Endesa S.a. · BME:ELE

Endesa — Investor Day (November 2016)

60 slides from Endesa's investor day presentation, Nov 23, 2016

  1. Slide 1: Endesa 2017-2019 Strategic Plan Update

    Endesa 2017-2019 Strategic Plan Update 23/11/2016

  2. Slide 2: Agenda

    1. Endesa’s latest successful restructuring equity story 2. New energy paradigm and transitional period 3. 2017-2019 strategic pillars to lead energy transformation 4. 2017-2019 main financial metrics 5. Final remarks 2

  3. Slide 3: Endesa's latest successful restructuring equity story

    1. Endesa’s latest successful restructuring equity story 2. New energy paradigm and transitional period 3. 2017-2019 strategic pillars to lead energy transformation 4. 2017-2019 main financial metrics 5. Final remarks 3

  4. Slide 4: Endesa's recent and successful restructuring

    Endesa’s recent and successful restructuring equity story 2014 2016 Gx mix Gx mix with no presence in renewables Fully diversified Gx portfolio Growth Higher growth opportunities: EGPE, VAS and Limited growth opportunities opportunities Dx 2017 targets achieved in 2016 Efficiency plans Launch of Eff

  5. Slide 5: Financial targets 2014-2016

    Financial targets 2014-2016 Last target Accomplishment Status EBITDA communicated: EBITDA achieved 2014: €2.9 bn 2014: €3.1 bn 2015: €3.0 bn 2015: €3.0 bn Financial 2016: €3.2 bn 2016e: ≥€3.2 bn Guidance Net Income communicated Net Income achieved: 2015: €1 bn 2015: €1.1 bn 2016: €1.3 bn 2016e: ≥€1.

  6. Slide 6: Agenda

    1. Endesa’s latest restructuring equity story 2. New energy paradigm and transitional period 3. 2017-2019 strategic pillars to lead energy transformation 4. 2017-2019 main financial metrics 5. Final remarks 6

  7. Slide 7: New energy paradigm and transitional period: EU fight against global warming

    New energy paradigm and transitional period European Union: leading the fight to global warming Emission targets for Spain according to European GHG emission reduction targets policies (MtCO2 equiv.)  Carbon neutrality 451 COP 21 commitment between 2050 ~380 and 2100 ~300 80-95%  2013-20 Climate C

  8. Slide 8: Electrification with renewables: path toward efficient and sustainable model

    New energy paradigm and transitional period Electrification with renewables: the feasible path toward an efficient and sustainable energy model CO2 Emissions in Spain (MtCO2 equiv.) Final energy demand (Mtoe) 79 80 78 Electrification (% of final energy) 25% 26% 31% ~380 (target) 343 Non-Energy ~300

  9. Slide 9: Generation fleet transition: avoid inefficient investments

    New energy paradigm and transitional period Generation fleet transition: avoid inefficient investments Path for an efficient Spain mainland Power capacity projections (GW) generation mix transition Minimum Reserve reserve 1.4 ~1.2 ~1.1 margin margin  Renewable generation: +30 GW Peak demand of new

  10. Slide 10: Networks: Smart grid as pivotal enabler in decarbonized economy

    New energy paradigm and transitional period Networks: Smart grid as a pivotal enabler in a decarbonized economy Services enabled by Smart Grids an smart grid Industrial Network devices plant  Massive scale renewables: integration of additional capacity Demand management Electric mobility  Distribu

  11. Slide 11: New investment cycle to decarbonize the economy

    New energy paradigm and transitional period New Investment cycle to decarbonize the economy Estimated investments in Spain to meet EU’s 2050 Climate targets (€2015 bn) Levers for an efficient model transition Switch of Mainly investments for transport electrification (oil products’ imports 29-39 ene

  12. Slide 12: Key actions to reach decarbonisation targets

    New energy paradigm and transitional period Key actions to reach decarbonisation targets Levers for an efficient model transition Key actions to reach decarbonisation targets  GHG emitting sectors Internalize CO2 cost and set ambitious targets for diffuse sectors(1) by 2030 Demand electrification 

  13. Slide 13: Agenda

    1. Endesa’s latest successful restructuring equity story 2. New energy paradigm and transitional period 3. 2017-2019 strategic pillars to lead energy transformation 4. 2017-2019 main financial metrics 5. Final remarks 13

