Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Galp Energia — Q1 2007 Earnings Presentation
32 slides from Galp Energia, Sgps S.a. Class B's earnings presentation, May 17, 2007
Slide 1: First Quarter 2007 Results
First Quarter 2007 Results Lisbon, 17 May 2007
Slide 2: Disclaimer
Disclaimer Matters discussed in this presentation may constitute forward-looking statements. Forward- looking statements are statements other than in respect of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expre
Slide 3: Growth delivered: Q1 Highlights
Growth delivered Q1 Highlights Working crude production of 17.2 thousand barrels per day, up 18% qoq Galp Energia refining margin up 22% yoy (equivalent to 1 Usd/bbl) Natural gas sales up by 12% qoq Adjusted proforma EBITDA* increased by 15% Net income of €143 million, corresponding to an
Slide 4: Adjusted net income up by 30%
Adjusted net income up by 30% Inventory effect of 21 M€ due to the increase in crude and oil products prices this quarter Tax rate decrease from 28% to 19% positively impacted net income Q1 2007 Net Income (M€) (21) (3) 143 119 Reported Inventory Non recurrent Adjusted holding effect items YoY +
Slide 5: Adjusted EBITDA increased by 5% without NG transport and regasification activities
Adjusted EBITDA increased by 5% without NG transport and regasification activities Block 14 continuing to deliver growth R&M higher contribution driven by improvement on refining margins Stable G&P EBITDA performance yoy on pro-forma1 basis from 66 €M to 64 €M Q1 2007 Adjusted EBITDA2 (M€) 64
Slide 6: Market Overview
Market Overview
Slide 7: Demand for gasoline sustained brent and refining margin levels
Demand for gasoline sustained brent and refining margin levels Rotterdam Cracking and Rotterdam Brent price (Usd/bbl) (Hydro + Aromatics)4 (Usd/bbl) 75 8 7 70 6 65 5 4 60 3 55 2 1 50 0 45 -1 40 -2 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-0
Slide 8: Stagnant Iberian market
Stagnant Iberian market Higher prices not allow oil internal consumption to increase Rainy weather of last months of 2006 and warm weather in Q1 clearly affected demand Portuguese natural gas market Iberian Oil market (M ton) (M m3) 618 637 13.0 12.9 470 335 2.8 2.7 Q1 06 Q1 07 Q1 06 Q1 07 Portu
Slide 9: Business Overview
Business Overview
Slide 10: E&P production souring in a lighter crude
E&P production souring in a lighter crude Production increase supported by BBLT and TL contribution Lower Kuito production due to works to revamp production by 2008 Total production by field (M bbl) Working Production Equity Production 1.5 TL 1.2 BBLT Kuito 0.5 0.3 Q1 06 Q1 07 Q1 06 Q1 07 Kbbl/d
Slide 11: E&P Q1 EBIT represents almost 50% of 2006
E&P Q1 EBIT represents almost 50% of 2006 Lighter crudes from BBLT and TL reduced discount to Brent Q1 2006 EBIT affected by definition of accounting principles Q1 2007 EBIT confirms sustained level of E&P activity Adjusted EBIT (M€) 8 22 (4) Q1 06 Q1 06 Q1 07 Proforma* * Assuming same account
Slide 12: Galp Energia refining margin up 22% yoy
Galp Energia refining margin up 22% yoy Spread over benchmark of 2.2 USd/bbl in 2006 and 1.8 Usd/bbl in Q1 2007 Premium to benchmark affected by lower utilization rate and consequently higher fuel & losses Galp Energia vs Benchmark Refining Margin (Usd/bbl) 8 7 6 5 4 3 2 1 0 Jan-06 Mar-06 May-06
Slide 13: Exports to US market up by 32% yoy
Exports to US market up by 32% yoy Lower utilization rates due to maintenance shutdowns Exports of gasoline to US represent 34% of total exports Sales to Galp Energia clients increased by 1%, despite a weaker Iberian market Million tons Q1 2006 Q1 2007 % Ch. Crude oil and other refinery inputs
Slide 14: Sales to direct clients supported by Spanish operations
Sales to direct clients supported by Spanish operations Sales to Galp Energia direct customers represented 69% of total raw materials processed Market share maintained despite decrease in the Portuguese market Q1 2007 marketing volumes (M ton) 0.6 2.3 Portugal 1.1 0.1 Spain (2%) YoY 0.6 +8% Reta
Slide 15: R&M EBIT boosted by refining margins increase
R&M EBIT boosted by refining margins increase Reported EBIT positively impacted by inventory effect of 22 M€ Adjusted EBIT up 28% impacted by higher refining margins despite Usd depreciation Maintenance shutdowns with a negative impact of 4% in volumes processed EBIT (M€) 21% 28% 104 86 80 62
