Slide 1: EDP 2008 Results Presentation
EDP 2008 Results Presentation March 6th, 2009
Slide 2: 2008: Highlights of the period
2008: Highlights of the period EBITDA: €3,155m, +20% YoY Increase of installed capacity: +2,765 MW (+18% YoY) to 18,419 MW in 2008 Capex +34% YoY to €3.6bn, with expansion in wind power Eficiency improvements: ratio of Opex/Gross Profit improves to 29% (vs. 30% in 2007) Maintenance of a low risk pro
Slide 3: 2008: Highlights of the period
2008: Highlights of the period Net profit of €1,092m: +20% YoY Slight decrease in average cost of debt to 5.6% in 2008 vs 5.7% in 2007 EDP has €5 bn available in Cash and Credit Lines Net debt/EBITDA flat YoY at 4.4x, falling to 3.8x ex-regulatory receivables Profitable Growth Maintenance of a sound
Slide 4: 2008 Financial Headlines
2008 Financial Headlines (€ million) 2007 2008 % Chg. EBITDA 2,628 3,155 +20% Net Profit 907 1,092 +20% Capex 2,700 3,618 +34% Net Debt (€ bn) 11,692 13,890 +19% Net Debt / EBITDA (x) 4.4x 4.4x - Adjust. Net Debt / EBITDA (1) (x) 4.2x 3.8x - Profitable growth maintaining a sound capital structure (1
Slide 5: 2008 EBITDA Breakdown
2008 EBITDA Breakdown +20% €3,155m % Chg. YoY €2,628m 13% Liberalized -10% 17% 18% Activities Iberia Brazil -4% 22% 14% Wind Power +105% 8% >85% 29% Regulated +57% 22% Networks Iberia LT Contracted +3% 31% 26% Generation Iberia > 85% of EBITDA comes from regulated or LT Contracted activities 4
Slide 6: Non-recurrent items above the EBITDA line
Non- Non-recurrent items above the EBITDA line EDP Group (€ million) 2006 2007 2008 CAGR 06-08 Reported EBITDA 2,305 2,628 3,155 +17% Tariff deviations & Recoveries Portugal (1) -5 75 (195) - Tariff deviations & Recoveries Brazil (2) (95) (216) - - Downward Revision of Enersul RAB 0 69 0 - HR Restru
Slide 7: EDP Consolidated Operating Costs: Anticipation of efficiency targets defined in Opex Program
EDP Consolidated Operating Costs: Anticipation of efficiency targets defined in Opex Program OPEX Program 2006-08 savings (1) Controllable Operating Costs (2) – EDP Group (€ million) (€ million) Measures taken in 2008 Measures taken in 2006 and 2007 +4.5% 28% above 2006-2008 target 1,358 1,422 EDP R
Slide 8: Business Areas
Business Areas 7
Slide 9: 2008: Highlights in Generation & Supply Iberia
2008: Highlights in Generation & Supply Iberia EBITDA -2% YoY to €1,208m LT Contracted Generation EBITDA +3% YoY: Inflation + commissioning of desox facilities Liberalized Generation: Hedging on forward fuel costs/energy sales avoided further deterioration Start up of two new CCGT groups in Spain: C
Slide 10: Generation & Supply Iberia (38% of EBITDA)
Generation & Supply Iberia (38% of EBITDA) EBITDA Breakdown (€ million) -2% Lower thermal spreads: electricity prices 1,226 1,208 increased less than fuel costs Forward energy sales to clients & fuel Liberalized -10% procurement limited EBITDA decline Generation & Supply 8.5% return on RAB, no volum
Slide 11: Liberalised Generation & Supply Iberia: Inversion of gas/coal in merit order
Liberalised Generation & Supply Iberia Inversion of gas /coal in the marginal cost merit order CCGT in Iberia: Load factors 2008 (%) Coal in Iberia: Load factors and Output, 2007-08 EDP - Portugal EDP - Spain Spain’s average EDP (HC) Spain’s average Load Factor (%) Output (TWh) Load Factor (%) Outpu
