Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — H1 2020 Earnings Presentation
55 slides from Engie Energia Chile's earnings presentation, Jul 29, 2020
Slide 1: ENGIE Energía Chile S.A. Investor Presentation First half 2020
ENGIE Energía Chile S.A. Investor Presentation First half 2020 ENGIE Energía Chile – Investor Presentation 1H20 July 29, 2020
Slide 2: Snapshots
Snapshots ENGIE Energía Chile – Investor Presentation – 1H20 July 29, 2020
Slide 3: A global reference in low carbon energy and services
Snapshots A global reference in low carbon energy and services FOCUSED ON FOUR GLOBAL BUSINESS LINES, 20 COUNTRIES, 30 URBAN AREAS AND 500 GLOBAL CLIENTS CLIENT SOLUTIONS NETWORKS RENEWABLES THERMAL Unique integrated solutions to Upstream presence in the gas and Generation and marketing of Reduction
Slide 4: Two main grids interconnected since year-end 2017
Snapshots Two main grids interconnected since year-end 2017 Gross installed capacity Generation (25,580 MW) (39,205 GWh – 1H20) Solar Wind 12% Hydro 6% Solar 21% 8% Wind Hydro 9% 27% SEN 3,300 Km Thermal Thermal 52% 65% Clients Market share (% of sales – 1H20) (% of installed capacity June 2020) Eng
Slide 5: 4th largest generation company; 3rd largest transmission player
Snapshots 4th largest generation company; 3rd largest transmission player A RELEVANT PLAYER IN RECONVERTING OUR CONTRACTED THE ENERGY INDUSTRY ASSET PORTFOLIO BUSINESS • Prepared to provide energy • Focused on reconversion • Capacity contracted over the next solutions to our customers implementation
Slide 6: Prepared to meet our clients' energy needs
Snapshots Prepared to meet our clients’ energy needs Technology Ownership as of 30-Jun-20 CH Chapiquiña (11MW) Coal PV El Aguila I (2MW) Diesel/Fuel oil Natural gas PV Pampa Camarones (6MW) Collahuasi Solar PV Float Wind 24.55% Baterías - Arica (2MW) El Abra Chuquicamata PV Tamaya (114MWp) Hydro Pen
Slide 7: A decisive, gradual and responsible path
Snapshots A decisive, gradual and responsible path Early steps OUR PERFORMANCE • Development of TEN project to facilitate renewable power transmission • Decision not to build any new coal plants PPA renegotiation with mining companies RENEGOTIATED + NEW GREEN CORPORATE PPAs • New tariff scheme: pric
Slide 8: Recent events
Recent events ENGIE Energía Chile – Investor Presentation – 1Q20 April 29, 2020
Slide 9: Decarbonization announcements
Recent Events Decarbonization announcements Jun. 4, 2019: Agreement with Dec. 8, 2019, COP 25: Engie to close 2 government to phase-out coal-based more coal units => 773 MW of coal generation capacity closed by YE 2024 • Binding commitment by Engie, Enel & AES • Letter of Intent signed w/ IDB Group
Slide 10: Launching renewable projects
Recent Events Launching renewable projects October 7, 2019: Launching of first renewable projects of 1GW/US$1bn investment plan Los Loros Monte Redondo Calama Capricornio Tamaya Acquired in April 2019 Acquired in July 2020 30% global advance 75% state of advance Construction started 2Q20 US$ 35 mill
Slide 11: Successful liability management
Recent Events Successful liability management Jan 28, 2020: New 10 yr., 3.4%, US$500 million 144A/RegS bond to refinance US$400 million notes due Jan-2021 600.000 7% 500 500.000 Before: 5.34% 6% 400 350 400.000 5% 300.000 4% 200.000 After: 3.85% 100.000 3% 0.000 2% 2020 2021 2022 2023 2024 2025 2026
Slide 12: Price stabilization mechanism
Recent Events Price stabilization mechanism PEC = Adjusted upwards if Dec. 2020 Dec. 2025 PEC = Fixed price to PEC = Adjusted upwards if Jul. 2023 PEC = Fixed price to consumers in necessary to permit full • Law #21,185 (Nov-19): Electricity consumers in nominal CLP @ 1H19 levels CLP adjusted for in
Slide 13: Covid-19 pandemic
Recent Events Covid-19 pandemic Focus on safety, operational continuity and reconversion strategy Safety first Operational continuity Projects in progress Caring for others • +70% home office • +131 internal communications • Crisis committee • US$700k donation • Strict protocols • CLP179M 1+1 fund •
Slide 14: AMSA (Centinela) PPA
Recent Events AMSA (Centinela) PPA Renegotiation of existing agreement + new green PPA signed on March 31, 2020 Amendment of existing PPA New 11-year 186MW PPA between Inversiones Hornitos between EECL and Minera (CTH) and Centinela for its Centinela beginning 1-Jan-22 Esperanza (150MW) and El and m
