Edp S.a. · EURONEXT:EDP

Edp — Energias de Portugal — Q1 2017 Earnings Presentation

27 slides from Edp's earnings presentation, May 3, 2017

  1. Slide 1: Results Presentation 1Q17

    <5 Results Presentation 1Q17 Lisbon, May 34, 2017

  2. Slide 2: Recurring EBITDA €1,011m, -5% YoY

    Recurring EBITDA: €1,011m, -5% YoY Hydro production in Iberia -54% YoY: 1Q17 the driest 1Q of the last 5 years, vs. the very rainy 1Q16 Recurring Net Profit: €285m, -1% YoY Benefiting from interest costs -13%, BRL vs. Euro +29%, lower effective tax rate Net debt flat at €16.0bn by Mar-17 1Q17 marked

  3. Slide 3: Iberian recurring EBITDA -17% YoY, penalized by hydro volumes

    EBITDA Recurring EBITDA (€ million) (€ million) % Chg. YoY ForEx impact: -11% +29% 1,130 1.069 1.011 Non recurring 61 1,011 EDP Brasil 11% +37% Items(1) 16% ForEx EDP Renováveis 35% -2% impact: +4% 37% Recurring (2) EBITDA 1,069 -5% 1,011 Generation & Supply 31% -38% 21% Iberia Networks 22% +13% 26%

  4. Slide 4: Resilient business model: recurring EBITDA and earnings growth vs. 2015 base

    Hydro Coefficient and Power Production in 1Q: Last 10 Years Recurring EBITDA Target CAGR 2015-20 (Deviation vs. avg. hydro year; TWh) (€ million) CAGR 1Q15-17 57% +3% Hydro 52% 45% Coefficient 24% +5% 15% Portugal 1,069 1,011 (Deviation 910 vs. avg. -18% -27% -36% hydro year) -69% -81% -22% 1Q15 Rec

  5. Slide 5: Regulated and long term contracted operations performing in line with expectations

    Regulated and long term contracted operations performing fully in line with expectations 2017 key moving parts: Low Hydro  No impact on medium-term guidance Production Iberia YTD  Easier YoY comparison in 2H17 (hydro factor 4Q16 Portugal of 0.50x) Gas Networks  Net debt reduction driven by ~€3.0b

  6. Slide 6: Value accretive growth preserving financial deleverage targets

    Investments: Focus on renewables and electricity networks Hydro  Long and sizeable investment cycle ending in 2017 Portugal & Brazil Wind & Solar  0.4GW under construction; >65% of 2016-20 additions target secured (mostly US) LT Contracted EDPR  Integration trends: Renewables, storage, smart grid

  7. Slide 7: Keeping a distinctive profile amongst European Utilities

    Visibility on profitable growth driven by renewables and regulated networks (avg. MW +6% YoY) Deleverage commitment Improved visibility with €3bn of gas networks disposals Keeping a low risk profile: ~75% weight of EBITDA from Regulated and LT Contracted Value of portfolio diversification by market

  8. Slide 8: Results Analysis

    rede Results Analysis

  9. Slide 9: Installed capacity +6%: +0.7GW wind, +0.7GW hydro pumping

    Installed Capacity Production Breakdown (GW) (TWh) Avg. installed capacity +6% -8% 21.0 25.9 2% 19.2 24.5 1% Other(1) Other(1) 20% 2% 1% 12% Coal +19% 13% 2% 26% Coal 14% CCGT 15% +268% CCGT 9% Wind 36% +8% 38% +2% Wind 38% Hydro & Wind: 40% Hydro & Wind: 72% of capacity 63% of output Hydro 40% -48%

  10. Slide 10: Electricity demand +0.2%; hydro production -50%

    Electricity Demand and Supply in Iberia (1) (TWh) +0.2% 77 +62% 77  Electricity demand: +0.2% CCGT 5 8 8 59% Coal 13  Hydro production: -50%; Hydro (1) 16 -50% 8  Coal and CCGT production: +59% Wind 21 -14% 18  Wind production: -14% Portugal: 16% above LT Nuclear 14 15 avg. in 1Q16, in line with

