Endesa S.a. · BME:ELE
Endesa — Investor Day (November 2018)
55 slides from Endesa's investor day presentation, Nov 21, 2018
Slide 1: Endesa 2019-2021 Strategic Plan Update
Endesa 2019-2021 Strategic Plan Update 21/11/2018
Slide 2: Agenda
1. Endesa’s Outstanding Position 2. Energy Transition context in Spain 3. Strategic Plan Update: 2019-2021 4. Key Financial Indicators 5. Closing remarks 2
Slide 3: 1. Endesa's Outstanding Position
1. Endesa’s Outstanding Position 2. Energy Transition context in Spain 3. Strategic Plan Update: 2019-2021 4. Key Financial Indicators 5. Final remarks 3
Slide 4: Endesa's outstanding position
Endesa’s outstanding position A portfolio of strategic assets (1) 1st player in electricity New Early mover in Iberia sales and 2nd in gas sales Customers products and • Electricity sales: services • 2,000 charging points ~103 TWh(2) • 1.8 M maintenance and • Gas sales: ~95 TWh repair clients e-Home
Slide 5: Strategic Plan Update
Strategic Plan Update Endesa updated strategic vision to reinforce our leading position in Iberia Customer focus Smart grids Generation mix Maximized customer Smart networks and Decarbonization and value and leadership best-in-class security of supply with Endesa-X operations Digitalization Efficien
Slide 6: Delivery on strategic plan: operating targets
Endesa’s outstanding position Delivery on strategic plan: operating targets Target 2017-2020 2018e ✔ Integrated Margin (€/MWh) ~20-24 ~ 23 Customer focus ✔ Gas Margin (€/MWh) ~0.7-2 ~2 Endesa X: e-home clients (M) ✔ ~1.2 ~1.8 ✔ Smart Meters (nº meters M) ~12 ~12 Smart grids ✔ Growth opportunities Ac
Slide 7: Delivery on strategic plan: financial targets
Endesa’s outstanding position Delivery on strategic plan: financial targets 2018 CAGR 2014 target 2018e 2014-18 TSR, €/sh ✔ CAPEX (€bn) 0.8 1.3 1.4 +13% ✔ +91% 25.8(3) OPEX (1) (€bn) 2.4 2.0 2.0 -4% ✔ EBITDA (€bn) 3.1 3.4 3.5 +2% 13.5(2) ✔ Net ordinary income (€bn) 0.9 1.4 1.4 +12% ✔ 2014 2018e Gros
Slide 8: 2. Energy Transition context in Spain
1. Endesa’s Outstanding Position 2. Energy Transition context in Spain 3. Strategic Plan Update: 2019-2021 4. Key Financial Indicators 5. Final remarks 8
Slide 9: Main challenges of the energy transition in Spain
Energy Transition context in Spain Main challenges of the energy transition in Spain Invest in new renewable capacity while maintaining ~55-60 GW(1) enough thermal capacity fleet to provide a competitive 2018-2030 and low-emission backup Support intelligent electrification of transport, buildings Fr
Slide 10: Energy policies acceleration towards a zero-carbon economy
Energy Transition context in Spain Energy policies acceleration towards a zero-carbon economy 2030 UE energy policy targets update Energy policy targets view in Spain Current situation Likely proposal • A 40% cut vs 1990 levels 341(2) -20% vs 230(3)-248 1990(3) GHG(1) - 43% vs 2005 in ETS sectors
Slide 11: Spanish energy and emission balances
Energy Transition context in Spain Spanish energy and emission balances 2030: proposal for the 2016 fulfillment of targets Final energy, MtCO2 80 MtCO2 82.5 Mtoe 7% 9% 24% 0 0 33% 16% CO2 emissions vs 2005 21% - 35% in non ETS 184 51% 143 - 66% in ETS(1) 37% - 86% in electricity Renewable Electricit
Slide 12: Spanish electrification across customer segments
