Enel SpA · MIL:ENEL
Enel SpA — FY2004 Earnings Presentation
52 slides from Enel SpA's earnings presentation, Mar 31, 2005
Slide 1: 2004 Results
2004 Results Rome, March 31 2005 0
Slide 2: Agenda
Uso: Agenda 1. 2004 Results 2. Strategy and targets 3. Dividends 4. Questions & Answers 1
Slide 3: Highlights of the year 2004
Uso: Highlights of the year 2004 Results 2004/2003 • Revenues at € 36.5 bn • +16.5% • EBITDA at € 11.0 bn • +11.9% • Net Ordinary Income(1) at € 1.8 bn • +67.8% • Group Net Income at € 3.4 bn • +36.3% • Net debt at € 24.3 bn • In line Excellent performance on key indicators 2 (1) Net Income less non
Slide 4: Revenues
Revenues (Euro mn) +16.5% 36,489 2,408 -38.6% 31,317 4,362 +10.2% Other 3,923 1,023 +10.4% Telecom 3,959 Terna 927 28,696 Total Energy 1,374 22,508 +9.6% Gas 1,254 27,322 Total Electricity 21,254 2,141 Other electricity 1,241 25,181 +25.8% Electricity 20,013 2003 2004 3
Slide 5: EBITDA
EBITDA +11.9% +613 11,010 +556 Regulatory 9,841 1.068 items Regulatory items 512 +6.6% 9.942 9.329 2003 Regulatory Business 2004 items improvement 4
Slide 6: EBITDA by division net of regulatory items
EBITDA by division net of regulatory items +613mn 544 -279 9,942 9,329 135 151 62 378 Services and Holding(1) 657 1.554 TLC 1.010 683 Terna 621 3.690 3.841 Network & Sales Generation & Energy Mgmt 3.351 3.486 2003 Generation Network Terna TLC Services 2004 & Energy & Sales and Mgmt Holding(1) 5 (1)
Slide 7: Net Debt Evolution
Uso: Net Debt Evolution (Euro mn) Up 122 mn December 31st, Cash Flow Capex Extraordinary Dividends, December 31, 2003 from operations Activities Interests and 2004 Taxes Net Operating Cash Flow: +4,339 ENEL -17,431 -17,575 ENEL Wind -6,743 +2,576 -6,721 Wind -3,834 -24,174 +8,173 -7,037 -24,296 6
Slide 8: IAS impact
Uso: IAS impact IAS Pro-forma Shareholders’ equity as of 2004 Income Statement December 31, 2004 (Euro mn) (Euro mn) 21.691 -1,200 +650 -150 -1,100 +500 20.391 3,919 +500 3.419 Group Cancellation Other Group Equity Personnel Assets Other 2004 Equity Net Income of goodwill adjustments Net Income (Ita
Slide 9: Agenda
Uso: Agenda 1. 2004 Results 2. Strategy and targets 3. Dividends 4. Questions & Answers 8
Slide 10: September 2002 strategy: delivered
Uso: September 2002 strategy: delivered • 30 businesses reduced to 2 business units + Wind and Terna Focus on • Increased Generation EBITDA (24% CAGR 2002-2004) Energy • 17% reduction of cash cost per customer in electricity distribution since 2002 (€1.2 bn cumulative cash savings(1)) Profitable • M
Slide 11: Evolving our strategy
Evolving our strategy 2002 2003 2004 2005 2006 2007 2008 2009 Terna Focus Wind Efficiency Organic Growth Growth Selective International Expansion Cash generation continues to be our priority 10
Slide 12: Focus: Terna and Wind
Uso: Focus: Terna and Wind •Agreed to sell 30% to CDP •14% sold to the market Terna •~1% retained to serve bonus shares of first tranche •Long term stake matching voting rights (5%) •2004 results and outlook supporting IPO Wind •Currently evaluating two firm expressions of interest •Deconsolidated a
Slide 13: Efficiency: Generation
Uso: Efficiency: Generation <1% 37% 29% ~20% Oil and Gas ST/OCGT 45% Gas CCGT Coal Production 19% Renewables 18% ~50% Fuel Mix 9% 25% 22% 22% 24% 23% 27% ~30% 2002 2003 2004 Target +13% Average fuel +12% New Entrant cost/ MWh ~-1% CCGT=100 (%vs new -30% (~36(1) €/ MWh) entrant) 2002 2003 2004 Target
Slide 14: Efficiency: Conversion to coal
