Endesa S.a. · BME:ELE
Endesa — H1 2002 Earnings Presentation
22 slides from Endesa's earnings presentation, Jul 23, 2002
Slide 1: 2002 First Half Results
2002 First Half Results July 23rd, 2002 1
Slide 2: The Quarter at a Glance
The Quarter at a Glance • Domestic Business: • Tariff shortfall continues. Still negatively affected by higher fuel costs. • Continuing reduction of Personnel Expenses • Europe: • Performing according to plan, results affected by seasonality in remuneration. • Latin America: • Strong improvement in
Slide 3: Highlights for 1H2002
Highlights for 1H2002 Euro million CONSOLIDATED RESULTS 1H 2002 1H 2001 Change (%) Revenues 8,496 7,601 +11.8% EBITDA 2,460 2,598 -5.3% EBIT 1,587 1,701 -6.7% Net Income 837 757 +10.6% EPS 0.79 0.71 +10.6% Employees 26,456 27,952 -5.4% BREAKDOWN BY LINE DOMESTIC EUROPE LATAM OTHER OF BUSINESS ELECTR
Slide 4: Consolidated EBIT 1H2002
Consolidated EBIT 1H2002 • 6.7% EBIT decrease (-2% in 2Q) from lower domestic EBIT due to tariff shortfall, higher fuel cost and sale of Viesgo. Partially offset by good performance in Latin America. • Domestic EBIT represents 48% of total EBIT, 66% proportionally consolidated. EBIT BY DIVISION EBIT
Slide 5: Domestic Business EBIT 1H2002
Domestic Business EBIT 1H2002 DOMESTIC EBIT Euro Million 1,058 65 -29% 84 (*) • Domestic EBIT -29%. 754 • Underlying EBIT -17%, adjusted -17% for the sale of Viesgo (Eur 65M ), 909 island compensation (Eur 50 M) and re-settlements (Eur 34 M) 1H01 1H02 Domestic EBIT Viesgo (*) Islands compensations +
Slide 6: Domestic Business: Lower hydro has resulted in higher fuel costs
Domestic Business: Lower hydro has resulted in higher fuel costs but improved Endesa´s relative position in the industry GENERATION MIX (GWh) FUEL COST (Eur Million) 35,994 +8% 38,873 1,905 864 730 +28% 13,893 19,203 572 +158 Eur M 13,354 13,994 7,883 3,771 -52% Hydro 1H 2001 1H 2002 1H 2001 1H 2002
Slide 7: Domestic Business: Tariff cap has prevented fully reflecting higher pool prices
Domestic Business: Tariff cap has prevented ENDESA from fully reflecting higher pool prices in revenues POOL PRICE (Eur / MWh) CTCs/Deficit (Eur Million) +59% 50,5 31,7 214 Eur -578 M 1H 2001 1H 2002 1H 2001 1H 2002 -346 • Eur 824 M higher generation revenues partially offset by Eur 588 M lower CTCs
Slide 8: Domestic Business Controllable Cost Reduction 1H2002
Domestic Business Controllable Cost Reduction 1H2002 • Personnel Expenses down by 2.6%, • Controllable costs in line with -5.3% in 2Q2002 plan • Headcount –11.3% YoY ex Viesgo • -1.1% in real terms WORKFORCE CONTROLLABLE COST Euro Million 15.368 -11.3% 1,444 14.140 13.630 13.364 -3.6% -5.5% 736 753
Slide 9: Endesa Italia: Performance continues in line with business plan
Endesa Italia: Performance continues in line with business plan • 1H02 EBIT: Eur 106 M affected by seasonality in revenues and lower hydro • Repowering of Tavazzano authorized with an increase of 320MW over initial plan • Hydro penalty: Eur 10 Million • Total output: 9,107 GWh, +21% WORKFORCE 1,580
Slide 10: Latin America: EBIT Breakdown 1H 2002
Latin America: EBIT Breakdown 1H 2002 EBIT − GENERATION EBIT − DISTRIBUTION Euro Million Euro Million 331 +9.6% 401 302 +7.2% 25 374 35 39 63 29 +16.4% 111 33 52 Ex Argentina 71 33 +39.2% CIEN 92M 88 32 Ex Argentina 26 213 29 106 146 94 92 91 1H 2001 1H 2002 1H 2001 1H 2002 Chile Brazil Colombia Chi
Slide 11: Latin America Brazil: CIEN fully operational in 1H02
