Iberdrola Sa · BME:IBE
Iberdrola Sa — H1 2020 Earnings Presentation
41 slides from Iberdrola Sa's earnings presentation, Jul 22, 2020
Slide 1: Results Presentation First Half 2020
Results Presentation First Half 2020 July 22, 2020 Internal Use
Slide 2: Legal Notice: Disclaimer
Legal Notice DISCLAIMER This document has been prepared by Iberdrola, S.A. exclusively for use during the presentation of financial results of the first semester of the 2020 fiscal year. As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity
Slide 3: Legal Notice: Forward-Looking Statements
Legal Notice FORWARD-LOOKING STATEMENTS This communication contains forward-looking information and statements about Iberdrola, S.A., including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operati
Slide 4: Highlights of the Period
Agenda Highlights of the Period Results Presentation / First Half / 2020 / 4
Slide 5: COVID management
COVID 19 management Fulfilling our commitments and maintaining operations… AENOR quality certification received for excellence in anti COVID measures Employees Infection rate much lower than the average of our countries Responsible re-entry plans in line with local regulations: all employees b
Slide 6: Highlights of the period
Highlights of the period A resilient business model: increasing results even in the current scenario Adjusted EBITDA grows by 4.2%, to EUR 5,075 M Reported EBITDA reaches EUR 4,918 M Ongoing improvement in operational efficiency Gross Investment reaches EUR 3,582 M (+2.3%), maintaining financial str
Slide 7: EBITDA
EBITDA Adjusted EBITDA1 reaches EUR 5,075 M (+4.2%) Networks Adjusted EBITDA by business • Impact of new regulatory period in Spain, as expected • Results in US affected by items reconciliable in US GAAP that still cannot be registered in IFRS Generation • Impact of tariff reviews in Brazil although
Slide 8: COVID Impact
COVID Impact Progressive normalization of demand and power prices in UK and Spain… Monthly evolution electricity demand 2021 forward price evolution Feb Mar Apr May Jun Jul (MTD) 44.5 44.4 0 -2% 2 4 6 8 -5% -9% (€/MWh) 40.8 -18% Feb Mar Apr May Jun Jul (MTD) Feb Mar Apr May Jun Jul (MTD) 46.0 +1% -x
Slide 9: Regulatory measures
Regulatory measures …with regulatory measures progressing in other countries • New York new rate case joint proposal • Off-balance sheet COVID system loans signed and decision expected in October approved to compensate pandemic (retroactive from April) impacts (BRL ~1,660 M allocated to • Initiative
Slide 10: Operational efficiency
Operational efficiency Net Operating Expenses improve by 3.3%… Net Operating Expenses (M EUR) -3.3% 2,146 2,074 26.1% (NOE / GM) 25.8% (NOE / GM) H1 2019 H1 2020 …even after considering non-recurrent1 expenses related to COVID 1 Related mainly to donations of healthcare materials (EUR 33 M) Results
Slide 11: Gross Investments
Gross Investments Increasing investments despite restrictions (+2.3%)… H1 Gross Investments by business Generation & 2% Corporate & other ~1,600 MW of new installed +15.0% Supply 8% capacity in H1 -16.9% +4,900 MW installed capacity 3,582 y-o-y 45% Renewables +4.0% M EUR More than 7,500 MW under Net
Slide 12: Cash Flow Generation
Cash Flow Generation Improving cash flow generation to EUR 3,922 M, up to +1.1%… FFO / Adjusted Net Debt Ratings reaffirmed (S&P, Moody’s and Fitch) +110 bp 21.7% EUR 14.6 Bn of liquidity available (30 months under normal scenario) 20.6% Proven access to capital markets EUR 2.6 bn new green / sustai
Slide 13: Greenfield M&A
Greenfield M&A Looking into the future with transactions delivering new growth platforms… Friendly takeover bid for Infigen • 1,184 MW in operation • 1,000 MW already under development with further growth potential • Over 70% generated energy in 2020, 2021 and 2022 contracted with PPAs • Current cus
Slide 14: Renewable Pipeline
Renewable Pipeline …and reinforcing our renewable pipeline Renewable pipeline by country Renewable pipeline (MW) United Mexico 37,000 58,000 9% States 9% Brazil 36% UK 10% 58,000 14,000 MW 7,000 12% IEI 24% Spain Under With Permits in Total construction permits process Leaders in offshore: 12 GW wit
Slide 15: Recovery plans
