EDP Renewables SA · EURONEXT:EDPR
EDP Renewables SA — EDP Renováveis — Investor Presentation (March 2020)
47 slides from EDP Renewables SA's investor presentation, March 2020
Slide 1: Investors Presentation
Investors Presentation March 2020 CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by EDP Renováveis, S.A. (the "Company“; LEI 529900MUFAH07Q1TAX06) solely for use at the presentation to be made on March, 2020. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to
Slide 3: Agenda
Agenda 1 Our Execution 2 Our Sector 3 EDP Group vision 4 Our Strategy 5 Annex -3-
Slide 4: Our execution
Our execution -4-
Slide 5: EDPR has successfully executed its 2016-20 strategic agenda
EDPR has successfully executed its 2016-20 strategic agenda… Selective growth Self-funding Operational excellence Presented in May-2016 Presented in May-2016 Presented in May-2016 3.5 GW up to €1.1bn -1% Core Opex/MW 2016-20 proceeds from assets sale CAGR 2015-20 Prioritize quality investments Sale
Slide 6: Delivering 2 years in advance and above target at the bottom-line
…delivering 2 years in advance and above target at the bottom-line EBITDA evolution1 Net Profit evolution2 €bn €bn +7% +43% CAGR 15-18 CAGR 15-18 €0.3bn €0.3bn €1.55bn €1.3bn €1.3bn €0.2bn €1.06bn €0.1bn 2015 2018 2018 2020 2015 2018 2018 2020 Target Actual Target Target Actual Target EBITDA increas
Slide 7: Our sector
Our sector -7-
Slide 8: EDPR operates in a sector with increased competitiveness and solid outlook
EDPR operates in a sector with an increased competitiveness and solid outlook… Wind and Solar are already cost competitive… …which along with solid fundamentals are driving demand across regions2 2020 LCOE1 [€/MWh] 2019-22E additions CAGR • US: PTC phase-out; Increasing demand 20-25 North America dr
Slide 9: High expected growth across regions and technologies, >60 GW avg per year
…with high expected growth across regions and technologies, with >60 GW avg per year until 2030 Expected renewables total installed capacity by region1… ...and per technology Total installed GW; wind onshore, offshore & solar utilities Total installed GW; wind onshore, offshore & solar utilities 1,2
Slide 10: EDP Group vision
EDP Group vision - 10 -
Slide 11: EDP envisions to keep capitalising on a winning sector
EDP envisions to keep capitalising on a winning sector… EDP is already a global leading renewables player1… ...and aims to strongly increase renewables weight Source of generated electricity, TWh ~21 GW of renewables capacity2 deployed worldwide Non-renewables Top global wind player with ~12 GW >9 G
Slide 12: Committed to accelerate EDPR growth in Business Plan 2019-22
…and is committed to accelerate EDPR growth in the new Business Plan 2019-22 EDP Group total investments… …to accelerate under new strategic plan… …with strong focus in renewables €bn; 2016-18 Investments; €bn per year €bn; % 2.9 +60% Hydro, Networks; Client solutions & 1.8 energy mgmt. €5.7bn ~€12b
Slide 13: Our strategy
Our strategy - 13 -
Slide 14: EDPR is one of the largest wind energy producers, with a 11.2 GW portfolio
EDPR is one of the largest wind energy producer, with a 11.2 GW portfolio… Canada 30 MW UK US Poland 6,112 Offshore under constr. project MW Offshore under 418 under constr. develop. MW 200 Offshore 53 MW under Belgium develop. MW Romania Mexico France Onshore under 521 develop. Colombia Portugal It
Slide 15: New BP 2019-22 based on the same pillars, expanded growth and sell-down model
…and has defined a new BP 2019-22 based on the same pillars and complemented by an expanded growth and sell-down model… Selective growth Self-funding Operational excellence 2019-22E 2019-22E 2019-22E Solid value creation, investing in quality …enhanced by selling assets’ stakes, …and supported by di
Slide 16: Selective growth: a 7 GW growth plan increasing diversification
Selective growth: a 7 GW growth plan increasing geographical and technological diversification Capacity Build-out by region Capacity Build-out by technology (GW; 2019-22) (GW; 2019-22) with CoD until 2022; excludes projects under Other markets development1 North America (60%) Wind Onshore – 4.0 GW s
Slide 17: Selective growth: North America as main market with 4.2 GW target
Selective growth: North America as the main market with 4.2 GW target of which 2.8 GW already secured… Projects already secured US Demand driven by increasing Build-out capacity breakdown MW cost-competitiveness GW Project Name MW Region CoD Prairie Queen 199 Kansas 2019E Timber Road IV 125 Ohio 201
Slide 18: Selective growth: Europe supported by new governance model and private PPAs
