Slide 1: 1H2006 Results
1H2006 Results July 27, 2006 0
Slide 2: EDP: Key Consolidated Financial Figures
EDP: KEY CONSOLIDATED FINANCIAL FIGURES edp Income Statement € million 1H06 1H05 Change % Gross Profit 1,992 1,913 +79 4.1% EBITDA* 1,058 963 +95 9.9% EBIT* 622 560 +62 11.0% Financial Results (19) (103) +84 81.6% Net Profit 375 318 +56 17.7% CAPEX 482 516 -34 -6.6% * Excluding discontinued operatio
Slide 3: Main Highlights (1/2)
Main Highlights (1/2) edp 1. EDP’s consolidated net profit in the 1H2006 rose 18% YoY (+€56m). 2. In the Iberian electricity market, our liberalized generation business benefited from the increase in wholesale prices in 1H2006, contributing for a significant YoY increase in gross profit (+€72m). 3.
Slide 4: Main Highlights (2/2)
Main Highlights (2/2) edp 6. In electricity distribution in Portugal, allowed revenues set by the regulator increased by 9.3% YoY but gross profit rose just by 1.4% YoY (€84m difference). This negative deviation reflects higher than expected costs with energy purchases, which should be recovered thr
Slide 5: Gross Profit Up 4% Supported by Renewables and Real Appreciation
GROSS PROFIT UP 4% SUPPORTED BY RENEWABLES AND REAL APPRECIATION edp Income Statement € million 1H06 1H05 Change % Gross Profit 1,992 1,913 +79 4.1% EBITDA* 1,058 963 +95 9.9% EBIT* 622 560 +62 11.0% Financial Results (19) (103) +84 81.6% Net Profit 375 318 +56 17.7% CAPEX 482 516 -34 -6.6% * Exclud
Slide 6: Gross Profit Up 4% Supported by Capacity Increases in Renewables in Iberia
GROSS PROFIT UP 4% SUPPORTED BY CAPACITY INCREASES IN RENEWABLES IN IBERIA AND FOREX IMPACT IN BRAZIL edp Gross profit evolution: 1H06 vs. 1H05 € millions • Higher gross profit in generation +4% mitigates losses in 16 supply 79 61 1,992 1,913 (58) (73) 54 (3) 1,856 3 136 • Significant growth Forex i
Slide 7: Increase in Iberian Electricity Pool Prices Driven by Fuel Prices
INCREASE IN IBERIAN ELECTRICITY POOL PRICES DRIVEN BY FUEL PRICES edp Commodities price performance 98.8 International gas market (IPE) (€/MWh) Brent (USD/bbl) 66.6 68.7 60.9 Coal (USD/ton) 56.9 52.9 54.4 62.7 Spanish pool market – price performance 51.9 38.2 30.7 29.1 Base load price; €/MWh Average
Slide 8: More Balanced Liberalized Generation/Supply Portfolio in Iberia
MORE BALANCED LIBERALIZED GENERATION/SUPPLY PORTFOLIO IN IBERIA edp Volumes produced and supplied in the market ( ) 1H05 1H06. GWh Portugal Spain* Iberian Portfolio Liberalised 3,349 6,300 9,649 Generation (2,672) (7,485) (10,157) Liberalised 2,749 4,501 7,250 Supply (2,890) (2,596) (5,486) Long pos
Slide 9: Higher Gross Margins and Additional Installed Capacity in Portugal
HIGHER GROSS MARGINS AND ADDITIONAL INSTALLED CAPACITY IN PORTUGAL OFFSET SPANISH VOLUME REDUCTION edp Portugal Unit cost (€/MWh) Spain Unit cost (€/MWh) Generation Avg. Selling Price Gross Margin Generation Avg. Selling Price Gross Margin GWh €/MWh €/MWh GWh* €/MWh €/MWh 1H05 2,672 38.8 4.5 35.1 7,
Slide 10: Supply: Recovery of the Commercial Activity in the 2Q2006
SUPPLY: RECOVERY OF THE COMMERCIAL ACTIVITY IN THE 2Q2006 edp Gross Profit of the liberalised supply activity Million euros 2006 2006 1Q 2Q 1Q 2Q (6.2) (21.4) (27.2) (66.0) B2B GWh 1,561 1,144 2,279 2,097 Clients 6,870 6,038 2,375 2,262 B2C GWh 24 20 63 62 Clients 1,066 1,044 57,206 58,814 • Reducti
Slide 11: Negative Supply Margins More Than Offset by Generation Margins
ON AN INTEGRATED PERSPECTIVE, NEGATIVE MARGINS IN SUPPLY WERE MORE THAN OFFSET BY INCREASED MARGINS IN GENERATION edp Unit Margin €/MWh Generation and Supply margins vs. Pool Price Vertical Integration in Iberia €/MWh Supply – Generation Pool - Generation Pool Supply portfolio volumes Volumes sold i