Slide 12: Hedging on sales to final clients: lower exposure to pool
Hedging on sales to final clients: lower exposure to pool Conventional generation output sold to liberalized clients(1) in Iberian market (% total output) Energy sales and fuel costs hedged 12 months ahead for c80% of expected output Hedging strategy in liberalized activity + PPA/CMECs reduce EDP’s
Slide 13: 2008: Highlights in Energy Regulated Networks Iberia
2008: Highlights in Energy Regulated Networks Iberia EBITDA growth of +57%YoY to €939m Slowdown of demand growth YoY in 2008: no material impact on financials Positive impact on EBITDA from non-recurrent tariff recoveries in electricity distribution Portugal Controllable operating costs: +3%YoY; Con
Slide 14: Regulated Energy Networks Iberia (29% of EBITDA)
Regulated Energy Networks Iberia (29% of EBITDA) EBITDA Breakdown Adjusted EBITDA Breakdown (1) (€ million) (€ million) +57% +10% 939 744 675 600 Positive impact from previous years Efficiency Improvement tariff recoveries (1) Electricity Distribution Portugal: adjusted for tariff differences, t-2 a
Slide 15: 2008: Highlights in Wind Power
2008: Highlights in Wind Power EBITDA growth of +105% YoY to €438m Gross installed capacity: +39% or +1,413 MW over year 2008 to 5,052 MW Output +107% YoY – Load factors of 26% in Europe and 34% in USA – Premium quality assets Average selling price in Spain: +29% to €101/MWh based on a €62/MWh avera
Slide 16: Wind Power (14% of EBITDA)
Wind Power (14% of EBITDA) EDP Renováveis: EBITDA Breakdown (€ million) +105% EBITDA growth supported on: 438 • 45% increase of EBITDA installed capacity (+ 1,370 MW to 31% 4,400 MW); 214 • High load factors (Europe 26% 11% and USA 34%); 69% 89% • Increase of pool price in Spain (up 66% YoY); 15
Slide 17: 2008: Highlights in Brazil
2008: Highlights in Brazil EBITDA decreased 4% YoY to €562m Asset swap: Accounts since Sep-08 already include 73% of Lajeado, do not include Enersul Distribution: Lower non-recurrent revenues from tariff receivables, growth of recurrent EBITDA Generation: four months of increased stake in Lajeado, p
Slide 18: Brazil (18% of EBITDA)
Brazil (18% of EBITDA) Reported EBITDA (€m) EBITDA Adjusted (€m) Generation & Supply* Generation & Supply* Distribution Distribution -4% +16% 585 562 526 168 450 217 217 168 418 346 282 309 2007 2008 2007 2008 Lower regulatory receivables in distribution Efficiency improvements Asset swap increases
Slide 19: Consolidated Financials
Consolidated Financials 18
Slide 20: Consolidated Capex
Consolidated Capex +34% €3,618m Wind Power: +1,413 MW in 2008 769 MW under construction by Dec-08 €2,700m Brazil: 360 MW@50% PPA coal plant started construction phase (Pecém) Wind Power Hydro: 861 MW under construction; Payment of new hydro concessions Brazil (Alqueva and Foz Tua) Hydro Portugal Reg
Slide 21: Regulatory Receivables
Regulatory Receivables CMECs Portugal Brazil Spain Portugal Reg. Distrib. &Supply +€1,172m €1,891m Tariffs Portugal 2008: pool price assumed at €50/MWh vs. real cost of €76.5/MWh 2008: extremely dry year + fuel costs at record highs €719m Tariff deficit 2008 in Portugal: abnormal and non-recurrent l
Slide 22: EDP Consolidated Net Debt