Selective growth: Europe supported by new governance model and increasing appetite for private PPAs… Projects already secured EDPR strategy per market Build-out capacity breakdown MW GW Country MW Status CoD 1.1 GW Projects’ develop./ promotion 2019 53 Installed 2019 already 123 U/ const. & dev. 202
Slide 19: Selective growth: Brazil set to increase representativeness, new markets
Selective growth: Brazil set to increase its representativeness, while continuing to analyse new markets opportunities Developing portfolio of competitive projects Others: Selecting investment opportunities with tariffs already secured In countries with strong long-term fundamental 10% 10% 0.1 GW An
Slide 20: Creating EDPR/ENGIE 50:50 joint-venture for offshore wind
Selective growth: Creating EDPR/ENGIE 50:50 joint-venture to focus on a fastest growing renewable technology Expected wind offshore global Combination of the right set of skills …and a EDPR/ENGIE 50:50 control installed capacity1 along with a successful track record… structure with the right governa
Slide 21: Fully integrated JV with 5.2 GW of offshore wind assets
Selective growth: Full integrated JV with 5.2 GW1 of pre-determined offshore wind assets PROJECT NAME TYPE CAPACITY COUNTRY EDPR ENGIE STATUS Moray East Offshore-Fixed 950 MW 33.3% 23.3% U/Construction Tréport & Noirmoutier Offshore-Fixed 992 MW 29.5% 31.0% U/Development Moray West Offshore-Fixed 80
Slide 22: Portfolio of 5.2 GW initial capacity across 6 markets
Selective growth: Together a portfolio of 5.2 GW1 initial capacity across 6 markets and defined growth targets with tariff awarded Moray East SeaMade B&C Wind 950 MW 487 MW 400 MW Status: Construction Status: Construction Status: Development JV Stake: 56.6% JV Stake: 17.5% JV Stake: 100.0% CoD: 4Q 2
Slide 23: Offshore JV investment framework and growth targets
Selective growth: The Offshore JV has a clear investment framework and selective yet ambitious growth targets 50:50 JV with selective investment criteria JV Growth Targets Gross MW Sound market fundamentals 1.5 5-7 Operational & Under construction GW1 GW Stable regulatory frameworks Contracted NPV (
Slide 24: Sell-down strategy: creating extra value through sale of majority stakes
Sell-down strategy: set to create extra value through the sale of majority stakes, without increasing capital employed Sell-down strategy rational… …to propelled extra-growth & value… …and extra-value (incremental value created at project execution) (Benefits of the Sell-down strategy) (Sell-down: S
Slide 25: Sell-down transactions realized totaling ~€1.2bn of value crystallized
Sell-down transactions realized totaling ~€1.2bn of value crystalized to accelerate value creation Sell-down transaction announced Rationale2 Scope Assets age Status Proceeds EV/MW Capital Gains 7-11% (average) (pre-tax; booked in EBITDA) 4-5% spread 997 MW 8 Closed €0.8bn €1.6m €226m 491 net MW yea
Slide 26: Operational excellence: core competences and know-how maximize efficiency
Operational excellence: EDPR core competences and unique know-how set to maximize efficiency Wind assessment know-how …and highly experienced teams …set to maximize efficiency to maximize asset value… delivering unique O&M strategy… and optimize costs O&M contract breakdown (avg MW;%) Core Opex/ avg
Slide 27: EDPR's 2022 agenda and strategic pillars
EDPR’s 2022 agenda and the 3 strategic pillars will unlock our full capabilities… Growth: increasing EDPR own portfolio at a faster pace… Operational excellence Sell-down: …given extra-visible value generated to speed-up growth… Selective growth Diversified: …with technological & geo mix (new market
Slide 28: Solid and ambitious growth targets through 2022
…to deliver solid and ambitious growth targets through 2022… Capacity build-out Excellence in operations Less capital intensive Excel at operational results Unlocking bottom-line MW TWh Sell-down EBITDA Net Profit New capacity being From MW to own with Generating extra value From capacity additions,
Slide 29: Annex
Annex - 29 -
Slide 30: 2019 Results
2019 Results - 30 -
Slide 31: 2019 operational performance on track, sell-down execution
EDPR 2019 operational performance on track to deliver solid growth, along with the execution of Sell-down strategy Quality Selective and Self-funding assets profitable growth business 32% load factor (vs. 30% in 2018) +888 MW built YTD €1.0bn of Sell-down in 2019 97% of LT avg. with 4Q19 @ 98% 1,156
Slide 32: EDPR built +888 MW reaching 11.4 GW portfolio
EDPR built +888 MW YoY reaching 11.4 GW portfolio after Sell-down transactions Evolution of Installed Capacity(1) (EBITDA MW + Equity Consolidated) MW Under Built YTD Construction 12,560 +720 MW +509 MW2 888 (1,156) +169 MW +154 MW 11,672 11,404 11,362 (42) - +330 MW3 • US: PQ (80% of 56% 199 MW; 4Q
