Engie S.a. · EURONEXT:ENGI
Engie — FY2020 Earnings Presentation
47 slides from Engie's earnings presentation, Feb 26, 2021
Slide 1: FY 2020 Results, 26th February 2021
26th February 2021 1 Greenhouse Gases 2 Science Based targets
Slide 2: Agenda
Agenda Introduction Aarti SINGHAL Investor Relations Director 2020 Overview Catherine MACGREGOR Chief Executive Officer Financial Review & Outlook Judith HARTMANN EVP, Chief Financial Officer 2021 Priorities Catherine MACGREGOR Chief Executive Officer FY 2020 Results February 2021 2
Slide 3: 2020 Overview
2020 Overview Catherine MACGREGOR CEO FY 2020 Results February 2021 3
Slide 4: Role in tackling climate change and energy mix
• Clear and meaningful role in tackling climate change $15 trillion • Critically important that decarbonization is achieved through an energy mix that is reliable, affordable and based on flexible/resilient energy systems to be invested in power generation globally by 2050 • ENGIE is a major player
Slide 5: 2020 key financial figures
EBITDA COI NRIgs Strong recovery from Q2 levels, with €9.3bn €4.6bn €1.7bn 2019: €10.4bn 2019: €5.8bn 2019: €2.7bn H2 organic performance similar to previous year Growth Capex 1 Proposed dividend Strong liquidity €4.0bn €0.53 maintained 2019: €7.1bn 1 Net of DBSO and US tax equity proceeds FY 2020 R
Slide 6: New strategic orientation driving Group simplification
New strategic orientation driving Group simplification and focus on execution … • SUEZ disposal 1 completed in October • Strategic reviews launched; strengthened position in key countries . . . while ensuring delivery of essential services for customers and executing on capital projects • Continuous
Slide 7: Commitment to exit from coal by 2027
Commitment to exit from Greenhouse Renewables Gender diversity coal by 2027 gases emissions Share of Renewables % of women in the 1 (GW at 100%) in the management of the Centralized coal power GHG emissions from 101 electric capacity mix in line Group GW generation capacity @100% energy production,
Slide 8: Renewables 2020 achievements
RENEWABLES 2020 achievements • 3 GW of wind and solar assets commissioned, second year in a row, despite Covid-19 Capacity growth in the last 2 years1 − In key markets: US, Europe, Latin America (GW @100%) − Including for the first time, both fixed and floating offshore wind through Ocean Winds JV w
Slide 9: Multi-technical services entity project
• J. Stubler appointed as EVP, to manage the project • Multi-technical services entity with scale and strong growth prospects • Employee consultation on organization design commenced in February 2021 • Preparation for the creation of potential new entity, subject to feedback of stakeholders Next ste
Slide 10: 2021 indications and guidance
1 • Expect significant improvement in financial performance driven by: − Strong recovery from Covid-19 impacts in 2020 COI indicative range − Benefit of growth in Renewables and international Networks €5.2-5.6bn − Improved Nuclear availability and higher achieved prices − Reversal of the warm weathe
Slide 11: Financial Overview & Outlook
Financial Overview & Outlook Judith HARTMANN EVP, CFO FY 2020 Results February 2021 11
Slide 12: Recovery in H2 following Covid-19 impacts in Q2
Recovery in H2 following significant impacts of Covid-19 in Q2 • 2020 COI impacted by 3 headwinds: 2020 YoY ∆ YoY ∆ ▪ €(1.2)bn Covid-19 €bn, unaudited figures 1 Actual Gross Organic Guidance ▪ €(0.3)bn FX EBITDA 9.3 (11)% (6)% 9.0 – 9.2 ▪ €(0.16)bn French temperatures COI 4.6 (21)% (16)% 4.2 – 4.4 •
Slide 13: COI evolution FY19 to FY20