Latin America Brazil: CIEN fully operational in 1H02 • CIEN: 2,100 MW electricity interconnection Brazil-Argentina in US$ (equivalent to 67% of Endesa’s thermal capacity in Argentina) • Line II became operational under “take or pay” basis CIEN II: Scheme of second 1,000 MW business Endesa Group 494
Slide 12: Telecommunications: Financial Performance in 1H 2002
Telecommunications: Financial Performance in 1H 2002 • AUNA: • Latest events: • AUNA reached Eur 246 M EBITDA, • Sale of Eresmas ISP exceeding its business plan • AMENA’s net income of Eur 42 M • Closure of Quiero TV broadcasts as up from Eur 76 M loss in 1H 01. of June 30 Clients up by 33% to 5.8 m
Slide 13: Financial results: Lower cost of debt but strong impact of FX losses
Financial results: Lower cost of debt but strong impact of FX losses • Financial expenses down by 10% as cost of debt was reduced from 6.2% to 5.1%. • Lower impact from FX losses in 2Q2002 • Gross FX losses of Eur 969 M against US$ 1.1 M debt in Brazil and Argentina Interest cost & FX net losses Bre
Slide 14: 1H2002 reduction of debt level
1H2002 reduction of debt level Investments Debt (Eur M) (Eur M) 25,007 -6.3% 23,434 1,714 1,963 -34.8% 11,525 1,159 10,106 537 1,633 32 35 11,768 835 749 9,732 June 01 June 02 Debt Dec 01 Debt June 02 Capex Intangibles Financial Domestic Europe International Other Debt / EBITDA Dec.01 June 02 Spain
Slide 15: 1H02 Financial Operations
1H02 Financial Operations • Main financing operations in 2Q 02: • MTN Eur 1 Bn, 7.3 years average maturity • New lines of credit = Eur 330 M long-term • Financial Flexibility: • Total unused lines of credit: Eur 2.7 Bn, average maturity 5yr (12.5 bp-20 bp) • CP average outstanding balance = Eur 2.2
Slide 16: Impact of Argentinean devaluation in 1H02
Impact of Argentinean devaluation in 1H02 1.7 to 3.81 AR$ per US$ devaluation in 1H02 Exposure to Argentina June ’02 Gross FX impact Eur (635) M M Euro % total ELE Net Exposure 1 158 Net FX impact Provision 210 Eur (134) M after minorities Assets * 459 1.2% EBIT * 21 1.8% In Reserves Eur (140) M Net
Slide 17: Impact of Brazilian devaluation in 1H02
Impact of Brazilian devaluation in 1H02 2.32 to 2.84 BRL per US$ Exposure to Brazil June ’02 devaluation in 1H02 M Euro % total ELE Gross FX impact Eur (69) M Net Exposure 667 Assets * 1,490 5.1% Net FX impact Eur (31) M EBIT * 141 12.3% after minorities Net Income -53 Debt with In Reserves Eur (70)
Slide 18: Others
Others • Total net extraordinary results amounted to Eur 666 M • Domestic Eur 873 M gain: Eur 1,066 gross capital gain from Viesgo • Latin America: Provision for Argentina Eur 210 M • Taxes: Effective tax rate of 17.4%: • 17.0% domestic tax rate due to new tax for capital gain • Latin America: tax c
Slide 19: 1H2002 results: conclusions
1H2002 results: conclusions •Domestic business: • Industry margins negatively affected by the shortfall in tariff and higher fuel costs • Endesa relative position improved from better mix and margins •Latin America: operational profitability improved which offsets the devaluation. •Reduction of debt
Slide 20: 1H2002 Strategic Performance
1H2002 Strategic Performance ENDESA continues to work along the strategic plan: •Proactive manage assets portfolio •Continue organic growth in core business and markets •Continue efficiency improvements •Strengthening balance sheet 20
Slide 21: Forward-looking Statements
Forward-looking Statements: Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the United States Private Securities Litigation Reform Act of 1995. The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This presentation co
Slide 22: 2002 First Half Results
2002 First Half Results July 23rd, 2002 22