Enel SpA · MIL:ENEL
Enel SpA — H1 2004 Earnings Presentation
34 slides from Enel SpA's earnings presentation, Sep 10, 2004
Slide 1: 2004 Interim Results
2004 Interim Results Rome, 10 September 2004
Slide 2: 1st Half Ordinary Net Income
Uso: 1st Half Ordinary Net Income* mn € 1.237 859 367 H1 ‘02 H1 ‘03 H1 ‘04 Turnaround in underlying profitability *excluding extraordinary and non recurring regulatory items 1
Slide 3: 2004 – 2006 Agenda
Uso: 2004 – 2006 Agenda • Continue to focus on core business Operations • Additional savings through three major efficiency programs • Reduce stake in Terna Portfolio • Divest from Wind Focus on cash generation for shareholder value 3 2
Slide 4: Agenda
Uso: Agenda 1. Financial Highlights 2. Businesses and Targets 3. Conclusions 4. Questions & Answers 3
Slide 5: Income statement (Euro Mn)
Uso: Income statement (Euro Mn) 1H2004 1H2003 % change Revenues 16.948 15.421 9,9% Operating Costs 11.599 10.736 8,0% EBITDA 5.349 4.685 14,2% % of Revenues 35%(1) 30% EBIT 3.047 2.231 36,6% % of Revenues 18% 14% (1) Calculated on revenues net of the Single Buyer effect 4
Slide 6: From EBIT to EPS (Euro Mn)
Uso: From EBIT to EPS (Euro Mn) 1H2004 1H2003 % change EBIT 3,047 2,231 36.6% Net Financial Charges (566) (568) -0.4% Net Extraordinary Items 732 254 188.2% EBT 3,197 1,913 67.1% Income Taxes 1,098 794 38.3% Minority Interest (52) 81 -164.2% Group Net Income 2,047 1,200 70.6% EPS (Euro) 0.34 0.20 70
Slide 7: EBITDA by business area (Euro Mn)
Uso: EBITDA1 by business area (Euro Mn) +14.2 % 5,349 4,685 814 +69.6% Telecom 480 223 -35.0% Services & Holding(2) 347 +13.4% 343 Terna 306 Networks 1.958 +11,8% & Sales 1.751 +11.2% Generation & 2.007 1.805 Energy Mgmt 1H2003 1H2004 (1) International generation and distribution activities have bee
Slide 8: Balance Sheet (Euro Mn)
Uso: Balance Sheet (Euro Mn) June 30, December 31, 2004 2003 % Change Net Financial Debt 24,030 24,174 -0.6% of which Wind(1) 6,757 6,743 0.2% Shareholders' Equity 22,260 21,315 4.4% of which minorities 1,095 191 Leverage 1.08 1.13 EBITDA/ Interest Coverage 9.6 8.7 Net Capital Employed 46,290 45,489
Slide 9: Net Debt Evolution (Euro Mn)
Uso: Net Debt Evolution (Euro Mn) Down 144 December 31st, Operating Cash Capex Extraordinary Dividends, June 30th, 2003 Flow Activities Interests and 2004 Taxes ENEL -17,431 -17,273 ENEL Net Operating Cash Flow 2,372 +3,919 Wind -6,743 -6,757 Wind -1,547 +1,357 -3,585 -24,174 -24,030 8
Slide 10: Agenda
Uso: Agenda 1. Financial Highlights 2. Businesses and Targets 3. Conclusions 4. Questions & Answers 9
Slide 11: Generation and Energy Management
Uso: Generation and Energy Management Business Highlights • Demand flat The • New electricity pool and single buyer in full operation Market • Imports decreased (- 14%vs. ’03*) • Prices declining slower than anticipated • Regained number one position in free market • Reservoir level (+17% vs. ’03*)
Slide 12: Generation and Energy Management Targets
