.1% Leverage 1.27 1.29 - Net Capital Employed 42,182 43,580 -3.2% of whic
Slide 25: EBIT by business area
EBIT by business area (€mn) 3,813 3,414 -10.5% 925 396 -57.2% Other(1) 1,269 1,511 -16% Networks & Sales 1,749 27% 1,377 Generation & Energy Mgmt 1H2004 1H2005 (1) Net of intercompany 24
Slide 26: Generation & Energy Management
Generation & Energy Management (€mn) 1H2005 1H2004(2) % change Revenues(1) 7,334 6,061 21.0% EBITDA 2,389 1,987 20.2% EBIT 1,749 1,377 27.0% Capex 414 376 10.1% Net Capital Employed 15,414 14,931 3.2% Headcount 10,435 10,828 -3.6% Net Power Generation 55,520 61,744 -10.1% (domestic) (GWh) (1) Net of
Slide 27: Networks & Sales
Networks & Sales (€mn) 1H2005 1H2004(2) % change Revenues(1) 9,636 9,860 -2.3% Power 8,732 9,065 -3.7% Gas 906 798 13.5% EBITDA 1,699 1,910 -11.0% Power 1,532 1,751 -12.5% Gas 167 159 5.0% EBIT 1,269 1,511 -16.0% Capex 752 758 -0.8% Net Capital Employed 12,561 12,334 1.8% Headcount 37,577 35,537 5.7
Slide 28: Operational data
Operational data 1H05 1H04 % change Power Net Power Generation (GWh) 55,520 61,744 -10.1% Purchase of Power (GWh) 86,885 62,317 39.4% Sales to End Users (GWh) 73,891 79,785 -7.4% of which: Regulated Market 64,842 69,230 -6.3% Free Market 9,049 10,555 -14.3% Total Power Dispatched (GWh) 125,689 125,2
Slide 29: Services & Holding
Services & Holding (€mn) 1H2005 1H2004(1) % change SERVICES Revenues 702 989 -29.0% EBITDA 105 173 -39.3% EBIT 63 108 -41.7% Capex 33 46 -28.3% Net Capital Employed 596 885 -32.7% Headcount 4,856 3,826 26.9% HOLDING Revenues 881 1,322 -33.4% EBITDA 350 881 -60.3% EBIT 346 880 -60.7% Headcount 581 59
Slide 30: Capex – Continuing operations
Capex – Continuing operations (€mn) +20mn +1.7% 1,200 - 1,180 Services & Holding 46 34 -26.1% 752 758 Networks & Sales -0.8% 376 414 Generation & Energy +10.1% Mgmt 1H2004 1H2005 29
Slide 31: Debt structure – Continuing operations
Debt structure – Continuing operations • Average debt maturity: 6 years and 0 months (the same including discontinued operations) • Average cost of debt: 4.2% (the same including discontinued operations) • (Fixed+Hedged)/Total Long Term Debt: 87% (67% including discontinued operations) • (Fixed+Hedg
Slide 32: Income statement – Continuing operations
Income statement – Continuing operations Quarterly Analysis (€mn) 2Q05 2Q04 % change 1Q05 Revenues 8,429 8,249 2.2% 8,376 EBITDA 2,546 2,765 -7.9% 1,984 % of Revenues 30% 34% 24% EBIT 1,959 2,220 -11.8% 1,455 % of Revenues 23% 27% 17% EBT 1,766 2,093 -15.6% 1,299 31
Slide 33: Terna – Discontinued operation
Terna – Discontinued operation (€mn) 1H2005 1H2004(1) % change Revenues 500 509 -1.8% EBITDA 348 330 5.5% EBIT 266 253 5.1% Capex 84 137 -38.7% Net Capital Employed 3,865 3,602 7.3% Headcount 2,908 2,929 -0.7% (1) Net capital employed and headcount figures as of December 31, 2004 32
Slide 34: Wind – Discontinued operation
Wind – Discontinued operation Key Performance Indicators 1H2005 1H2004 1H2005 1H2004 Profit & Loss Customers (mn) (€mn) (3) Fixed Active 2.3 2.6 Revenues 2,339 2,425 of which direct (1) 0.5 0.4 EBITDA 757 798 Mobile (2) 12.9 10.6 EBIT 122 87 Internet Subscribers 19.5 16.4 1H2005 1H2004 June 30, Dece
Slide 35: Disclaimer
DISCLAIMER THESE SLIDES HAVE BEEN PREPARED BY THE COMPANY SOLELY FOR THE USE AT THE ANALYST PRESENTATION IN ROME. THE INFORMATION CONTAINED HEREIN HAS NOT BEEN INDEPENDENTLY VERIFIED. NONE OF THE COMPANY OR REPRESENTATIVES SHALL HAVE ANY LIABILITY WHATSOEVER IN NEGLIGENCE OR OTHERWISE FOR ANY LOSS H
Slide 36: Contact us
Contact us Investor Relations Team: Luca Torchia: +39 06 8305 3437 Donatella Izzo: +39 06 83057449 Fausto Sblandi: +39 06 83052226 Federica Todaro: +39 06 8305 9502 investor.relations@enel.it Visit our website at: www.enel.it (Investor Relations) 35