Enel SpA · MIL:ENEL
Enel SpA — H1 2003 Earnings Presentation
34 slides from Enel SpA's earnings presentation, Sep 10, 2003
Slide 1: 2003 Interim Results
2003 Interim Results Rome, 10 September 2003
Slide 2: Disclaimer
Disclaimer THESE SLIDES HAVE BEEN PREPARED BY THE COMPANY SOLELY FOR THE USE AT THE ANALYST PRESENTATION IN ROME. THE INFORMATION CONTAINED HEREIN HAS NOT BEEN INDEPENDENTLY VERIFIED. NONE OF THE COMPANY OR REPRESENTATIVES SHALL HAVE ANY LIABILITY WHATSOEVER IN NEGLIGENCE OR OTHERWISE FOR ANY LOSS H
Slide 3: Agenda
Agenda 1. 2003 Interim Results 2. Regulatory and Market Update 3. Review of Targets 4. Conclusions 5. Q&A 3
Slide 4: Consolidated Financial Highlights
Consolidated Financial Highlights Income Statement (Euro Mn) 1H2002 1H2003 % change Pro Forma Revenues 15.421 14.789 4,3% Operating Costs 10.736 11.074 -3,1% EBITDA 4.685 3.715 26,1% % of Revenues 30% 25% EBIT 2.231 1.375 62,3% % of Revenues 14% 9% Note: Proforma excluding Eurogen and Interpower 4
Slide 5: Consolidated Financial Highlights
Consolidated Financial Highlights From EBIT to EPS (Euro Mn) 1H2002 1H2003 Pro Forma % change EBIT 2,231 1,375 62.3% Net Financial Charges -572 -615 -7.0% Net Extraordinary Items 254 608 (1) of which: Gains from Disposals 400 2,353 EBT 1,913 1,368 39.8% Income Taxes 794 66 Minority Interest 81 84 -3
Slide 6: Consolidated Financial Highlights
Consolidated Financial Highlights EBITDA and EBIT by Business Areas (Euro Mn) 4,685 2,231 480 381 3,715 649 1,375 Telecom 232 Services, Terna 171 Services, Terna & Holding(1) 1.071 469 & Holding(1) 1.751 Networks 1.043 & Sales Networks 1.710 & Sales 1.175 Generation & 697 Energy Mgmt 1.805 Generatio
Slide 7: Consolidated Financial Highlights
Consolidated Financial Highlights Balance Sheet (Euro Mn) June 30, 2003 Dec. 31, 2002 % Change June 30, 2002 Net Financial Debt 24,584 24,467 0.5% 23,932 (1) of which Wind 6,941 6,621 4.8% 6,029 Shareholders' Equity 19,932 20,842 -4.4% 20,274 of which minorities 149 70 135 Leverage 1.23 1.17 1.18 (2
Slide 8: Net Debt Evolution
Net Debt Evolution (Euro Mn) Up 117 December 31st, Ordinary Cash Flow Extraordinary Capex Dividends, June 30th, 2002 from Operations Activities Interests and 2003 Taxes ENEL -17,846 -17,643 ENEL +734 -1,684 +3,777 Wind -6,621 -2,944 -6,941 Wind -24,467 -24,584 8
Slide 9: Agenda
Agenda 1. 2003 Interim Results 2. Regulatory and Market Update 3. Review of Targets 4. Conclusions 5. Q&A 9
Slide 10: The Marzano Reform
The Marzano Reform €0.4bn €1.3-1.8bn €0.9-1.4bn Marzano Decree Stranded Costs on 2002 Hydro Total Plants and NLNG 00-031 Penalty Terms and conditions of distribution concessions confirmed Marzano Transmission ownership limit to 20% by July 2007 Draft Law Guidelines on transmission and distribution t
Slide 11: Expected Outcome of Tariff Consultation
Expected Outcome of Tariff Consultation RAB revaluation on the basis of 1997-2001 inflation RAB Net investments over the period 2002-2003 Possible further increase due to longer depreciation schedule WACC Based on the 10 years bond yield, instead of the 3 years yield 50/50 sharing of the extra savin
