Endesa S.a. · BME:ELE
Endesa — Q1 2007 Earnings Presentation
55 slides from Endesa's earnings presentation, May 4, 2007
Slide 1: 1Q07 Results: Strong growth across the businesses
1Q07 Results Strong growth across the businesses May 4, 2007
Slide 2: 1Q 2007 Results
1Q 2007 Results ?? Results in line with 2007 targets ?? Strong like-for-like growth in a demanding scenario ?? Dividend in line with the announced target
Slide 3: Positive results in 1Q07
2 +15% +13% +11% Change 31/12/06 +3% -3% +2% -4% +3% 2,000 1,443 -236 1.24x 5,069 2,820 633 -40% 1Q 2006 1,947 1,491 -232 1.24x 5,274 2,734 1,052 1Q 2007 31/03/07 Positive results in 1Q07 RESULTS SUMMARY Revenues Gross margin EBITDA EBIT Net financial expenses Leverage €M Net income Like-for-like ch
Slide 4: Sound results thanks to diversified portfolio
3 Sound results thanks to diversified portfolio RESULTS SUMMARY EBITDA: €2,000M Spain and Portugal Latam Rest of Europe 51% 16% 33% EBIT: €1,443M Net income: €633M Spain and Portugal 69% Rest of Europe 16% Latam 37% Rest of Europe 16% Latam Spain and Portugal 47% 15%
Slide 5: Efficiency Improvement Plan: ahead of schedule
4 Efficency Improvement Plan: ahead of schedule RESULTS SUMMARY EBITDA improvement due to Efficiency Plan €M 1Q07 incr. growth: • Europe: €17M • Latin America: €2M • Spain and Portugal: €36M 63% of 2009 target already achieved 181 171 55 204 695 139 385 2005 2006 2007 2008-2009 Total 2009
Slide 6: Results in line with targets
5 2005 2006 2007 target Results in line with targets RESULTS SUMMARY +8% 6,020 7,139 €M EBITDA +15% 1,735 1,486 1Q 7,440 2,000 (1) (1) Stripping out recognition of revenues for the non-mainland generation extra costs in 2001-2005: €212M in 1Q06, and €227M for FY06. 212 227
Slide 7: Dividend in line with the announced target
6 ?? Dividend target 2006 Dividend in line with the announced target RESULTS SUMMARY ?? Payment of 2006 dividend: €1.64/share - Interim dividend of €0.50/share paid in January - Final dividend of €1.14/share Ordinary activities 2005 Ordinary activities 2006 Divestments 2006 €/share 1.1334 +12% 0.37
Slide 8: 1Q07 Results Spain and Portugal
1Q07 Results Spain and Portugal 1Q07 Results
Slide 9: Spain and Portugal: Strong earnings growth
8 SPAIN AND PORTUGAL Strong earnings growth Revenues Gross margin EBITDA EBIT Net financial expenses €M 1Q 2007 Change -1% -12% -9% -7% -1% 1,027 684 -74 2,405 1,515 Net income -23% 437 1,037 773 -81 2,578 1,527 568 1Q 2006 Like-for-like change(1) +24% +22% +23% ( 1 ) Stripping out the non-recurrent
Slide 10: Spain and Portugal: Strong EBITDA growth
9 SPAIN AND PORTUGAL Strong EBITDA growth Generation + Supply Distribution 1Q07 1,037 1,027 +24% EBITDA 235 661 590 1Q06 €M 366 Highlights ?? Leadership and margin enhancement in deregulated business ?? Lower CO2 emissions and cost ?? Contribution to margins from gas business ?? Distribution: impact
Slide 11: Selective and profitable supply policy
10 16% 51% 49% 84% Rest of the sector Endesa Selective and profitable supply policy SPAIN AND PORTUGAL ?? Sales in the deregulated market as a hedge against price changes in the wholesale market Electricity sales (GWh) Equivalent energy price in the deregulated market (€/MWh) +21% Deregulated market
