Endesa S.a. · BME:ELE
Endesa — H1 2020 Earnings Presentation
42 slides from Endesa's earnings presentation, Jul 28, 2020
Slide 1: Endesa H1 2020 Consolidated results
Endesa H1 2020 Consolidated results July 28, 2020
Slide 2: H1 2020 Consolidated results
H1 2020 Consolidated results José Bogas CEO
Slide 3: Key highlights of the period
Key highlights of the period EBITDA Push on Covid-19 Low risk profile Solid results performance decarbonisation Liberalized Steady EBITDA Business Accelerating Net Income evolution of increased by resilient to coal phase increases by Distribution +22%(1) Covid-19 out +45%(2) business implications (1
Slide 4: COVID-19: Macroeconomic backdrop
COVID-19 Macroeconomic backdrop Market context Business update Financial Highlights GDP downturn: Spanish GDP Distribution: Regulated Solid financial Position: Healthy variation of -22% in H1 2020, adding remuneration not affected by leverage ratios and limited re- an economic crisis to the pandemic
Slide 5: COVID-19: Regulatory update
COVID-19 Regulatory update PNIEC Draft EU Green Deal Climate Change and Energy Transition Law Draft EU Fair Transition mechanism Other regulatory measures: • RDL 8 and 11/2020 Urgent measures to mitigate social and economic Covid-19 impact • RDL 23/2020 Energy transition and economic recovery Repair
Slide 6: Capex: Accelerating renewable development
Capex Accelerating renewable development Net capex(1), €bn Asset development capex, €bn By business By type 14% 26% 31% 37% 45% 0.6 0.6 0.3 0% 2% 41% 72% 12% 21% Conventional Gx(2) Dx Asset Management Renewables Dx Customers Retail + Endesa X Renewables(3) Asset Development Conventional Gx Retail +
Slide 7: Decarbonisation: Installed capacity and production
Decarbonisation Mainland Installed capacity and production(1), GW Emission free share of production, % -11% H1 2019 H1 2020 24.7 22.6 18.1 17.0 11% 4.9 6.5 + 0.9 GW 27% +14% 7.4 7.4 13.2 3.3 3.3 12.7 25 TWh 23 TWh 6.6 8.3 - 2.1 GW (2) -25% 6.3 2.5 73% H1 2019 H1 2020 89% Renewable(3) Thermal Nuclear
Slide 8: Decarbonisation: Growth in renewable generation capacity
Decarbonisation Growth in renewable generation capacity Gross pipeline(1) of renewable projects, GW 24.3 • 70% Solar • 30% Wind • Pipeline with COD 2020-22 entirely covers the new capacity considered in the Strategic Plan (2.8 GW). Total 7.3 GW • All the 7.3 GW of this pipeline has already been awar
Slide 9: Decarbonisation: Coal phase out
Decarbonisation Coal phase out Coal net capacity evolution 2019-2021, GW (1) Coal production (TWh) -95% -43% Closure of domestic coal plants (Compostilla II and Teruel) in June 2020, representing Coal Phase out 4.8 -43% in coal installed capacity acceleration Non mainland 0.2 2.1 Domestic coal 2.8 J
Slide 10: Enablers and ecosystems: Distribution
Enablers and ecosystems Distribution Distributed energy(1), TWh OPEX, €/end user(2) -8% -3% 54.6 50.3 41.6 40.5 Stable regulatory framework No exposure to volumes H1 2019 H1 2020 H1 2019 H1 2020 Network digitalization in process Losses(3) (%) 9.9 10.3 End users (mn) 12.2(5) 12.3 Minutes of 22.9 22.1
Slide 11: Retail and Endesa X: Client focus