Slide 12: Outlook on Italian Generation Market
Outlook on Italian Generation Market Drivers of ’03 - ‘07 Plan Recent Events Around 2% annual demand growth Around 3% demand growth in H1 Around 2% peak growth 4.2% higher summer peak 10GW1 of new capacity by 2007 Some delays in building new capacity Significant price pressure from Upward pressure o
Slide 13: Agenda
Agenda 1. 2003 Interim Results 2. Regulatory and Market Update 3. Review of Targets 4. Conclusions 5. Q&A 13
Slide 14: Generation and Energy Management
Generation and Energy Management Thermal 13.9 12.8 Large Hydro 13.1 12.6 11.6 11.7 O&M/MW kEuro kEuro Targets 2002 LTM1 2005 2002 LTM1 2005 100 Brent +3 $/bbl Fuel Cost Index New entrant = 87 Reduction2 98 86 60 2002 H1 2003 2004 2007 3% Renewables 24% 15% Production 45% 32% Coal & Orim. Gas CCGT Fu
Slide 15: Distribution and Sales
Distribution and Sales Cash Cost € / Customer1 Quality bonus 150 146 >€100m 127 >€70m Power Targets 2002 LTM2 2005 Target Expected Cash Cost € / Customer3 Volumes (BCM) 138 132 4.6 5.2 113 Gas Targets 3.9 2002 LTM2 2005 2002 LTM2 2005 1 Excluding Digital Meter, including Sales 2 LTM = Latest Twelve
Slide 16: Terna
Terna 0.95 0.93 0.82 Euro Opex/MWh 2002 LTM1 2005 Timing: first half 2004 IPO Target size: around 50% 1 LTM = Latest Twelve Months, June 2002-June 2003 16
Slide 17: Wind
Wind Review of targets 2005 Target 1H03 vs 1H02 EBITDA > 40% CAGR +106% Mobile ARPU 8% CAGR +18% Mobile Revenues1 15% CAGR +29% ULL Leverage existing infrastructure 425K acquired customers Opex/Revenues 22% 29% vs 34% 1 Service revenues excluding sales of handsets 17
Slide 18: Wind
Wind Financial investor approach Financial Confirmed by YE 2004 Independence Infrastructure Contribution of Backbone by year end to save Wind Independence €50mn in rent currently paid to Enel Launched program expected to save €60mn a year, Savings mainly in financing costs and general purchasing 18
Slide 19: Agenda
Agenda 1. 2003 Interim Results 2. Regulatory and Market Update 3. Review of Targets 4. Conclusions 5. Q&A 19
Slide 20: Conclusions
Conclusions On track on targets Strong financial performance More predictable regulatory environment Significant non-recurring regulatory reimbursements 20
Slide 21: Agenda
Agenda 1. 2003 Interim Results 2. Regulatory and Market Update 3. Review of Targets 4. Conclusions 5. Q&A 21
Slide 22: Appendices
Appendices 22
Slide 23: Summary of Targets
Summary of Targets 2002 LTM1 2003 2005 Impact on opex Generation and Fuel Cost Index % 100 98 2 86 3 Energy O&M / MW Thermal k€ 13.9 12.8 11.6 €620 Mn Management O&M / MW Lrg Hydro k€ 13.1 12.6 11.7 Cash Cost/Cust – Power € 150 146 127 Distribution €260 Mn and Sales Cash Cost /Cust - Gas € 132 1384
Slide 24: EBITDA Growth - by Business Area
EBITDA Growth - by Business Area (Euro Mn) +970 +160 4,685 +248 +501 +41 +20 3,715 1H2002 Generation Networks Terna Wind Holding & 1H2003 Pro Forma & Energy & Sales Other Management 24
Slide 25: Generation & Energy Management
