Engie Energia Chile S.a. · BCS:ECL

Engie Energia Chile — Q1 2016 Earnings Presentation

41 slides from Engie Energia Chile's earnings presentation, March 2016

  1. Slide 1: 1Q16 Results

    m==E-C Gor swez

  2. Slide 2: Agenda

    AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 2

  3. Slide 3: Financial performance in 1Q16

    Financial performance in 1Q16 HIGHLIGHTS  EBITDA reached US$71 million, a 12% decrease compared to 1Q15, due to the reduction in certain indices that adjust our PPA prices, the decrease in gas sales, and higher emission- reduction costs, partly offset by positive foreign exchange-related effects an

  4. Slide 4: Highlights of the last quarter

    Highlights of the last quarter HIGHLIGHTS  On January 27, 2016, E.CL sold 50% of its shares in the TEN transmission project to Red Eléctrica Chile SpA, an indirect subsidiary of Red Eléctrica Corporación S.A. (Spain) for US$217.6 million.  Construction of the IEM1 375MW coal-fired project (with th

  5. Slide 5: Agenda

    AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 5

  6. Slide 6: Chilean electricity industry – 1Q16

    Chilean electricity industry – 1Q16 INDUSTRY Growth Generation GWh Main players Market Clients (2016-2025)¹ (1Q16) (% installed capacity 1Q16) Other Regulated Renew. Diesel 6% 11% E.CL 11% 5% 25% capacity 4.7% Gas 10% Endesa 48% 4,887 GWh 22% 4,416 MW SING 26% demand AES Unregulated Gener 89% Coal 7

  7. Slide 7: Characteristics of the SING

    Characteristics of the SING INDUSTRY  Most installed capacity based on coal, natural gas (LNG) and diesel  No exposure to hydrologic risk  Long-term contracts with unregulated clients (mining companies) account for 89% of demand  Flexibility to negotiate prices and supply terms  Maximum demand:

  8. Slide 8: Chile, a world-class copper producer

    INDUSTRY Chile, a world-class copper producer SING Copper Production(1) & SING Electricity Demand vs. Copper Price Evolution US¢ / lb GWh 500 1.800 450 1.600 400 1.400 350 1.200 300 1.000 250 800 200 600 150 4.087 3.981 3.959 3.964 3.987 3.981 3.799 3.767 3.826 3.876 3.721 3.747 400 100 3.141 3.421

  9. Slide 9: Ownership structure (as of March 31, 2016)

    COMPANY Ownership structure (as of March 31, 2016) ENGIE (formerly Local Foreign Individuals Pension Funds GDF SUEZ) 52.76% Institutions Institutions 18.96% 22.44% 5.32% 0.51% Inv. Punta de E.CL S.A. Red Eléctrica Rieles Ltda. Chile S.A. 40% 50% Inversiones Central Gasoducto Edelnor Transmisora Horn

  10. Slide 10: Installed capacity: SING & E.CL

    COMPANY Installed capacity: SING & E.CL SING - Gross installed capacity – December 2015 (MW) E.CL - Growth in installed capacity 2.500 3.000 2,494 MW 2,114 MW 18 12 2.500 2,108 MW 2.000 288 288 1,799 MW 12 2.000 13 288 688 1.500 688 317 1.500 688 962 MW 688 1.000 1.000 836 MW 24 1.500 510 MW 500 1.1

  11. Slide 11: E.CL's assets and installed capacity

    COMPANY Installed Capacity (Mar. 2016) E.CL’s Assets Technology Coal Renewables Diesel/FO Chapiquiña (10MW) Natural gas 1% El Aguila I (2MW) Renewables Diesel 14% Coal 53% Diesel Arica (14MW) Diesel Iquique (43MW) TE Tocopilla (1,004MW) Collahuasi Tocopilla puerto El Abra Gas/diesel Chuquicamata 33%

  12. Slide 12: Contractable efficient capacity

    COMPANY Contractable efficient capacity March 2016 December 2018 2,452 MW 2500 2500 18 2,114 MW 12 288 2000 288 2000 688 1,593 MW 1,348 MW 6 1500 688 1500 5 521 521 1000 1000 1.457 500 1.125 500 1.066 822 0 0 Gross Installed Contractable efficient Gross Installed Contractable efficient capacity capa

  13. Slide 13: SIC distribution companies auction

    COMPANY SIC distribution companies auction  In December 2014, E.CL secured 15-year sale contracts to supply electricity to distribution companies in the SIC:  Up to 2,016 GWh in 2018, equivalent to 230 MW-average  Up to 5,040 GWh per year between 2019-2032, equivalent to 575 MW-average  Monomic

  14. Slide 14: PPA portfolio indexation

    COMPANY PPA portfolio indexation Overall indexation applicable to electricity and capacity sales (as of March 2016) Other Marginal 0,6% Cost 2,2% Coal U.S. CPI 32,9% U.S. PPI Node Price 45,8% Gas 18,4% Indexation of electricity and capacity (“monomic”) prices as a percentage of effective demand …mat