Slide 12: Leadership and revenue enhancement in deregulated business
11 SPAIN AND PORTUGAL Leadership and revenue enhancement in deregulated business Average revenue from mainland generation(1) and pool price Generation revenue from sales to: (1) Includes -€121M in 1Q06 and -€8M in 1Q07 following application of Article 2 of RD3/2006 €/MWh Pool price: -41,6% Avg. reve
Slide 13: Competitive mainland fuel costs thanks to efficient generation portfolio
12 SPAIN AND PORTUGAL Competitive mainland fuel costs thanks to efficient use of generation portfolio Endesa (1) Estimates (2) Conventional thermal facilities excluding fuel-oil Mainland fuel cost in Ordinary Regime Rest of the Sector (1) Load factor of thermal plants (2) vs. rest of the sector Rest
Slide 14: Lower emissions and CO2 costs
13 (1) Also, the updated value of CO2 rights in the 2006 deficit included in the balance sheet until April due to falling prices had a positive impact on EBITDA of Euro 35 million. (2) Due to adjustment of rights consumed in 1Q07 to market value, under IFRS, recognised in depreciation and amortisati
Slide 15: Contribution to margins from natural gas business
14 SPAIN AND PORTUGAL Contribution to margins from natural gas business Natural gas sales (GWh) (1) Gross margin (M€) 1Q 07 1Q 06 +30% (1) Includes regulated and deregulated market. It does not include gas generation consumption. Total gas sales in 1Q (including interest companies): 9,013 GWh +26.2%
Slide 16: Distribution: strong growth in EBITDA and quality of supply
15 SPAIN AND PORTUGAL Distribution: strong growth in EBITDA and quality of supply €M ?? Distribution EBITDA improved largely due to better remuneration, fewer losses and optimisation of fixed costs ?? Quality continues to improve: Interruption time has declined 37% in the last 12 months Increase in
Slide 17: Spain and Portugal: Results in line with 2007 targets
16 SPAIN AND PORTUGAL Results in line with 2007 targets EBITDA 3,266 2005 2006 (1) 3,835 824 1,027 1Q €M 2007 target 4,010 825 +11% +24% (1) Stripping out revenues recognized for non-mainland generation extra cost in 2001-2005: €212M in 1Q06, and €227M for FY06. 212 227
Slide 18: 1Q07 Results Europe
17 1Q07 Results Europe 1Q07 Results
Slide 19: Europe: Solid results in an unfavorable market environment
18 1Q 2007 Change -4% -13% +64% -12% -2% 310 224 -18 1,029 398 -15% 100 1Q 2006 322 257 -11 1,165 407 118 +5% -3% -4% Like-for-like change(1) EUROPE Solid results in a unfavorable market environment Revenues Gross margin EBITDA EBIT Net financial expenses €M Net income (1) Stripping out the Delibra
Slide 20: Europe: Like-for-like EBITDA growth in a demanding scenario
19 EUROPE Like-for-like EBITDA growth in a demanding scenario 322 310 +5% (1) EBITDA 234 247 56 1Q 06 1Q 07 Endesa France Endesa Italia €M Trading and other Highlights 60 6 3 Delibera 26 ?? Fall in demand due to high temperatures ?? Decrease in activity ?? Margins increased despite falling prices ??
