Edp S.a. · EURONEXT:EDP
Edp — Energias de Portugal — H1 2008 Earnings Presentation
19 slides from Edp's earnings presentation, 2008
Slide 1: EBITDA: €1,585m, +17% YoY
0 EBITDA: €1,585m, +17% YoY Generation & supply Iberia: PPA/CMEC and hedging policy provide stable performance Wind power: Major growth driver, good load factors, favourable pricing in Spain Controllable operating costs ex-EDP Renováveis: flat YoY Brazil: YoY comparison penalized by non-recurrent it
Slide 2: Net profit of €703m: +67% YoY; ex-items +12%
Net profit of €703m: +67% YoY; ex-items: +12% YoY to €473m EDPR IPO concluded in Jun-08: Cash proceeds of €1.57bn 1,677 MW of wind capacity under construction in Jun-08: On track to install 1.4GW in 2008 €759m payment of hydro domain in Apr-08: Secure hydro in the market till 2047 Increase of regula
Slide 3: Adjusted net profit up 12% YoY to €473m; EBITDA breakdown
! " # $% €m +67% 703 405 +12% 49 -75 473 -148 422 Reported Net Adj. Net Profit Turbogás and Discontinued BCP/SNC EDPR IPO Reported Net Profit 1H07 1H08 Potugen Oper. Enersul impairments capital gain Profit 1H08 Capital Gain Ex-items, adjusted net profit increased 12% YoY to €473m 4 $& '() & * + EBIT
Slide 4: EBITDA +5.1% YoY to €616m
, - . EBITDA +5.1% YoY to €616m LT Contracted Generation EBITDA +13% YoY: Remuneration of Sines new desox facilities Liberalized Generation: Good performance in Portugal, margins’ deterioration in Spain CCGT expansion on track: Soto 4 in Spain (3Q08), Lares 1+2 in Portugal (3Q09) Hydro development i
Slide 5: Tight reserve margin justifies intensive use of CCGTs in Portugal
/ 4 , - . " * $ 5 6 Market Splitting Portugal vs. Spain in 1H08 Load factor of CCGT in 1H08 Iberian Peninsula per operator (€/MWh) 74% 75 63% 60% 60% 57% 70 65 44% 36% 60 26% 55 Jan-08 Feb Mar Apr May Jun-08 EDP EDP EDP Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Pool Prices Spain Pool Prices Portugal Iberia
Slide 6: Expected output and electricity sales; hedging
/ 4 , - . + 0 Expected Output Electricity Sales (TWh;weight %) (TWh;weight %) 4% Hydro • Avg. Selling price**: €58/MWh Nuclear 6% For • Spark Spread* locked in: above €11/MWh 2008: • Dark Spread* locked in: above €27/MWh CCGT • Take advantage of arbitrage opportunities: 57% (ex: sale of 1 coal cargo
Slide 7: EDP's Investment Plans in Hydro
$(6 % " * 72 8 Edp’s Investment Plans in Hydro Hydro To enter in MW Capex Type Status Plans Operation MW Under 51% Picote II 246 135 2011/12 Repowering construction 33% 918 Under Bemposta II 191 130 2011/12 Repowering construction 1,629 Under Alqueva II 240 149 2012 Repowering construction Under 5,0
Slide 8: Evolution of conventional generation portfolio; wind EBITDA +145%
0 5 $ , " % $5 EDP: Evolution of Conventional Generation Portfolio (MW) Iberian Market Hydro CCGT Others** Market LT Contracted* 8% 43% 31% 52% 37% 64% 100% 27% 14% 48% 42% 55% 43% 36% 2007 2010 2017 2007 2010 2017 Going from a stable return portfolio in 2007 to a highly competitive market portfolio
Slide 9: Wind: installed capacity, output and EBITDA
= 6 + 1 72 $& '()3 Installed Wind Capacity (EBITDA) Wind Power Output EBITDA MW GWh (€ million) 182% 145% 227 138% 3,960 3,237 76 3,237 1,403 1,359 151 93 1H07 1H08 1H07 1H08 1H07 1H08 Wind Average Tariffs Total Opex/ Average MW Europe USA (€/MWh) (€ th. annualized) 16% EBITDA growth supported on: 9
