Companhia Energetica De Minas Gerais Sa · BMFBOVESPA:CMIG3
Companhia Energetica De Minas Gerais Sa — Energy Co of Minas Gerais — FY2008 Earnings Presentation
40 slides from Companhia Energetica De Minas Gerais Sa's earnings presentation, Apr 28, 2009
Slide 1: Successful Strategy, Better Positioned to Face the Crisis: 2008 Results
Successful Strategy Better Positioned to face the crisis PRESENTATION OF ANNUAL AND FOURTH QUARTER 2008 RESULTS
Slide 2: Disclaimer
Some statements in this presentation constitute “forward-looking statements” as defined by the American Securities Law, and are subject to risks and uncertainties. “Forward-looking statements” are projections that may differ from final numbers and are not under our control. For a discussion of the r
Slide 3: A successful strategy focused on the long term assures financial solidity
A successful strategy focused on the long term assures financial solidity and maintaining results at projected levels • Growth of 8.3% in annual net income because of the business portfolio Balanced business portfolio sustains consistent growth • Revenues of Cemig GT grew 6.3% in the quarter (4Q08/4
Slide 4: Shareholders' Equity and Dividends
Shareholders’ Equity and Dividends Shareholders’ Equity 2008 2007 Capital 2,482 2,432 Capital Reserves 3,983 4,032 Profit Reserves 2,860 1,899 Accumulated Income - 18 Funds Earmarked for Capital Increase 27 27 Total Shareholders’ Equity 9,352 8,408 Proposal for 2008 Net Income: • Dividends of R$ 944
Slide 5: Investment Program
Investment Program Business (2) 2009(3) 2010 2011 2012 CEMIG Generation & Transmission 132.8 87.7 88.6 100.9 Generation 72.2 47.8 55.5 65.0 Transmission 33.3 7.7 10.9 13.4 Environment 6.8 11.8 4.4 4.1 Others 20.6 20.4 17.7 18.4 CEMIG Distribution 836.8 608.7 551.6 570.8 Sub-transmission 380.6 226.8
Slide 6: Corporate Governance and Managing Human Capital
Corporate Governance and Managing Human Capital Sérgio Barroso takes over as Chairman of the Board of Directors • Wide experience in executive management in Brazil and internationally – CEO of Cargill do Brasil for 9 years – Management of units of Cargill in Switzerland, the Netherlands, the USA and
Slide 7: Finance
Finance Financial solidity sustains expansion plan, including acquisitions • Net Debt/EBITDA: 1.23 times EBITDA/Interest: 4.22 times Robust cash position optimizes financial management • Cash reaches R$ 2.2 billion: + 10.5 % (2008/2007) Financial management guarantees adequate debt profile • D/D + P
Slide 8: Moody's Investment Grade rating and market recognition
Moody’s gives Cemig and its subsidiaries a global Investment Grade rating – Baa3 Finance Market recognition • Cemig was selected as part of the Global Dow Index, one of three Brazilian companies, and the only company from the electricity sector in Latin America • Share performance in 2008 o CMIG4: +
Slide 9: Commercialization
Management of contract portfolio captures the trend of higher prices with reduction of risk, in combination with long-term strategic partnerships with selected clients • The two largest sales during the year total 980 MW (average) and combined revenues of R$ 15 billion during the contractual periods
Slide 10: New Businesses and Holdings
New Businesses and Holdings Financial discipline and technical rigor in execution of expansion strategy • Return within limits set by Board • High standards of corporate governance in the strategic partnerships • Due diligence ensures quality of assets and risk reduction Acquisition of stake in wind
Slide 11: Expansion and Asset Management: New Power Plants and Transmission Lines
New Power Plants • Small hydro plant Cachoeirão (Manhuaçu River, MG) 27 MW, Dec 2008: Cemig 49% • Wind farms (CE) 99 MW, by May 2009: Cemig 49% • 5 Small hydro plants 64MW, 2010: Cemig 49% • Baguari hydro plant (Doce River, MG)140 MW, Sep 2009: Cemig 34% • Santo Antônio hydro plant - (Madeira River,
Slide 12: Natural Gas
Natural Gas Gasmig • Investment totaling R$ 789 million in the next two years – Shareholders will contribute with R$300 million: – Cemig: R$ 166 million – Petrobrás: R$ 120 million – MGI: R$ 14 million – BNDES loan: R$ 294 million – Gasmig’s own funds: R$ 195 million • With this investment, sales vo
Slide 13: Operational efficiency program