  14. Slide 14: Strategic pillars to lead the transformation

    Strategic pillars to lead the transformation New energy paradigm fuelling growth and sustainable targets 1 Decarbonization of energy mix by 2050 2 Reinforcing our position in smart grids and preparing for growth 3 Profitable and innovative customer excellence 4 Continuous commitment to efficiency Le

  15. Slide 15: Decarbonization of energy mix by 2050

    Strategic pillars to lead the transformation New energy paradigm fuelling growth and sustainable targets 1 Decarbonization of energy mix by 2050 Emission reduction plan for decarbonization of energy mix EGPE: New Endesa’s renewable platform Conventional generation: enabling the transitional period 2

  16. Slide 16: Ambitious emission reduction plan for decarbonisation by 2050

    Strategic pillars to lead the transformation -1 Ambitious emission reduction plan for decarbonisation of the energy mix by 2050 -34% -47% -61% -81% -100% 51.3(2) Endesa’s CO2 emissions(1) 33.7 (MtCO2; % reduction vs. ~27 ~20 2005) <10 ~0 2005 2015 2020 2030 2040 2050 100% >75% ~54% ~63% Endesa’s CO2

  17. Slide 17: EGPE: efficient and sustainable renewable platform

    Strategic pillars to lead the transformation -1 EGPE: Endesa’s efficient and sustainable renewable platform Actions to develop a EGPE generation installed capacity outlook (GW) renewable platform + 0.1 GW by 2020 0.3 2.0 1.7  Operating life extension Expected 3GW of wind plants > 25 years renewable

  18. Slide 18: Conventional generation: key to guarantee security of supply

    Strategic pillars to lead the transformation -1 Conventional generation: key to guarantee security of supply Objectives Key actions Capex(1) 2016 - 2019  Guarantee long-term, safe and cost-effective Safety and long term Nuclear  Continuous improvement of plant safety and efficiency operation of nu

  19. Slide 19: Reinforcing our position in smart grids

    Strategic pillars to lead the transformation New energy paradigm fuelling growth and sustainable targets 1 Decarbonization of energy mix by 2050 2 Reinforcing our position in smart grids and preparing for growth Main initiatives to prepare the grid for the future Focused on efficiency Levers for val

  20. Slide 20: Main initiatives to prepare the grid for the future

    Strategic pillars to lead the transformation -2 Main initiatives to prepare the grid for the future Capex (1) 2016-2019  Acceleration of implementation program in 2017 implying full deployment ahead of legal deadline in 2018 (~ 12 M of devices) Smart  Remote reading of all households consumption (

  21. Slide 21: Growth through efficiency and digitalization

    Strategic pillars to lead the transformation -2 Growth through efficiency and digitalization Efficiency improvement initiatives Losses improvement plan Antifraud plans Interruption 64 62 59 Time (min) -16% 53 50 10.3% 10.0% 8.7%  Antifraud measures have allowed Distribution 46 Electricity unitary l

  22. Slide 22: Grid innovation projects

    Strategic pillars to lead the transformation -2 Grid innovation projects GROWSMARTER Smart Mobility integrated infrastructure and efficient neighbourhoods urban solution MONICA E- LV and MV network status mobility simulator using real time information Demand and generation management of 1000+ connec

  23. Slide 23: Profitable and innovative customer excellence

    Strategic pillars to lead the transformation New energy paradigm fuelling growth and sustainable targets 1 Decarbonization of energy mix by 2050 2 Reinforcing our position in smart grids and preparing for growth 3 Profitable and innovative customer excellence Sustainable leadership and growth in ret

  24. Slide 24: Sustainable leadership and growth in retail business

    Strategic pillars to lead the transformation -3 Sustainable leadership and growth in retail business Electricity (TWh bus bars) Electricity (#M Customers)  Consolidation of leadership in the +6 TWh 0.3M Spanish market 103 109 2 11.1 11.4 3.7 0.2 0.4 Power  Development of sophisticated and 7.5 8.9

  25. Slide 25: Sustainable leadership and growth in retail business: retail margin

    Strategic pillars to lead the transformation -3 Sustainable leadership and growth in retail business Endesa’s retail margin (1) (current and estimated) Pool prices 42-50 38 43-50 (€/MWh)  Delivering strong results EBITDA supply under all market scenarios ~4% 5% ~4% margin ~22 ~21 ~20-21  Very limi