Slide 15: New green corporate PPAs
Recent Events New green corporate PPAs 1H20: Ongoing commercial and development activity 400 GWh/y 15 years 114 GWh/y 5 years 2,347-hectare land in Tal-Tal Others awarded in auction launched by Ministry of National Assets to develop up to 320 MW of 204 GWh/y renewable energy projects. 5-year avg. EN
Slide 16: Eólica Monte Redondo SpA
Recent Events Eólica Monte Redondo SpA 84MW of renewable capacity acquired on July 1, 2020 • Acquired from ENGIE Latam for US$53 million+cash, on debt-free basis. Approved by independent board members (“Comité de Directores”) • 275 GWh/yr PPAs w/CGE (100 GWh maturing Dec-2021 + 175 GWh/yr PPA maturi
Slide 17: Other company events
Recent Events Other company events NEW GREEN CORPORATE PPAs EXPANDING INTO RENEWABLES • 137MW Renewables acquisitions • PPA renegotiations & new green Los Loros (US$35 million Apr-19) corporate PPAs Eólica Monte Redondo (US$53 million Jul-20) 5.8 TWh/y; >78% unregulated demand of which 2.0 TWh/y sig
Slide 18: Key messages
Key messages ENGIE Energía Chile – Investor presentation – 1Q20 April 29, 2020
Slide 19: Key messages
Key messages Key messages Regulated demand impacted by COVID-19 New context, with special attention to COVID-19 crisis and its effects Building our future together with our clients AMSA PPA renegotiation + new green corporate PPAs Paving the way for our energy transformation plan 3 renewable project
Slide 20: 2020: Working on our reconversion
Key messages 2020: Working on our reconversion To reduce CO2 emissions and our average supply cost OUR PERFORMANCE Renegotiated and New green corporate PPAs • Contracted portfolio has grown to more than 12 TWh/y • A more balanced regulated vs. unregulated portfolio 1H18 1H19 1H20 ENERGY SALES (TWh)
Slide 21: Regulated demand impacted by COVID-19
Key messages Regulated demand impacted by COVID-19 EBITDA decrease explained by one-off revenue in 2019 1H19 1H20 Variation Operating Revenues (US$ million) 766.3 657.3 -14% EBITDA (US$ million) 284.8 202.1 -29% EBITDA margin (%) 37.2% 30.7% -6.5 pp Net income (US$ million) 80.6 66.2 -18% Net income
Slide 22: Demand met w/generation and energy purchases
Key messages Demand met w/generation and energy purchases Coal plant decommissioning schedule US$/MWh Unit (MW) Date % 1H20 supply 140 U14-U15 268 Dec-21 1.4% CTM1-CTM2 334 Dec-24 4.0% 120 Average monomic price US$101/MWh 100 Diesel Average fuel & 80 electricity purchase cost: US$57/MWh 60 U15 Toll
Slide 23: Sound contract portfolio with average remaining life of 12 years
Key messages PPA life extension and decarbonization Sound contract portfolio with average remaining life of 12 years 700 ● Regulated contracts ● Unregulated contracts 600 Renegotiated contracts Average demand (MW) Distribution Companies Clients’ credit ratings (S&P/Moody’s/Fitch): 500 (South SEN) •
Slide 24: PPA life extension and decarbonization
Key messages PPA life extension and decarbonization 0.7 GW or ~75% of unregulated PPAs renegotiated since 2018. Minera Centinela Price discount, Price discount, CPI-indexed + new PPA w/extended life 186MW coal-indexed Antucoya 50MW Price discount, Price discount, & others PPA life extension coal-ind
Slide 25: Contracted demand: our vision through 2030
Key messages Contracted demand: our vision through 2030 Renegotiated PPAs (extended lives and decarbonized tariffs) and new green corporate PPAs GWh 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free
Slide 26: 1GW/1Bn asset rotation plan: first steps
Key messages 1GW/1Bn asset rotation plan: first steps ACQUISITIONS: Arica y Los Loros & Andacollo solar PV plants Parinacota Tamaya • 55 MWp acquired Apr-19 ~US$35 million 114 MWp Calama Eólica Monte Redondo 151.2 MW Antofagasta Capricornio • 48 MW wind + 34 MW hydro acquired Jul-20 ~US$53 million 9
Slide 27: 151 MW Calama wind farm
Key messages 151 MW Calama wind farm US$159 million CAPEX / COD: 3Q21 Advance: Global 30%, Wind farm construction 59% Concrete pouring completed at 29 out of 36 foundations Substation construction: 35% advance Connection process w/ CEN: Technical information 94% Main contractors: Siemens Gamesa & GE
Slide 28: 94.5 MWp Capricornio solar PV plant