Uso: Efficiency: Conversion to coal 2009 Market demand (estimate) GW +5 GW Coal TorreNord Porto Tolle baseload Import Increase 0 Hours 8760 IMPORT+ Baseload Renewables + CIP6 Cogeneration Coal CCGT Oil & Gas Peak Hydro Coal sustaining long term profitability 13
Slide 15: Efficiency: Electricity Distribution & Sales
Uso: Efficiency: Electricity Distribution & Sales 150 Cash Cost € / Customer 136 Old targets 129 127 New targets 125 OPEX 99 122 118 115 89 110 83 80 CAPEX 51 36 32 30 2002 2003 2004 2005 2006 2007 2008 2009 One year ahead on cash cost per customer targets 14
Slide 16: Growth: Renewables
Uso: Growth: Renewables ’09-05 plan IRR Investments (bn€) Additional capacity Italy - Wind: ~150 MW Abroad Italy - Geo: ~50 MW >20% 1.7 - Hydro: ~50 MW 0.6 1.1 - Spain: Enel-Union 0,5(1) Fenosa Renewables 1.1 Interna- (EUFR) ~500 MW 0.6 ~10% tional - Americas: US, El Salvador and 2003-2004 2005-2009
Slide 17: Growth: Gas
Uso: Growth: Gas Residential customers (mn) • Acquisitions +0,5 mn customers(1) 3.9 1.9 2.5 Growth • Renew and expand concessions 1.7 Strategy +0,5 mn customers(1) • Aggressive customers growth +1,0 mn customers(1) 2002 2004 2006 new 2009 Sales Volumes (bcm) • Significant purchasing power 7.1 5.7 5.
Slide 18: Growth: Slovenské Elektrárne
Uso: Growth: Slovenské Elektrárne - IRR >10% Financials - EPS accretive pre-goodwill from year one - Competitive and efficient installed capacity (6.9 GW) Assets - 83% market share in Slovakia Poland Czech Republic Slovakia Vojany Interconnected Nováky Bohunice Ukraine with Central Europe Mochovce A
Slide 19: New financial targets
Uso: New financial targets Cumulative CAPEX ‘05-’09 <20 bn € Free cash flow ‘05-’09(1) >20 bn € Credit Rating Strong A ROACE(2) (‘05,’06) >11% 18 (1): Pre dividend, including Terna deconsolidation and excluding Slovenske financing (€2 bn) (2) ROACE= EBIT/ Average Net Capital Employed All figures exc
Slide 20: Agenda
Uso: Agenda 1. 2004 Results 2. Strategy and targets 3. Dividends 4. Questions & Answers 19
Slide 21: Income and dividends
Uso: Income and dividends >53% CAGR >36c Net ’02-’05 30c ordinary 18c Income per 10c share 2002 2003 2004 2005 • 2004 dividend of 36 c€ (paid in June 2005), includes all payments for stranded costs (11c€) and New Real (2c€) Dividends • Additional 16-18 c€ per share Terna dividend to be paid in 2005
Slide 22: Agenda
Uso: Agenda 1. 2004 Results 2. Strategy and targets 3. Dividends 4. Questions & Answers 21
Slide 23: Appendix
Uso: Appendix 22
Slide 24: Financials
Uso: Financials 23
Slide 25: Income statement (Euro Mn)
Uso: Income statement (Euro Mn) 2004 2003 % change Revenues 36,489 31,317 16.5% Operating Costs 25,479 21,476 EBITDA 11,010 9,841 11.9% % of Revenues 30% 31% EBIT 6,325 4,732 33.7% % of Revenues 17% 15% 24
Slide 26: From EBIT to EPS (Euro mn)
Uso: From EBIT to EPS (Euro mn) 2004 2003 % change EBIT 6,325 4,732 33.7% Net Financial Charges (1,103) (1,130) 2.4% Net Extraordinary Items 298 -136 EBT 5,481 3,393 61.5% Income Taxes 1,936 966 Minority Interest (126) 82 Group Net Income 3,419 2,509 36.3% EPS (Euro) 0.56 0.41 36.6% Net Ordinary Inc
Slide 27: Balance Sheet (Euro mn)
Uso: Balance Sheet (Euro mn) December 31, December 31, % Change 2004 2003 Net Financial Debt 24,296 24,174 0.5% of which Wind(1) 6,721 6,743 -0.3% Shareholders' Equity 21,691 21,315 1.8% of which minorities 1,131 191 Leverage 1.12 1.13 EBITDA/ Interest Coverage 10.0 8.7 Net Capital Employed 45,987 4
