Edp S.a. · EURONEXT:EDP
Edp — H1 2010 Earnings Presentation
34 slides from Edp's earnings presentation, Jul 30, 2010
Slide 1: 1H10 Results Presentation
1H10 Results Presentation July 30th, 2010
Slide 2: 1H10: Highlights of the period
1H10: Highlights of the period EBITDA: €1,831m, +14% YoY EBITDA from Brazil: +45% YoY (+17% in local currency; BRL/EUR +23% YoY) Electricity distributed +18% YoY; Brazil represented 18% of EBITDA in 1H10 Resilient performance of liberalized activities in Iberia Higher volumes sold directly to client
Slide 3: 1H10: Highlights of the period
1H10: Highlights of the period Net Profit: €565m, +18% YoY Net interest costs down 18% YoY Average cost of debt down from 4.2% in 1H09 to 3.5% in 1H10 Maintenance of a high level of financial liquidity: €4.2bn by Jul-10 Covers our expected funding needs beyond 2011 Capex: €1,312m in 1H10: 77% in exp
Slide 4: 1H10 Financial Headlines
1H10 Financial Headlines (€ million) 1H09 1H10 ∆% EBITDA 1,611 1,831 +14% NetProfit 479 565 +18% Capex 1,653 1,312 -21% Net Debt 14.0 * 16.1 +15% Net /EBITDA (x)** 4.2 x * 4.4 x - (1) Adjusted Net /EBITDA 3.9 x * 4.2 x - Net profit: +18% YoY Profitable growth maintaining a low risk profile (1) Exclu
Slide 5: 1H10 Operating Headlines
1H10 Operating Headlines Installed Capacity 1H10 Generation Breakdown by Technology (GW) (%) (1) Wind Hydro CCGT Other +10% Other (1) CCGT 20.8 15% 14% 18.9 24% 26% 16% 23% 13% 36% 33% 48% 60% wind & hydro 27% 71% 25% Hydro & Wind 1H09 1H10 Installed capacity up 10% YoY; Wind & Hydro represent 60% o
Slide 6: 1H10 EBITDA Breakdown
1H10 EBITDA Breakdown 85% of 1H10 EBITDA came from regulated and long-term contracted activities % Chg. YoY +14% €1,831m €1,611m 15% Liberalized -5% Activities Iberia 18% 18% Brazil +45% 14% +27% 19% Wind Power 17% 85% Regulated 25% +13% 25% Networks Iberia LT Contracted 26% +1% 23% Generation Iberi
Slide 7: EDP Consolidated operating costs
EDP Consolidated operating costs: OPEX/Gross Profit: 1H10 vs. 1H09 Efficiency Program 2008-12 annual savings (1) (%) (€ million) Chg. YoY Human Resources -1p.p. Supplies and services 160 28% 27% 120 51 73 30 69 43 1H09 1H10 Measures taken Target 2010 Target 2012 1H10 Improvement of opex/gross profit
Slide 8: Business Areas
‘ SO business reas
Slide 9: Electricity & Gas Demand in EDP's Key Markets
Electricity & Gas Demand in EDP’s Key Markets Brasil Portugal Spain Electricity Electricity Gas (Total Market) Electricity Gas (Total Market) 9.9% 11.1% 7.2% 5.4% 4.3% 3.0% 1.5% -0.9% -2.4% 1H10 vs. 1H09 1H10 vs. 1H08 -13.8% Brazil: Sound growth of Brazilian economy, low impact from international cr
Slide 10: Market Environment in 1H10
Market Environment in 1H10 Residual Thermal Demand in Iberia Free market growth in Iberia Forward Energy Markets for 2011 (TWh) (% of total consumption) (€/MWh) Total demand Others (1) 2008 1H09 2009 1H10 Gas cost NBP (UK) OMIP power price (Spain) Hydro Wind Gas cost (Iberian proxy, oil linked) 73%
Slide 11: Long Term Contracted Generation Iberia (23% of EBITDA)
Long Term Contracted Generation Iberia (23% of EBITDA): Growth prompted by higher mini- mini-hydros output LT Contracted generation: Installed capacity EBITDA Long Term Contracted Generation (MW) (€ million) PPA/CMEC Special regime (1) PPA/CMEC Special regime (1) -1% 0% +6% 6,987 6,931 420 422 470 4
Slide 12: Liberalised Energy Activities Iberia (15% EBITDA)
Liberalised Energy Activities Iberia (15% EBITDA) Resilient performance in an adverse market environment Electricity: Sources and Uses in 1H10 EBITDA Liberalised Activities (GWh) (€ million) +13% Wholesale -5% 33% Markets Pool 66% 295 Purchases 280 220 Sales to 67% Clients Own 34% Generation Sources
Slide 13: Liberalised Electricity & Gas Supply in Portugal & Spain
Liberalised Electricity & Gas Supply in Portugal & Spain Electricity Liberalized Supply – Portugal & Spain Gas Supply – Portugal & Spain Volume Sold (TWh) # Clients (‘000) Volume Sold (TWh) # Clients (‘000) Portugal Spain Portugal Spain Last Resource Supply in Spain +31% +184% +55% +87% 822 17.2 15.
