Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — FY2019 Earnings Presentation
51 slides from Engie Energia Chile's earnings presentation, February 2020
Slide 1: Engie Energía Chile S.A. Presentation to investors Full year 2019
ENGIE ENERGÍA CHILE S.A. Presentation to investors Full year 2019
Slide 2: Snapshots
SNAPSHOTS 2
Slide 3: Engie group snapshot
Supporting our clients in their zero BUSINESS LINE – CLIENT SOLUTIONS carbon roadmap Focus on 20 countries, 30 urban areas, BUSINESS LINE – RENEWABLES 500 global clients Decentralized organization: BUSINESS LINE – NETWORKS 24 business units; 4 business lines CAPEX 2019-2021: BUSINESS LINE – THERMAL
Slide 4: SEN market: capacity, generation, clients and market share
Gross installed Generation capacity (MW) 2019 (GWh) Solar Hydro 11% 27% Wind Wind Hydro 6% 9% 27% Solar 8% SEN 25,206 MW 77,382 GWh 3,300 Km Thermal Thermal 59% 53% Clients Market Share (% of sales 2019) (% installed capacity Dec-19) Enel Regulated 29% 42% Engie 9% Colbún 13% 25,206 MW 10,793 MW AES
Slide 5: Relevant player in the energy industry
RELEVANT PLAYER IN THE ENERGY CONTRACTED INDUSTRY GROWTH UNDERWAY BUSINESS Leader in northern mining 15-yr regulated PPA Capacity contracted under region, 4th largest electricity w/distribution companies => long-term sales agreements; generation company in contracted physical sales 12 years re
Slide 6: Technology and asset map
Technology Chapiquiña (11MW) Coal El Aguila I (2MW) Diesel/Fuel oil 2,204 MW (*) Natural gas Pampa Camarones (6MW) Renewables Baterías - Arica (2MW) Collahuasi Diesel Arica (14MW) El Abra 2,293 kms HV + MV TE Tocopilla (708MW) Chuquicamata transmission lines. 50% share in TEN Tocopilla port Gaby C.
Slide 7: Contracted growth, new power supply and interconnection
NEW PPA: NEW POWER REVENUE & EBITDA INTERCONNECTION SUPPLY GROWTH Contracted revenue growth TEN: 600-km, 500 kV, IEM + Puerto Andino • ~8,200 GWh p.a. in 2017 ~US$0.8bn, transmission company ~US$1 bn investment including • ~11,000 GWh p.a. in 2019 port More balanced portfolio Operating s
Slide 8: Our performance: PPA renegotiation and decarbonization
Early steps OUR PERFORMANCE • Development of TEN project => procurement of low-carbon energy sources • Decision not to build any new coal plants PPA renegotiation with mining companies RENEGOTIATED PPAs • New tariff scheme: price reduction • Decarbonization (tariff indexed to CPI rather than to coal
Slide 9: Recent events
RECENT EVENTS 9
Slide 10: Decarbonization process and coal phase-out
Jun. 4, 2019: Agreement with Dec. 8, 2019, COP 25: Engie to close 2 government to phase-out coal-based more coal units => 773 MW of coal generation capacity closed by YE 2024 • Binding commitment by Engie, Enel & AES • Letter of Intent signed w/ IDB Group to to close 8 units/1GW by 2024 structure US
Slide 11: Launch of first renewable projects: 1GW/US$1bn plan
October 7, 2019: Launching of first 3 renewable projects out of 1GW/US$1bn investment plan Los Loros Calama Capricornio Tamaya Acquired in April 2019 Site mobilization 10-19 1st cargo w/solar panels on Construction to start 1Q20 US$ 35 million US$159 million CAPEX site - US$64 million CAPEX US$68 mi
Slide 12: New US$500 million bond and IDB letter of intent
Jan 28, 2020: New 10 yr., 3.4%, US$500 million 144A/RegS bond to refinance US$400 million notes due Jan-2021 600.000 6% 500 500.000 Before: 4.83% 400 5% 400.000 350 300.000 4% 200.000 After: 3.72% 80 3% 100.000 0.000 2% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 • Average debt maturity e
Slide 13: Electricity price stabilization mechanism (Law 21,185)
PEC = Adjusted upwards if Dec. 2020 Dec. 2025 Jul. 2023 • Law #21,185 (Nov-19): Electricity PEC = Fixed price to consumers in nominal PEC = Fixed price to consumers in PEC = Adjusted upwards if necessary to avoid breaching necessary to permit full price stabilization mechanism for CLP adjusted for i
Slide 14: SEN interconnection and gas supply