Key messages 94.5 MWp Capricornio solar PV plant US$64 million CAPEX / COD: 2Q21 15.6k drill holes, 13k steel piles, 205 trackers, 11k Global state of advance: 75% solar modules assembled Main contractors: GES, Trina Pro, Sungrow Civil works at substation & CEN connection process begun ENGIE Energía
Slide 29: 114 MWp Tamaya solar PV plant
Key messages 114 MWp Tamaya solar PV plant US$68 million CAPEX / COD: 2Q21 Global state of advance: 5.9% Mobilization started Main contractors: Tozzi, Trina Pro, Sungrow Engineering for connection process with CEN started ENGIE Energía Chile – Investor Presentation – 1H20 29 July 29, 2020
Slide 30: National / zonal transmission projects in execution
Key messages National / zonal transmission projects in execution Arica y Parinacota Nueva Chuquicamata Antofagasta Capricornio SS expansion Nueva Chuquicamata (National) Algarrobal (National) Atacama Algarrobal • Substation + 2 x 220 kV transmission line • 220 kV sectioning substation • Referential
Slide 31: New national transmission projects awarded
Key messages New national transmission projects awarded Arica y Parinacota Antofagasta By Pass • Multi-circuit transmission line 2x110 kV, 1x220 kV. By Pass • Referential investment value: US$13.36 million Antofagasta • AVI: US$0.64 million La Negra • COD: 30 & 48 months from the Decree date • Await
Slide 32: Room to finance projects on balance sheet
Key messages Room to finance projects on balance sheet Completion of 2015-2019 investment program has released capacity to finance transformation MUSD 4.0 500 TEN 30 3.5 3.0 400 TEN 35 Net debt capacity: ~US$1.2bn @ 2.5x 2.5 Net Debt/EBITDA 300 IEM & Port 2.0 436 IEM & Port Renewables 200 314 1.5 27
Slide 33: Our guidance before COVID-19 pandemic
Key messages Our guidance before COVID-19 pandemic Under review in the current challenging environment Demand & prices + New PPAs US$ 244 mln US$ 160 to 180 mln - COVID-19 pandemic US$ 75 mln LDs (*) - Client migration & lower demand US$ 450 to - PPA renegotiation US$ 161 mln 470 mln US$ 460 mln Mar
Slide 34: COVID-19 impacts on demand
Key messages COVID-19 impacts on demand Actual 1H demand and sensitivities GWh 1H Unregulated customers demand GWh 1H Regulated customers demand 600 600 400 400 200 200 - - Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun 2019 2020 2019 2020 Potential impact of demand decrease on EECL’s EBITDA (in US
Slide 35: Financial update
Financial update ENGIE Energía Chile – Investor Presentation – 1Q20 April 29, 2020
Slide 36: EBITDA evolution
Financial update EBITDA evolution Decrease primarily explained by liquidated damages received in 2019 By main effect In US$ Million +33 +2 +1 (84) OPEX & Spot +65 SG&A Transmission Physical Gas sales (75) 285 free Average clients Lower realized energy electricity purchase prices (23) volumes L
Slide 37: Net income evolution
Financial update Net income evolution 2019: Impairments + income from LDs 2020: Make-whole on early bond redemption 144 By main effect +6 Recurring Results In US$ Million minority 64 interest (54) 81 +6 (10) minority interest EBITDA (10) Decrease Impairment (LDs in 2019) Other 76 (10) U14+U15 Deprec
Slide 38: Net debt evolution
Financial update Net debt evolution Net debt increased due to CAPEX, taxes and premium paid on 144-A bond prepayment Main cash flows In US$ Million +58 (8) (101) Cash +22 payment +20 +14 Income from TEN 772 +84 Leases Taxes Accrued (IFRS 16) + Green Operating Make-whole Interest/ Taxes cash flow ear
Slide 39: Robust financial structure
Financial update Robust financial structure NET DEBT/EBITDA @ 1.7 X Net debt/EBITDA well below 2.5x 4.000 3.500 3.000 2.8 2.2 Rating upgraded to BBB+ by Fitch 2.500 2.000 1.7 1.7 1.500 1.3 • International: 1.000 • Fitch (June 2020): BBB+ Stable Outlook 0.500 0.000 • S&P (January 2020): BBB Stable Ou
Slide 40: Shareholder return
Financial update Shareholder return DIVIDENDS PAID MARKET CAP & DIVIDEND YIELD In US$ Millions In US$ Millions 120 100% 112 100% 7.0% 90% 100 81% 22 80% 2,000 5.4% 5.8% 6.0% 78 70% 5.0% 80 7 60% 1,500 47% 56 3.4% 4.0% 56 60 50% 47 2,265 1,000 3.0% 17 34 90 40% 1,922 1,819 1,866 2.5% 12 30% 30% 30% 3
Slide 41: Addenda
Addenda ENGIE Energía Chile – Investor Presentation – 1Q20 April 29, 2020
Slide 42: Long-term contracts
Addenda Long-term contracts The basis for stable sales and prices ENERGY SALES AND PRICES Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Unregulated Regulat