Slide 10: 1,677 MW under construction by Jun-08
> * ?!, = + % 2008 Capacity Additions + Under Construction (Gross MW) 1H08 Additions 206 Capacity to increase from 3,846 MW in 1H08 Under Construction 1,677 to more than 5,000 MW by YE08 YE08 Forecast 5% 10% 20% 65% 1.4 GW 1Q 2Q 3QE 4QE 1,677 MW under construction by Jun-08 Concentration of capacity
Slide 11: Regulated networks: EBITDA growth of +14% YoY to €438m
$ @ + * EBITDA growth of +14%YoY to €438m Slowdown of demand growth YoY in 1H08: no material impact on financials Controllable operating costs: +1.2% (+€2m) YoY; Continued efficiency improvement Regulatory receivables increase significantly in the period but with no impact on P&L Efficiency improvem
Slide 12: Brazil: EBITDA decreased 8% YoY to €298m; Enersul/Lajeado swap
& 4 EBITDA decreased 8% (-€25m) YoY to €298m Lower non-recurrent revenues from tariff receivables: €97m in 1H07 vs €27m in 1H08 Impact of regulatory revisions in distribution: Stable framework for next 4 years Efficiency improvement: Employees/TWh distributed decreased 5.5% YoY 56% EBITDA growth in
Slide 13: EBITDA Brazil Distribution and Generation
$ ( & 4 EBITDA Brazil Distribution (€ million) Tariffs Recovery and other non-recurrent Normalized EBITDA 250 97 181 End of the non-recurrent tariff recovery component 27 154 153 Normalized EBITDA flat YoY due to regulatory revisions; Future growth: Demand growth and efficiency improvement 1H07 1H08
Slide 14: Net profit +67% YoY to €703m; controllable operating costs
Net profit 67% YoY to €703m; 12% increase YoY ex-items (€ million) 1H07 1H08 % Change Gross Profit 2,263 2,445 +8% Operating Costs 910 861 -5% EBITDA 1,353 1,587 +17% EBIT 828 973 +18% Net Financial Costs, Capital Gains & Other (159) (11) +93% Net Profit 422 703 +67% Capex 554 1,345 +143% Net Debt (
Slide 15: OPEX savings and capex allocation
$ 5 5 OPEX savings € million Measures taken in 2006 and 2007 Measures taken in 1H08 Personnel costs: 150 12% above 140 2008 target 2010 Brazil 6 100% €58.7m cost savings already achieved by net 23 Iberia 20 headcount reduction in 2005-1H08: 2008 451 employees in Brazil / 624 employees in Iberia Braz
Slide 16: Generation capacity under construction; debt and liquidity
0 + MW under construction by Market MW under construction by Technology United States CCGT 16% Brazil 31% 10% Coal Rest of 8% Spain Europe 3% 29% Hydro 21% Portugal Wind 42% 40% 4,300 MW of generation capacity under construction in 7 markets and 4 technologies 30 0 @ " < Apr-08: €925m revolving cred
Slide 17: Increase of financial costs due to higher net debt
(€ million) 1H07 1H08 % Chg. • 50% increase of net financial interest due to (1) 32% increase in Net financial interest (227) (341) 50% average gross debt 1H08 vs. 1H07 due to funding of expansion capex Net foreign exchange differences 14 5 -60% and (2) 20bp increase in avg. cost Other financials 32
Slide 18: On track to reach EBITDA commitment
> * Generation&Supply: Forward hedging already closed provides good visibility for gross profit Wind: 1,677 MW under construction by Jun-08, on track to reach 1.4GW by Dec-08 Efficiency improvements: Continuous effort Capex 2008: expected to be close to €3.5bn Continue to deliver profitable growth b
Slide 19: edp - feel our energy
edp feel our energy
EDP - Energias de Portugal — H1 2008 Earnings Presentation on 6ix