Slide 28: EBIT by business area (Euro mn)
Uso: EBIT by business area (Euro mn) 6,325 689 4,732 Other(1) 509 356 Terna 430 2.885 Network & Sales 2.329 Generation & 2.457 2.698 Energy Mgmt -456 -840 Telecom 2003 2004 27 (1) Net of intercompany
Slide 29: Generation & Energy Management (Euro mn)
Uso: Generation & Energy Management (Euro mn) 2004 2003 % change Revenues 12,982 12,607 3.0% EBITDA 3,999 3,863 3.5% EBIT 2,698 2,457 9.8% Capex 857 853 0.5% Net Capital Employed 15,146 14,458 4.8% Headcount 10,828 11,196 -3.3% Net Power Generation (domestic) (GWh) 125,868 137,794 -8.7% 28
Slide 30: Network & Sales (Euro mn)
Uso: Network & Sales (Euro mn) 2004 2003 % change Revenues(1) 19,466 20,433 -4.7% Power 18,052 19,059 Gas 1,421 1,374 EBITDA 3,841 3,690 4.1% Power 3,575 3,418 Gas 266 272 EBIT 2,885 2,329 23.9% Capex 1,711 1,764 -3.0% Net Capital Employed 13,386 11,981 11.7% Headcount 35,537 36,826 -3.5% Power Disp
Slide 31: Operational data
Uso: Operational data 2004 2003 % change Power Net Power Generation (GWh) 125,868 137,794 -8.7% Purchase of Power (GWh) 152,525 73,654 107.1% Sales to End Users (GWh) 157,801 152,189 3.7% of which: Regulated Market 136,961 141,453 -3.2% Free Market 20,840 10,736 94.1% Total Power Dispatched (GWh) 25
Slide 32: Terna (Euro mn)
Uso: Terna (Euro mn) 2004 2003 % change Revenues 1,023 927 10.4% EBITDA 683 621 10.0% EBIT 509 430 18.4% Capex 277 371 -25.3% Net Capital Employed 3,691 3,580 3.1% Headcount 2,929 2,837 3.2% 31
Slide 33: Wind
Uso: Wind Key Performance Indicators 2004 2003 2004 2003 Profit & Loss Customers (mn) (€mn) Fixed Active 2,4 3,1 Revenues 4.714 4.383 of which direct (1) 0,5 0,5 EBITDA(2) 1.554 1.010 Mobile 12,1 9,9 EBIT(3) 99 (340) Internet Subscribers 17,1 15,2 December 31, December 31, 2004 2003 2004 2003 Balanc
Slide 34: Services & Holding (Euro mn)
Uso: Services & Holding (Euro mn) 2004 2003 % change SERVICES Revenues 1,799 2,742 -34.4% EBITDA 298 481 -38.0% EBIT 130 213 -39.0% Capex 112 127 -11.8% Net Capital Employed 915 2,220 -58.8% Headcount 3,826 4,620 -17.2% HOLDING Revenues 1,617 1,139 42.0% EBITDA 729 256 184.8% EBIT 653 223 192.8% Cap
Slide 35: Debt structure
Uso: Debt structure • Average debt maturity: 6 years 4 months • Average cost of debt: 4.4% • (Fixed+Hedged)/Total Long Term Debt = 58% • (Fixed+Hedged)/Total Net Debt = 53% • S&P’s: A+/A-1 stable Moody’s: A1/P-1 stable (Euro Mn) December 31, December 31, % Change 2004 2003 Long-term 18,631 16,472 13
Slide 36: Consolidated Financial Highlights
Uso: Consolidated Financial Highlights Quarterly Analysis - Income Statement (Euro Mn) 4Q04 4Q03 % change 1Q04 2Q04 3Q04 Revenues 10,505 8,024 30.9% 8,029 8,919 9,036 EBITDA 3,512 2,277 54.2% 2,642 2,707 2,149 % of Revenues 33% 28% 33% 30% 24% EBIT 2,207 856 157.8% 1,560 1,487 1,071 % of Revenues 21
Slide 37: Capex (Euro mn)
Uso: Capex (Euro mn) -135 3,969 -3.4% Services & Holding 127 3,834 122 -3.9% Telecom 854 867 +1.5% 371 Terna 277 -25.3% 1.764 1.711 Networks & Sales -3.0% 853 857 +0.5% Generation & Energy Mgmt 2003 2004 36
Slide 38: Market & Regulation
Market & Regulation 37
Slide 39: 2005-2009 Plan key assumptions
Uso: 2005-2009 Plan key assumptions Electricity demand (TWh) Peak Demand: +2.6% CAGR (’04-’09) 362 2.4 % New Entrant CCGT: +8.7 GW + AGR (’05-’09) C Import: +2.2 GW 321 322 (’05-’09) 311 2002 2003 2004 2009 38
Slide 40: 2005-2009 Fuel price scenario