Uso: Generation and Energy Management Targets Thermal Large Hydro 13.9 13.1 11.4 kEuro 11.7 11.5 10.8 O&M/MW 2002 LTM* 2006 2002 LTM* 2006 Actual Actual 1% 25% 20% 45% Oil and Gas ST/OCGT Production 19% Gas CCGT 47% 9% Mix 22% 27% Coal and Orimulsion Renewables 24% 29% 32% 2002 1H 2004 Target 100 Fu
Slide 13: Distribution and Sales
Uso: Distribution and Sales Business Highlights • Liberalized all non residential customers The • Gas Volumes increased (+ 3,9 % vs. ’03*) Market • Fastest growing player in the liberalized gas market • 20% of electricity distribution in Romania Enel • Digital meter deployment program on track and b
Slide 14: Distribution and Sales Targets
Uso: Distribution and Sales Targets Cash Cost € / Customer1 Quality bonus 150 > 150 M€ €115m 129 122 Electricity 2002 2003 2002 LTM 2006 Actual Expected Actual Sales Volumes (BCM) Distribution Cash Cost € / Customer(2) 105 5.3 100 5.0 92 3.9 Gas 2002 2002 Actual LTM 2006 Actual LTM 2006 (1) Excludin
Slide 15: Terna
Uso: Terna OPEX/MWh 0.95 0.87 (1) € Target 2002 LTM Actual • Terna stake reduction to 5% in 2005 • GRTN integration underway • Structure of sale to maximise shareholder value Net gains from up to 45% sale of Terna distributed to shareholders (1) Excluding € 9m for IPO 14
Slide 16: Wind
Uso: Wind Target Actual €m 40% 814 (1) CAGR 480 EBITDA 618 232 2002 2005 H1 ‘02 H1 ‘03 H1 ‘04 31% 34% 31% 27% Opex/ 22% Revenues 2002 2005 H1 ‘02 H1 ‘03 H1 ‘04 2004 cash positive (1) Including 194 mn Turnover Contribution 15
Slide 17: Exit from Wind
Uso: Exit from Wind • Equity story driven by broadband opportunity and convergence • CAPEX financed by operating cashflow • IPO preferred exit • Primary/secondary offering Divest from Wind at the right price 16
Slide 18: Agenda
Uso: Agenda 1. Financial Highlights 2. Businesses and Targets 3. Conclusions 4. Questions & Answers 17
Slide 19: Conclusion
Uso: Conclusion • Strong financial performance • On track or ahead on all targets • Significant non-recurring regulatory reimbursements • Net gains from Terna IPO and Real Estate Delivering value to shareholders 18
Slide 20: Agenda
Uso: Agenda 1. Financial Highlights 2. Businesses and Targets 3. Conclusions 4. Questions & Answers 19
Slide 21: Disclaimer
Uso: Disclaimer CAUTIONARY STATEMENT This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe-harbor provisions of the U.S. federal securities laws. These
Slide 22: Appendix
Uso: Appendix 21
Slide 23: EBIT by business area (Euro Mn)
Uso: EBIT1 by business area (Euro Mn) 3,047 90 252 2,231 Services & Holding(2) 206 Terna 175 1.515 Networks & Sales 1.071 Generation & 1.399 1.175 Energy Mgmt -209 Telecom -396 1H2003 1H2004 (1) International generation and distribution activities have been reclassified under GEM and N&S respectivel
Slide 24: Generation & Energy Management (Euro Mn)
Uso: Generation & Energy Management (Euro Mn) 1H04 1H03 % change Revenues 6,029 6,193 -2.6% EBITDA 2,007 1,805 11.2% EBIT 1,399 1,175 19.1% Capex 376 286 31.5% (1) Net Capital Employed 15,129 14,458 4.6% (1) Headcount 11,012 11,196 -1.6% Net Power Generation (domestic) (GWh) 61,744 66,097 -6.6% (1)
Slide 25: Networks & Sales (Euro Mn)
