Edp S.a. · EURONEXT:EDP

Edp — Energias de Portugal — Q1 2006 Earnings Presentation

28 slides from Edp's earnings presentation, May 25, 2006

  1. Slide 1: 1Q2006 Results

    energias de portugal 1Q2006 Results May 25, 2006 0

  2. Slide 2: EDP: Key Consolidated Financial Figures

    EDP: KEY CONSOLIDATED FINANCIAL FIGURES Income Statement € million 1Q06 1Q05 Change % Gross Profit 1.012 981 +30 3.1% EBITDA* 569 561 +8 1.4% EBIT* 352 362 -10 -2.9% Financial Results 17 (75) +136 - Net Profit 237 217 +20 9.3% CAPEX 196 191 +5 2.6% * Excluding discontinued operations 1

  3. Slide 3: Main Highlights (1/2)

    Main Highlights (1/2) 1. EDP’s consolidated net profit in the 1Q2006 rose 9% YoY. 2. The regulated core business in Iberia – comprising the PPAs and the electricity and gas distribution activities which represent 62% of the Group’s consolidated gross profit - posted a stable performance in the 1Q06

  4. Slide 4: Main Highlights (2/2)

    Main Highlights (2/2) 6. EDP’s renewable energy installed capacity rose by 72% to 1,024MW surpassing for the first time the 1,000 MW threshold and allowing a strong growth of NEO’s contribution to EDP’s gross profit (+€30m). This was achieved both through organic growth (155 MW) and through acquisit

  5. Slide 5: Net Profit Up 9% Supported by Growth in Renewables, Brazil and Revaluation

    NET PROFIT UP 9% SUPPORTED BY GROWTH IN RENEWABLES, GOOD BRAZILIAN OPERATIONS AND REVALUATION OF THE CMEC’S SWAP % change Gross Profit EBITDA* Net Profit € million € million € million 3.1% 1.4% 981 1,012 9.3% 561 569 217 237 1Q05 1Q06 1Q05 1Q06 1Q05 1Q06 (1) Gross margin improvement in generation su

  6. Slide 6: Gross Profit Supported by Renewables Capacity Increases and Brazil

    GROSS PROFIT SUPPORTED BY CAPACITY INCREASES IN RENEWABLES IN IBERIA AND GOOD PERFORMANCE FROM BRAZIL Gross profit evolution: 1Q06 vs. 1Q05 € millions • In Iberia the higher 60 (38) 60 (69) 1,012 gross profit in (11) (2) generation was 981 30 30 mitigated by the losses in supply Forex impact PPAs €1

  7. Slide 7: Iberian Electricity Prices Driven by CO2 Costs, Fuel Prices and Peak Demand

    IBERIAN ELECTRICITY PRICES DRIVEN BY (1) INTERNALIZATION OF CO2 COSTS, (2) FUEL PRICES AND (3) HIGHER DEMAND FOR PEAK CAPACITY Commodities price performance Hydro production index (average = 100) Residual demand in the market* International gas GWh Portugal market (IPE) (€/MWh) Spain 98.8 Brent (USD

  8. Slide 8: EDP's Long Position in Iberian Wholesale Electricity Market Lower

    EDP’S LONG POSITION IN THE IBERIAN WHOLESALE ELECTRICITY MARKET WAS 1,325 GWh LOWER THAN IN THE 1Q2005 1Q06 GWh Portugal Spain Iberian Portfolio Liberalized 1,643 3,454 Generation 5,097 Liberalized Supply 1,585 2,342 3,927 Long position in wholesale market 58 1,112 1,170 1Q06 Long Long position posi

  9. Slide 9: Contract Portfolio Conditions Drive Distinct Commercial Approaches for Portugal and Spain

    CURRENT CONTRACT PORTFOLIO CONDITIONS DRIVE DISTINCT COMMERCIAL APPROACHES FOR PORTUGAL AND SPAIN % demand from customers outside of incumbent distribution areas customers Quarterly change in the number of liberalized B2B customers (electricity) Portugal Spain 0% + 1.588 + 1.378 51% + 475 + 299 + 27

  10. Slide 10: Negative Supply Margins More Than Compensated by Generation Margins

    ON A GROUP PERSPECTIVE, NEGATIVE MARGINS IN SUPPLY WERE MORE THAN COMPENSATED BY THE INCREASE OF MARGINS IN GENERATION Avg. Quarterly Spread Generation margin in the liberalized market Supply margin in the liberalized market Euro/MWh Euro/MWh 69.4 69.4 60.6 60.6 56.7 56.7 53.8 53.8 50.2 Pool 50.2 45