Slide 21: Endesa Italia: Wider margins offset lower activity
20 Endesa Italia: Wider margins offset lower activity EUROPE ?? Decrease in activity : 2% fall in demand (warm weather), low rainfall and more imports ?? Increase in unit margin: ?? Hedge by bilateral contracts and contracts with Acquirente Unico ?? Decline in CO2 and Brent prices ?? Greater self-su
Slide 22: Endesa France: EBITDA growth in a low energy prices scenario
21 EUROPE Endesa France: EBITDA growth in a low energy prices scenario ?? Decrease in activity: Strong decline in demand (approx. -8%) and prices ?? Increase in unit margin: Output hedged with forward and EdF contracts ?? Increasing contribution from other sales than EdF contract ?? Lower fixed cost
Slide 23: Integrated management of asset portfolio
22 EUROPE Integrated management of asset portfolio Trading EBITDA: €15M Additional contributions: - Endesa Italia: €11M - Endesa France: €5M 16 GWh 776 GWh 18 GWh 25 GWh 5 GWh 20 GWh 7 GWh Physical assets Virtual assets Interconnection 100 GWh 15 GWh
Slide 24: Greece: strategic alliance with Mytilineos group
23 EUROPE Greece: strategic alliance with Mytilineos group One of the most attractive markets in Europe ?? Lack of capacity ?? High prices ?? Barriers to entry Endesa Hellas: Joint Venture with the Mytilineos Group Assets (MW) Date of Operation Contribution to Endesa: €485M + Success premium + Price
Slide 25: Europe: Results in line with 2007 targets
24 EUROPE EBITDA 887 2005 1,116 296 +12% 1Q +5% 234 €M 2007 target 310 1,150 26 Results in line with 2007 targets 86 (1) Stripping out the non-recurrent effect for regulatory items: €26M in 1Q06 and €86M in FY06 2006 (1)
Slide 26: 1Q07 Results Latin America
25 1Q07 Results Strong growth across all businesses Latin America 1Q07 Results
Slide 27: Latin America: Strong growth in operating results
26 LATIN AMERICA Strong growth in operating results 1Q 2007 Change €M Revenues Gross margin EBITDA EBIT Net financial expenses Net income before taxes and minorities Net income +13% +16% -51% +3% +7% +13% 663 535 96 -144 1,635 907 +16% 394 (1) Stripping out the non-recurrent tax effect of the Elesur
Slide 28: Latin America: Strong growth across all businesses
27 LATIN AMERICA Strong growth across all businesses 588 663 +13% EBITDA 277 335 349 309 1Q 07 1Q 06 €M 2 Distribution Transmission and other Generation -21 Highlights ?? Sharp growth in demand in all countries ?? Strong growth in output and sales ?? Significant improvement in generation and distrib
Slide 29: Strong growth in output and sales
28 LATIN AMERICA 15.711 +7.2% Output (GWh) 1Q 07 1Q 06 Argentina Brazil Chile Colombia Peru Sales (GWh) 15.268 +6.3% CAGR +3.5% CAGR +5.0% Strategic Plan 2004-2009 14.656 14.363 1Q 07 1Q 06 Strong growth in output and sales 1,651 2,118 2,976 2,745 4,369 5,192 1,080 982 4,580 4,674 1,209 1,292 2,545
Slide 30: EBITDA growth in Generation, largely due to Chile
29 EBITDA growth in Generation, largely due to Chile 45 42 63 48 133 169 34 38 34 38 EBITDA Generation (€M) 1Q 07 1Q 06 Argentina Brazil Chile Colombia Peru +8% 309 335 ?? Significant contribution from Chile: high rainfall with high wholesale prices ?? Generation unit margin exceeded 2009 target (US
Slide 31: Strong EBITDA growth in distribution
30 Strong EBITDA growth in distribution, especially in Argentina and Brazil 22 25 63 58 50 51 117 154 61 25 EBITDA Distribution (€M) Argentina Brazil Chile Colombia Peru +26% 277 349 +13% CAGR +2.6% Distribution margin (USD/MWh) Strategic Plan 2004-2009 ?? Implementation of new tariffs in Argentina