Generation & Energy Management (Euro Mn) 1H2002 1H2003 % change Pro Forma Revenues 6,193 5,333 16.1% of which Int. Operations 236 277 -14.8% EBITDA 1,805 1,304 38.4% of which Int. Operations 94 76 23.7% EBIT 1,175 697 68.6% Capex 286 418 -31.6% (1) Net Capital Employed 14,364 15,541 -7.6% (1) Headco
Slide 26: Networks & Sales
Networks & Sales (Euro Mn) 1H2002 1H2003 % change Pro Forma Revenues 10,244 10,071 1.7% Power 9,500 9,720 -2.3% Gas 744 351 112.0% EBITDA 1,751 1,710 2.4% Power 1,608 1,662 -3.2% Gas 143 48 197.9% EBIT 1,071 1,043 2.7% Capex 821 799 2.8% (1) Net Capital Employed 12,144 12,218 -0.6% (1) Headcount 38,
Slide 27: Operational Data
Operational Data 1H2002 1H2003 % change Pro Forma Power Net Power Production (GWh) 66,097 65,228 1.3% Purchase of Power 39,440 49,303 -20.0% Sales to End Users (GWh) 75,883 90,454 -16.1% of which: Regulated Market 70,575 75,762 -6.8% Free Market 5,308 14,692 -63.9% Total Power Dispatched (GWh) 121,8
Slide 28: Terna
Terna (Euro Mn) 1H2003 1H2002 % change Revenues 430 413 4.1% EBITDA 295 275 7.3% EBIT 168 150 12.0% (1) Headcount 3,070 3,106 -1.2% Capex 70 65 7.7% (1) Net Capital Employed 2,997 3,067 -2.3% (1) 2002 Proforma as of December 31, 2002 28
Slide 29: Wind
Wind Key Performance Indicators 30-giu-03 30-giu-02 1H2003 1H2002 Profit & Loss Customers (mn) 26,4 22,9 (€mn) Fixed Active 3,3 3,8 Revenues 2.123 1.887 of which CPS 1,8 1,9 EBITDA 480 232 ULL (1) 0,2 - EBIT(2) -173 -263 Mobile 9,2 8,1 Internet Subscribers 13,9 11,0 1H2003 1H2002 30-giu-03 31-dic-02
Slide 30: Services & Holding
Services & Holding (Euro Mn) 1H2003 1H2002 % change SERVICES Revenues 1,279 1,280 -0.1% EBITDA 267 149 79.2% EBIT 141 -12 (1) Headcount 4,802 6,163 -22.1% Capex 159 313 -49.2% (1) Net Capital Employed 2,665 2,681 -0.6% HOLDING Revenues 540 1,029 -47.5% EBITDA 120 85 41.2% EBIT 105 73 43.8% (1) Headc
Slide 31: Debt Structure
Debt Structure • Average debt maturity: 4 years and 9 months • Average cost of debt: 4,5% • (Fixed+Hedged)/Total Long Term Debt = 60% • (Fixed+Hedged)/Total Net Debt = 52% • S&P’s: A+/A-1 negative Moody’s: A1/P-1 negative (Euro Mn) 30-giu-03 31-dic-02 % change Long Term 20.688 18.292 13,1% Short Ter
Slide 32: Capex
Capex (Euro Mn) -549 2,233 Terna 65 Services 313 1,684 70 Terna Telecom 638 159 Services 348 Telecom Networks 799 & Sales Networks 821 & Sales Generation & 418 Generation & Energy Mgmt 286 Energy Mgmt 1H2002 1H2003 Pro Forma 32
Slide 33: Consolidated Financial Highlights
Consolidated Financial Highlights Quarterly Analysis - Income Statement (Euro Mn) 2Q2002 2Q2003 % change 1Q2003 ProForma Revenues 7,352 7,223 1.8% 8,069 EBITDA 2,309 1,851 24.7% 2,376 % of Revenues 31% 26% 29% EBIT 1,027 621 65.4% 1,204 % of Revenues 14% 9% 15% EBT 647 932 -30.6% 1,266 33
Slide 34: Consolidated Financial Highlights
Consolidated Financial Highlights Quarterly Analysis - Balance Sheet (Euro Mn) June 30, 2003 March 31, 2003 % Change Net Financial Debt 24.584 22.831 7,7% (1) of which Wind 6.941 6.836 1,5% Shareholders' Equity 19.932 21.694 -8,1% of which minorities 149 60 Leverage 1,23 1,05 (2) EBITDA/ Interest Co