(€m) • Renewables, Thermal and Nuclear resilient, 5,819 (369) showed organic growth +101 Scope Renewables (323) • Networks mainly impacted by warm / FX Networks temperatures and higher D&A (590) +17 (58) • Covid-19 weighed significantly on Clients Client Solutions Thermal (221) +203 Others 4,578 Sol
Slide 14: Renewables
RENEWABLES +11% organic growth • Latin America: decrease mainly due to FX BRL (c. €-195m) and unfavorable hydro Renewables COI by GSF / energy allocation in Brazil, partly offset by positive GFOM ruling in Brazil (c. €165m) geography (€m) • France: decrease mainly due to lower DBSO, partly offset by
Slide 15: Networks
NETWORKS France lower due to temperature and higher D&A International networks up significantly, mainly driven by TAG Networks COI by • France: geography (€m) − largely driven by lower volumes due to temperature (c. €-100m) and Covid-19 2,344 (both recoverable under regulatory arrangements) 103 2,06
Slide 16: Client Solutions
CLIENT SOLUTIONS Recovery in H2 after a Covid-19 impacted H1 • Lower revenues of €-0.9bn COI (€m) FY19 FY20 Delta • Cost control actions achieved a gross Opex reduction of €0.3bn Client Solutions 1,082 459 -623 • Increasing cumulated backlog for projects Major global impact of Covid-19 (c. €-600m) C
Slide 17: Thermal
THERMAL +1% organic growth despite material positive one-offs in 2019 • Disposals of Glow (Thailand), US gas assets and German / Dutch coal COI (€m) FY19 FY20 Delta power plants (c. €-90m) Thermal 1,320 1,209 -112 • Negative FX impacts (c. €-40m), mainly BRL • Higher contribution from European merch
Slide 18: Supply, Nuclear and Others
SUPPLY NUCLEAR OTHERS Nuclear improvement mainly driven by better prices Supply and Others performance impacted by Covid-19 • Supply COI (€m) FY19 FY20 Delta − Strong negative impacts from Covid-19 (net c. €-290m) Supply 345 112 -233 − Negative impact from warm temperature (c. €-100m) Nuclear (314)
Slide 19: From EBITDA to NRIgs and NIgs
From EBITDA to NRIgs From NRIgs to NIgs (€bn) FY19 FY20 Delta (€bn) 2020 EBITDA 10.4 9.3 -1.1 NRIgs 1.7 D&A and others (4.5) (4.7) -0.2 Impairment2 & Others (4.7) COI 5.8 4.6 -1.2 Restructuring costs (0.3) Net interest expense1 (1.3) (1.4) -0.1 Capital gains 3 1.6 Recurring income tax (1.1) (0.8) +0
Slide 20: Strong liquidity and net debt
Strong liquidity of €23.0bn as at 31 December 2020, incl. €13.3bn of cash Financial Net Debt and cost of gross debt (€bn) Leverage ratios World leader in green bonds with 25.9 7.7 (4.2) 0.6 (0.5) 4.0x 4.0x €12bn (7.1) issued since 2014 Scope 2 Dividends Others 3 22.5 2.5x 2.4x 58% CFFO Gross Capex 1
Slide 21: Indications for FY 2021
Indications for FY 2021 Growth Capex1 split per BL Maintenance and (€bn) Nuclear funding Capex c. €4bn 5.5 - 6.0 Disposals driving simplification Renewables c. €2bn Networks • Strategic reviews Client Solutions • Geographical refocus Thermal & Supply • Coal exit 1 Net of DBSO and US tax equity proce
Slide 22: Business Line performance expectations vs. 2020
1 Business Line Performance expectations vs. 2020 Growth in the US and France, partly offset by lower benefit from the GFOM rulings in Brazil Renewables and weaker BRL New lower RAB remuneration rates in France offset by reversal of 2020 warm temperatures Networks and growth in Latin America Overall
Slide 23: 2021 EBITDA, COI and NRIgs ranges
1 EBITDA indicative range Leverage “Strong investment grade” rating Key assumptions €9.9-10.3bn Economic Net Debt / EBITDA ≤ 4.0x Covid-19: Projections based on over the long term absence of additional stringent lockdowns and gradual easing of COI indicative range Dividend restrictions over 2021 €5.
