Edp S.a. · EURONEXT:EDP

Edp — Energias de Portugal — FY2012 Earnings Presentation

44 slides from Edp's earnings presentation, Mar 6, 2013

  1. Slide 1: Results Presentation 2012

    Results Presentation 2012 Lisbon, March 6th, 2013 0

  2. Slide 2: Disclaimer

    Disclaimer This document has been prepared by EDP ‐ Energias de Portugal, S.A. (the "Company") solely for use at the presentation to be made on the 6th of March 2013 and its purpose is merely of informative nature and, as such, it may be amended and supplemented. By attending the meeting where this

  3. Slide 3: 2012: Highlights of the period

    2012: Highlights of the period EBITDA: €3,628m, ‐3% YoY Negative non recurrent items in Brazil; Challenging Iberian market; Healthy growth in renewables +881 MW of new capacity commissioned: wind, hydro and Brazil 65% of generation capacity is hydro & wind Continued focus on efficiency Opex (1): +3%

  4. Slide 4: 2012: Highlights of the period

    2012: Highlights of the period Capex of €2.0bn (‐7% YoY): fewer expansion projects in wind power €0.8bn of disposals: €0.6bn to be received in 1H13 Regulatory receivables Portugal +€1.1bn in 2012: €0.3bn above expected due to very dry weather Electricity system sustainability agreement: Receivables

  5. Slide 5: EDP's Earnings Delivery to Shareholders versus main European Integrated Utilities

    EDP’s Earnings Delivery to Shareholders versus main European Integrated Utilities EPS11: Actual data versus consensus on Jan‐09 (1) EPS12: Actual Data/Current Consensus vs. Jan‐10 Consensus (2) (%) (%) CENTRICA CENTRICA EDP 9% FORTUM SSE SSE IBERDROLA -9% EDP EDP FORTUM ENDESA ENEL GAS NAT ENDESA EN

  6. Slide 6: 2012 Operating Headlines: Hydro & wind represent 65% of installed capacity

    2012 Operating Headlines: Hydro & wind represent 65% of installed capacity by Dec-12 Installed Capacity Generation Breakdown by Technology (GW) (TWh) +1% ‐6% 58.4 23.2 23.4 54.7 7% 32 3.2 +2% Other (1) 10% 3.2 Other (1) 11% 12% 12.2 Coal +26% 15.4 Coal CCGT 16% 16% 6.8 ‐55% 55% CCGT 3.1 Hydro 32% 33

  7. Slide 7: EBITDA 2012: Breakdown by division

    EBITDA 2012: Breakdown by division EBITDA Breakdown by division (€ million) % Chg. YoY ‐3% €3,756m €3,628m Liberalized 10% ‐14% 14% A i i i Iberia Activities Ib i 9% EDP Brasil 16% ‐22% 15% EDP Renováveis 21% +17% 26% 91% Regulated 28% ‐3% 29% N Networks Ib i (1) k Iberia LT Contracted 22% ‐4% 22% G

  8. Slide 8: 2012 EBITDA: Increasing portfolio diversification

    2012 EBITDA: Increasing portfolio diversification EBITDA Breakdown by Major Subsidiaries: 2012 vs. 2011 EBITDA Breakdown by Geography (2): 2012 vs. 2011 (%) (%) ∆ % 2011‐12 Rest of Europe 3% +77% 5% 2011 2012 Var. % Var. Abs. Brazil 19% ‐21% 15% USA 7% +18% 9% EDP Brasil 682 535 ‐22% ‐147 Spain 26%

  9. Slide 9: EBITDA 2012 vs. guidance provided at May-12 investor day

    EBITDA 2012 vs. guidance provided at May-12 investor day EBITDA 2012 Breakdown (€ million) EDP Brasil 19% 15% EDP 23% Major EBITDA deviations in Brazil: 26% Renováveis  Delay in the commissioning of Pecém;  Negative tariff deviations in distribution (to be recovered in 2013 2013‐14); 14);  ForEx;

  10. Slide 10: Operating costs: Opex/Gross Profit at 28% in 2012

    Operating costs: Opex/Gross Profit(2) at 28% in 2012 Operating costs (1) : 2012 vs. 2011 2012 YoY Inflation (3) (€ million) (%) Brazil EDPR Iberia +3% 1,522 1,575 300 ‐2% 306 286 324 +13% 5.8% 2.8% 2.4% 930 950 +2% 2011 2012 Portugal Spain Brazil (IGP‐M)  Iberia: Operating costs +2% YoY (excluding

  11. Slide 11: Capex: execution of selective growth

    Capex: execution of selective growth Consolidated Capex Breakdown(1) (€ billion) 36 3.6 2.2 2.0 0.2 1.5 0.4 0.3 Other Expansion 0.4 Brazil Generation Expansion 0.8 Hydro Portugal Expansion 0.6 Wind Expansion 0.8 0.7 Maintenance 2006 2008 2011 2012 Capex in 2012 at €2bn, down 7% YoY, following slowdo

  12. Slide 12: Delivery of strategic partnership with CTG: first wind farms minority stakes transaction

    Delivery of strategic partnership with CTG: execution of first wind farms minority stakes transaction Transaction Scope & Assets Description  Dec‐12: EDPR agreed with CTG the sale of a 49% minority stake in EDPR Portugal, representing Total Invested Capital/Net Fixed Assets (€m) 615MW of wind capac

  13. Slide 13: Net regulatory receivables by Dec-12

    Net regulatory receivables by Dec-12 Regulatory Receivables Portugal hydro coefficient (€ million) (1.0 = avg. year) +€1,062m , 2,710 , ‐48% 48% 0.92 1 648 1,648 2,197 0.48 Portugal(2) 1,130 Spain 514 424 Brazil (1) 4 89 Dec‐11 Dec‐12 2011 2012 In Portugal, +€1,067m, mainly driven by:  +€797mn most

  14. Slide 14: Net debt

    Net debt EDP consolidated lid t d nett d debt bt position: iti D Dec‐12 12 EDP consolidated lid d debt d b b by currency: Dec‐12 D 12 (€ million) (%) PLN 18,233 7% raised at EDP Brasil USD 1% Bank loans and capital markets; 18% EDP Brasil Ring‐fenced policy essentially ‘non‐ 1,296 recourse’ to EDP S

  15. Slide 15: Change in Net debt

    Change in Net debt Change in Net Debt: Dec‐12 vs. Dec‐11 (€ billion) 0.7 18.2 0.6 Regulatory 17.6 1.4 Receivables 16.9 1.7 1.0 2.7 1.6 2.7 15 2 15.2 15.5 14 9 14.9 Nett Debt N D bt FFree C Cash h Regulatory R l t EExpansion i Dividends Di id d Nett D N Debt bt Disposals Di l Nett D N Debt bt Dec‐11

  16. Slide 16: Improvement in credit conditions & execution of CTG partnership

    Improvement in credit conditions & execution of CTG partnership 5‐Year Credit Default Swaps: Portuguese Government and EDP (bps) Major credit deals of EDP in Jul/Jan‐13: ECB announces the  Jul‐12: €1bn loan from China Development Bank, Bank 1,600 terms of a new 5 year‐tenor, interest Euribor 6M + 4

  17. Slide 17: Net Debt Profile

    Net Debt Profile EDP consolidated debt maturity profile (€ billion) Impact Jan‐13 Credit Facility (€1.6bn) Adjusted Avg. Debt Commercial paper Maturity (2): 4.3 years Other subsidiaries(1) EDP SA + BV Brazil: €267M Project Finance: €116M 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 2017 2018

  18. Slide 18: Financial Liquidity position

    Financial Liquidity position (€ million) Sources of liquidity (Dec‐12) Maximum Number of Instrument Utilised Available Maturity Amount counterparties Revolving Credit Facility 2,000 21 300 1,700 03‐11‐2015 Domestic Credit Lines 183 8 0 183 Renewable Underwritten CP Programmes 300 2 0 300 Renewable T

  19. Slide 19: Main sources and uses of funds

    Main sources and uses of funds Sources of funds Use of funds  Cash & Equivalents (Dec‐12) : €1.7bn  Refinancing needs in 2013: Bond maturing in Mar‐13 €0.15bn  Available Credit Lines (Dec‐12): €2.2bn RCF maturing in Apr‐13 and d in Nov‐13: €2.0bn b  5‐Year Loan (Jan‐13): €1.6bn Bond maturing in

  20. Slide 20: Net Profit breakdown

    Net Profit breakdown (€ million) 2011 2012 ∆% ∆ Abs. Combined impact from increase of wind EBITDA 3 756 3,756 3 628 3,628 ‐3% 3% ‐127 127 farms’ accounting useful life (from 20 to 25 farms years) , new capacity in operation (wind and Net Depreciations and hydro) and impairments at EDPR level 1,488 1

  21. Slide 21: Business Areas

    Business Areas

  22. Slide 22: Iberian Electricity & Gas Markets

    Iberian Electricity & Gas Markets Iberian Market % Weight in Iberia in 2012 Electricity Demand Gas Demand 100% 16% 84% 100% 12% 88% Iberian Iberian Market Portugal Spain Market Portugal Spain ‐2.8% ‐4.1% ‐1.3% ‐1.6% ‐2.9% 2 9% ‐13.0% 13 0%  Electricity Iberia: In Portugal significant decline in res

  23. Slide 23: Long Term Contracted Generation Iberia (22% of EBITDA)

    Long Term Contracted Generation Iberia (22% of EBITDA) EBITDA LT Contracted Generation Adjusted EBITDA LT Contracted Generation (€ million) (€ million) PPA/CMEC Special regime ‐4% ‐0.3% 838 851 849 802 ‐22% ‐22% ‐3% +1.6% 2011 2012 2011 2012  One‐offs (‐€13m in 2011; ‐€46m in 2012): restructuring c

  24. Slide 24: Liberalised Energy Activities Iberia (9% EBITDA)

    Liberalised Energy Activities Iberia (9% EBITDA) EDP Liberalised Power Plants Iberia – Production Coal vs. CCGT – Load factors in 2011 and 2012 (TWh) (%) 2011 2012 ‐13% 15.2 8% 52 Nuclear 13.2 Hydro 12% 9% 42 16% Coal 35% 51% 21 9 CCGT 45% 24% 2011 2012 Coal CCGT Production 13% lower due to very low

  25. Slide 25: Liberalised Energy Activities Iberia (9% EBITDA)

    Liberalised Energy Activities Iberia (9% EBITDA) EBITDA Liberalised Activities in Iberian Market (€ million) • Electricity generation: 13% decline in volumes produced flat unit cost ~€39/MWh produced, ~€39/MWh, no capacity payments in Portugal since Jun‐12 (‐€39m YoY) ‐14% 369 • Energy supply: sligh

  26. Slide 26: Regulated Energy Networks Iberia (29% of EBITDA)

    Regulated Energy Networks Iberia (29% of EBITDA) EBITDA Adjusted EBITDA (1) (€ million) (€ million) Gas Iberia Gas Iberia Electricity Spain Electricity Spain Electricity Portugal Electricity Portugal ‐4% ‐1% 1 101 1,101 1,057 1,041 1,029 +3% +3% ‐28% ‐25% +3% ~0% 2011 2012 2011 2012  Electricity Po

  27. Slide 27: Commercial Activity Portugal: Control over bills collection

    Commercial Activity Portugal: Control over bills collection Impairment for customers’ doubtful debts Overdue Debt from Customers (1) Average Collecting Period (net of reversal) (€m; %) (Days) (€m; %) Impairment for customers’ doubtful debts Overdue Debt from Customers (net of reversal) Overdue Debt

  28. Slide 28: EDP Renováveis (26% of EBITDA): Strong growth driven by new installed capacity

    EDP Renováveis (26% of EBITDA): Strong growth driven by new installed capacity Installed Capacity EBITDA (MW) (€ million) 2012 7 597 7.597 2012 938 YoY % Chg + 6% YoY % Chg + 17% 1% 2% 13% 17% 33% 8% 48% 13% 30% 36% Installed Capacity +440MW: 75% of additions outside Iberia (+215MW in US and + 113MW

  29. Slide 29: Brazilian Electricity System: 2012 market conditions

    Brazilian Electricity System: 2012 market conditions SSpott market k t prices i iin Southeast‐Central S th t C t l W Westt region i vs. H Hydro d Electricity Demand 2012 YoY growth Reservoir Levels (%) (R$ / MWh); (%) Reservoir levels Spot market prices 9.0% 600 100% 90% 500 80% 4.7% 400 4.0% 4.9% 7

  30. Slide 30: EDP Brasil (15% of EBITDA)

    EDP Brasil (15% of EBITDA) EBITDA -15% YoY in local currency, non-recurrent events in 2012 EDP Brasil EBITDA EDP Brasil Adjusted EBITDA (1) (BRL million) (BRL million) Generation & Other Distribution Generation & Other Distribution ‐15% ‐5% 1,586 1,600 1 521 1,521 1,341 ‐12% ‐26% ‐4% +2% 2011 2012 2

  31. Slide 31: EDP Brasil: 2013 prospects

    EDP Brasil: 2013 prospects Distribution Generation Regulatory receivables of R$241m (€89m) by Dec‐12: Pecém EBITDA 2012 contribution: ‐R$104m Revenues to be collected/booked at EBITDA level in 2013/2014 Costs due to delay vs vs. contracted commissioning date 23 23‐Jul‐2012 Jul 2012 Jan/Feb‐13: Spot

  32. Slide 32: Sustainable dividend policy results in Top 6 dividend yield

    Sustainable dividend policy results in Top 6 dividend yield among major European companies EuroStoxx 600: Top 10 Dividend Yield 2012E EDP’s dividend performance 2006‐2012 (%) (1) Dividend p per share (€ ( cent)) Dividend Payout Ratio (%) Firstgroup PLC 12.4% 67% 60% France Telecom 10.7% 58% 55% 50%

  33. Slide 33: Outlook

    Outlook

  34. Slide 34: Weak macro environment in Iberia for 2013 should impact electricity demand

    Weak macro environment in Iberia for 2013 should impact electricity demand GDP YoY Change 2013E(1) Electricity Demand Iberia: Jan+Feb/2013(2) Gas Demand Spain: Jan+Feb/2013(2) (%) (YoY Chg.) (YoY Chg.) adjusted for temperature Iberian Electricity Market Portugal Spain Conventional generation Total P

  35. Slide 35: Thermal production in Iberian Market Jan/Feb-13: ~50% lower YoY

    Thermal production in Iberian Market Jan/Feb-13: ~50% lower YoY Thermal Power Production in Iberian market(1) (TWh) ‐46% 24 ‐3 +4 +5 ‐2 13 Jan+Feb 2012 Demand Chg. Hydro Chg. Special Regime Nuclear & Jan+Feb 2013 Chg. Other Recovery of hydro production (hydro factor(2) 0.98x 0 98x in Jan/Feb‐13 Jan/

  36. Slide 36: Jan/Feb-13: Lower avg. pool prices but more volatility

    Jan/Feb-13: Lower avg. pool prices but more volatility Avg. Pool Price in Iberia Distribution of Hourly Pool Prices in Spain(1) (€/MWh) (€/MWh) Spain p Portugal g Jan 1st - Feb 26th 2013 Jan. 1st -Feb 29th 2012 100 ‐9% 80 60 40 52.5 47 9 47.9 20 0 Jan‐Feb Jan‐Feb 1 201 401 601 801 1001 1201 1401 201

  37. Slide 37: EDP Liberalised Activities 2013 Outlook

    EDP Liberalised Activities 2013 Outlook EDP: Forward Contracting – 2013 C l&G Coal Gas sourcing i Commitments C it t Wh l Wholesale l &R Retail t il M Markets k t FForward dSSales l 2013 ~20TWhe ~16TWhe 100% ~80% Committed Committed Coal Gas Electricityy Sales Gas Sales  Forward contacting/Hedging:

  38. Slide 38: Regulatory receivables in Portugal

    Regulatory receivables in Portugal Regulatory receivables in the Portuguese electricity system Jan/Feb‐13 developments (€bn) Regulatory receivables already securitized Regulatory receivables owed to EDP Sustainability measures considered in 2013 tariffs: 4.0 − Implemented: cuts on CMEC, capacity pay

  39. Slide 39: Costs with renewables & cogen: Portugal vs. Spain

    Costs with renewables & cogen: Portugal vs. Spain Breakdown of 2013E special regime premium in Iberia (1) (%) Biomass, Waste Biomass Biomass, Waste  Portugal: May‐12/Sep‐12 & Other & Other Solar & Wind measures have already Waves 9% reduced wind power and 6% 10% 21% cogeneration costs 41% Hydro Win

  40. Slide 40: EDP's securitisable deficits in Portugal

    EDP’s securitisable deficits in Portugal Securitisable Deficits’ Amortisation Profile (Dec‐12 stock + 2013 SRP Overcost deferral) (€ billion) 2012 SRP Overcost deferral A R Avg. Receivables i bl M Maturity i 2013 SRP Overcost deferral Dec‐12: 2.5 years Tariff deficit tranches available for Other sec

  41. Slide 41: Capex 2013E flat YoY

    Capex 2013E flat YoY Capex 2012‐13E (€ bn) Capex ‐ Expansion Capex ‐ Maintenance i 2.0 ~2.0  EDP Brasil: 2 hydro plants under construction: 18% Brazil i) Jari (373MW to start operations in 2015); ii) Cachoeira‐Caldeirão (219MW to start in 2017) 1.3 1.3 Hydro 34% Portugal  New N hydro h d plants l

  42. Slide 42: EBITDA Outlook 2013

    EBITDA Outlook 2013 Liberalized Activities  Spain: New generation taxes in 2013; Portugal: Capacity payments at zero since May‐12 Iberia 5%  Iberian market: Weak demand, low CCGT load factors, CO2 cash cost, low thermal spreads  Strong hedging for 2013; Jan/Feb‐13 volatility in pool price bring a

  43. Slide 43: A resilient business model in a challenging environment

    A resilient business model in a challenging environment  More than 90% of EBITDA from Long term or regulated activities Resilient performance  EBITDA 2012 Iberia + EDPR flat YoY fully in line with guidance at May‐12 Investor day enhanced by  EBITDA 2012 in Brazil ‐22% penalized by one‐offs, to re

  44. Slide 44: IR Contacts

    IR Contacts Miguel Viana, Head of IR Sónia Pimpão Elisabete Ferreira Ricardo Farinha Pedro Coelhas N éli Rocha Noélia R h E‐mail: ir@edp.pt Phone: +351 210012834 Visit EDP Website Next Events Site: www.edp.pt March 11th‐12th: London EEI Conference (Morgan Stanley) Link Results & Presentations: March

EDP - Energias de Portugal — FY2012 Earnings Presentation on 6ix