Energy Transition context in Spain Spanish electrification across customer segments Main final energy consumption by segment, Mtoe Mobility (road) Residential & services Industry 27.7 25.3 25.7 23.7 19.0 21.4 4% 17% 59% 43% 50% 73% 96% 83% 81% 57% 41% 50% 27% 2016 2030E 2016 2030E 2016 2030E • ~30%
Slide 13: Spanish capacity mix
Energy Transition context in Spain Spanish capacity mix Spanish electric mainland system Requirements Electricity 253 325 Smart tariffs to promote intelligent demand, TWh electrification (minimize increase in Peak demand, GW 41 49 peak demand) Reserve margin 1.35 1.10 Installed capacity, Thermal gen
Slide 14: A smarter and more resilient grid
Energy Transition context in Spain A smarter and more resilient grid to support Spanish electrification and new services Investments in power grid 2017-2030E(1), nominal €bn • Digitalization and automation of substations, Grid digitalization control centers, etc. to integrate RES and 19-21 & moderni
Slide 15: 3. Strategic Plan Update: 2019-2021
1. Endesa’s Outstanding Position 2. Energy Transition context in Spain 3. Strategic Plan Update: 2019-2021 4. Key Financial Indicators 5. Final remarks 15
Slide 16: Strategic pillars
Strategic pillars Smart Customer Efficiency through Decarbonization networks value digitalization Growth oriented business plan 16
Slide 17: Strategic pillars: Decarbonization
Strategic pillars Decarbonization ▪ Significant growth in renewables ▪ Keep emission free generation guaranteeing security of supply ▪ Environmental investments 17
Slide 18: Renewable generation 2018-2021: our main growth platform
Decarbonisation of the generation mix Renewable generation 2018-2021: our main growth platform Installed capacity, GW Output by technology, TWh 1.0 8.4 4.5 15.7 0.9 6.5 12.2 -0.9 Wind & 3.7 8.2 1.8 3,7 Solar Hydro(1) 8.5 4.8 4.8 7.5 2018e 2017 New 2021 2018e Wind& 2021 Hydro Auctions Capacity Solar
Slide 19: Conventional generation: sustainable and efficient operation
Decarbonisation of the generation mix Conventional generation: sustainable and efficient operation Installed capacity, GW • Domestic coal: -2.1 - No BREF(1) investment Thermal 8.4 - Planned closure of Compostilla and Teruel in 2020(3) 6.3 • Imported coal: Thermal - Litoral BREF investment completed
Slide 20: Progressing towards total decarbonisation in 2050
Decarbonisation of the generation mix Progressing towards total decarbonisation in 2050 Endesa CO2 emissions(1), Total output, TWh MtCO2, % reduction vs. 2005 75 -1 75 -4 +1 +4 -47% Non-mainland 13 12 51(2) RES(1) 12 16 -44% 25 27 -100% Nuke 26 <20 25 21 Thermal 0 1 2 3 4 5 6 2005 2020 2030 2050 201
Slide 21: Strategic pillars: Smart networks
Strategic pillars Smart networks New investment opportunities towards energy transition Becoming a digital network operator Increasing efficiency towards best in class excellence 21
Slide 22: Investments in digitalization of networks
Smart networks Investments in digitalization of networks Net Capex (1) 2018-2021, €bn Digital Capex, €bn 2.0 1.9 Smart 0.3 0.1 meters Grid automatization: 0.4 Grid 0.9 1.0 Digitalization Grid modernization: 0.4 1.7 1.8 ~€1.8 bn capex (~+€100 M vs. old plan) devoted to ensure Grid upgrade 0.8 0.8 RAB
Slide 23: Margin evolution