Slide 32: Cash returns in line with the Strategic Plan
31 Cash returns in line with the Strategic Plan LATIN AMERICA ?? Achieving 42% of the Strategic Plan 2005-09: USD1,600M ?? Also, approx. USD170M from Enersis dividend (May 2007) 1Q07 USD million Dividends and interest Capital reductions & others Divestments Total 7 111 118 334 318 679 27 2005-06 327
Slide 33: Stock market increase: Enersis and Endesa Chile at highest levels
32 Stock market increase LATIN AMERICA Enersis and Endesa Chile, trading at highest levels Stock market performance over last 5 years ?? Stock market performance shows the strong track record and favourable outlook for the Latin American subsidiaries +417% +110% Market cap (US$M) 13,140 12,538 Histo
Slide 34: Latin America: Results in line with 2007 targets
33 LATIN AMERICA Results in line with 2007 targets EBITDA 1,878 2005 2007 target 2,280 663 +4% 1Q +13% 432 €M 2,188 588 2006
Slide 35: 1Q07 Results Financial analysis
34 1Q07 Results Strong growth across all businesses Financial analysis 1Q07 Results
Slide 36: Positive cash flow
35 FINANCIAL ANALYSIS Positive cash flow €M Spain & Portugal Cash Flow Capex Rest of Europe Latin America Cash Flow Capex Cash Flow Capex Group Cash Flow Capex 1,312 418 227 667 567 152 36 379
Slide 37: Debt performance
36 Debt performance FINANCIAL ANALYSIS By Businesses By company Latam Europe Spain, Portugal and other Enersis E. Italia Spain, Portugal and other €M 19.840 +4% Net debt at 31/12/06 Net debt at 31/03/07 Cash Flow Investments + divestments Dividends Exchange rate WK and others Net debt at 31/03/07 Ne
Slide 38: Recognised regulatory items pending collection
37 Recognised regulatory items pending collection FINANCIAL ANALYSIS Mainland deficit 2006 Historical Non-mainland deficit Stranded Costs Italy Total €M Deficit 2007 2,813 1,449 10 116 1,238
Slide 39: Favourable debt structure in a context of rising interest rates
38 Debt by interest rate Debt by exchange rate Favourable debt structure in a context of rising interest rates FINANCIAL ANALYSIS Debt structure Euro 76% USD 11% Chilean Peso 4% Other 9% Fixed 54% Hedged 10% Floating 36% ?? Debt structure: ?? Fixed-rate or hedged debt: 64% ?? Debt in currency in whi
Slide 40: Conclusions
39 Conclusions ?? Solid earnings in a demanding scenario ?? Diversified business portfolio in highly attractive markets ?? Expected results in line with announced targets ?? Active management of the businesses: growth, efficiency and investments. ?? An experienced and committed team CONCLUSIONS
Slide 41: 1Q07 Back-up
40 1Q07 Back-up
Slide 42: Generation output in Spain and Portugal
41 Generation output in Spain and Portugal SPAIN AND PORTUGAL Endesa's mainland generation output (GWh) Nuclear Hydro CCGT Coal Fuel +3.7% 19,457 20,008 -2.8% Renew/CHP 6,450 6,640 1,793 1,910 8,717 8,247 2,030 1,739 98 403 615 823 1Q 06 1Q 07 Hydro and nuclear: +33.8% Renew/CHP -9.6% Conventional t
Slide 43: Competitive mainland fuel costs
42 SPAIN AND PORTUGAL Competitive mainland fuel costs Breakdown of impact on fuel costs (1) €32./MWh in 2007 and €32.9 in 2006 ex-ATR. (2) Net of coal premiums. Gross cost was €25.1/MWh in 2007 and €22.8/MWh in 2006. Includes imported coal consumed by domestic coal plants. Breakdown of mainland unit
Slide 44: Renewables and CHP affected by drop in pool prices
SPAIN AND PORTUGAL Renewables and CHP technologies have been strongly affected by the drop of pool prices (1) Accounting output (corresponding to the booked sales) EBIT (€M) -11% 37 -17% Sales (€M) 83 141 1Q 07 1Q 06 1Q 07 1Q 06 69 33 101.1 €/MWh 81.7 €/MWh -19% Output(1) 615 GWh 823 GWh +34% Sale p