Slide 12: Stability of the Liberalised Activity's Gross Profit in Iberia
STABILITY OF THE LIBERALISED ACTIVITY’S GROSS PROFIT IN IBERIA edp Gross Profit 1H06 € Million Portugal Spain Iberian Portfolio 74* 279 352 * Liberalised Generation Liberalised (33) (87) Supply (121) Integrated Gross 40* Profit 191 232 * Gross Gross Profit Profit 23 209 232 1H05 1H05 * Includes €20m
Slide 13: Provisional Impact of the Real Decreto-Ley 03/2006 on HC Energia Results
PROVISIONAL IMPACT OF THE REAL DECRETO-LEY 03/2006 ON HC ENERGIA RESULTS edp Jun.06 HC’s EBITDA performance Mar.06 1H05 vs. 1H06 € million Break-down of RD-L 03/06 impact on HC’s EBITDA € million EBITDA 1H05* 228 Provision for Change of other regulatory EBITDA risks Value of CO2 without RD-L 11 emis
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 edp Forward market prices Market Average At March 1st 2006 At July 3rd 2006 2006 2007 2006 2007 OMEL (Spain) 59.12 55.20 54.50 51.00 EEX 58.92 56.50 52.40 53.40 (Germany) Powernext 62.00 59.15 53
Slide 15: Growth in Iberian Renewables Supported by Capacity Increases and Higher Prices
GROWTH IN IBERIAN RENEWABLES SUPPORTED BY CAPACITY INCREASES AND HIGHER SELLING PRICES IN SPAIN edp MW gross in Iberia * Installed Capacity (wind) MW Spain NEO Gross Profit 1.108 Portugal € million 509 50 260 599 120% 387 635 +85% 98 210 248 71 142 213 1H05 Change 1H06 45 88 +121% Output Wind 401 88
Slide 16: Electricity Distribution: Higher Purchase Costs and RD 03/2006 Impact
edp ELECTRICITY DISTRIBUTION: INCREASE OF ELECTRICITY PURCHASE COSTS AND RD 03/2006 WITH NEGATIVE IMPACT ON GROSS MARGIN Annual Growth Gross profit evolution Spain Portugal - Electricity consumption evolution Portugal TWh Higher growth (+6.1%) in (€ million) +4.8% regulated system (namely in higher
Slide 17: EDPD Gross Profit Reflects Lack of Short Term Pass Through of Costs
EDPD GROSS PROFIT REFLECTS LACK OF SHORT TERM PASS THROUGH OF ENERGY AQUISITION COSTS AND RECOGNITION FOR RECOVERY OF 2006 TARIFF DEFICIT edp 1H2006 EDP Distribuição electricity gross profit * 9% increase in Allowed (€ million) Revenues not fully received through tariffs to final clients: • Tariff D
Slide 18: Increase in Regulated Business Through Portgás Acquisition
INCREASE IN REGULATED BUSINESS THROUGH PORTGÁS ACQUISITION AND INCREASE IN SUPPLY ACTIVITY COMPENSATE THE OVERPRICING IN GAS SOURCING (SPOT MARKET – 1Q06) edp Iberian gross profit evolution Spain (€ million) Gross profit evolution in gas liberalised market Portugal € million 1H05 81 13 Portgás 25 Co
Slide 19: Gross Profit in Brazil Penalized by Higher Non-Controllable Costs
edp GROSS PROFIT IN BRAZIL PENALIZED BY HIGHER NON-CONTROLLABLE COSTS TO BE RECOVERED IN THE NEXT TARIFF REVIEWS Gross profit evolution Change in Regulated Revenues (R$ million) 7.5% R$126m to be 849 recovered in next 801 (36) tariff reviews: 1H05 901 11 (90) (126) Aug-06:Escelsa 58 (10) Oct-06: 723
Slide 20: EBITDA Up 10% Supported by Gross Margin Growth
EBITDA UP 10% SUPPORTED BY GROSS MARGIN GROWTH edp Income Statement € million 1H06 1H05 Change % Gross Profit 1,992 1,913 +79 4.1% EBITDA* 1,058 963 +95 9.9% EBIT* 622 560 +62 11.0% Financial Results (19) (103) +84 81.6% Net Profit 375 318 +56 17.7% CAPEX 482 516 -34 -6.6% * Excluding discontinued o
Slide 21: EBITDA Performance Supported by Gross Margin Growth