Smart networks Margin evolution Distribution margin, €bn 2.6 2.5 -0.13 +0.03 Remuneration reduction partially Other 0.4 0.4 compensated by: - New investments - Incentives Regulated 2.2 2.1 Improvement in other revenues: Connections and others 2018e Regulated Mg Others 2021 Distribution margin ev
Slide 24: Continuous focus on operational efficiency
Smart networks Continuous focus on operational efficiency OPEX, €/customer Losses(1), % Minutes of interruption 9.3% 70 45 8.9% 0.4pp 41 9% 26% 52 2018e 2021 2018e 2021 2018e 2021 Better service quality reducing interruptions, losses and improving efficiency (1) SO criteria 24
Slide 25: Strategic pillars: Customer value
Strategic pillars Customer value ▪ Consolidate power and gas businesses ▪ Customer value-based strategy ▪ Innovation, new business models and digital platforms ▪ Digitalization of customer-related processes 25
Slide 26: Strategic guidelines to lead the energy transformation
Customer value Strategic guidelines to lead the energy transformation Power and Gas Endesa-X • Integral Home Solutions Margin improvement through a Maximizing Customer value-based management of the consolidated • Cost saving and energy efficiency- Value based industry solutions client. businesses •
Slide 27: Maintaining leadership in the electricity business
Customer value Maintaining leadership in the electricity business Sales Liberalized Business 2018-21(1), TWh Power margin(2), €/MWh +3% ~1.2x 103 106 Regulated ~27 15 13 Free B2C 20 22 ~23 Free B2B 68 71 2018e 2021 Average Market share (3) 35% integrated margin Customer base evolution 2018-21, M Gro
Slide 28: Consolidating as the 2nd gas operator
Customer value Consolidating as the 2nd gas operator Sales 2018-21(1), TWh Gas retail margin, €/MWh -5% ~1.5x 95 90 ~3 Retail 71 73 Others 24 17 ~2 2018e 2021 Market share (2) 16% Customer base evolution 2018-21, M +19% 1.6 1.9 2018e 2021 2018e 2021 Substantial recovery in gas market fundamentals dr
Slide 29: Improving efficiency and digitalization
Customer value Improving efficiency and digitalization Business indicators Digital KPIs(1) 11% 3.9 10% -1pp 2.8 Power churn rate, e-billing, +39% % #M 72% 78% 15% 15% +6pp Gas churn rate, - e-care, % % digital 13 11 4.4 -15% 3.7 +19% Cost to Serve(1) , Digital contracts, €/customer #M 2018e 2021 201
Slide 30: Endesa X delivery
Customer value Endesa X delivery Main KPIs Gross margin Maintenance and repair clients, ~€0.2 bn #M 2018e 2021 e-Home 1.8 2.5 New initiatives Energy Infrastructure, k# 2018e 2021 e-Industries 1.1 1.3 ~€0.1 bn Public lighting, Consolidated k# 2018e 2021 businesses 95 130 e-City Charging points, k# 20
Slide 31: e-Mobility: Deployment of charging points
Customer value e-Mobility Public charging points Private charging points Charging points map 2023 k# Accum. charging points Deployment of charging 38 Total charging points 2021: points ~3,300 2 2018 2021 Opportunity to provide flexibility services through aggregation JuiceBoxC JuiceStation Platform
Slide 32: Strategic pillars: Efficiency through digitalization
Strategic pillars Efficiency through digitalization ▪ Digitalization as a key driver for efficiency enhancing ▪ €1.3 bn investments in digitalization ▪ Continuous focus on efficiencies following cost-reduction track record 32
Slide 33: Efficiency through digitalization: main initiatives