• Interchile’s Cardones-Polpaico transmission Project: COD = May 29, 2019: Together with increased gas supply, full interconnection contributed to SING SEN “Sistema • reduced marginal cost volatility Eléctrico • lower average marginal costs Nacional” SIC • EECL contracted up to 4.6 TBtu of gas impor
Slide 15: 2019 highlights: clients, assets, ratings, shareholders
OUR CLIENTS OUR ASSETS • 55MWp Solar PV acquisition 17-Apr-19 • PPA renegotiations & new contracts Los Loros & Andacollo @ US$35 million Antucoya, Molycop & others ~778 GWh p.a. • 248MWp Wind +Solar PV in construction Calama wind farm and Capricornio solar PV plant • 15-yr. PPA w/distribution compan
Slide 16: Key messages
KEY MESSAGES 16
Slide 17: Key messages
2019 results exceeding guidance Mastering the growth achieved Building our future together with our clients PPA renegotiation, decarbonization & life extension Paving the way for our energy transformation plan Development focused on replacing coal with renewable capacity Robust and flexible capital
Slide 18: Profitable long-term growth; improved risk profile
PROFITABLE LONG-TERM GROWTH; IMPROVED RISK PROFILE OUR PERFORMANCE New PPAs w/distribution companies and Free Clients • Growth in contracted portfolio reaching >11 TWh of contracted demand • Portfolio diversification (regulated vs. unregulated) 2017 2018 2019 ENERGY SALES (TWh) Operation in an inter
Slide 19: Financial results 2019 vs 2018
2018 2019 Variation Operating Revenues (US$ million) 1,275.3 1,454.5 +14% EBITDA (US$ million) 375.7 534.9 +42% EBITDA margin (%) 29.5% 36.8% +7.3 pp Net income (US$ million) 102.6 110.8 +8% Net income-recurring (US$ million) 155.5 244.4 +57% Net debt (US$ million) 841.7 682.7 -19% Spot energy purch
Slide 20: Energy supply, purchase costs and coal decommissioning schedule
Coal plant decom m issioning schedule US$/MWh Capacity % of 2019 Plant Date (MW) pow er supply 140 U12+U13 171 Jun-19 0.1% U14+U15 268 Dec-21 1.2% Average monomic price 120 US$112/MWh CTM1+CTM2 334 Dec-24 3.8% 100 Diesel Average fuel & 80 electricity purchase cost: US$62/MWh 60 Toll G.A. U15 CTM3 U1
Slide 21: Contract portfolio with 12-year average remaining life
Sound contract portfolio with average remaining life of A GROWTH 12 years DRIVING PPA 600 ● Regulated contracts • 2018: Up to 2,016 GWh ● Unregulated contracts (230 MW-avg.) • 2019-2032: Up to 5,040 GWh Renegotiated contracts 500 Distribution per year (575 MW-avg.) Average demand (MW) Companies (Sou
Slide 22: PPA renegotiations signed in 2018 and 2019
PPA renegotiations signed by EECL in 2018 and 2019 Antucoya 50MW Price discount, Price discount, CPI-indexed & others PPA life extension coal-indexed 23MW Price discount, Price discount, Chuqui PPA life extension @ new, CPI-indexed price 200MW coal-indexed CPI-indexed Alto Norte Price discount, Pric
Slide 23: Contracted demand: our vision through 2030
GWh CONTRACTED DEMAND: OUR VISION THROUGH 2030 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free clients-renegotiated+new free clients Other free clients • We will potentially invest ~US$1 bn in rene
Slide 24: Renewable acquisitions and green-field projects
ACQUISITIONS: Arica y Parinacota Tamaya Los Loros & Andacollo solar PV plants 114 MWp • 54 MWp + 1.3 MWp Calama • Acquired by EECL in April, 2019 for ~US$35 million 151.2 MW Antofagasta Capricornio 97.4 MWp GREEN-FIELD PROJECTS: • 3 projects with approved “RCA” Atacama Los Loros 54 MWp • 2 under con
Slide 25: Transmission projects
Nueva Chuquicamata Arica y Parinacota • Substation + 2 x 220 kV line • Referential investment value: US$ 18 million Nueva • AVI: US$ 0.9 million Chuquicamata Antofagasta • COD: 24 / 48 months • RCA approved May-19 Atacama Algarrobal Algarrobal • Sectioning 220 kV substation Coquimbo • Referential in
Slide 26: IEM power plant