  11. Slide 11: Forward sales: 30TWh of electricity sold at ~€55/MWh

    Spain - Spot Electricity Price (Monthly avg. 2017) Spain - Forward Electricity Prices for Remaining 2017(1) (€/MWh) (€/MWh) 71.5 51.4 50.2 51.5 48.9 43.9 44.2 Jan Feb Mar Apr May/Jun-17 3Q17 4Q17 Hydro Factor PT 0.36 0.92 0.67 0.42 (1.0 = avg.) EDP hedging strategy in energy markets: Hydro output 

  12. Slide 12: EBITDA Generation & Supply Iberia

    EBITDA Generation & Supply Iberia (€ million) -41%  Hydro: Capacity +12%, production -54% 339  Avg. sourcing cost +76%: – Lower weight of hydro on production mix (33% in 1Q17 vs. 62% in 1Q16) 201 – High spot price inflates the cost of demand forecast deviations in supply  Energy management: wiped

  13. Slide 13: Regulated networks EBITDA +13%

    EBITDA - Regulated networks Controllable Costs(1) - Regulated networks (€ million) (€ million) Gas Iberia Electricity Spain Electricity Portugal +13% -3% 265 115 111 234 17% +57% +5% 1Q16 1Q17 1Q16 1Q17  Electricity Spain: positive impact from new remuneration model (in place as from Jun-16, retroa

  14. Slide 14: EDPR EBITDA -2%

    EDPR Installed Capacity Production EDPR EBITDA (GW) (TWh) (€ million) Europe and Brazil North America vs. Long +7% +1% ForEx impact: +2% Term avg. +8% +2% -2% 10.1 7.5 7.7 379 373 9.4 Italy (+44MW) France (+24MW) 1% 52% 55% US (+429MW) Mexico (+200W) 45% 15% 48% 1Q16 1Q17 1Q16 1Q17 1Q16 1Q17 EBITDA

  15. Slide 15: EDP Brasil EBITDA

    EDP Brasil EBITDA EDP Brasil Recurring EBITDA (BRL million) (BRL million) Non recurring Recurring Hydro Generation & Other Pecém I Distribution -32% +3% 814 550 536 Gain on Pantanal 278 137 550 +52% 216 disposal 201 -52% 96 536 3% 550 198 +22% 238 1Q16 1Q17 1Q16 1Q17  Distribution: Increase of regu

  16. Slide 16: Opex and Opex IV efficiency programme

    Weight on Opex Business area Indicator YoY Change Main drivers  Avg. MW: +6%; Avg. # customers: +1% 55% Iberia Opex +2%  Thermal prod.: +60%; Inflation Portugal +1.4%  Average installed capacity: +8% 25% EDPR Core Opex/MW: -1%  Opex ex-forex: +6% Opex in BRL  Opex in BRL:+6% 20% EDP Brasil +1%

  17. Slide 17: Tariff surplus of €56m in 1Q17 vs deficit in 1Q16

    Portugal: Electricity System Regulatory Receivables (€bn) Share of total receivables in the system 5.2 5.1 5.0 0.1 -0.2 -0.1 86% Other 3.0 4.1 4.3 4.6 EDP 2.2 14% 1.0 0.7 Dec-15 1Q16 2Q-4Q16 Dec-16 1Q17 Mar-17 2017E Dec-17(E) Demand(1) (YoY Chg.) +0.7% -0.6% Wind Factor (1.0=avg.) 1.00 1.01 Special

  18. Slide 18: Net regulatory receivables

    Net Regulatory Receivables: EDP Balance Sheet (€ billion) Portugal Spain Brazil -€1.9bn -€0.3bn 2.6 1.6 2.4 1.1 1.0 1.6 0.7 1.1 1.0 0.7 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17  Portugal: -€0.3bn YTD; including €0.6bn of sales without recourse in 1Q17  Brazil: €0.1bn regulatory payables in Mar-17 on low