Slide 43: Demand supplied with own generation and energy purchases hedged by our installed capacity
Addenda Demand supplied with own generation and energy purchases hedged by our installed capacity Renewables Diesel 3% 7% • Energy purchases decreased due to IEM, but remain high due to (i) Coal efficient capacity additions in the grid since 2016 and (ii) start-up of Installed 61% PPA with distribut
Slide 44: Generation and spot price history – North SEN
Addenda Generation and spot price history – North SEN • Limited exposure to hydrologic risk until interconnection became fully operative • Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand (bilateral negotiation of prices and supply terms) • Maximum demand:
Slide 45: Regulatory and grid coordination challenges
Addenda Regulatory and grid coordination challenges Generation North SEN – June 1 to 10, 2020 MW 4,000 200 US$/MWh 180 3,500 160 3,000 140 2,500 120 2,000 100 80 1,500 60 1,000 40 500 20 0 0 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5
Slide 46: Sistema Eléctrico Nacional - SEN
Addenda Sistema Eléctrico Nacional - SEN SEN – June 2020 25,580 MW SING SEN 8,555 MW “Sistema Eléctrico 7,370 MW Nacional” 1,100 4,599 SIC 3,450 3,609 MW 3,310 MW 275 45 267 2,204 MW 1,370 58 127 57 1,611 10 195 2,033 610 3,009 2,586 (*) 1,304 532 MW 1,332 660 532 350 Enel Generación AES Gener Colbú
Slide 47: IEM and Puerto Andino
Addenda IEM and Puerto Andino Puerto Andino • Mechanized port. 6 million TPY transfer capacity, 3,000 TPH unloading speed => lower demurrage costs • Conventional & tubular conveyor belts => better environmental standards • Diversification opportunities • US$122 million investment at CTA subsidiary I
Slide 48: PPA portfolio indexation
Addenda PPA portfolio indexation Shifting away from coal Overall indexation applicable to Overall indexation applicable to electricity and capacity sales electricity and capacity sales (as of June 2020) (2021, proforma PPA U.S. CPI renegotiation) U.S. PPI U.S. CPI Gas 11% Node U.S. PPI Price Node Pr
Slide 49: EECL, a relevant player in transmission
Addenda EECL, a relevant player in transmission EECL operates 23 substations with total 2,293 kms. capacity of 821 MVA 821 MVA 5 US$ 16.7 million regulated revenue p.a. Transmission substations EECL operates 2,293 kms. of transmission lines Generation 821 substations MVA 18 Kms of transmission lines
Slide 50: Transmisora Eléctrica del Norte (TEN)
Addenda Transmisora Eléctrica del Norte (« TEN ») • Double circuit, 500 kV, alternate current TEN annual revenue: (HVAC), 1,500 MW, 600-km long (in USD millions transmission line at Jun 30, 2020 FX rates) • National transmission system AVI (VI annuity): 72.2 interconnecting SIC and SING grids since
Slide 51: Copper industry
Addenda Copper industry Copper production in Chile ('000 tons) 6,500 US¢/lb 500 8,000 GWh Copper price LME (US¢/lb) SEN monthly electricity demand 450 7,000 5,500 400 6,000 4,500 350 5,000 300 3,500 250 4,000 5,776 5,761 5,772 5,832 5,787 5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,434 5,553 5,504 2
Slide 52: Ownership structure
Addenda Ownership structure Pension funds Local institutions Foreign institutions Individuals 52.76% 22.69% 14.89% 9.24% 0.42% ENGIE ENERGÍA CHILE S.A. Minera Centinela Red Eléctrica Chile (“EECL”) S.A. 40% 50% Central Central Gasoducto Edelnor Transmisora Termoeléctrica Termoeléctrica Norandino S.A
Slide 53: EECL organizational structure
Addenda EECL organizational structure Shareholders’ assembly Committee Functional committees: Board of directors - Management of directors - Commercial origination - Development - Business knowledge CEO - Stakeholders & Regulation - Change management - Construction - Portfolio & risk management Inte
Slide 54: For more information about ENGIE Energía Chile
Addenda For more information about ENGIE Energía Chile Ticker: ECL +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl MORE INFORMATION ON 1H 2020 RESULTS IN OUR WEB PAGE 1H 2020 Presentation Addenda Press Recorded Financial Analyst Release conference report pack audiocast ENGIE Ener
Slide 55: Forward-Looking statements
Forward-Looking statements This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Chile S.A. (“EECL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-