  11. Slide 11: Decline of Liberalized Gross Profit in Iberia Influenced by CO2 Provisioning

    DECLINE OF LIBERALIZED ACTIVITY’S GROSS PROFIT IN IBERIA ALSO INFLUENCED BY THE PROVISIONING OF CO2 COSTS Gross Profit 1Q06 € million Portugal Spain Iberian Portfolio (31) • -€8m deficit in CO2 (31) allowances versus CO2 emissions in the 1Q2006 • -€8m mark-to-market of Liberalized 157 the provision

  12. Slide 12: Change of Regulatory Framework in Spain: Real Decreto-Ley 03/06

    CHANGE OF REGULATORY FRAMEWORK IN SPAIN IMPLEMENTATION OF THE REAL DECRETO-LEY 03/06 RD-L Implementation Description • The government may reduce the system deficit through the attribution of a market value to the CO2 emission licenses previously Companies may granted for free to the electricity sect

  13. Slide 13: Provisional Impact of Real Decreto-Ley 03/2006 on HC Energia

    PROVISIONAL IMPACT OF THE REAL DECRETO-LEY 03/2006 ON HC ENERGIA HC’s EBITDA performance 1Q05 vs. 1Q06 Electricity acquisition € million Break-down of RD-L 03/06 impact on HC costs by distribution Energia EBITDA set at €42.35/MWh €29m EBITDA 1Q05 139 Value of CO2 emission 4 33 Change of rights, excl

  14. Slide 14: Wholesale Tariff Set by RD-L 03/2006 Below European Electricity Prices

    WHOLESALE TARIFF SET BY RD-L 03/2006 CLEARLY BELOW ELECTRICITY PRICES IN OTHER RELEVANT EUROPEAN MARKETS € /MWh foward market prices Market average At March 1st 2006 At May 22nd 2006 2006 2007 2006 2007 OMEL (Spain) 59.12 55.20 51.19 49.75 EEX (Germany) 58.92 56.50 50.15 53.35 Powernext (France) 62.

  15. Slide 15: Growth in Iberian Renewables from Capacity Increases and Higher Prices

    GROWTH IN IBERIAN RENEWABLES SUPPORTED BY CAPACITY INCREASES AND HIGHER SELLING PRICES IN SPAIN Spain Installed Capacity (wind) 1.024 Portugal MW MW gross in Iberia**** 429 261 NEO Gross Profit 25 € million 595 65 201 134% 236 339 +72% 52.9 136 561 223 1Q05 Change ** 1Q06 46.3 Output +117% 22.6 GWh

  16. Slide 16: Electricity Price Paid to REN and RD 03/2006 Impact on Distribution Margin

    INCREASE OF ELECTRICITY PRICE PAID TO REN AND RD 03/2006 WITH NEGATIVE IMPACT ON GROSS MARGIN IN DISTRIBUTION Allowed revenues* Gross profit evolution** € million € million Allowed revenues resulting Receivables related with from revenues deviations allowed revenues from • Increase of allowed revenu

  17. Slide 17: Portgás Consolidation and Higher Procurement Costs in Spain Gas

    CONSOLIDATION OF PORTGÁS AND INCREASE OF PROCUREMENT COSTS IN SPAIN FOLLOWING GAS ACQUISITION IN THE SPOT MARKET Spain GROSS PROFIT 1Q05 VS. 1Q06 Portugal Gross profit in gas liberalized market € million € million 1Q05 Volume Margin Spot Other 1Q06 Effect Effect Overpricing 1Q05 43.1 6.2 Portgás 8.1

  18. Slide 18: Energias do Brasil Gross Profit Growth

    GOOD PERFORMANCE FROM GENERATION BUT THE DISTRIBUTION ACTIVITY WAS ENERGIAS DO BRASIL GROSS PROFIT GROWTH DRIVER Gross profit R$ million 1Q 05 1Q 06 1Q05 413.1 Volume Sold Avg. margin Volume Sold Avg. margin GWh R$/MWh GWh R$/MWh Generation 287 72.5 670 76.8 Generation 37.5 Enertrade 1,604 16.2 1,65