• 377MWe gross capacity => 348MWe net base-load capacity • Pulverized coal-fired power plant w/ strict environmental standards • Turnkey EPC contractor: SK Engineering & Construction (Korea) • Commercial operation date: May 16, 2019 • 1,466 GWh injected to SEN in 2019 • US$0.9 billion investment Sou
Slide 27: Puerto Andino port
• Mechanized port, with 6 million TPY transfer capacity • 3,000 TPH unloading speed => lower demurrage costs • Conventional & tubular conveyor belts => better environmental standards • Space for mineral product exports => diversification opportunities • 1.5 million tons of coal + 62 thousand tons of
Slide 28: Free cash flow positive and financing capacity for energy transformation
• FREE CASH-FLOW POSITIVE STATUS STARTING 2019 HAS RELEASED FINANCING CAPACITY FOR ENERGY TRANSFORMATION PLAN MUSD 4.0 500 TEN 30 3.5 400 3.0 TEN 35 Net debt capacity at ~US$1.2bn @ 2.5x 2.5 Debt/EBITDA 300 IEM & Port 2.0 436 IEM & Port 200 314 1.5 Renewables Renewables 64 241 IEM & Port 1.0 183 Tan
Slide 29: EBITDA and recurring income drivers 2017-2020
Demand & prices + New PPA w/distribution co’s. US$ 160 to 180 US$ 244 mln + New PPAs w/free Clients mln US$ 75 mln LDs (*) - Client migration & lower demand US$ 450 to - PPA renegotiation US$ 161 mln 470 mln US$ 460 mln Marginal cost risks - Coal prices US$ 87 mln US$ 376 mln - Hydrologic conditions
Slide 30: Financial update
FINANCIAL UPDATE 30
Slide 31: EBITDA bridge 2018 to 2019
+107 (135) By main effect In US$ Million +72 (63) Lower +24 +5 Physical +33 prices (125) Other on energy energy +83 OPEX, purchases Spot sales operating purchases Sufficiency Fuel Transmission SG&A, income capacity +158 costs Gas other 535 (LDs) purchases Volume Average sales free realized cli
Slide 32: Recurring results
Recurring Results In US$ Millions (9) 244 116 +8 (19) minority Other interest (134) Depreciation Financial FX Diff. expenses Insurance PD 156 +9 minority 52 interest 111 103 EBITDA +8 +9 increase minority minority interest interest Impairment Impairment Net Net Net Net Recurring Recurring Inco
Slide 33: Main cash flows and net debt
Main cash flows In US$ Million +72 (22) (569) +49 +23 +119 Cash Leases Income payment Accrued (IFRS 16) Taxes from TEN +135 +33 Interest/ + Green Dividends deferred Taxes Acquisition (including financial 842 Los Loros 40% CTH) Andacollo cost + CAPEX (*) MTM on (**) 683 hedges Operating cash flow (**
Slide 34: Net debt/EBITDA, ratings and debt details
Net debt/EBITDA well below 2.5x NET DEBT/EBITDA @ 1.4 X 4.000 3.500 Rating confirmed @ BBB 3.000 2.8 2.2 2.500 2.0 1.7 • International: 2.000 1.3 1.500 Fitch (June 2019) Positive Outlook 1.000 • S&P (July 2018) Stable Outlook 0.500 0.000 • National scale: Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 • Fitch (
Slide 35: Dividends paid, market cap, dividend yield, share price
DIVIDENDS PAID MARKET CAP & DIVIDEND YIELD In US$ Millions In US$ Millions 120 100% 112 100% 7.0% 90% 100 22 6.0% 5.8% 2,000 80% 5.4% 78 70% 5.0% 80 7 60% 1,500 47% 56 3.4% 4.0% 56 60 50% 47 2,265 1,000 3.0% 17 34 90 40% 1,922 1,819 1,866 2.5% 12 30% 30% 30% 30 40 72 30% 2.3%1,657 2.2% 1,620 1,440 2
Slide 36: Delivery and development priorities
DELIVERY AND CLIENTS AND DEVELOPMENT OPERATION LEADERS IN ENERGY IEM+PORT TRANSITION RENEWABLES PPA PORTFOLIO PORTFOLIO EXTENSION NEW PPA WITH ASSET ROTATION DISTRIBUTION CO’S CAPITAL STRUCTURE CUSTOMER SOLUTIONS & LEAN PROGRAM 36 Engie Energía Chile - Presentation to Investors – FY 2019
Slide 37: Addenda
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Slide 38: Energy sales and prices
ENERGY SALES AND PRICES Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Unregulated Regulated Spot Energy+Capacity Price->Unregulated Energy+Capacity Price->Regulated
Slide 39: Energy sources and average supply cost
Renewables Diesel 7% 3% Coal 61% • Increased spot purchases due to (i) coal, gas and renewable efficient Installed capacity additions in the grid since 2016 and (ii) start-up of PPA with Gas distribution companies in central Chile 29% capacity 2,204 MW • Fuel prices, CO2 taxes, emission-reduction co