EDP Consolidated Net Debt Debt by Interest Rate Debt by Currency Debt by Source of Funds USD Capital Banks Fixed Market BRL EUR Floating 2007 2008 Rating Last Rating Action Net Debt/EBITDA 4.4x 4.4x Standard & Poors A-/Stable/A2 03/07/2008 Moody’s A2/Neg/P1 19/10/2007 Net Debt/EBITDA ex Reg.Receivab
Slide 23: EDP Consolidated Net Debt Evolution
EDP Consolidated Net Debt Evolution (€ Billion) Impact of regulatory receivables 13.9 11.7 Excluding Regulatory Receivables, Net Debt increased by €1 bn EDPR IPO supports funding of expansion Capex Abnormal increase of regulatory receivables led to a higher net debt by Dec-08 (1) Operating Cash Flow
Slide 24: EDP liquidity position Dec-08
EDP liquidity position Dec- Dec-08 (€ million) Sources of liquidity (Dec-08) Instrument Maximum Number of Utilised Available Maturity Amount counterparties Revolving Credit Facility (US$1.5bn) 1,078 22 1,031 47 02-07-2014 Revolving Credit Facility 1,300 21 730 570 27-07-2009 Domestic Credit Lines 18
Slide 25: EDP consolidated debt maturity profile
EDP consolidated debt maturity profile EDP consolidated debt maturity profile (December 30, 2008) (€ million) Commercial paper Other companies EDP SA + BV Brazil: € 323 M Project Finance: € 43 M Average Debt Maturity Dec-08: 5 years € 1 bn Bond: Oct 09 4.000 24.8% 3.600 3.000 17.4% 16.0% 2.400 1.800
Slide 26: Consolidated Net profit up by 20%
Consolidated Net profit up by 20% (€ million) 2007 2008 % Chg. EBIT 1,560 1,931 24% Net interest costs increased Net Interest Costs (539) (722) -34% 34% YoY due the increase in average net debt Other Financial Income/(Costs) (1) 280 287 3% Other Financial Costs in 2008 include total impairments of €
Slide 27: Prospects 2009
Prospects 2009 26
Slide 28: Demand: Recent decline was lower in Portugal than in Spain
Demand: Recent decline was lower in Portugal than in Spain PORTUGAL – Electricity SPAIN – Electricity SPAIN – Gas Total Market 4Q08 Jan./Feb-09 Jan./Feb-09 Adjusted (1) 2009 E Demand destruction from industrial segment less significant in Portugal than in Spain Heavy equipments industry (Auto, steel
Slide 29: Thermal generation costs: Significant reduction for 2009, slight rise for 2010
Thermal generation costs: Significant reduction for 2009, prospect of slight rise for 2010 Coal and Brent: Sep-08 up to 2010 CO2 Allowances (EUA): Sep-08 up to 2010 (Brent: $/bbl; Coal: $/Ton) (€/Ton) Coal Spot Price(1) Coal Forward Price(1) Spot Price Forward Price Brent Spot Price(2) Brent Forward
Slide 30: Electricity market Prices in MIBEL
Electricity market Prices in MIBEL MIBEL Pool Prices (€/MWh) Avg. OMEL Portugal 46.2 Avg. OMEL Spain 45.6 47.9 47.2 42.3 38.6 37.0 42.0 34.9 36.0 2Q09 3Q09 4Q09 2010 OMEL (Spot Prices) OMIP Spain (Forward Prices) Increase of hydro output in Jan/Feb-09 (+128% YoY) although still below historical aver
Slide 31: Evolution of Theoretical Thermal Generation Spreads in MIBEL
Evolution of Theoretical Thermal Generation Spreads in MIBEL MIBEL Forward dark spreads(1) MIBEL Forward spark spreads, 2009(1) (€/MWh) (€/MWh) 19.4 15.5 16.1 9.3 13.8 9.8 5.7 3.5 3.6 -2.8 1.2 -3.6 Forward spreads were at attractive levels in 4Q08, but fell significantly in Jan/Feb-09 (1) EDP estima
Slide 32: Prospects of lower Inflation for 2009