  19. Slide 19: Net Profit Up 9% Supported by Growth in Renewables, Brazil and Revaluation

    NET PROFIT UP 9% SUPPORTED BY GROWTH IN RENEWABLES, GOOD BRAZILIAN OPERATIONS AND REVALUATION OF THE CMEC’S SWAP % change Gross Profit EBITDA* Net Profit € million € million € million 3.1% 1.4% 981 1,012 9.3% 561 569 217 237 1Q05 1Q06 1Q05 1Q06 1Q05 1Q06 (1) Gross margin improvement in generation su

  20. Slide 20: EBITDA Performance Supported by Gross Margin Growth

    EBITDA PERFORMANCE SUPPORTED BY GROSS MARGIN GROWTH of which 97% is the impact of the Real Decreto-Ley 03/2006 (€29m) EBITDA performance 1Q06 vs. 1Q05 € million (21) (7) 70 (2) (31) 569 • Increase of supply 561 559 10 and services costs in Excluding the BRL Iberia and Brazil appreciation impact, cos

  21. Slide 21: Moderate Increase in Supplies & Services Amplified by Brazilian Currency

    THE MODERATE INCEASE IN SUPPLIES & SERVICES WAS AMPLIFIED BY THE APRECIATION OF THE BRAZILIAN CURRENCY Supplies & Services performance 1Q06 vs. 1Q05 Core Iberia € million Increase of wind farms O&M costs steaming from the first 177 (30) time consolidation of DESA and 9 (1) 168 7 the end of the two y

  22. Slide 22: Labour Costs Penalised by Brazilian Real and Perimeter Changes

    2. LABOUR COSTS PENALISED BY THE APPRECIATION OF THE BRAZILIAN REAL AND CHANGES IN THE CONSOLIDATION PERIMETER Number of employees Personnel costs Forex impact € million Social benefits Staff costs 1Q05 14,844 133 25 Adjustments to - 370 2 the 1Q2005 * 1Q05 14,474 131 25 pro- forma -141 -2% 2.3% 14,

  23. Slide 23: Other Net Operating Costs Affected by Real Decreto Ley Provisions

    OTHER NET OPERATING COSTS MAINLY AFFECTED BY THE ACCOUNTING OF THE REAL DECRETO LEY 03/2006 PROVISIONS Other net operating costs* € million Real Decreto-Ley 03/2006 impact represents 97% of YoY increase 115 14 3 29 30 85 2 (18) 1Q05 Concession Reversal of CO2 Other Other 1Q06 rents the Spanish emiss

  24. Slide 24: Net Profit Up 9% Supported by Growth in Renewables, Brazil and Revaluation

    NET PROFIT UP 9% SUPPORTED BY GROWTH IN RENEWABLES, GOOD BRAZILIAN OPERATIONS AND REVALUATION OF THE CMEC’S SWAP % change Gross Profit EBITDA* Net Profit € million € million € million 3.1% 1.4% 981 1,012 9.3% 561 569 217 237 1Q05 1Q06 1Q05 1Q06 1Q05 1Q06 (1) Gross margin improvement in generation su

  25. Slide 25: CMEC Interest Rate Swap Revaluation Supports Positive Financial Results

    REVALUATION OF THE CMEC’s INTEREST RATE SWAP SUPPORT THE POSITIVE FINANCIAL RESULTS Financial Results Includes a €44m provision related € millions to financial guarantees by EDP to Electra (Cape Verde) on this company’s debt 127 (50) ƒFinancial results boosted by the 17 partial reversion of last yea

  26. Slide 26: Total Capex in Line with Last Year, More Weighted on Iberian Energy

    TOTAL CAPEX IN LINE WITH LAST YEAR’S AND MORE WEIGHTED ON THE IBERIAN ENERGY BUSINESS CAPEX Brazil € million Portugal Spain 6 196 53 5.5 6 0.8 53.3 57 1.9 53.3 17 4.2 49.8 80.5 56 2.0 14.9 21.3 7.3 62.2 34.9 Generation Renewables Distribution Gas Brazil Other Total Iberia 1Q05 31 24 57 4 65 10 191 ƒ

  27. Slide 27: Consolidated Net Debt Fell After Settlement of Galp Stake Disposal

    CONSOLIDATED NET DEBT FELL FOLLOWING THE FINAL SETTLEMENT FROM THE DISPOSAL OF OUR 14.3% STAKE IN GALP ENERGIA Consolidated net debt € million -3.5% 9,463 9,130 EDP’s net financial debt €333m (3,5%) lower from 31 December 2005 level mainly as a result of: • The settlement of the second (and last) in

  28. Slide 28: 1Q2006 Results

    energias de portugal 1Q2006 Results May 25, 2006 27

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