Slide 14: Liberalised Energy Activities Iberia: forward contracting
Liberalised Energy Activities Iberia: EDP: Electricity forward contracting - 2010 EDP: Electricity forward contracting – 2011 (%) (%) Pool Purchases Hydro 27TWh Not 8% contracted Contracted Nuclear 7% with Coal 22% clients 100% >50% CCGT 63% Contracted Expected output Sales Expected output Sales • C
Slide 15: Regulated Energy Networks Iberia (25% of EBITDA)
Regulated Energy Networks Iberia (25% of EBITDA): EBITDA (€ million) Gas Iberia Electricity Spain Electricity Portugal +13% 464 409 +40% +30% +3% 1H09 1H10 • Electricity Portugal: 1% YoY rise in regulated revenues, 1%YoY decline in operating costs. • Electricity Spain: Lower costs YoY; Positive acco
Slide 16: Regulated Energy Networks Iberia: Demand recovery, efficiency improvements
Regulated Energy Networks Iberia: Demand recovery from industrial sector, efficiency improvements Energy Distributed Efficiency Ratios (annualised) (TWh) (€) Electricity Distributed Gas Distributed Opex(1)/Km Network Opex(1)/Client Connected Spain Portugal +5% 2.0x -5% 28.7 -2% 27.3 28.5 2.8 2.7 90.
Slide 17: EDP Renováveis (19% of EBITDA): EBITDA up 27% YoY
EDP Renováveis (19% of EBITDA): EBITDA up 27% YoY Installed Capacity Output Average Selling Prices (EBITDA MW) (GWh) Europe (€/MWh) USA ($/MWh) +22% +32% 5,665 6,940 -8% 4,632 5,242 91.4 84.3 +3% 47.5 49.0 1H09 1H10 1H09 1H10 1H09 1H10 1H09 1H10 22% increase of installed capacity, 32% growth of tota
Slide 18: Wind power prices
Wind power prices Production Breakdown Avg. Selling Price per MWh 6,940 GWh 1H10 1H09 % Portugal/France: Tariffs CPI updated Tariffs, PPAs Poland: first park in 2010: (€108/MWh: 16% €97 €96 +1% & Merchant market + PPA on green certificates) 68% hedged or protected by floor Market + Premium €77 €89 -
Slide 19: Brazil: Evolution of energy demand and BRL/EUR
Brazil: Evolution of energy demand and BRL/EUR Electricity Distributed (TWh) BRL/EUR exchange rate(1) Bandeirante & Escelsa Concession Areas Third-party access Average in the 1H Final Clients +18% 3.20 11.9 3.00 2.92 10.1 2.80 +37% 2.60 2.38 +9% 2.40 2.20 2.00 1H09 1H10 Jan-09 Abr-09 Jul-09 Out-09 J
Slide 20: Brazil (18% of EBITDA)
Brazil (18% of EBITDA) Evolution of EBITDA of EDP Brasil Evolution of EBITDA of EDP Brasil (BRL millions) (€ million) Generation & Other Distribution +17% +45% 813 341 693 236 +0% +32% 1H09 1H10 1H09 1H10 EBITDA Distribution +32% YoY. Excluding tariff deviations: +17% YoY on strong volume growth EBI
Slide 21: Consolidated Financials
Consolidated Financials 20
Slide 22: EDP reinforces control over Naturgas
EDP reinforces control over Naturgas EDP to acquire 29.43% of Naturgas > 90% of the transaction’s implied from EVE for a €617m equity value EV related to gas regulated in three similar tranches to be paid until 1H13, allowing assets with a low risk profile and EDP to control 95% of Naturgas until 1H
Slide 23: Naturgas evolution 2003-2009
Naturgas evolution 2003- 2003-2009 A successfull low risk / high growth operation Naturgas: Consolidated EBITDA Net Profit attributable to Naturgas Shareholders (€ million) (€ million) 217 190 185 131 154 121 101 113 106 114 57 Assumption 55 45 of 2003 49 acquisition 14 (1) 2003 2004 2005 2006 2007
Slide 24: Acquisition Multiple
Acquisition Multiple EV/EBITDA multiple comparison Equity Value €2,097m (x) Cash and equivalents €66m 9.4 9.4 Enterprise Value €2,033m EBITDA 2009 Pro-forma (1) €217m Transaction multiple 29.4% Stake in Gas assets Cantabria Naturgas Murcia & other EV/EBITDA 9.4 x Current transaction multiple in line