Prospects of lower Inflation for 2009 PORTUGAL: Inflation (1) SPAIN: Inflation (1) BRASIL: Inflation (1) Regulated revenues: lower inflation in 2009 would impact only 2010 regulated revenues Main activities impacted by inflation: PPA/CMECs, regulated networks, wind power feed-in tariffs Operating co
Slide 33: Prospects for EBITDA: 2009
Prospects for EBITDA: 2009 Liberalized Forward sales 2009: c80% of expected output at average price >€60/MWh Activities Iberia and spark/dark spreads in line with 2008’s. Forward sales 2010: ~20% of expected output Brazil PPAs in generation, stable regulation in distribution Avg. BRL/EUR: Depreciati
Slide 34: Prospects for Capex: 2009
Prospects for Capex: 2009 CCGTs Iberia +860 MW in Portugal to be commissioned in 3Q09: Lares 1+2 +420 MW in Spain to be commissioned in 2011: Soto 5 Hydro Portugal 860 MW and 4 plants under construction: Commissioning dates in 2011/13 Upfront payment on Fridão/Alvito concession made in Jan-09: €234m
Slide 35: Prospects for 2009: Continuous focus on efficiency
Prospects for 2009: Continuous focus on efficiency Opex reduction program - Annual cost reduction target of €160m between 2008 and 2012 OPEX savings target* (€ million) Measures taken in 2008 Main efficiency improvements targeted for 160 2009: • Further Integration of support services Portugal/Spain
Slide 36: Prospects for 2009: Regulatory Receivables
Prospects for 2009: Regulatory Receivables 2007 and 2008 tariff deficit: already securitized in Mar-09 Tariff Deficit Tariffs Portugal 2009: pool price assumed at €70/MWh vs. current €45/MWh level Portugal Marginal tariff surplus possible in 2009, not enough to compensate 2008 deficit Tariff Deficit
Slide 37: First Quarter 2009 Financing
First Quarter 2009 Financing €1bn 5 Year Bond – Feb-09: • Extremely strong appetite: books achieved more than €8bn • Books were very strong (70% from real money ) and extremely well diversified: Germany (25%), Iberia (20%), France and UK (16% each) and Benelux (11%) €1.5bn 3 Year Revolving Credit Fa
Slide 38: EDP major sources and uses of funds for 2009 and 2010
EDP major sources and uses of funds for 2009 and 2010 Sources of Funds Use of Funds • Total liquidity available Dec-08: €2.3bn • Total liquidity available Sep-08: • 5Y Bond issued in Feb-09: €1.0bn • Refinancing needs in credit market: • Bond issued in Oct-09: • Tariff deficit monetization in Mar-09
Slide 39: In summary: Delivery of targets committed for 2006-2008
In summary: Delivery of targets committed for 2006- 2006-2008… EBITDA (1) (€ million) EPS (1) (€) 15% 17% TARGET EBITDA TARGET EPS CAGR 2005-2010 > 13% CAGR 2005-2010 > 14% Dividend per Share (€) Net Debt / EBITDA 12% 4.4x TARGET DPS TARGET CAGR 2005-2010 > 11% Net Debt/EBITDA 3.8 x * Value to be pr
Slide 40: ...and good visibility for 2009
…and good visibility for 2009 EBITDA strongly resilient, stable and predictable Stable, low-risk • ~85% EBITDA with low sensitivity to economic cycle returns • Hedging strategy in liberalized activities • Demand destruction lower in Portugal than in rest of Europe • Tariff deficits: no material amou
Slide 41: IR Contacts
IR Contacts Miguel Viana, Head of IR Sónia Pimpão Elisabete Ferreira Ricardo Nuno Farinha Noélia Rocha E-mail: ir@edp.pt Phone: +351 210012834 Fax: +351 210012899 Visit EDP Website Next Events EEI Conference: March 16th-17th, 2009 Site: www.edp.pt 1Q09 Results: May, 5th 2009 Link Results & Presentat