Retail and Endesa X Client focus Retail Endesa X and new infrastructures Free market Energy sold (TWh) power customers (mn) 2019 H1 2020 -1% -10% +14% 47.7 Charging points(1) (k) 5.0 5.7 5.8 5.8 42.9 6.7 6.4 9.5 9.4 +6% E-Home contracts(2) (mn) 1.7 1.8 31.6 27.1 2019 H1 2020 H1 2019 H1 2020 Total po
Slide 12: H1 2020 Financial results
H1 2020 Financial results Luca Passa CFO
Slide 13: Financial highlights (€mn)
Financial highlights (€mn) EBITDA Net Income FFO Net Debt Reported 2,315 1,128 995 7,092 +22% +45% +10% +11% 1,959(1) 861(2) Like-for-like +3% +11% H1 2019 1,894 776 907 6,377(3) (1) EBITDA excluding +515 €mn of provision reversal from the commitments contained in the new Collective Agreement and -1
Slide 14: COVID-19 estimated impact on demand and bad debt
COVID-19 estimated impact on demand and bad debt €mn Net of Like-for-like Demand Bad debt COVID-19 H1 20 absorbs the majority of Covid-19 effects, not expecting further relevant impacts in H2. EBITDA 1,959 80 2,039 Businesses resilience mitigated that impact D&A (760) 20 Bad debt provisioning amount
Slide 15: Market context in H1 2020
Market context in H1 2020 Demand decrease and declining commodities lead to lower pool prices Demand(1) Electricity wholesale prices Average pool prices Spain, €/MWh Spain, TWh(2) -8% -36% -44% -52% -3% -13% 123.6 114.0 54.9 48.7 51.8 64.1 62.2 34.9 59.5 51.8 29.0 23.2 Q1 Q1 Q2 Q2 H1 H1 Q1 Q1 Q2 Q2
Slide 16: Electrification: Energy management
Electrification Energy management Liberalized sales(1), TWh Power integrated margin(1), €/MWh Output(2) hedged -11% 39.7 Unitary revenue 68.3 66.9 35.3 15.1 12.7 40.4 31.9 Variable cost(3) +25% 100% 92% 24.7 22.6 Unitary integrated margin 35.0 27.9 30% H1 2019 H1 2020 H1 2019 H1 2020 2020 2021 2022
Slide 17: Electrification: Gas operational highlights
Electrification Gas operational highlights Volumes sold(1), TWh Key figures -13% 2019 H1 2020 Var. Total customers 39.3 1.65 1.66 +1% mn Wholesale business 3.3 34.0 3.9 (2) Churn rate (%) 9.8% 10.8% 1 PP Retail 35.9 30.1 Unitary margin (3) 1.6 4.1 2.6x €/MWh H1 2019 H1 2020 Gas margin benefits from
Slide 18: Like-for-like EBITDA evolution
Like-for-like EBITDA evolution €mn +3% DYoY DYoY (like-for-like) (reported) (1) 1,959 +3% +22% 1,894 -37 -56 158 745 903 +21% +43% 124 68 -45% -35% 1,025 988 -4% +14% (2) H1 2019 Dx Non mainland Gx Gx+Sx H1 2020 Dx Non mainland Gx Gx+Sx EBITDA improvement mainly supported by liberalized business per
Slide 19: Efficiency through digitalisation
Efficiency through digitalisation Efficiency compensates the increase of inflation and growth Opex(1) evolution, €bn (3) H1 2019 H1 2020 Target 2022 +1.5% Unitary cost (2,5) 46 47 45 k€/MW -3 42 -24 Unitary cost (5) 42 41 39 €/end user Cost to Serve (5) (3) (4) 10.6 10.2 9.1 €/customer (3) (4) 992 1
Slide 20: Regulated business
Regulated business €mn Gross margin EBITDA Regulated margin: 1,425 €mn (-134 €mn) -9% -8% • Dx: -65 €mn, affected by the new 1,559 retributive parameters 1,246 1,425 1,149 80 265 1,056 196 124 68 • Non mainland: -69 €mn, affected by regulatory inefficiencies that do not allow full cost recovery in c
Slide 21: Liberalized business
Liberalized business(1) €mn Gross margin EBITDA Liberalized margin: 1,497 €mn +12% (+166 €mn) +21% 1,497 • Electricity & Others : 1,294 €mn 1,069 1,331 141 (+84 €mn) 87 903 150 87 • Gas (2): 140 €mn (+76 €mn) 745 117 1,356 • Endesa X : 63 €mn (+6 €mn) 982 1,181 816 628 Like-for-like fixed costs(3):