  26. Slide 26: Leadership in portfolio value maximization

    Strategic pillars to lead the transformation -3 Leadership in portfolio value maximization B2C: value segmentation model Action plans per segment and targets Value management for pricing Increased loyalty  Value model development of Customer base  Client segmentation Reduction of bad debt risk Lar

  27. Slide 27: Leadership in digitalization

    Strategic pillars to lead the transformation -3 Leadership in digitalization Digitalization initiatives Targets Be Go 3.7 Digital Digital Digital customers 1,6 x2.3 @  Transfer of customers (million) to digital channels  Digitalization of processes 15%  Digital Sales Digital 8% x2  Customer insi

  28. Slide 28: Value-Added Services growth

    Strategic pillars to lead the transformation -3 Value-Added Services growth VAS Margin(1) 2012-2016e (€M) Margin(1) 2016e (€M) Contracts 2016e (#) Maintenance Alliance 8% (Insurance and Others) Maintenance ~1 M Equipment 27% ~60 Alliances ~1.7 M CAGR: +16% 66% 90 ~70 Equipment ~13,000 ~47 Monitorin

  29. Slide 29: Value-Added Services growth: strategic pillars

    Strategic pillars to lead the transformation -3 Value-Added Services growth: Strategic pillars  Development of new sales channels  Geographical growth in other territories in Spain Maximize current business  Focus on high potential investments linked to VAS (Gas, Energy Efficiency and Renewable e

  30. Slide 30: Value-Added Services growth: innovation and new products

    Strategic pillars to lead the transformation -3 Value-Added Services growth: Innovation and development of new products as growth lever  B2C: – Tempo Solar Tariff with advantages  B2C: for Distributed Generation customers ‒ Providing integral solutions at Distributed – Integral Solution: Includes

  31. Slide 31: Value-Added Services growth: market and financial targets

    Strategic pillars to lead the transformation -3 Value-Added Services growth: Market and financial targets 2016e (€M) 2019 forecast (€M) Addressable market Addressable market Endesa Endesa 200 ~12% ~20% ~90 ~700 ~1,000 Gross margin Gross margin Capex(1) 2016-2019: €242 M Ambitious target growth 31 (

  32. Slide 32: Continuous commitment to efficiency

    Strategic pillars to lead the transformation New energy paradigm fuelling growth and sustainable targets 1 Decarbonization of energy mix by 2050 2 Reinforcing our position in smart grids and preparing for growth 3 Profitable and innovative customer excellence 4 Continuous commitment to efficiency 32

  33. Slide 33: Efficiency Plan with strong focus on cash cost reduction

    Strategic pillars to lead the transformation -4 Efficiency Plan with strong focus on cash cost reduction Opex(1) (€bn) Cash costs (€bn)(4) -14% Target achieved one 2.4 year in advance 2.0 2.1 -13% 0.2 0.1 EGPE FY2014 3.0 adjusted 2.7 0.2 2.6 ~ €2.2bn 0.1 EGPE 2014 2016e(2) 2019 FY2014 adjusted 2.8 M

  34. Slide 34: Action Plan per business line

    Strategic pillars to lead the transformation -4 Action Plan per business line Opex(1) evolution Distribution Unitary cost (4) -13% (€/customer) 2016e (2) €2.0 bn 53 50 46 2015 2016e 2019 EGPE (3) €85 M €0.1bn Generation Unitary cost (4) (k€/MW) -3% 2016e €2.1 bn 49 48 48 2015 2016e 2019 CPI €70 M €0

  35. Slide 35: Efficiency plan through digitalization

    Strategic pillars to lead the transformation -4 Efficiency plan through digitalization: Digitalization plan Capex(1) Margin&savings Digital initiatives 2016-19 (€ M) 2016-19 (€ M)  Digital transformation on industrial assets (Industry 4.0)  Internet of Things: pilot at Besos plant for digital tran

  36. Slide 36: Commitment to sustainable development objectives

    Strategic pillars to lead the transformation New energy paradigm fuelling growth and sustainable targets 1 Decarbonization of energy mix by 2050 2 Reinforcing our position in smart grids and preparing for growth 3 Profitable and innovative customer excellence 4 Continuous commitment to efficiency Co

  37. Slide 37: ENDESA and the UN Sustainable Development Goals

    ENDESA and the UN Sustainable Development Goals Renewed in Sep 2016 Renewed in October 2016 Included in Sep 2016 Renewed in Nov 2016 Renewed in Score: 86/100 Score: B Leaders in Social dimension (World, Europe and Eurozone) January 2016 Our outstanding performance enables us to be included in the ma