Slide 24: 2021 Priorities
2021 Priorities Catherine MACGREGOR CEO FY 2020 Results February 2021 24
Slide 25: Build a robust foundation for long-term growth
• Simplify the Group at pace • Accelerate investments in Renewables, Networks and Asset-based Build a robust Client solutions foundation for • Strengthen the Group’s commitment to the energy transition long-term growth NEXT UPDATE Q1 results and medium-term outlook 18 May 2021 FY 2020 Results Februa
Slide 26: Simplified, focused on four activities
Simplified, focused on four activities Four business activities An Thermal Multi-technical services Renewables Networks Client Solutions organisation & Supply organisational project with clear priorities and high performance orientation Paulo ALMIRANTE Edouard SAUVAGE Cécile PREVIEU Sébastien ARBOLA
Slide 27: Renewables: key long-term growth engine
RENEWABLES A key long-term growth engine for the Group • ENGIE has a 13 GW portfolio of young wind and solar assets Renewables capacity − Average age of ~ 5 years under construction − Highly contracted with ~15 years of average residual duration with COD expected in 2021 As at December 2020 • On tra
Slide 28: Networks
NETWORKS French networks RAB • Investing significantly in Networks to ensure safety, reliability and improve energy efficiency 53% GRDF • Significant platform of regulated Networks in France 31% GRTgaz − Regulatory remunerations set through to 2024 €28.3bn 13% Storengy 3% Elengy − Playing a leading
Slide 29: Client Solutions
CLIENT SOLUTIONS • Asset-based, decentralized energy solutions − Attractive growth potential driven by decarbonization targets and growth in energy efficiency solutions − District Heating and Cooling (DHC), onsite generation, onsite solar PV, green mobility, public lighting, smart cities • Leadershi
Slide 30: Summary
Summary Progress at pace A simple and in 2020, despite focused challenging business backdrop organisation Accelerating investment in Clear priorities Renewables, for sustainable, Networks and long-term value Asset-based creation Client Solutions FY 2020 Results February 2021 30
Slide 31: Additional Material
ADDITIONAL MATERIAL FY 2020 Results February 2021 31
Slide 32: Cash flow from operations
Negative impact from operations partially compensated by change in WCR improvement (€bn) 7.6 0.0 (0.2) Change in WCR Taxes & 7.1 (1.1) 0.7 excluding GEM interest paid Operating Change in WCR cash flow for GEM FY19 FY20 CFFO CFFO FY 2020 Results February 2021 32
Slide 33: COI by business line and geography
2020 Client (€m) Renewables Networks solutions Thermal Supply Nuclear Others1 TOTAL France 150 1,610 363 - 106 - - 2,229 Rest of Europe 87 71 131 370 100 (111) - 648 Latin America 750 384 (3) 359 53 - - 1,542 USA & Canada 62 2 24 43 (8) - 1 124 Middle East, Asia & Africa 65 3 41 441 (32) - - 518 Oth
Slide 34: COI bridge FY19 to FY20
(€bn) (0.0) 0.3 (0.4) 0.2 5.8 Volumes Lean FX & Prices 2021 net Scope (1.2) (0.2) Covid-19 Others 4.6 FY19 FY20 COI COI FY 2020 Results February 2021 34
Slide 35: Financial assets and provisions
Details of some financial assets Provisions As at 31 Dec 2020 As at 31 Dec 2020 €1.2bn Equity instruments at fair value through equity €0.5bn Equity instruments at fair value through income €26.1bn €1.9bn Debt instruments at fair value through equity €27.1bn €1.8bn Debt instruments at fair value thr
Slide 36: Income statement summary
(€m) FY 2019 FY 2020 EBITDA 10,366 9,276 of which recurring share in net income of equity method entities 592 690 Depreciation, amortization and others (4,547) (4,698) CURRENT OPERATING INCOME 5,819 4,578 Financial result (1,282) (1,422) of which recurring cost of net debt (674) (772) of which cost