Slide 22: Profit & loss
Profit & loss €mn H1 2020 H1 2019 Δyoy EBITDA 2,315 1,894 +22% EBITDA increase +22%, affected by the new collective agreement application D&A (760) (794) -4% EBIT 1,555 1,100 +41% Lower D&A coming from the coal impairments booked in Net Financial Results (48) (96) -50% 2019 Results from equity inves
Slide 23: Cash Flow
Cash Flow €mn -356 -113 -774 2,315 -22 -55 -842 995 153 (3) (4) (5) EBITDA Net provision Provisions Working Income Financial FFO Capex FCF (2) release (1) paid capital Taxes Expenses Previous year 1,894 n.a. -163 -705 -72 -47 907 -991 -84 Delta YoY +22% n.a. -31% +16% -69% +17% +10% -30% 2x (1) Net
Slide 24: Net financial debt analysis
Net financial debt analysis €mn Gross debt Net debt evolution 7,479 7,092 6,607 387 6,377 122 Cash & Derivatives 746 867 230 153 894 Net debt 7,092 6,225 6,377 5,483 (1) 2019 H1 2020 2019 FCF Dividends Others H1 2020 Regulatory working capital(2) Net debt ex-regulatory working capital ▪ Cost of Debt
Slide 25: Sustainable Finance
Sustainable Finance New sustainability linked Sustainable finance H1 2020 Sustainable Finance vision transactions April, 2020 2 years ▪ Endesa promotes innovative financial solutions and Club deal bank facilities encourages its stakeholders to 550 mn€ share the sustainable long term 44% 7.5 bn€ Gros
Slide 26: Final Remarks
Final Remarks H1 sound Resilient integrated Sustainable finance Strongly committed performance business model & key to accelerate to our people and providing comfort financial strength energy transition communities towards full year through the targets pandemic disease 26 H1 2020 Results - Madrid, 2
Slide 27: H1 2020 Consolidated results: Annexes
H1 2020 Consolidated results Annexes
Slide 28: Commodities spot prices
Commodities spot prices(1) Gas PVB, €/MWh CO2, €/t (1) As of 13.07.2020 H1 2020 Results - Madrid, 28 July 2020 28
Slide 29: Installed capacity and output
Installed capacity and output Total net installed capacity, MW Total gross output(1), GWh H1 2020 FY 2019 Var. (%) H1 2020 H1 2019 Var. (%) Mainland 17,002 19,066 -11% 22,601 24,707 -9% Renewables 7,405 7,408 0% 7,396 4,923 50% Hydro 4,748 4,748 0% 4,714 2,849 65% Wind (2) 2,305 2,308 0% 2,424 2,059
Slide 30: Profitability and credit metrics
Profitability and credit metrics Profitability(1) Return on invested capital Credit metrics +800 bps +40 bps -400 bps 49% 11.7% 12.1% 50% 46% 41% 1.7x 1.7x H1 2019 H1 2020 2019 H1 2020 2019 H1 2020 Net Income/EBITDA ROIC(2) FFO(3)/Net Debt Net debt/EBITDA (1) Calculated on Net Ordinary Income H1 202
Slide 31: Fixed costs evolution
Fixed costs evolution €mn -389 €mn -39% +15 €mn +1.5%(1,2,3) 1,007 996 (1) 992 Personnel -4 (2) 356 costs -1% 495 505 501 (3) 607 44 95 O&M costs Capitalized 590 590 +3% 609 609 costs -99 -99 -97 -97 H1 2019 Other H1 2019 H1 2020 Net provision Other H1 2020 Reported adjustment Adjusted Adjusted rele
Slide 32: Financial debt maturity calendar
Financial debt maturity calendar €bn Gross balance of maturities(1) 5.0 ▪ Average life of debt: 4.9 years 3.6 ▪ Coverage of 23 months of debt maturities 1.4 ▪ Liquidity additional strengthening by 0.1 0.0 0.6 1,250 €mn through 3 operations in Q2 2020 1.3 0.2 0.1 0.0 0.2 1.4 0.0 0.5 0.0 0.1 0.1 0.2 0