Slide 33: 32% load factor in 2019 vs 30% in 2018
In the 2019 EDPR achieved a 32% load factor (vs 30% in 2018) reflecting 97% of P50 (long term average for 12M)… Load Factor and Technical Availability(1) EDPR Quarterly Load Factor vs. Long-term average (%) 2018 2019 2019 ∆ YoY 2019 vs. LT avg. +5% 28% +2pp 102% 93% -1% -2% -2% 34% - -7% -8% 43% +2
Slide 34: Electricity output higher 6% YoY
Electricity output higher 6% YoY, with capacity additions over the period and load factor offsetting impact from EU assets deconsolidation Electricity Production TWh (TWh) % YoY Driven by new capacity and higher wind resource (despite the +3% deconsolidation of 997 MW in Jul-19 +6% +5% related to t
Slide 35: Avg. price at €55/MWh (+2% YoY)
Avg. price at €55/MWh (+2% YoY) benefitting from price recovery in Eastern Europe and favorable FX translation EDPR Price Evolution 2019 % YoY(1) (€/MWh) SP lower price -2% (from lower realised price); RoE +6% (mainly €77.3 0% due to RO & PL recovery); +2% PT -1% (from new additions) €54.7 €53.7 Fl
Slide 36: Revenues increased 7% YoY
Revenues increased 7% YoY given higher wind resource (+3%), higher avg. price (+3%), higher avg. EBITDA MW (+1%) and positive forex, despite scheduled PTCs expiration Revenues Main drivers for Revenues performance (€ million) Higher output: +6% YoY; +€60m (NCF: +€50m; MW: +€10m) +7% from NCF (+2pp Y
Slide 37: Core Opex per Avg. MW flat YoY
Core Opex per Avg. MW Flat YoY given O&M strategy and cost control offsetting the requirements needed to cope with Business Plan expanded growth Opex (excludes Other Operating Income) (1) (€ million) Core Opex/Avg. MW (€k) (Supplies & Services and Personnel Costs) -2% reported +5% IFRS 16 (€45m) 42…
Slide 38: EBITDA of €1,648m (+27% YoY)
Delivering EBITDA of €1,648m (+27% YoY) from the execution of Sell-down strategy, top line performance and IFRS16 EBITDA YoY EBITDA per Region(2) (€ million) (%) +27% Portugal +25% ex-fx +13 1,648 RoE 23% +208 12% 1,300 +127 Braz… 2019(1): €313m from Sell-down in EU & Brazil Spain €1,648m 21% 2018:
Slide 39: Net Profit totaled €475m (+52%)
Net Profit totaled €475m (+52%), with YoY comparison driven by top-line performance and a Sell-down transaction 2019 EBITDA to Net Profit (€ million) €m YoY 1,648 Operating performance driven by top-line & EBITDA +€348m gains related to Sell-down transaction D&A 593 -€47m Effect from YoY capacity a
Slide 40: Cash Flow generation with RCF at €953m
Cash Flow generation with RCF at €953m, +23% higher YoY 2019: Retained Cash Flow (RCF) 1 (€ million) +27% 1,648 +30% (232) +23% (55) 1,266 (300) 953 (108) 313 Includes €313m from Sell-down gains from the EU portfolio and the Brazilian assets EBITDA Non-operating Current Interests, Dividends & RCF Se
Slide 41: Solid balance sheet with Net debt and Tax Equity decreasing by €239m
Solid balance sheet with Net debt and Tax Equity decreasing by €239m... 2019 from RCF to Debt and TEI variance (€ million) 2019 Debt and TEI Breakdown (%) +23% +30% 313 5% TEI Other (825) €1.3bn & TEI 73% 44% 1,266 953 Gross (61) (141) Debt Loans €3.4bn with EDP 239 22% 56% RCF Sell-down RCF Cash Di
Slide 42: Business Plan Execution
BUSINESS PLAN EXECUTION
Slide 43: EBITDA performance from operational evolution and sell-down
EBITDA performance benefitting from solid operational evolution and Sell-down strategy execution EBITDA YoY variance walk by driver (€ million) +27% YoY +3% +23% 1,648 1,300 45 27 1,338 206 (65) 170 (33) Scheduled Mainly USD 2018 PTC IFRS16 Forex Sell-down Performance Sell-down 2019 phase-out Impact
Slide 44: 2019 performance backed by EDPR main pillars
2019 successful performance strongly backed by EDPR main pillars EDPR built +888 MW reaching …keeping adj. Core Opex(2) per Avg. …while successfully executing its self funding 11.4 GW(1) after Sell-down MW Flat YoY given O&M strategy and strategy with the Sell-down of a 997 MW transactions… strict c
Slide 45: Unprecedented execution; 76% of capacity secured for 2022
EDPR unprecedent execution; increasing its own portfolio at a faster pace with 76% of the capacity secured for 2022 along with 1.2 GW secured for post-2022 Build-out GW; 2019-22 76% 4% UNPRECEDENT EXECUTION 5.4 GW capacity secured 1.9 21% Leadership position securing 0.3 long term contracts in 2019-
Slide 46: Conclusions
Conclusions 2019 positive top-line performance benefitted from higher avg. capacity (+1% YoY) and price recovery (+2% YoY), driven by Eastern Europe recovery and forex translation. Adj. Core Opex/avg. MW was flat YoY, given the strict cost control in the context of a growth strategy… …together with
Slide 47: a company of group
a company of group 47