Recovery plans Multiple measures approved to accelerate green recovery • National Energy and Climate Plan1 • Stimulus Federal Plan • Climate Change and Energy Transition Bill • PTC extension (5 years safe harbor) currently being discussed at Congress • New York sets framework to reach 70% renewable
Slide 16: Shareholder remuneration
Shareholder remuneration “Iberdrola Retribución Flexible” program in execution Supplementary dividend of EUR 0.232 per share (or a new share for 44 rights) to be paid on 4th August… …to reach an annual shareholder remuneration of EUR 0.40 per share Share buy-back to maintain the number of shares at
Slide 17: ESG and Iberdrola
ESG and Iberdrola Leaders in ESG investment, after 20 years implementing our model International Awards • Social dividend included in bylaws and committed with ethics and transparency AAA for MSCI • Iberdrola ESG focus reinforced by green “Dark green” for BlackRock recovery plans “Silver class
Slide 18: Analysis of Results
Agenda Analysis of Results Results Presentation / First Half / 2020 / 18
Slide 19: COVID impact / Group
COVID impact / Group Two main direct COVID impacts considered, totalling EUR 228 M in H1’20: demand (EUR 157 M) at EBITDA level and bad debt (EUR 71 M) at EBIT level DEMAND1 BAD DEBT2 EUR M Generation Generation Networks Networks &Supply &Supply Networks Expected recovery of most impacts SPAIN 7 31
Slide 20: Income Statement / Group
Income Statement / Group Reported Net Profit grows 12.2%, to EUR 1,844.9 M. Adjusted Net Profit grows +7.5% EUR M H1 2020 H1 2019 % H1 2020 % Adjusted (Adjusted) Revenues 16,467.4 18,281.0 -9.9 Gross Margin 8,050.3 8,230.0 -2.2 Net Operating Expenses -2,074.4 -2,145.8 -3.3 Levies -1,057.7 -1,094.5 -
Slide 21: Results reconciliation
Results reconciliation Adjusted results exclude main non-recurring impacts in H1’19 and H1’20, but not fx impact (EUR -92 M at EBITDA level) EBITDA Net Profit 5,075 -157 1,845 +485 -157 1,670 -153 4,918 +4.2% -1.4% +7.5% +12.2% 2020 COVID 2020 2020 COVID Siemens Tax 2020 Adjusted effect Reported Adj
Slide 22: Gross Margin / Group
Gross Margin / Group Gross Margin falls 2.2%, to EUR 8,050.3 M … EUR M Revenues EUR M Procurements -9.9% -16.3% 18,281.0 16,467.4 10,051.0 8,417.1 H1 2019 H1 2020 H1 2019 H1 2020 … with a negative fx impact of EUR 121.3 M Results Presentation / First Half / 2020 / 22
Slide 23: Net Operating Expenses / Group
Net Operating Expenses / Group Net Operating Expenses improve 3.3%, to EUR 2,074.4 M, driven by cost containment and efficiency plans implemented in 2019 EUR M Net Operating Expenses H1 2020 H1 2019 vs H1’19 (%) Net Personnel Expenses -1,071.5 -1,083.4 -1.1% Net External Services -1,002.9 -1,062.4 -
Slide 24: Levies / Group
Levies / Group Levies fall 3.4%, to EUR 1,057.7 M, … EUR M +28 +7 -1,094 -1,058 Spanish taxes on H1 2019 generation Other H1 2020 … due mainly to lower output and prices in Spain Results Presentation / First Half / 2020 / 24
Slide 25: Results by Business / Networks
Results by Business / Networks Networks EBITDA falls 10.6%, to EUR 2,318.6 M EBITDA by Geography (%) Key Figures (EUR M) Brazil 21% H1 2020 H1 2019 vs H1’19 (%) 34% Spain Gross Margin 3,822.8 4,144.5 -7.8% 2,318.6 Net Op. Exp. -1,034.6 -1,094.6 -5.5% Levies -469.5 -456.3 +2.9% United 23% States 21%
Slide 26: Results by Business / Networks
Results by Business / Networks Spain EBITDA EUR 790.7 M (EUR -45.9 M; -5.5%), due to the 50 bps lower remuneration established for 2020 in the regulatory framework (EUR -29 M) and positive settlements accounted for in H1 2019 (EUR -33 M). EBITDA IFRS USD 587.8 M (USD -194.3 M; -24.8%), EBITDA US GAA
Slide 27: Results by Business / Renewables
Results by Business / Renewables Renewables EBITDA up 5.3%, to EUR 1,226.9 M, driven by the US and the UK. Average operating capacity increases +6.1%, to 28,696 MW EBITDA by Geography (%) Key Figures (EUR M) IEI* 14% H1 2020 H1 2019 vs H1’19 (%) Mexico 3% Spain 25% Gross Margin 1,833.1 1,749.9 +4.8%
Slide 28: Results by Business / Renewables
Results by Business / Renewables Spain EBITDA EUR 300.7 M (EUR -79.2 M; -20.9%), despite higher output (+17.9%), driven by hydro production (+51.5%), and higher PV capacity, due to lower sales price to the Supply business US EBITDA USD 312.9 M (USD +34.6 M; +12.4%), driven by higher output (+20.7%),