Slide 45: Renewable and CHP: Operating magnitudes
44 Renewable and CHP: Operating magnitudes MW Total CHP Wind Minihydro Other Net Accounting Gross 1Q 06 1Q 07 Installed capacity GWh Total CHP Wind Minihydro Other Output Net Accounting Gross 1Q 06 1Q 07 Net Accounting Gross Net Accounting Gross 919 174 46 246 826 165 22 34 1,280 218 140 533 1,136 1
Slide 46: Favourable shift in the regulatory environment
45 Favourable shift in the regulatory environment SPAIN AND PORTUGAL Tariffs Regulated activities ?? Quarterly tariff update ?? Elimination of high voltage customers tariff by 2010 Developments expected ?? Distribution: remuneration set to evolve in coming years ?? Renewables/CHP: new RD pending Mov
Slide 47: Europe: Output and installed capacity
46 3,593 1,691 731 567 Output and installed capacity EUROPE Output (GWh) Fuel Gas Coal Hydro CCGT 7,619 -17% 1Q06 1Q07 Wind 6,354 Installed capacity (MW) France Poland 4,324 -48% 1Q06 1Q07 2,258 Italy E. France 7,062 6,590 1Q06 1Q07 +7% Fuel Gas Coal Hydro CCGT Wind 1,860 871 1,619 1,556 839 422 3,2
Slide 48: Progress in streamlining ownership structure
47 LATIN AMERICA Progress in streamlining ownership structure Etevensa - Edegel merger ?? Carried out June 2006 Creation of Brazilian holding ?? Carried out October 2005 ?? IFC acquired stake (2.7%) in Endesa Brasil Chilectra - Elesur merger ?? Carried out March 2006 Emgesa - Betania merger To close
Slide 49: Breakdown of EBITDA growth by business line: 2006-09
48 Breakdown of EBITDA growth by business line: 2006-09 EBITDA €M 7,139 7,440 7,960 8,500 Spain and Portugal Rest of Europe Latin America 3,835 4,010 4,320 4,630 2,188 2,280 2,360 2,470 1,150 1,280 1,400 1,116 2006 2007E 2008E 2009E FINANCIAL ANALYSIS
Slide 50: Net income target growth
49 Net income Net income target growth Ordinary income Capital gains from divestments €M 3,075 2,620 2,830 2,969 2,576 2,470 2,720 2,970 2006 2007E 2008E 2009E FINANCIAL ANALYSIS
Slide 51: Debt structure aligned with needs and business risk
50 47% 76% 54% 11% 10% 42% 19% 36% 5% Endesa excl. Enersis Enersis Group TOTAL FINANCIAL ANALYSIS Debt structure aligned with needs and business risk ?? Currency risk is mitigated by denominating debt in the same currency in which cash flow is generated ?? The high percentage of interest rate hedgin
Slide 52: Endesa debt maturities excluding Enersis
51 10 1,976 941 579 392 339 332 306 1,813 235 FINANCIAL ANALYSIS ENDESA debt maturities excluding Enersis Balance of debt maturities: €16,196M (1) ENDESA's liquidity exluding Enersis is €6,245M (€349M in cash and €5,896M in available credit lines), sufficent to cover debt maturities falling due duri
Slide 53: Enersis debt maturities
52 FINANCIAL ANALYSIS Enersis debt maturities 202 498 332 438 15 643 181 303 155 €M Balance of debt maturities: €5,544M (1) 2,725 2008 2009 2010 Bonds Bank debt Enersis' liquidity is €1,295M (€760 in cash and €535M in available syndicated loans), sufficent to cover debt falling due during the next 1
Slide 54: Legal Information
53 Legal Information This document was made available to shareholders of Endesa, S.A.. In relation with the announced joint offer by ENEL SpA and Acciona, S.A., Endesa shareholders are urged to read the report of Endesa’s board of directors when it is filed by the Company with the Comisión Nacional
Slide 55: 1Q07 Results: Strong growth across all businesses
54 1Q07 Results Strong growth across all businesses May 4, 2007 1Q 2007 Results