  15. Slide 15: Long-term contracts with creditworthy customers

    Long-term contracts with creditworthy customers COMPANY Average demand¹ [MW] and remaining life [years] of current contracts Highlights  Clients’ international credit ratings: 600 ● Unregulated Contracts  Codelco: A+ ● Regulated contracts  Freeport-MM (El Abra ): 500 BB SIC DISCOS  Antofagasta P

  16. Slide 16: Indexation of the EMEL PPA

    COMPANY PPA portfolio indexation Indexation of the EMEL PPA  Timetable of tariff adjustments: May and November of each year  The tariff is determined in US dollars and converted to CLP at the average observed exchange rate of March and September of each year. Such exchange rate prevails for 6 mont

  17. Slide 17: E.CL's energy supply curve – 1Q16

    COMPANY E.CL’s energy supply curve – 1Q16 US$/MWh 140 Average realized monomic price: 120 US$ 91/MWh 100 80 Average fuel & electricity purchase cost per FO-DI MWh sold: US$46/MWh 60 40 Spot U15 U14 U13 U12 purchases 20 CTH CTM3 CTA CTM2 CTM1 U16 Firm capacity payments 0 Renewables Spot Diesel Coal M

  18. Slide 18: Generation overcosts in the SING

    Generation overcosts in the SING INDUSTRY  Until March 2016, the so-called “overcosts” (“sobrecostos”) were regulated by Resolution 39/2000 (RM39) and by Supreme Decree 130/2012 (DS130) to cope with the costs stemming from the SING’s operational characteristics:  Units that cannot operate below a

  19. Slide 19: Agenda

    AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 19

  20. Slide 20: Infraestructura Energética Mejillones (IEM) (1 of 2)

    PROJECTS Infraestructura Energética Mejillones (IEM) (1 of 2) Characteristics Gross capacity (IEM1) 375 MW Net capacity 320 MW Availability (plant factor) 90% Location Mejillones Mechanized port Associated infrastructure (Capesize carriers) Connection to SIC-SING Transmission line IEM1 transmission

  21. Slide 21: Infraestructura Energética Mejillones (IEM) (2 of 2)

    PROJECTS Infraestructura Energética Mejillones (IEM) (2 of 2) Status as of March 31, 2016 EPC – IEM1 Under execution by S.K. Engineering & Construction (Korea) EPC – New port Under execution by Belfi (Chile) Main works started: Boiler steel structure erection; concrete pouring for steam Project stat

  22. Slide 22: The TEN Project (1 of 4)

    PROJECTS The TEN Project (1 of 4) Characteristics & status Type Double circuit, 500 kV, alternate current (HVAC) Capacity 1,500 MW Length 600 km connecting Mejillones (SING) to Copiapó (SIC) T.E.N. (Transmisora Eléctrica del Norte), 50/50 joint venture Sponsor between E.CL and Red Eléctrica beginnin

  23. Slide 23: The TEN Project (2 of 4)

    PROJECTS The TEN Project (2 of 4) TEN additional transmission line project S/S Nueva Crucero Encuentro TEN trunk transmission line project Interchile (ISA) transmission project S/S Kapatur Existing lines ANG 1 To S/S Laberinto New projects in tender process by the CNE ANG 2 To S/S O’Higgins Kel ar 1

  24. Slide 24: The TEN Project (3 of 4)

    PROJECTS The TEN Project (3 of 4) Status as of March 31, 2016 • Red Eléctrica acquired 50% of TEN’s share capital for US$217.6 million plus 50% of TEN’s debt with E.CL. • TEN’s trunk revenues were defined as described in next slide. Recent • The EIA for the Interchile (ISA) N.Cardones-N.Polpaico tra

  25. Slide 25: The TEN Project (4 of 4)

    PROJECTS The TEN Project (4 of 4) Revenue scheme VI Indexation AVI COMA VATT AVI COMA VATT In MUSD @ Oct- In CLP to In USD (In MUSD @ Oct-13 FX Rates) (In MUSD @ Mar-16 FX Rates) 13 FX Rates Chile CPI to US CPI 738.3 41% 59% 74.0 9.7 83.7 69.7 8.1 77.8 αj 41% βj 59% IPC0 100.90 IPCk 112.13 CPI0 233.