Operational efficiency program Goal to save R$200 million / year starting in 2010 Implementation plan under way Significant reduction in operating costs and optimization of non-operating costs Optimization of management processes Voluntary Retirement Program – PPD: began on March 11, 2008 • Ongoing,
Slide 14: Analysis of Consolidated Results – 2008
Net Income R$ 1,887 Profit sharing (R$ 370) IR and CSLL (R$ 914) Minority Shares (R$ 119) Analysis of Consolidated Results –2008 Variations over 2007 Earnings before IR, CSLL, Shares and Minority Interest R$ 3,291 Financial Result (R$ 94) Operating Income R$ 3,384 EBITDA R$ 4,099 Net Operating Reven
Slide 15: Director Plan provides added value
Director Plan provides added value Financial Income Added (Consolidated Amounts) *Calculated to represent the ex-post cost of capital of the period. This is not a reference for calculating economic- financial evaluation. Indicator 2005 2006 2007 2008 ROIC 13.8% 12.3% 13.9% 13.7% Nominal WACC* 13.6%
Slide 16: Robust cash position
Robust cash position 2008 2007 Cash at the start of the period 2,066 1,402 Cash generated by operations 2,968 3,208 Net Income 1,887 1,743 Depreciation and Amortization 715 778 Suppliers 68 34 RTD - Deferred Tariff Adjustment 412 509 Other Adjustments 298 653 Financing Activity (1,397) (1,359) Finan
Slide 17: Debt management
Debt management focused on: • Lengthening term (without pressure on cash flow ) • Limiting debt to levels established in the by-laws • Reduction of cost of debt Little net financial exposure to foreign currency minimized the impact of the accentuated devaluation of the real to the dollar • Sales to
Slide 18: Getting the benefits from reduced interest rates
9.2 9.5 8.6 7.9 7.9 7.4 8.6 9.7 9.0 Average real cost (%) Consolidated Debt Average cost of debt: 8.98 % per year at constant prices of December 2008, including participations in other companies • Expectation to resume monetary policy of reducing interest rates indicates decrease in the cost of debt
Slide 19: Analysis of Consolidated Results – 4Q08
Net Income R$ 281 Profit sharing (R$ 304 ) IR and CSLL (R$ 79) Minority Shares (R$ 34 ) Analysis of Consolidated Results –4Q08 Variations over 4Q07 Earnings before IR, CSLL, Shares and Minority Interest R$ 698 Financial Result (R$ 76) Operating Income R$ 774 EBITDA R$ 948 Net Operating Revenues R$ 2
Slide 20: Consolidated Energy Sold – GWh
14,951 15,007 128 513 102 16 4 675 4Q07 Residential Industrial Commercial Rural Others Supply 4Q08 Consolidated Energy Sold – GWh: Variations by Class 4Q08/4Q07 Growth in energy sold driven by the industrial and commercial sectors Consumption Class 4Q08 4Q07 Var. % Residential 2,278 2,150 6.0% Indus
Slide 21: Net Revenue by company – 4Q08
Net Revenue by company – 4Q08 Participations and Cemig GT neutralized the impact of the tariff revision on Cemig D on net revenue during the quarter Evolution of Consolidated Net Income by Company 4Q08/4Q07 2,733 2,755 121 45 100 6 9 17 Net Revenue y Company 55% 28% 13% 3% 1% Net Revenue by Company
Slide 22: Evolution of Consolidated Expenses – 4Q08/4Q07
47 -20 21 47 5 60 37 -9 -2 8 1,899 1,981 Evolution of Consolidated Expenses – 4Q08/4Q07 + R$82 Consolidated Expenses -50 -62 Personnel Depreciation Contractors Retirement Benefits Materials Operating Provisions Other Expenses Energy Purchase Basic Network Raw Materials Royalties Gas Purchase 4Q07 4Q
Slide 23: Evolution of Consolidated Quarterly EBITDA
Evolution of Consolidated Quarterly EBITDA 1,092 1,082 980 1,090 948 Margin of 38% in 2008 EBITDA in 2008 was R$ 4.1 billion, within our guidance Average quarterly EBITDA was higher than R$ 1 billion in 2008, despite the tariff revision (+1% compared with average quarterly EBITDA in 2007) 4Q07 1Q08
Slide 24: EBITDA by Company
Participations and Cemig GT mitigate the impact of the tariff revision Evolution of Consolidated EBITDA by Company 4Q08/4Q07 1,092 948 200 34 99 1 8 84 Business portfolio sustains consolidated EBITDA in 4Q08 EBITDA by Company EBITDA by Company – 4Q08 35% 48% 12% 1%3% 1% Cemig D Cemig GT RME Gasmig T
Slide 25: Consolidated EBITDA 4Q08 – Market estimates
Consolidated EBITDA 4th Quarter 2008 – Market estimates 948 1,119 720 942 970 Realized Maximum Minimum Average Median R$ millions EBITDA for the quarter in line with the average and median of market estimates
Slide 26: Net Income by Company
Business portfolio ensures income growth Evolution of Consolidated Net Income by Company 4Q08/4Q07 277 281 25 80 9 1 7 68 Net Income by Company – 4Q08 Net Income by Company Net Income by Company – 4Q08 14% 11% 4% 5% 66% Cemig D Cemig GT RME Gasmig TBE Company 4Q08 4Q07 Var. % Cemig Distribution 43 6