Slide 37: Guidance assumptions
• Normalized temperature in France (gas distribution and supply) • Normalized hydro production in France • Full pass through of supply costs in French regulated gas tariffs • No major regulatory or macro-economic changes • No change in Group accounting policies • Market commodity prices as of 12/31/
Slide 38: Estimated Covid-19 impact by business line
Estimated (€bn) COI level Nature RENEWABLES (0.05) Lower volumes dispatched NETWORKS (0.07) Lower volumes, lower capitalized costs, specific Covid-19 related purchases CLIENT SOLUTIONS (0.60) Loss of revenues / contracts, specific Covid-19 related purchases THERMAL (0.04) Lower demand SUPPLY (0.29)
Slide 39: Capex and main growth projects
€7.7bn Capex, o/w €4.0bn growth Capex focused on strategic priorities Main growth projects (€bn) Breakdown by nature Growth Capex (€bn) by business line Client Solutions ~0.7 (€bn) USA – University of Iowa ~0.2 10.0 USA – SoCore on site solar ~0.1 France – DHC ~0.1 7.7 Networks ~1.5 7.2 €4.0bn 1 Bra
Slide 40: Lean 2021 performance plan
Slightly above plan COST REDUCTION REVENUE ENHANCEMENT Net COI improvement €bn, cumulated) PROCUREMENT INDUSTRIAL ASSETS 84% of the Pooling, insourcing, centralization PERFORMANCE IMPROVEMENT 3Y-target 0.80 and standardization Availability and efficiency 0.67 DIGITALIZATION IMPROVED SERVICES OFFERIN
Slide 41: Nuclear and Hydro hedges
Nuclear and Hydro Outright hedges Volumes & prices (% and €/MWh) 100% 100% 80% 47% 27% 46 47 46 42 36 As at 12/31/20 Belgium and France (+ Germany until April 2019) 2019 2020 2021 2022 2023 FY 2020 Results February 2021 41
Slide 42: Contracted positions and residual contract duration
• Significantly contracted positions up to and beyond 2030 • Limited merchant price risk Residual contract duration Onshore wind & solar Hedge ratio @conso%, as at 31 December 2020 Volumes @conso%, 2020 Solar Wind Residual Residual 85% contract contract 84% 81% 78% 77% duration 2020 duration 2020 74
Slide 43: Asset age by generation technology
By generation technology (years) 60 59 Hydro Wind Solar Natural Gas Coal Nuclear 50 40 45 40 30 27 28 20 20 8 16 10 15 13 4 6 5 4 3 2 3 4 9 2 - - - 7 - - - - - - 0 FRANCE REST OF EUROPE USA & CANADA LATIN AMERICA MIDDLE EAST, ASIA & AFRICA FY 2020 Results February 2021 43
Slide 44: Nuclear impairment by asset type
1. Following the announcements of the Belgium government in Q4 2020, it has been decided to stop Nuclear impairment all the preparation works that would allow a 20-year by asset type extension of half of the second-generation units beyond 2025 as it seems unlikely that such an extension can take pla
Slide 45: French networks regulated asset base
Period of RAB remuneration Regulated asset base regulation (real pre-tax) Type of tariff at 01/01/2020 (in €bn) Distribution 07/01/2020 - 4.10% Price cap yearly 14.9 30/06/2024 + incentives of 200bps over 20 years for Gazpar update Transmission 04/01/2020- 4.25% Cost + 8.8 31/03/2024 + incentives up
Slide 46: Forward-Looking statements
Forward-Looking statements This communication contains forward-looking information and statements. These statements include financial projections, synergies, cost-savings and estimates, statements regarding plans, objectives, savings, expectations and benefits from the transactions and expectations
Slide 47: More information on FY 2020 results
Ticker: ENGI +33 1 44 22 66 29 ir@engie.com https://www.engie.com/en/financial-results FOR MORE INFORMATION ABOUT FY 2020 RESULTS: https://www.engie.com/en/finance/results/2020 FY 2020 Results February 2021 47