Efficiency through digitalization Efficiency through digitalization: main initiatives 2018-21 Digitalization Net Capex Key highlights Savings: ~€150 M Disruptive efficiency: process digitalization and system integration Savings: ~€30 M Data driven networks: quality plan, loss reduction, 4% remote co
Slide 34: Unitary KPIs of the Efficiency Plan per area
Efficiency through digitalization Unitary KPIs of the Efficiency Plan per area Opex(1) evolution, €bn -10% 49 45 44 Unitary cost(2), Generation 2014 2.4 k€/MW 2015 2018e 2021 2018e 2.0 -21% Fixed cost, 48 38 CPI 0.1 EGPE k€/MW Growth 2015 2018e 2021 0.1 -22% Efficiency -0.2 Unitary cost, 53 45 41 Di
Slide 35: A strategy with a sustainable approach
A strategy with a sustainable approach Endesa’s contribution to UN SDGs Commitment to local communities ▪ Sustainable approach at local level: ‒ Deployment of CSV methodology in power plants ‒ Sustainable construction site & plant model 100% Energy mix ▪ Accompaniment plan for a Fair Transition on p
Slide 36: 4. Key Financial Indicators
1. Endesa’s Outstanding Position 2. Energy Transition context in Spain 3. Strategic Plan Update: 2019-2021 4. Key Financial Indicators 5. Final remarks 36
Slide 37: Main financial figures
Key Financial Indicators Main financial figures Net Capex Plan(1) 2018-2021, €bn EBITDA, €bn Funds from Operations, €bn 1.2 +14% 0.7 4.0 2.0 3.5 +40% 2.8 6.4 2.0 €2.5 bn Regulated Capex 1.9 0.6 Dx Non mainland Renewables (2) Gx 2018e 2021 2018e 2021 Supply Regulated Capex Capex increase drives EBITD
Slide 38: Net Capex analysis
Key Financial Indicators Net Capex analysis Net Capex by business line, €bn 1.8 +1.4 1.6 1.6 6.4 1.4 39% 29% 32% 5.0 Renewables(2) 22% 3.3 Asset 27% 2.5 Dx 37% 28% 26% development 14% Gx 19% Asset 2.4 24% 19% 11% Supply 11% management 2.2 Gx non-mainland 13% 9% 12% 19% 0.7 4% 5% Customer (1) 0.3 1 2
Slide 39: EBITDA analysis
Key Financial Indicators EBITDA analysis EBITDA by business, €bn Main drivers 2021 vs. 2018e +14% • Higher integrated margin: improvement 4.0 of pool prices, new renewables 0.0 capacity (+1.9GW) and higher Supply 3.5 +0.6 Generation & Supply margin, offset by lower thermal spreads Gx & Sx (1) 1.1 1.
Slide 40: Comparison of old plan vs. updated plan
Key Financial Indicators Comparison of old plan vs. updated plan EBITDA, €bn + Macro context + Power & Gas margin + Macro context + Renewables higher growth + Power & Gas margin - CDS evolution + RWs higher growth - Lower sales - CDS evolution - Non mainland - Lower sales 4.0 3.8 3.5 3.7 3.7 3.4 3.5
Slide 41: Net income evolution
Key Financial Indicators Net income evolution Net Income(1), €bn ~-0.1 1.8 +24% 1.8 1.6 +0.5 1.5 1.4 1.4 2018e 2019 2020 2021 2018e EBITDA D&A, financial 2021 & others Net income(1) sound increase (1) Ordinary Net Income 41
Slide 42: Cash flow generation
Key Financial Indicators Cash flow generation Plan 2019-2021: Cash flow generation, €bn Change Net Debt Plan 19-21 vs. Plan 18-20, €bn 8.4 3.4 -5.0 1.7 -1.2 -0.4 -1.0 -4.6 -1.5 -1.2 Chg. Net D FFO D Capex D Dividends Chg. Net FFO Capex(1) FCF Dividends Chg. Net Debt Debt Plan Debt Plan 18-20 19-21 S
Slide 43: Debt analysis
Key Financial Indicators Debt analysis 2018-21 Gross debt evolution, €bn Cost of Debt (%) Net Debt/EBITDA (times) 7.6 0.5 6.2 0.3 2.1% 1.8x 7.1 1.9% 5.9 1.7x 2018e 2021 2018e 2021 2018e 2021 Cash & Equivalents Net Debt Higher debt to finance growth but leverage contained 43
Slide 44: 5. Final remarks