Slide 27: Consolidated Net Income 4Q08 – Market Estimates
Consolidated Net Income 4Q08 – Market Estimates 250 322 273 281 487 Realized Maximum Minimum Average Median Net income in the quarter below the average and in line with the median of the market’s estimates
Slide 28: Expansion through new projects and acquisitions
Expansion through new projects and acquisitions – Market share is the consequence of an investment policy that prioritizes getting returns that are compatible with risk • Focus on the electricity sector and synergistic activities • Limits of Capex and indebtedness ensure financial balance Strategy p
Slide 29: Cemig Corporation – 2008
2 companies • Gross Revenue : R$ 12,089 Distribution Business portfolio ensures growth Net Income Gross Revenue EBITDA Cemig Corporation –2008 Transmission million • Net Income: R$ 838 million • EBITDA: R$ 1,936 million • Largest in Brazil (energy transported, number of consumers and network extensi
Slide 30: We are expanding our national leadership
We are expanding our national leadership Distribution Transmission Cemig Free Client Generation Generation under construction Energy Purchase Gas Distribution Transmission under construction Wind generation under construction
Slide 31: Cemig: Global investment option
4.9% -11.6% -41.2% CMIG4 IEE Ibov Evolution of participation of foreign shareholders in the shareholder base* Cemig: Global investment option Share performance in 2008 PN Participation of foreign investors in Cemig’s shareholder base remains unchanged • We have shareholders in 46 countries • There w
Slide 32: 2009 – Ready to face the challenges
2009 – Ready to face the challenges Growth of GDP of Minas Gerais state may exceed national average • According to Minas Gerais Industries Association (FIEMG) and specialized consultants (MCM) Market of Cemig Distribuição is marginally growing Cemig Distribuição Tariff Review impact mitigated due to
Slide 33: Investor Relations contact
Telephone: (55-31) 3506-5024 Fax: (55-31) 3506-5025 E-mail: ri@cemig.com.br Website: http://ri.cemig.com.br 2. Summary of Decisions of the 456th Meeting of the Board of Directors, Companhia Energética de Minas Gerais – CEMIG, March 27,
Slide 34: Acquisition of Terna Participações S.A.
Acquisition of Terna Participações S.A. April 24, 2009
Slide 35: Disclaimer
Some statements in this presentation constitute “forward-looking statements” as defined by the American Securities Law, and are subject to risks and uncertainties. “Forward-looking statements” are projections that may differ from final numbers and are not under our control. For a discussion of the r
Slide 36: Transaction Summary
Transaction Summary • Acquisition of 65.86% of Terna Participações S.A. (“Terna Part.”) from Terna S.p.A. for R$2,330.5MM (R$40.29 per unit(1)) – Price will be adjusted for any dividends distributed until the closing date – Closing on Sep. 30, 2009 or later, depending on the timing of regulatory and
Slide 37: Terna Part. Overview
Line Start-up Date Concession Term TSN abr-03 dez-30 GTESA jul-03 jan-32 PATESA mar-04 dez-32 Munirah nov-05 fev-34 Novatrans abr-04 dez-30 ETAU mai-05 dez-32 ETEO out-01 mai-30 Brasnorte under construction mar-38 Terna Part. Overview Total: 3,753km BRASNORTE 424km / 230kV Under construction 35% own
Slide 38: Transaction Rationale
Transaction Rationale • Expansion of CEMIG’s transmission portfolio: – Lower regulatory risk – Stable cash flow, with defensive profile • High quality assets: – Facilities planned and built according to world-class standards of quality and reliability – All assets started operations within the last
Slide 39: Transaction Impacts to CEMIG
Transaction Impacts to CEMIG Source ANEEL Notes 1. Pro-forma numbers assuming the acquisition of ETEO had been effective on Jan. 1st, 2008, calculated as the sum of financials results of all Terna Part.’s subsidiaries 2. Net Debt including acquisition disbursement of R$3,538 million, assuming minimu
Slide 40: Investor Relations
Investor Relations Telephone: (55-31) 3506-5024 Fax: (55-31) 3506-5025 E-mail: ri@cemig.com.br Website: http://ri.cemig.com.br 18. Summary of the Minutes of the 449th Meeting of the Board of Directors, Companhia Energética de Minas Gerais – CEMIG, December 29, 2008
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