Uso: Networks & Sales (Euro Mn) 1H04 1H03 % change Revenues1 9,986 10,244 -2.5% Power 9,185 9,500 -3.3% Gas 803 744 7.9% EBITDA 1,958 1,751 11.8% Power 1,791 1,608 11.4% Gas 167 143 16.8% EBIT 1,515 1,071 41.5% Capex 758 821 -7.7% (2) Net Capital Employed 12,778 11,981 6.7% (2) Headcount 35,660 36,8
Slide 26: Operational Data
Uso: Operational Data 1H04 1H03 % change Power Net Power Generation (GWh) 61,744 66,097 -6.6% Purchase of Power (GWh) 62,317 39,440 58.0% Sales to End Users (GWh) 79,785 75,883 5.1% of which: Regulated Market 69,230 70,575 -1.9% Free Market 10,555 5,308 98.9% Total Power Dispatched (GWh) 125,264 121
Slide 27: Terna (Euro Mn)
Uso: Terna (Euro Mn) 1H04 1H03 % change Revenues 519 450 15.3% EBITDA 347 306 13.4% EBIT 252 175 44.0% Capex 137 173 -20.8% (1) Net Capital Employed 3,630 3,580 1.4% (1) Headcount 2,950 2,837 4.0% (1) As of December 31, 2003 26
Slide 28: Wind Key Performance Indicators
Uso: Wind Key Performance Indicators 1H04 1H03 1H04 1H03 Profit & Loss Customers (mn) 29,6 26,2 (€mn) Fixed Active 2,6 3,3 Revenues 2.408 2.123 of which LLU 0,4 0,2 EBITDA 814 480 (1) (2) Mobile 10.6 9 EBIT 69 (173) Internet Subscribers 16,4 13,9 1H04 1H03 30-giu-04 31-dic-03 Balance Sheet ARPU (€/a
Slide 29: Services & Holding (Euro Mn)
Uso: Services & Holding (Euro Mn) 1H04 1H03 % change SERVICES Revenues 1,004 1,259 -20.3% EBITDA 182 256 -28.9% EBIT 60 134 -55.2% Capex 46 56 -17.9% (1) Net Capital Employed 1,985 2,220 -10.6% (1) Headcount 4,380 4,620 -5.2% HOLDING Revenues 504 540 -6.7% EBITDA 97 120 -19.2% EBIT 86 105 -18.1% Hea
Slide 30: Debt Structure
Uso: Debt Structure • Average debt maturity: 5 years and 10 months • Average cost of debt: 4.5% • (Fixed+Hedged)/Total Net Debt = 58% • S&P’s: A+/A-1 stable Moody’s: A1/P-1 negative (outlook under review) (Euro Mn) 30-Jun-04 31-Dec-03 % change Net Long Term 17,539 16,472 6.5% (1) Short Term 7,177 8,
Slide 31: Consolidated Financial Highlights
Uso: Consolidated Financial Highlights Quarterly Analysis - Income Statement (Euro Mn) 2Q04 2Q03 % change 1Q04 Revenues 8.919 7.352 21,3% 8.029 EBITDA 2.707 2.309 17,2% 2.642 % of Revenues 37%(1) 31% 33% EBIT 1.487 1.027 44,8% 1.560 % of Revenues 17% 14% 19% EBT 1.941 647 200,0% 1.256 (1) Calculated
Slide 32: Capex (Euro Mn)
Uso: Capex (Euro Mn) -137 1,684 1,547 -8,1% Telecom 348 230 -33,9% Services & Holding 56 46 -17,9% Terna 173 137 -20.8% 758 Networks & Sales 821 -7,7% Generation & Energy 376 31,5% 286 Mgmt 1H2003 1H2004 31
Slide 33: Wind's strategy in mobile, fixed and internet
Uso: Wind’s strategy in mobile, fixed and internet • Expand On-Net free traffic offers • Further enhance brand equity • Use i-mode platform for 2 G and 3G technology • Reposition Infostrada brand with competitive offer • Invest in customer care and new sales channels • Develop convergent handset and
Slide 34: Summary Operational Targets
Uso: Summary Operational Targets 2002 LTM 2006 Actual Target Generation and Fuel Cost Index % 100 87(1) 86(3) Energy O&M / MW Thermal k€ 13.9 11.4 10.8 O&M / MW Large Hydro k€ 11.5 Management 13.1 11.7 Network 150 129 122 Cash Cost / Cust - electricity € and Sales Cash Cost / Cust - gas € 105 100 92