Slide 40: Hydrologic risk and long-term unregulated contracts
• Limited exposure to hydrologic risk until interconnection became fully operative • Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand (bilateral negotiation of prices and supply terms) • Maximum demand: ~ 2,983 MW in 4Q 2019; expected 3.4% compounded avera
Slide 41: Generation North SEN, December 2019
MW Generation North SEN – December 1 to 10, 2019 US$/MWh 3,500 100 90 3,000 80 2,500 70 60 2,000 50 1,500 40 1,000 30 20 500 10 0 0 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 2 3 4 5 6 7 8 9
Slide 42: Agile, diversified, client-focused approach to industry change
More agile, diversified, client-focused approach to face industry change INCREASED TECHNOLOGIC RECOVERY IN COMPETITION DISRUPTION DEMAND GROWTH More flexible power auction Lower investment cost of Mining industry recovery regulations (Law # 20,805) renewable capacity w/copper >2.7 $/lb: reviva
Slide 43: SEN installed capacity by company, December 2019
SEN – December 2019 25,206 MW SING SEN “Sistema 8,838 MW Eléctrico 7,370 MW Nacional” 1,100 4,382 SIC 3,450 3,452 MW 3,310 MW 21 45 270 2,204 MW 1,370 127 61 57 1,611 10 195 2,033 610 2,990 2,586 (*) 1,304 532 MW 1,332 660 532 350 Enel Generación AES Gener Colbún EECL Kelar Other Coal Gas Diesel Hyd
Slide 44: PPA indexation
Overall indexation applicable to Overall indexation applicable to electricity and capacity sales electricity and capacity sales (as of December 2019) (2021, proforma PPA U.S. CPI renegotiation) U.S. CPI U.S. PPI U.S. PPI Gas 11% Node Node Price Price 66% 57% Coal 31% 1,450 MW 1,428 MW Contracted * C
Slide 45: Transmission lines and substations
EECL operates 23 substations with total 2,293 kms. capacity of 844 MVA 844 MVA 5 US$ 19.4 million regulated revenue p.a. Transmission substations EECL operates 2,293 kms. of transmission lines Generation 844 substations MVA 18 Kms of transmission lines 8% 891 2,293 Kms. AVI + COMA for National & Zon
Slide 46: TEN transmission line
• Double circuit, 500 kV, alternate current TEN annual revenue: (HVAC), 1,500 MW, 600-km long (in USD millions transmission line at Dec.31, 2019 FX rates) • National transmission system AVI (VI annuity): 74.0 interconnecting SIC and SING grids since + COMA (O&M cost): 8.3 Nov. 24, 2017 -------------
Slide 47: Chile copper industry challenges
US¢/lb Copper production in Chile ('000 tons) GWh 6,500 500 8,000 Copper price LME (US¢/lb) SEN monthly electricity demand 450 7,000 5,500 400 6,000 350 4,500 5,000 300 3,500 250 4,000 5,776 5,761 5,772 5,832 5,786 5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,434 5,553 5,504 200 5,263 2,500 4,739 4,9
Slide 48: Corporate structure and shareholders
Pension funds Local institutions Foreign institutions Individuals 52.76% 22.14% 15.52% 9.15% 0.42% ENGIE ENERGÍA CHILE S.A. Inversiones Punta de Red Eléctrica Chile Rieles Ltda. (“EECL”) S.A. 40% 50% Central Central Gasoducto Edelnor Transmisora Termoeléctrica Termoeléctrica Norandino S.A. Transmisi
Slide 49: Governance and organization
Shareholders’ assembly Committee Functional committees: Board of directors - Management of directors - Commercial origination - Development - Business knowledge CEO - Stakeholders & Regulation - Change management - Construction - Portfolio & risk management Internal auditor Finance & Human Commercia
Slide 50: Contact and more information
Ticker: ECL +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl MORE INFORMATION ON 2019 RESULTS IN OUR WEB PAGE 2019 Presentation Addenda Press Recorded Financial Analyst Release conference report pack audiocast 50 Engie Energía Chile - Presentation to Investors – FY 2019
Slide 51: Disclaimer
Disclaimer Forward-Looking statements This presentation may contain certain forward-looking statements and information relating to Engie Energía Chile S.A. (“EECL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan