Engie S.a. · EURONEXT:ENGI
Engie — H1 2020 Earnings Presentation
37 slides from Engie's earnings presentation, Jul 31, 2020
Slide 1: H1 Results 2020
H1 Results 2020 July 31st 2020
Slide 2: Update on strategic orientation
Update on strategic orientation Jean-Pierre CLAMADIEU Chairman of the Board 2 July 31st 2020
Slide 3: Rationale and objectives of strategic orientation
Rationale Objectives Acceleration of investment in renewables ⚫ Strengthen ENGIE’s capacity and infrastructure assets to play a key role in the energy transition ⚫ Higher renewables growth target up to 4 GW p.a. and more projects retained on balance sheet ⚫ Clarify strategic priorities, including ⚫
Slide 4: Introduction
Introduction Claire WAYSAND Interim Chief Executive Officer 4 July 31st 2020
Slide 5: H1 key messages
• Q2 financial performance most impacted by the Covid-19 crisis • Expect recovery in H2 and beyond • Solid operational performance in a challenging backdrop • Maintained a strong financial position and liquidity • Continued to prioritize Group simplification • Focus on green recovery is well aligned
Slide 6: Business lines and share of 2019 COI
CLIENT SOLUTIONS ENERGY EFFICIENCY RENEWABLES • Building renovation, city planning, 9% efficient new-build and clean mobility POWER RENEWABLES • Driving competitive Renewables growth • Greener power supply offers 21% 10% CLIENT SOLUTIONS LOW CARBON HEATING & COOLING • Accelerate decarbonization of h
Slide 7: H1 Financial Results
H1 Financial Results Judith HARTMANN EVP, CFO and Member of the executive leadership team 7 July 31st 2020
Slide 8: H1 results: robust operational performance but significant Covid-19 impacts
H1 RESULTS– In €bn, ∆ ∆ unaudited figures(1) Actual Gross(2) Organic(2) EBITDA 4.5 -16% -14% Robust operational COI 2.2 -31% -29% performance but significant NRIgs 0.7 -50% -52% impacts of Covid-19 and temperature effects, NIgs 0.0 -2.1 mainly in Q2 CFFO(3) 3.0 +0.3 - Capex(4) 3.0 -2.5 Financial Net
Slide 9: Estimated impacts of Covid-19 and temperature on COI
[€M] Estimated impacts of Covid-19(1) and French -€852M organic Temperature(2) on COI by Business Line of which estimated Covid-19 impact of ~-€850M 3,135 and -€195M temperature effect in France French (115) [€bn] Covid-19 temperature(2) Scope / FX Client Solutions - (0.49) Networks (0.04) (0.12) (5
Slide 10: Revenue
Revenue(1) [€bn] 5.0 5.3 +5% 4.9 -16% 4.1 Q1 2019 Q1 2020 Q2 2019 Q2 2020 ⚫ +5% growth in revenue in Q1 ⚫ Significant negative impact of Covid-19 in Q2 ⚫ Comparable level of order intake (€6.1bn, flat yoy), overall project backlog growing (€12.2bn, c. +15% yoy) (1) As Suez is accounted for as an Ass
Slide 11: Costs (Opex+D&A)
Costs(1) (Opex+D&A) [€bn] Focus on Q2 costs(1) yoy evolution 5.2 [€bn] Q2 19 Q2 20 Delta 4.8 4.8 -9% 4.3 Energy 0.3 0.1 -26% COS 3.7 3.3 -11% SG&A 0.5 0.5 flat Opex 4.6 4.1 -11% D&A 0.2 0.2 +28% Q1 2019 Q1 2020 Q2 2019 Q2 2020 Total costs 4.8 4.3 -9% ⚫ Opex reductions through strong action plans in
Slide 12: Client Solutions COI
COI [€M] 414 ⚫ Covid-19 impacts: loss of revenue, specific additional purchases, bad debts ⚫ Lower Suez contribution ⚫ Other small headwinds (incl. warmer temperature ~(490) ~(65) -142 Europe, start-up costs and others) (1) H1 2019 Covid-19 Others H1 2020 (1) Including Suez accounted for an Associat
Slide 13: Supply COI per market segment
Supply COI per market segment [€M] ⚫ Negative impacts from Covid-19, mainly B2B (gross c. -€260M(1)) ⚫ lower B2B volumes leading to margin losses and unwinding of overhedged positions 340 ⚫ B2C services revenues underperformance and B2C-B2B bad debt increase 249 3 ⚫ Negative impacts from warm temper
Slide 14: Networks COI by geography
Networks COI by geography [€M] ⚫ France: mainly lower volumes due to temperatures (- €120M) 1,359 and Covid-19; however, volume effects recoverable under 1,266 91 1,239 regulatory arrangements 54 140 91 185 140 ⚫ Latin America: positive scope effect from TAG acquisition (c. +€80M) but negative FX an
Slide 15: Renewables COI per geography
Renewables COI per geography [€M] ⚫ Latin America: decrease mainly due to FX BRL (c. -€80M) and lower hydro contribution in Brazil (c. -€20M) 559 512 65 468 97 69 ⚫ France: higher volumes for hydro and wind (c. +€60M) and better prices for hydro (c. +€15M), partly offset 414 by scope out and DBSO 33
Slide 16: Thermal, Nuclear and Others COI
Thermal, Nuclear and Others COI [€M] ⚫ Thermal: mainly Glow and German / Dutch coal power plants disposals (c. -€100M) H1 19 H1 20 Delta Thermal 682 588 49 -94 ⚫ Nuclear: better prices and lower Opex, but lower volumes Nuclear (216) (107) +109 and higher depreciation Others 682 (3) 49 588 +52 ⚫ Othe
Slide 17: Cash flow from operations (CFFO)
[€bn] Delta WCR change: +1.3 +0.6 +0.01 3.0 2.7 (1.0) Taxes & +0.7 Interest paid Other WCR Operating Margin Cash Flow Calls & financial derivatives CFFO CFFO H1 2019 H1 2020 17 July 31st 2020
Slide 18: Financial net debt, cost of gross debt and liquidity
Financial Net Debt and cost of gross debt Strong liquidity [€bn] 25.9 (3.0) 3.0 (0.6) 0.3 (0.5) 25.1 Scope(2) Dividends Others(3) ⚫ €23.5bn of liquidity CFFO Gross Dec. Capex(1) June at June 30, 2020 2019 2020 ⚫ Incl. €13.1bn of cash Cost of gross debt 2.70% 2.38% Leverage ratios Rating reviews Fina
Slide 19: Robust operational performance
Robust operational performance Paulo ALMIRANTE EVP, COO and Member of the executive leadership team 19 July 31st 2020
Slide 20: ENGIE employee activity and power & water production
ENGIE employee activity Power & water production (@100%) HIGHLIGHTS 100% Solar & Wind Hydro [TWh] [TWh] Partial unemployment ⚫ All critical activities operational 39.1 12.8 and resilient 30.5 80% Non active(1) 9.1 ⚫ Working methods rapidly adapted to new health & safety requirements ⚫ Seamless execu
Slide 21: Client Solutions revenue and order book
Revenue (€bn) Order book(1) (€bn) HIGHLIGHTS -5% 12.2 ⚫ Significant impact of lockdowns 10.6 in Q2 with TO down 16% YoY 9.9 ⚫ Implementation of cost adjustments in 9.4 Q2 achieves a net amount of -€500M -16% 6.2 6.1 ⚫ Strong sales activity in Q1 and 4.9 commercial successes in Q2 resulting 4.1 in go
Slide 22: Supply: gas and power sales and portfolio effect
Gas and Power sales [TWh] Gas and Power demand vs. 2019 [%] HIGHLIGHTS ⚫ Sales volumes positively impacted 0% by strong commercial activity (+23TWh) +23 -11 279 275 -8 BEL Gas BEL ⚫ Significantly offset by 3 extreme events: Power exceptionally warm weather; oversupply FR Power resulting in very low
Slide 23: Networks, Renewables and Thermal relatively resilient
NETWORKS RENEWABLES THERMAL NUCLEAR ⚫ Storage facilities used ⚫ 5.5 GW under construction ⚫ 78% contracted / 22% merchant(1) ⚫ Delivering lifetime extension intensively (> 80% filled end ⚫ 2.3 GW sell-down signed in H1 program despite Covid-19 ⚫ Stable availability rate (89% in H1 versus ~70% LY) ⚫
Slide 24: Outlook
Outlook Judith HARTMANN EVP, CFO and Member of the executive leadership team 24 July 31st 2020
Slide 25: 2020 guidance
EBITDA indicative range of €9.0 – 9.2 bn COI indicative range of €4.2 – 4.4 bn NRIgs range of €1.7 – 1.9 bn Economic Net Debt / EBITDA above 4.0x for 2020 but below or equal to 4.0x over the long term Capex(2) indication of €7.5 – 8.0bn o/w c. €4bn Growth, c. €2.5bn Maintenance and c. €1.3bn Nuclear
Slide 26: Limited medium-term impact of Covid-19 on the majority of businesses
Limited medium-term impact of Covid-19 on the majority of businesses which benefit from good visibility Organic evolution ⚫ Asset-Based: limited impact from Covid-19 expected Client Solutions ⚫ Asset-Light: some uncertainty due to ongoing impacts of Covid-19 but activity levels up considerably from
Slide 27: Additional material
Additional material 27 July 31st 2020
Slide 28: COI by business line and geography
[€M] Client Solutions Networks Renewables Thermal Nuclear Supply Others(2) Total France 40 1,027 104 68 1,239 Rest -45 56 44 160 -107 61 168 of Europe Latin America -1 185 311 179 22 696 USA & Canada -20 1 34 16 -33 2 1 Middle East, 8 43 236 -44 243 Asia & Africa Others -124 -3 -25 -2 -70 47 -179 To
Slide 29: COI bridge H1 2019 to H1 2020
[€bn] 3.1 +0.2 +0.1 Prices Lean 2021 -0.1 -0.2 net(1) FX & Volumes Scope 2.2 COI COI H1 -0.9 H1 2019 Others 2020 (o/w -0.8 from Covid-19) (1) Gross gains (recurring) less inflation (on a total cost basis) and retrocessions 29 July 31st 2020
Slide 30: Main assumptions for 2020 guidance
• Normalized temperature conditions in France (gas distribution and energy supply) • Normalized hydro production in France • Full pass through of supply costs in French regulated gas tariffs • No major regulatory or macro-economic changes • No change in Group accounting policies • Market commodity p
Slide 31: Estimated Covid-19 impacts at COI level
Estimates at COI level [€bn] Nature Client Solutions (0.49) Loss of revenues / contracts, credit losses, specific purchases Networks (0.04) Lower volumes, lower capitalized costs, specific purchases Renewables (0.02) Lower volumes dispatched Thermal (0.02) Lower demand Nuclear - Supply (0.24) Lower
Slide 32: From EBITDA to NRIgs and NIgs
From EBITDA to NRIgs From NRIgs to NIgs H1 2020 H1 2019 ∆ YoY EBITDA €4.5bn €5.3bn -0.8 NRIgs H1 2020 €0.7bn D&A and others (2.3) (2.2) (0.1) MtM below COI (0.4) COI €2.2bn €3.1bn -€1.0bn Restructuring costs (0.1) Net interest expense(1) (0.6) (0.6) (0.0) Capital gains +0.0 Income tax (0.5) (0.6) +0
Slide 33: Capex breakdown and main projects
Breakdown by nature [€bn] Growth Capex(3) by business line [€bn] Main projects [€bn] 5.5 Client Solutions ~0.4 Noram – University of Iowa ~0.2 Supply Other 1.9 4% Client Solutions Development(1) Thermal(4) 5% -2% 17% Networks ~0.7 3.0 Elengy ~0.2 GRDF (smart meters + networks dvt) ~0.2 Financial(2)
Slide 34: Net COI improvement: Lean 2021
Net COI improvement [€bn], cumulated Cost reduction Revenue enhancement Procurement 0.80 Industrial assets Insourcing, pooling, performance improvement centralization and standardization 55% of the 2019-21 Availability and efficiency 3Y cumulated target 0.44 Digitalization Process automation and ass
Slide 35: Nuclear and Hydro outright hedges
Nuclear and Hydro Outright hedges: volumes & prices [% and €/MWh] 100% 96% 64% 35% 15% 46 47 46 41 36 2019 2020 2021 2022 2023 As of 06/30/20 Belgium and France (+ Germany until April 2019) 35 July 31st 2020
Slide 36: Forward-Looking statements
Forward-Looking statements This communication contains forward-looking information and statements. These statements include financial projections, synergies, cost-savings and estimates, statements regarding plans, objectives, savings, expectations and benefits from the transactions and expectations
Slide 37: Ticker: ENGI
Ticker: ENGI +33 1 44 22 66 29 ir@engie.com https://www.engie.com/en/finance-area FOR MORE INFORMATION ABOUT H1 2020 RESULTS: https://www.engie.com/en/finance/results/2020 37 July 31st 2020