Slide 25: Consolidated Capex 1H10: 77% in expansion
Consolidated Capex 1H10: 77% in expansion; 91% of expansion capex was wind and hydro power Consolidated Capex (€ million) 1,312 Brazil Wind Power CCGT Iberia 5% 63% USA, 11% Spain, 23% Rest of Europe 2% Hydro Portugal 6% Projects ongoing: 82%; projects concluded: 18% Expansion Hydro in Portugal unde
Slide 26: Net Regulatory Receivables by Jun-10
Net Regulatory Receivables by Jun- Jun-10 Regulatory Receivables (€ million) Regulatory Receivables from CMECs: €495m (-€90m vs. Dec-09) 859 • €92m created in 1H10 (low coal production and low electricity prices) • ~€275m are being recovered in 2010; remaining to be recovered in 2011 Portugal 495 CM
Slide 27: Change in Net debt: Forex impact reflects hedging policy
Change in Net debt: Forex impact reflects hedging policy; Funding of operations in local currency Change in Net Debt: Jun-10 vs. Dec-09 (€ million) 783 16,108 709 15,325 562 14,007 47 Net Debt Business & Other 2009 annual Extra Tax + Net Debt before Forex & Fair Value Net Debt Dec-09 (1) Dividend De
Slide 28: Net Debt Breakdown
Net Debt Breakdown Debt by Interest Rate Term Debt by Currency Debt by Source of Funds Fixed USD Banks 22% 46% 34% BRL 7% 54% 71% 66% Capital Floating EUR Market Dec-09 Jun-10 Rating Last Rating Action Net Debt/EBITDA 4.2x 4.4x Standard & Poors A-/Negative/A2 04/08/2009 Moody’s A3/Stable/P2 13/07/20
Slide 29: EDP consolidated debt maturity profile
EDP consolidated debt maturity profile EDP consolidated debt maturity profile (June 30, 2010) (€ million) Commercial paper Other companies Average Debt Maturity EDP SA + BV Brazil: € 79 M Jun-10: 5.2 years Project Finance: € 38 M €0.7bn Bond: Mar-11 4.000 €0.5bn Bond: Jun-11 20% 3.500 3.000 14% 14%
Slide 30: EDP main sources and uses of funds in 2010-2011
EDP main sources and uses of funds in 2010- 2010-2011 Sources of funds Use of funds • Refinancing needs in the bond market 2010-2011: • Cash & Equivalents (Jun-10): €1.5bn Bond issue maturing in Mar-11: €0.7bn • Available Credit Lines (Jun-10): €2.3bn Private Placement maturing • Loans Contracted af
Slide 31: Net Profit up 18% YoY
Net Profit up 18% YoY (€ million) 1H09 1H10 ∆ % ∆ Abs. EBITDA 1,611 1,831 +14% +220 10% increase of installed capacity Net Depreciations and 632 744 +18% +112 Acquisition of gas networks + IFRIC18 in Spain Provisions EBIT 979 1,086 +11% +108 Lower cost of debt: 3.5% in 1H10 vs. 4.2% in 1H09 Net Inte
Slide 32: Prospects for 2010YE
Prospects for 2010YE Regulated & LT contracted activities: Stable operating performance in line with low risk profile. EBITDA Liberalized activities: No change in guidance (EBITDA 2010E €100m-€150m lower vs. 2009). 2010E EDP expects to deliver current consensus (1) (€3,522m) Timing for securitizatio
Slide 33: A resilient business model in a challenging environment
A resilient business model in a challenging environment • Reported EBITDA +14% (key growth drivers: Brazil and Wind Power) Improvement of • Net interest costs: -18% (cost of debt down from 4.2% to 3.5%) returns • Net Profit: +18% • Total Installed capacity: +10% YoY in 1H10 (wind capacity +22%) Cont
Slide 34: IR Contacts
IR Contacts Miguel Viana, Head of IR Sónia Pimpão Elisabete Ferreira Ricardo Farinha Rui Freitas Noélia Rocha E-mail: ir@edp.pt Phone: +351 210012834 Visit EDP Website Next Events Site: www.edp.pt Madrid Meetings with Investors: September 8th & 9th Link Results & Presentations: BBVA Conference Londo