  38. Slide 38: Agenda

    1. Endesa’s latest successful restructuring equity story 2. New energy paradigm and transitional period 3. 2017-2019 strategic pillars to lead energy transformation 4. 2017-2019 main financial metrics 5. Final remarks 38

  39. Slide 39: Main financial metrics: EBITDA breakdown

    Main financial metrics EBITDA breakdown by business and drivers EBITDA by business (€bn) Main drivers +9%  EGPE: Full year consolidation  Non mainland: Positive one-off from capacity payments 3.7 2017 3.4 3.4 3.5  Gx & Sx: Weather conditions normalization and lower positive impact from non recurr

  40. Slide 40: Capex program focused on growth

    Capex program focused on growth 2016-2019 2016-2019 Net CAPEX by business (€bn) Net CAPEX by nature (€bn) Strong Investment increase 12% 11% vs previous Plan:  +€1 bn (+27%): 56%  Renewables: € +0.5bn 38% 4.7 (1) 4.7 (1) 44%  Dx: € +0.2bn 30%  Non mainland: € 0.3bn  44% devoted to growth 9% (33

  41. Slide 41: Net Capex breakdown by business

    Main financial metrics Net Capex breakdown by business Maintenance Growth Regulated Distribution Non-Mainland Gx EGPE Business 94% (€bn) 54% 52% 48% 1.81.8 0.6 0.6 0.50.5 (1) (1) 46% 6% Liberalized Mainland Generation Supply Business (€bn) 86% 59% 1.4(2) 0.4 41% 14% ~80% of Growth Capex devoted to r

  42. Slide 42: Searching for inorganic growth opportunities

    Searching for inorganic growth opportunities Selected opportunities per business Main interest Description  EGPE: Consolidation opportunities in  Deep market scouting to identify possible deals: Renewables a highly fragmented market – Potential market 6,500 MW  Small Distribution companies  Smal

  43. Slide 43: Cash flow generation

    Main financial metrics Cash flow generation EBITDA and Capex(1) (€bn) 2017-2019 Cash flow generation (€bn) +9% 3,7 3,4 3,4 3,5 2.0 1.7 6.8 1,3 1,3 1,0 1,1 4.8 3.2 2016 2017 2018 2019 FFO Maintenance FFO after Growth Capex (1) FCF capex (1) maint. Capex EBITDA Capex Net 1.4 1.4 1.5 1.7 income Strong

  44. Slide 44: Agenda

    1. Endesa’s latest successful restructuring equity story 2. New energy paradigm and transitional period 3. 2017-2019 strategic pillars to lead energy transformation 4. 2017-2019 main financial metrics 5. Final remarks 44

  45. Slide 45: Shareholder remuneration

    Shareholder remuneration Ordinary DPS evolution +29% 2017-2019 €/Share 1,32 (1) 1,32-1,37 +5% +35% +17-21% 1,26  100% Pay-out on ordinary net 1,03 1,13 income 0,76 2017 Interim dividend 0,7  Minimum DPS of 1.32 euro per 0,7 share (+17% vs. previous guidance) Previous Previous 2014 2015 guidance 20

  46. Slide 46: Key financial metrics

    Key financial metrics 2016 CAGR 2016e underlying 2017 2018 2019 2016-2019 EBITDA (€bn) ~ 3.4 ~ 3.2 3.4 3.5 3.7 ~ +3% Net Income ~ 1.4 ~ 1.3 1.4 1.5 1.7 ~ +6% (€bn) DPS (€/share)(1) ~ 1.32 ~ 1.26 1.37 1.42 1.57 ~ +6% Minimum DPS for 2017 1.32 Cumulative 3,2 billion euro FCF(2) One of the most attract

  47. Slide 47: Closing remarks

    Closing remarks 1 Endesa is committed to the decarbonisation of the economy 2 New energy paradigm will bring new opportunities for growth 3 Best position to capture innovative client-centric business 4 Digitalization as a driver for efficiency and quality of service 5 Financial targets upgraded on t

  48. Slide 48: Appendix

    Appendix endesa

  49. Slide 49: Macro assumptions

    Market trends and strategy Macro assumptions Spanish GDP evolution Commodities (I) 2,5% Brent ($/bbl) 2,3% 2,1% 2,1% 74 1,9% 1,9% 1,8% 1,8% 70 66 60 55 52 47 48 2016e 2017 2018 2019 2016e 2017 2018 2019 Commodities (II) Old assumptions New assumptions API2 ($/t) Gas HH ($/Mbtu) CO2 (€/t) 71 16 68 63