1. Endesa’s Outstanding Position 2. Energy Transition context in Spain 3. Strategic Plan Update: 2019-2021 4. Key Financial Indicators 5. Final remarks 44
Slide 45: Endesa dividend policy
Final remarks Endesa dividend policy Pay-out (% on ordinary Net Income) 100% ✔ 100% ✔ 100% ✔ 80% 0.63 New dividend policy supporting new growth profile Interim dividend 0.70 2018e 2019 2020 2021 ✔ Dividend policy of DPS 1.33(1) previous year Floor confirmed Previous plans commitments confirmed, adju
Slide 46: Closing overview
Final remarks Closing overview CAGR 2018e 2019 2020 2021 2018-2021 EBITDA, €bn ~ 3.5 ~ 3.7 ~ 3.8 ~ 4.0 ~ +5% Net Income(1), ~ 1.4 ~ 1.5 ~ 1.6 ~ 1.8 ~ +7% €bn Minimum DPS, 1.33 (2) €/sh S 2018-2021 Capex, €bn 1.4 1.8 1.6 1.6 6.4 Cummulative 3.4 FCF(3), €bn (1) Ordinary Net Income (2) Gross dividend (
Slide 47: Final remarks
Final remarks 1 First-class integrated player in Iberia 2 Sound delivery track record 3 Multiple growth opportunities in the energy transition 4 Strategic vision reaffirmed and growth path enhanced 5 Sustainable value creation over the long term 47
Slide 48: Back-up
Back-up
Slide 49: Commodity overview and update to latest market consensus
Key Financial Indicators Commodity overview and update to latest market consensus Brent price, $/bbl CO2 price, €/ton 2019-21 plan 2018-20 plan 71.0 69.0 17.5 18.0 67.5 16.0 63.5 13.0 64.5 7.6 8.8 6.0 57.0 60.0 2018e 2019 2020 2021 2018e 2019 2020 2021 Consensus 65 66 66 Consensus 9 12 16 17 Coal AP
Slide 50: Power market overview and update to latest market consensus
Key Financial Indicators Power market overview and update to latest market consensus Mainland Spain demand(1), TWh Average daily market price(2), €/MWh 2019-21 plan 2018-20 plan 263 266 56.5 55.0 55.4 259 260 50.9 256 256 46.6 46.7 253 45.2 2018e 2019 2020 2021 2018 2019 2020 2021 Consensus 255 256
Slide 51: EBITDA analysis
Key Financial Indicators EBITDA analysis EBITDA by business line, €bn 3.7 3.8 4.0 3.5 2.0 2.0 Dx 2.0 2.1 1.2 1.4 Gx/Sx(1,2) 0.9 1.1 EGPE 0.2 0.2 0.3 0.3 Gx non-mainland 0.4 0.3 0.3 0.3 2018e 2019 2020 2021 (1) Includes Hydro EBITDA (2) Gx & Sx EBITDA figure includes Generation and Supply business, C
Slide 52: Old Plan Capex reconciliation
Old Plan Capex reconciliation Net Capex 2017-2020 Net Capex by category, €bn 5.0 5.0 0.3 Retail, Endesa X (e-Home, e- Customers(1) Industries), Network Maintenance 2.2 Investments for recurring asset 2.2 Asset management maintenance Growth investments in Growth 2.8 renewables, networks (quality 2.5
Slide 53: Glossary of terms (I/II)
Glossary of terms (I/II) Item Definition Average cost of debt (%) Cost of gross financial debt / gross average financial debt Average life of debt (number of years) (Principal x number of days of term) / (Principal in force at the end of the period x number of days of the period) Cash flow from oper
Slide 54: Glossary of terms (II/II)
Glossary of terms (II/II) Item Definition Net financial debt (€M) Long and short term financial debt - Cash and cash equivalents – Derivatives recognized as financial assets Net financial results (€M) Financial Revenues - Financial Expenses - Foreign Exchanges Revenues (€M) Sales + Other operating r
Slide 55: Disclaimer
Disclaimer This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and they are subject to material risks, uncertainties, changes and other fact