Slide 33: Headcount
Headcount 2019 H1 2020 9,952 9,924 1,687 1,706 7,573 7,550 893 2,969 904 2,958 2,527 2,519 2,379 5,296 2,374 5,260 4,153 794 4,127 802 442 439 1,143 1,133 Male Female Total Male Female Total Generation & Supply Distribution Structure & others H1 2020 Results - Madrid, 28 July 2020 33
Slide 34: Spanish power market
Spanish power market H1 2020 Customers(1), mn Energy sold(2), TWh 18.5 29.5 97.5 111.4 26.9 29% 32% 40.1 17.6 28.6 11.0 70.6 0.9 24% 71.4 30% 11.0 13.9 13.1 0.0 0.9 0.7 Regulated 45% Free 29% Total Regulated 44% Free 32% Total Residential Business XX% Endesa market share 34 (1) Customers: CNMC “Info
Slide 35: Commitment to SDGs
Commitment to SDGs SDGs Local communities Our employees Target 2020 Agreement for a Just Transition signed between Target Diversity Achieved Ministry/Trade Unions/Endesa. 2020 ~73% Energy production 60% Women in new hires 31% 38% CO2 free Accompaniment plan for a Fair Transition on Compostilla and T
Slide 36: ESG: Main initiatives
ESG Main initiatives Environment Social Governance • Authorization to close the Compostilla II • Endesa creates a 25 million fund and • Independent Board Members: 61.5% and Andorra thermal power plants activates a plan to provide material, services, equipment and infrastructure in • Women in the Boa
Slide 37: Endesa: H1 2020 P&L
Endesa: H1 2020 P&L €mn Gx+Sx Dx Structure Adjustments TOTAL Income 7,661 1,309 252 -339 8,883 Procurements and services -5,933 -80 -20 72 -5,961 Gross margin 1,728 1,229 232 (267) 2,922 Self-constructed assets 32 58 7 0 97 Personel expenses -59 57 -98 5 -95 Other fixed operating expenses -534 -178
Slide 38: Endesa: H1 2019 P&L
Endesa: H1 2019 P&L €mn Gx+Sx Dx Structure Adjustments TOTAL Income 8,520 1,377 279 -385 9,791 Procurements and services -6,893 -83 -16 91 -6,901 Gross margin 1,627 1,294 263 (294) 2,890 Self-constructed assets 27 65 7 0 99 Personel expenses -260 -141 -110 6 -505 Other fixed operating expenses -525
Slide 39: Glossary of terms (I/II)
Glossary of terms (I/II) Reference note (#) of Consolidated Item Calculation Management Report Cost of gross financial debt / gross average financial debt: (68 €mn x (360/180) + 1 €mn) / 7,822 Average cost of debt (%) 4.1 €mn = 1.8% (Principal x number of days of term) / (Principal in force at the e
Slide 40: Glossary of terms (II/II)
Glossary of terms (II/II) Reference note (#) of Consolidated Item Calculation Management Report Gross tangible (717 €mn) and intangible (72 €mn) Capex - IFRS 16 effect (140 €mn) - assets from Net Capex (€mn) 4.3 clients’ contributions and subsidies (69 €mn) = 580 €mn Long and short term financial de
Slide 41: Disclaimer
Disclaimer This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and they are subject to material risks, uncertainties, changes and other fact
Slide 42: IR Team
IR Team Contact us Mar Martinez Head of Investor Relations Investor Relations team Contacts Isabel Permuy Javier Hernandez Email: ir@endesa.es Francesc Trilla Juan Carlos Jimenez Phone: + 34 91 213 15 03 Sonia Herranz + 34 91 213 90 49 Paloma de Miguel Website: www.endesa.com 42