  50. Slide 50: Electricity market assumptions in Spain

    Market trends and strategy Electricity market assumptions in Spain Mainland electricity demand (%) Thermal Gap (TWh) 2,8% 1,7% 68 69 1,5% 1,5% 65 67 67 67 1,2% 1,2% 1,2% 61 55 0,8% 2016e 2017 2018 2019 2016 2017 2018 2019 Old assumptions Wholesale electricity prices (€/MWh) Interconnections (TWh) Ne

  51. Slide 51: Capital Markets Day Iberia

    Capital Markets Day Iberia November 22, 2016

  52. Slide 52: Positioning and key figures

    Capital Markets Day Positioning and key figures 2016E EBITDA 2016E Power and gas customers Key figures 2016 Capacity (GW) 22.8 27% 16% Dx RAB (€bn) 11.2 47% 18% Customers (million) 12.6 2% 11.1 mn 3.4 bn€ 1.5 mn Power Gas Net production (GWh) 70 53% 82% 55% Financials (€bn) EBITDA 3.4 Liberalized ma

  53. Slide 53: Regulatory scenario

    Capital Markets Day Regulatory scenario Social tariff Renewables Current financing considered discriminatory according to Supreme Court rules. Parameters for the 2nd regulatory semi-period have to be 2014-16 contributions to be reimbursed defined Wide consensus on social tariff amendment. A proposal

  54. Slide 54: Retail: Spanish power market description

    Capital Markets Day Retail: Spanish power market description1 Customers (mn) Energy sold (TWh. Bus bars) 35,00 300,00 15.3 223 30,00 28.5 262 1.3 1.7 250,00 25,00 200,00 20,00 14.0 169 169 150,00 15,00 13.3 26.8 0.5 100,00 10,00 54 12.8 39 93 50,00 5,00 39 ,00 ,00 Regulated Free Total Regulated Free

  55. Slide 55: Retail: Spanish market description: Gas

    Capital Markets Day Retail: Spanish market description1: Gas 10,00 Customers (mn) Gas sold (bcm) 25,00 9,00 22.4 8,00 0.1 7.7 20,00 7,00 6,00 15,00 18.7 1 5,00 1 4,00 7.6 10,00 3,00 2,00 5,00 1,00 3.7 ,00 ,00 Residential Business Total Residential Business Total First non incumbent player in Spain 5

  56. Slide 56: Retail: customer base and unitary margin evolution

    Capital Markets Day Retail: customer base and unitary margin evolution Power market1 Gas market2 Ebitda evolution3 (€bn) 130,000 +6% 90% +13% 1,200 +14% 80% 90,000 90% 120,000 1,000 79 85,000 80% 78 70% 107 109 105 110,000 80,000 70% 103 60% 75,000 70 73 ,800 60% 100,000 50% 70,000 50% ,600 65,000 4

  57. Slide 57: Digitalization as a driver for efficiency, quality of service and VAS

    Capital Markets Day Digitalization as a driver for efficiency, quality of service and VAS Key drivers Leverage Cost to Serve (€/customer)1 16 -7% Accelarate use of electronic bill (e-factura) to 15 achieve digital engagement and reduce postal 14 service cost 13  3.7 million digital customers in 201

  58. Slide 58: Digitalization: new services

    Capital Markets Day Digitalization: new services 2016 VAS Margin breakdown Key drivers VAS Margin (€mn) 7% Maximize current business +133% 66% (~2.7 million VAS contracts portfolio in ~ €60 mn 27% 2016) 27% 200 ~200 Portfolio evolution and development of 150 Maintenance Alliance Equipment new VAS 10

  59. Slide 59: Asset profitability

    Capital Markets Day Asset profitability EBITDA and CAPEX (€bn) 2017-19 Cash flow generation (€bn) +9% 04 6.8 2.0 04 3.7 03 3.4 3.4 3.5 4.8 1.7 03 02 02 3.2 01 1.3 1.3 01 1.0 1.1 00 2016 2017 2018 2019 FFO Maintenance FFO after Growth FCF capex maint. capex capex EBITDA CAPEX Strong cash flow generat

  60. Slide 60: 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

Endesa — Investor Day (November 2016) on 6ix