  19. Slide 19: Net expansion investment

    (€ million) 1Q16 1Q17 ∆ Abs.  New hydro plants Portugal reaching full completion Expansion Capex 127 112 -15 Change in Equipment  Seasonal 1Q effect at EDPR level 322 309 -13 Suppliers (post 4Q commissioning) Change in Consolidation 25 215 +190  1Q17: full consolidation of Mexico wind farm Perime

  20. Slide 20: Change in net debt: Mar-17 vs Dec-16

    Change in Net Debt: Mar-17 vs. Dec-16 (€ billion) +€0.1bn +0.2 -0.03 16.0 15.9 -0.4 +0.7 Regulatory -0.3 0.7 1.0 Receivables VAT one-off payment: Refundable in 2017 15.3 15.0 Net Debt FCF Ex-Reg. Reg. Receivables Adj. Net Expan. One-offs ForEx Net Debt Dec-16 Receivables (1) & Securitiz. Invest. (2)

  21. Slide 21: Natural hedge policy and debt maturity profile

    EDP consolidated debt by currency: Mar-17 EDP consolidated debt maturity profile as of Mar-17 (%) (€ billion) Commercial Paper Hybrid Bond Avg. Debt Maturity: Other Subsidiaries EDP S.A. & EDP Finance BV PLN 4.9 years USD 2% 4.0 21% 3.5 3.0 2.5 BRL 9% 2.0 68% 1.5 EUR 1.0 0.5 0.0 2017 2018 2019 2020

  22. Slide 22: €5.6bn of financial liquidity covering refinancing needs

    Financial liquidity (Mar-17) Refinancing needs 2017-2019  Cash & Equivalents: €1.6bn  2017: €1.5bn 6.625% GBP Bond maturing @Aug-17 €0.32bn  Available Credit Lines: €4.0bn 5.75% Eurobond maturing @ Sep-17 €0.75bn Revolving Credit Facility (Jun-19) €3.73bn Bank Loans and ECP €0.4bn Other RCF/Credi

  23. Slide 23: Steady deleveraging and marginal cost below average cost of debt

    Net Interest Cost (1) EDP 5-Year Bond Yield (last 6 months) (€ million) (%) Latest Bond Issue (amount; maturity; yield) -13% 202 197 1.6 185 €0.6bn; 6.7Y; 1.9% 179 175 1.3 1Q16 2Q16 3Q16 4Q16 1Q17 1.1 Avg. Net Debt -7% 1.0% 17.2 16.0 (€bn) Avg. Cost of 4.5 -20bp 4.3 Debt (%) 0.8 Nov-16 Dec-16 Jan-17

  24. Slide 24: Flat recurrent net financial costs

    Financial Results & Associates: 1Q17 vs. 1Q16 (€ million of net cost) One-offs(1)  Net interest costs: -13% YoY 188 (26) 9  Regulatory receivables related: 9 7 75% decline on balance sheet, lower returns  Capitalised interest: Commissioning of 199 197 Venda Nova III hydro plant in Jan-17; Unwindi

  25. Slide 25: Income statement and net profit

    Net Profit (€ million) 1Q16 1Q17 ∆% ∆ Abs. (€ million) % Chg. YoY EBITDA 1,130 1,011 -11% -119 Net Depreciations and -18% 369 363 -2% -6 Provisions 263 215 EBIT 760 648 -15% -113 Financial Results & Associated (188) (197) +5% -10 Companies Recurring 287 -1% 285 Income Taxes 152 66 -57% -86 Net profi

  26. Slide 26: IR Contacts, Website and Next Events

    IR Contacts Miguel Viana, Head of IR Sónia Pimpão João Machado Maria João Matias Sérgio Tavares Noélia Rocha E-mail: ir@edp.pt Phone: +351 210012834 Visit EDP Website Next Events Site: www.edp.pt May 10th-12th: London: Roadshow Link Results & Presentations: May 17th-19th: US Roadshow (Chicago/Boston

  27. Slide 27: 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 3rd of May, 2017 and its purpose is merely of informative nature and, as such, it may be amended and supplemented. By attending the meeting where this presentation

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