Uso: 2005-2009 Fuel price scenario 46 $/bl 38 $/bl Brent 32 $/bl 2004 Feb ‘05 Long Term (2009) 72 $/ton 65 $/ton 49 $/ton Coal* 2004 Feb ‘05 Long Term (2009) 39 * CIF ARA (Rotterdam)
Slide 41: Generation & Energy Management
Uso: Generation & Energy Management Regulatory Outlook • Stranded cost recovery approved, • Pool fully operating: demand side actively participating from 2004-2005 1st January 2005 • Single Buyer in full operation • CO2 NAP for Trial Period yet to be approved • Draft NAP allowances consistent with o
Slide 42: ETS: National Allocation Plan
Uso: ETS: National Allocation Plan* • 2nd draft issued in July 2004; allocations by plant defined in February 2005 • ~255 mn ton/y allocated , of which ~138 mn ton/y to the electricity sector • Allowances based on fuel differentiation • EU approval expected in May/June ’05 mn ton/year 55 45 45 Enel
Slide 43: Targets
Uso: Targets 42
Slide 44: Generation and Energy Management
Uso: Generation and Energy Management 13.9 11.4 10.7 10.2 O&M/MW kEuro Thermal 2002 2004 2006 2007 Actual Actual New 13.1 11.6 11.4 11.4 O&M/MW kEuro Large Hydro 2002 2004 2006 2007 Actual Actual New 43
Slide 45: Distribution and Sales
Uso: Distribution and Sales Quality Bonus € 203 m € 115m Electricity 2002 2003 Actual Actual Distribution Cash Cost € / Customer(3) 105 97 98(1) Gas 91 2002 2004 2006 2007 Actual Actual New 44 (1) Including mandatory investments on new acquired assets (2) Including Sales (3) Excluding Sales, Distrib
Slide 46: Wind performance 2002-04
Uso: Wind performance 2002-04 Old targets 1.552 194 CAGR 59% vs. 59% EBITDA 614 CAGR >40% 2002 (49% excl. 1.358 Turnover (€ bn) CAGR Contribution) ’02-’05 2002 2004 2,594 Mobile 1,853 18% Ahead on Turnover(1) CAGR 15% target CAGR (€ mn) ’02-’05 2002 2004 31% OPEX/ 25.6% Revenues Planned Non commer-
Slide 47: Summary of Targets
Uso: Summary of Targets 2002 2004 2006 2006 Actual Actual old new Generation Fuel Cost Index (1) % 100 87 86 86 and Energy O&M / MW Thermal k€ 13.9 11.4 10.8 10.7 Management O&M / MW Large Hydro k€ 13.1 11.6 11.5 11.4 Distribution Cash cost - Electricity € 150 125 122 118 and Sales Cash cost - Gas €
Slide 48: Past Financial targets (ITA-GAAP)
Uso: Past Financial targets (ITA-GAAP) Target Delivered as of 2004 ’02- ’05 EBITDA CAGR(1) 8% 14% ’03- ’07 free cashflow € 16bn € 6.6bn ’03 - ’07 CAPEX € 20.9 bn € 7.8bn ’06 vs.’02 OPEX reduction €1.1 bn €0.8 bn 47 (1) Excluding Terna and stranded cost
Slide 49: International assets
Uso: International assets Spain 9 Viesgo: 2.366 MW coal, oil, hydro: more than 600.000 customers 9 80% of Enel Uniòn Fenosa Renovables 445 MW Enel North America 9 Escatron CCGY realization started 800MW 9 410 MW Hydro, wind and other Russia renewable in US (and Canada) 9 Operation NWPP, CCGT S. Pete
Slide 50: Slovenské Elektrárne
Uso: Slovenské Elektrárne Thermal capacity Novaky A (ENO) Novaky B 1&2 (ENO) Novaky B 3&4 (ENO) 32+28+22 MW, lignite/cogen 2 x 110 MW, lignite 2 x 110 MW, lignite Vojany 1 B1-6 (EVO) Bohunice 3&4 (EBO V2) 6 x 110 MW, coal 2 x 440 MW, nuclear Start-up: 1965-1967 VVER technology second generation Voja
Slide 51: Slovenské Elektrárne
Uso: Slovenské Elektrárne Hydroelectric plants >20 MW Orava Hricov 22 MW Miksova 32 MW Seasonal Nosice Povaszka 94 MW Basin Basin 68 MW 55 MW River flow Liptovská Mara Basin River flow 198 MW Mixed Pump 4 plants Storage 66 MW River flow Cierny Vah 735 MW Kostolna Pump storage 25 MW Basin Ružin 60 MW
Slide 52: Disclaimer
Uso: 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 L