  26. Slide 26: Renewable Energy Projects Portfolio

    PROJECTS Renewable Energy Projects Portfolio  Pampa Camarones I is under construction: • PV Plant 1st stage (6MW) ready; connection to SING in 2Q16 • Approved environmental permits for up to 300MW  El Águila II (34MW) is under study: • Approved environmental permit  Calama wind farm is under stud

  27. Slide 27: Projects under study

    PROJECTS Projects under study Las Arcillas CCGT Gross capacity 480 MW Type Combined-cycle gas turbine Location Pemuco, Bío-Bío Region CAPEX ~US$ 450 million Preliminary development stage; Status early socialization Permits EIA to be submitted during 2016 Gas procurement Different alternatives under

  28. Slide 28: CAPEX program for the ongoing business and new projects

    PROJECTS CAPEX program for the ongoing business and new projects Apr-Dec CAPEX (US$ million) 2015 1Q16 e 2017e 2018e TOTAL 2016 E.CL – Current business 88 12 84 78 73 335 IEM (including port) 109 42 280 448 187 1,066 TOTAL 197 54 364 526 260 1,401 Apr-Dec TEN (US$ million) 2015 1Q16 2017e 2018e TOTA

  29. Slide 29: CAPEX financing program

    PROJECTS CAPEX financing program  E.CL is committed to maintaining a strong investment grade rating  E.CL has a flexible dividends policy: pay-out is being reduced to cope with the required investments  IEM and new port: financed within E.CL’s balance sheet, with a mix of funding sources, in the

  30. Slide 30: Agenda

    AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 30

  31. Slide 31: Electricity sales, generation and average monomic prices

    FINANCIAL RESULTS Electricity sales (GWh) Gross electricity generation (GWh) Total 2,338 Total 2,329 Total 2,266 Total 2,411 2.500 3.000 149 109 2.000 483 2.500 13 12 463 23 7 2.000 404 499 1.500 1.500 1.000 1.726 1.737 1.000 1.826 1.893 500 500 0 0 1Q15 1Q16 1Q15 1Q16 Unregulated Regulated Spot Coa

  32. Slide 32: Income Statement

    FINANCIAL RESULTS Income Statement (US$ millions) 1Q15 1Q16 Var. % Operating revenues 287.6 230.9 -20% Operating income (EBIT) 48.1 36.3 -25% EBITDA 80.1 70.7 -12% Net income 27.3 212.0 677% Average realized monomic sale price (US$/MWh) 104.1 91.3 -12%  Total operating revenues decreased 20% mainly

  33. Slide 33: EBITDA comparison 1Q16 vs 1Q15

    FINANCIAL RESULTS EBITDA comparison 1Q16 vs 1Q15 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 100 In millions of US$ 90 +3 -8 +4 +2 -4 80 -5 70 60 50 40 80 71 30 2

  34. Slide 34: Net Income comparison 1Q16 vs 1Q15

    FINANCIAL RESULTS Net Income comparison 1Q16 vs 1Q15 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 300 In millions of US$ Minority 250 +154 -21 Interest -7 -2 1 200

  35. Slide 35: Strong liquidity and low leverage

    FINANCIAL RESULTS Available Cash (US$ million) Gross Debt / LTM(1) EBITDA 500 4,0 400 3,0 300 2,0 200 401 2,4 2,4 1,0 100 147 0 0,0 31/12/15 31/03/16 31/12/16 31/03/16 Available cash Gross Debt / LTM EBITDA Net Debt / LTM(1) EBITDA LTM1 EBITDA / LTM(1) Gross interest Expense 2,5 9,0 2,0 8,5 1,5 8,0

  36. Slide 36: E.CL's debt breakdown (as of March 31, 2016)

    FINANCIAL RESULTS E.CL’s debt breakdown (as of March 31, 2016) Simple debt structure, solely at E.CL corporate level: 1. 5.625%, 144-A/Reg-S bond for US$400 million maturing January 2021:  Bullet, unsecured, no financial covenants. YTM as of March 31, 2016 = 3.29% 2. 4.500%, 144-A/Reg-S bond for US

  37. Slide 37: Net Debt evolution 1Q16

    FINANCIAL RESULTS Net Debt evolution 1Q16 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- In millions of US$ 800 700 +60 +8 +10 -10 -218 600 500 -42 -13 -70 400 613

  38. Slide 38: Dividends

    FINANCIAL RESULTS Dividends  E.CL has a flexible dividend policy, which consists of paying the minimum legal required amount (30% of annual net income), although higher payout ratios may be approved in function of (among others) anticipated capital expenditures: Payout ratio in recent years:  2012

  39. Slide 39: Evolution of E.CL share price LTM

    FINANCIAL RESULTS Evolution of E.CL share price LTM (*) -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Index Mar.31, 2016: Mar. 31, 2015 = 100 ECL: CLP 1,097 120 IP

  40. Slide 40: Strong investment-grade ratings

    FINANCIAL RESULTS International ratings Solvency Perspective Date last review Standard & Poors BBB Stable November 2015 Fitch Ratings BBB Stable August 2015 National ratings Solvency Perspective Shares Date last review Feller Rate A+ Stable 1st Class Level 2 January 2016 Fitch Ratings A+ Stable Augu

  41. Slide 41: Forward-looking statements disclaimer

    This presentation may contain certain forward-looking statements and information relating to E.CL S.A. (“E.CL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking statements include, without limitat

Engie Energía Chile S.A. (E.CL) — Q1 2016 Earnings Presentation on 6ix