EBITDA PERFORMANCE SUPPORTED BY GROSS MARGIN GROWTH edp EBITDA evolution between 1H2005 and 1H2006 € million 10% 136 (7) (64) • Increase in S&S in Iberia 15 and Energias do Brasil 1,058 95 963 15 978 • Increase in Personnel Costs due to forex effect and Redundancy Plan impact in Brazil, and ordinary
Slide 22: Costs with Supplies & Services: Stable Excluding Forex Impact
COSTS WITH SUPPLIES & SERVICES: STABLE EXCLUDING FOREX IMPACT edp Supplies & Services performance 1H06 vs. 1H05 Iberian Core € million • Decrease at EDPD’s commercial costs (-€9.1m) through lower re- branding (-€3.2m), invoicing, 409 (61) billing and posting (-€6.2m) 7 12 (12) expenses… 348 (1) 354
Slide 23: Personnel Costs Rose by 2.7% YoY Excluding Non Recurring Issues
PERSONNEL COSTS ROSE BY 2.7% YoY EXCLUDING NON RECURRING ISSUES edp Number of Employees Personnel Costs Forex Effect € million Social Benefits Personnel Costs Redundancy Plan 1H05 14,829 286 14 (Brasil) 1H05 (8) Adjustments* (361) 1H05 14,468 278 14 Pro-forma (389) 2.7% 22% 14,079 286 36 1H06 13 19
Slide 24: Redundancy Plan Estimated Cost Savings of R$68 Million/Year
edp THE IMPACT OF THE REDUNDANCY PLAN WILL IMPLY AN ESTIMATED COST SAVINGS OF R$68 MILLION*/YEAR FROM DEC-07 ONWARDS Expected net annual cost savings of “Redundancy Plan” – R$ millions* 60 35.6 Direct Personnel costs 24.8 14.8 Indirect Personnel costs 5.2 8.4 2.4 4 -52 Total cost Jun-06 Dec-06 Jun-0
Slide 25: Other Net Operating Costs: Main Impact from Spanish Regulation
edp OTHER NET OPERATING COSTS: MAIN IMPACT COMES FROM PROVISIONS ON SPANISH REGULATION Other Operating Costs/(Revenues) Excluding capital gains in the disposal of financial stakes in 2005 and 2006 * € million + €15.8m of contributions to Pension Fund and others + €9.9m of deviation payments to REN 2
Slide 26: Net Profit Up 18% Supported by Growth in Renewables
NET PROFIT UP 18% SUPPORTED BY GROWTH IN RENEWABLES AND REVALUATION OF THE CMEC’S SWAP edp Income Statement € million 1H06 1H05 Change % Gross Profit 1,992 1,913 +79 4.1% EBITDA* 1,058 963 +95 9.9% EBIT* 622 560 +62 11.0% Financial Results (19) (103) +84 81.6% Net Profit 375 318 +56 17.7% CAPEX 482
Slide 27: Revaluation of the CMEC's Interest Rate Swap Supports Financial Results
REVALUATION OF THE CMEC’s INTEREST RATE SWAP SUPPORT THE POSITIVE PERFORMANCE OF FINANCIAL RESULTS edp Financial Results evolution Includes a €44m provision related € million to financial guarantees by EDP to Includes €30m of Electra (Cape Verde) on this Capital Gain due to company’s debt, lower fin
Slide 28: Net Income Increased 18%
NET INCOME INCREASED 18% edp Net Income € million 18% 84 (44) (48) 3 318 62 375 Net Change in Improvement Discontinued Increase in Increase in Net Income EBIT of financial operations income minority Income 1H05 results and capital taxes interests 1H06 gains* * Discontinued operations and capital gai
Slide 29: Capex Slowdown Due to Conclusion of Peixe Angical Hydro Plant
edp CAPEX SLOWDOWN DUE TO CONCLUSION OF PEIXE ANGICAL HYDRO PLANT, MORE CAPEX IN CCGTs & LCPD RELATED IN IBERIA Brazil EDP Consolidated Capex Portugal € million Spain 15 482 127 13 127 129 21 2 62 115 196 9 11 12 129 50 49 14 159 80 Generation Renewables Distribution Gas Brazil Other Total Ibéria 1H
Slide 30: Consolidated Net Debt Fell €100m Following Final Settlement of Galp Disposal
CONSOLIDATED NET DEBT FELL €100m FOLLOWING THE FINAL SETTLEMENT FROM THE DISPOSAL OF OUR STAKE IN GALP edp Consolidated net debt Jun-06 vs. Dec-05 € million +576m from the sale of 14.3% stake in GALP +€7.2m from the sale of 50% of EDP Bioeléctrica +€5.4m regarding the sale of Edinfor -€58.7m from th
Slide 31: feel our energy
&) edp feel our energy