Slide 16: Natural gas sales up by 12% qoq
Natural gas sales up by 12% qoq Consumption of power generators still being affected by strong rainfall occurred in the last months of 2006 Warm weather affected growth of Portuguese market (+3% excluding power generators) Natural gas sales (M m3) 1,111 139 335 406 Up 31% 230 qoq Distribution In
Slide 17: Constant EBIT on a proforma basis despite lower volumes
Constant EBIT on a proforma basis despite lower volumes Unbundling effect strongly impacted yoy reported and adjusted EBIT Stable EBIT on a proforma basis: (i) despite lower volumes and (ii) replacement of electrical volumes by trading volumes EBIT (M€) 82 75 Proforma: 58M€* 56 47 Q1 06 Q1 07 Q1
Slide 18: Financial Overview
Financial Overview
Slide 19: Adjusted EPS increased by 30%
Adjusted EPS increased by 30% Reported Adjusted Q1 06 Q1 07 % Ch. € Million Q1 06 Q1 07 % Ch. 3,026 2,754 (9.0%) Sales 3,026 2,750 (9.1%) 227 237 4.5% EBITDA 210 221 5.2% 159 175 10.1% EBIT 142 160 12.6% 14 19 31.8% Income from Associates 14 19 31.8% 117 143 22.1% Net Income 91 119 30.4% 0.14 0.17 2
Slide 20: Controlled cost structure
Controlled cost structure COGS down by 12% mainly due to lower crude and oil products prices Proforma supply and services increased 2%, despite higher crude production costs driven by ramp up in production Lower personnel cost due to impact of 188 employees transferred to REN Operational Costs
Slide 21: E&P represents more than 50% of total capex
E&P represents more than 50% of total capex Development of Block 14 and exploration activities in Block 32 Set of minor investments in refineries and construction of new service stations Additional 154 kms of ng distribution network built this quarter Capital expenditures (M€) 16 76 21 40 E&P
Slide 22: Net debt decreased by 178 M€
Net debt decreased by 178 M€ Balance Sheet Items (M€) Dec. 2006 Mar. 2007 Change Fixed Assets 2,413 2,445 31 Strategic Stock 453 443 (10) Other assets (liabilities) (148) (192) (44) Working Capital 205 194 (11) Net Debt 887 709 (178) Equity 2,037 2,180 143 Capital Employed 2,924 2,889 (34) Debt to E
Slide 23: Dividend Policy
Dividend Policy
Slide 24: Dividend proposal up 13% from 2005
Dividend proposal up 13% from 2005 2006 Results (M€) 755 (30) (220) Already distributed in September 2006 504 50% 2006 dividend Payout 0.304 €/share1 ratio Dividend yield2 of 4.1% Reported net Replacement Impact of NG Total income cost assets sale adjustment 1 Board proposal to the Annual General Me
Slide 25: Stable and clear dividend policy
Stable and clear dividend policy Annual Dividend of year n Net income @ 50% payout replacement x ratio Annual Dividend cost Interim Dividend of year n+1 Annual 50% x dividend of Interim dividend year n Subject to approval of all related parties 2007 interim dividend of 0.152 €/share1 1st half re
Slide 26: Final Remarks
Final Remarks
Slide 27: Q1 main events
Q1 main events E&P New oil discoveries in Block 32 and Block 14 Confirmation of Block BM-S-11 major discovery (Tupi) Agreement with the Portuguese State for oil exploration and production rights in Alentejo’s costs R&M Approval of conversion project for both Sines and Oporto refineries Def
Slide 28: Short term outlook
Short term outlook E&P Drilling campaign in onshore Brazil has just started, 16 wells to be drilled in 2007 R&M Selecting phase of licensing entities of the major equipments for the conversion project Bidding for the EPC already launched Restructuring plan for convenience stores in order to
Slide 29: Galp Energia positioned for growth
Galp Energia positioned for growth Adjusted EBITDA Proforma Adjusted EBITDA Q1 07 Q1 06 R&M 58% R&M 56% G&P G&P 34% 29% E&P E&P 8% 15% 192 M€ +15% 221 M€ Towards a more balanced portfolio Adjusted EBITDA proforma Q1 2006: G&P adjusted by transportation, storage and regaseification activities sold to
Slide 30: Appendix
Appendix
Slide 31: Onshore Brazil Review
Onshore Brazil Review Espírito Santo Basin (12 Blocks) Average area per block of 30 km2 Galp is the operator in 5 blocks Ownership with Petrobras on a 50/50 basis Seismic and geological evaluation under way 4 operated exploration wells programmed for 2007 Sergipe / Alagoas Basin (4 Blocks)
Slide 32: Investor Relations
First Quarter 2007 Results Investor Relations Tiago Villas-Boas Tel: +351 21 724 08 66 Fax: +351 21 003 09 11 E-mail: investor.relations@galpenergia.com Website: www.galpenergia.com