Slide 29: Results by Business / Generation and Supply
Results by Business / Generation and Supply Generation & Supply EBITDA up 14.3% to EUR 1,351.8 M,… EBITDA by by Geography Geography(%) (%) Key Figures (EUR M) Brazil 2% H1 2020 H1 2019 vs H1’19 (%) Gross Margin 2,405.8 2,327.3 +3.4% Mexico 28% 60% Net Op. Exp. -658.2 -709.5 -7.2% 1,351.8 Spain Levie
Slide 30: Results by Business / Generation and Supply
Results by Business / Generation and Supply Spain EBITDA EUR 813 M (EUR +59.4 M; +7.9%) • Lower output 14,950 GWh (-16.0%), higher purchases at lower prices vs H1 2019 • Active management of customer portfolio: Energy + Smart Solutions • LNG contracts sale (+EUR 89 M) in Q2 2019 Mexico EBITDA USD 42
Slide 31: EBIT / Group
EBIT / Group Group EBIT falls 10.6%, to EUR 2,674.8 M, including EUR 71 M of bad debt provisions: EUR 35 M in Networks, to be mostly recovered through regulatory mechanisms and … COVID Bad Debt provisions (EUR M) D&A and Provisions (EUR M) H1 2020 H1 2019 vs H1’19 (%) Networks 35 D&A -1,994.0 -1,821
Slide 32: Net Financial Expenses / Group
Net Financial Expenses / Group Net Financial Expenses improve by EUR 210.7 M to EUR 400.2 M, due to one-off fx hedges and lower cost, … Net Financial Exp. evolution (EUR M) Cost of Debt - 610.9 + 71.7 - 42.7 + 181.7 - 400.2 3.63%* -40 bps 3.23% Fx and Jun 2019 Cost Avg. debt other Jun 2020 Jun 2019
Slide 33: Adjusted Net Debt / Group
Adjusted Net Debt / Group Stronger Credit metrics Adjusted credit metrics Jun 2020*** Jun 2019** Adjusted Net Debt* (EUR M) Adjusted Net Debt* / EBITDA 3.7x 3.8x 37,554 37,492 FFO / Adjusted Net Debt* 21.7% 20.6% RCF / Adjusted Net Debt* 20.0% 19.4% Adjusted Leverage* 44.9% 45.3% Jun 2019** Jun 2020
Slide 34: Liquidity and debt diversification / Group
Liquidity and debt diversification / Group Liquidity totals EUR 14.6 bn, covering 30 months of financing needs Liquidity: EUR 14,626 M Gross debt by market Cash Bank loans 2.320 11,0% Leases 4,5% EUR bonds Structured 31,5% 2,3% Available Loans Backup Lines Multilateral 2.060 7.300 11,3% Commercial p
Slide 35: Main financial transactions of the year
Main financial transactions of the year Group’s solid and sustainable profile allows funds to be raised in all markets New financing: EUR 5,642 M EUR bonds Market Amount Remarks Bank loans 1,110 1,401 Deals in all markets with EUR 1,110 M oversubscribed order books that Bonds USD 975 M allowed issui
Slide 36: Green/sustainable financing
Green/sustainable financing Iberdrola remains the world leading private group in green bonds issued Green Financing: EUR 13,581 M Green/Sustainable Financing: EUR 22,613 M Public hybrid Bank loans bonds 357 2,500 Multilateral EUR loans 1,485 77% AGR TEI 339 AGR bonds 1,875 USD 22% Public bonds Neo b
Slide 37: Net Profit / Group
Net Profit / Group Reported Net Profit up 12.2%, to EUR 1,844.9 M, and Adjusted Net Profit +7.5% EUR M H1 2020 H1 2019 vs H1’19 (%) EBIT 2,674.8 2,990.7 -10.6% - Net Financial Expenses -400.2 -610.9 -34.5% - Equity Method -8.7 +8.2 +5.1% - Non Recurring Results +505.1 +6.8 n/a - Corporate Tax -780.4
Slide 38: Conclusions
Agenda Conclusions Results Presentation / First Half / 2020 / 38
Slide 39: Conclusions: First half results
Conclusions: First half results Reported Net Profit of EUR 1,845 M, up 12%... Gross investments reach EUR 3,582 M (+2.3%) 4,900 new MW in the last 12 months, exceeding 53,100 MW (~2/3 renewable) Net Operating Expenses reduce by 3.3% Maintaining financial strength (14.6 Bn of liquidity) …despite COVI
Slide 40: Conclusions: 2020 Outlook
Conclusions: 2020 Outlook Solid performance on the delivery of our plans Investments New Capacity Rate Cases Efficiency USA ~EUR 10 Bn ~4,000MW Cost savings Brazil Results Presentation / First Half / 2020 / 40
Slide 41: Conclusions: 2020 Outlook
Conclusions: 2020 Outlook Depending on COVID evolution affecting factors such as… Demand Overdue Debt Regulatory measures to Power prices mitigate impacts …we maintain Net Profit guidance at mid / high single-digit growth Dividend growing in line with Net Profit Results Presentation / First Half / 2