Edp S.a. · EURONEXT:EDP

Edp — Energias de Portugal — 9M17 Earnings Presentation

26 slides from Edp's earnings presentation, Nov 3, 2017

  1. Slide 1: Results Presentation 9M17

    <5 Results Presentation 9M17 Lisbon, November 34, 2017

  2. Slide 2: 9M17 highlights: EBITDA, net profit and net debt

    EBITDA €3,269m, +13% YoY benefiting from gain on Naturgas disposal Recurring EBITDA(1) €2,711m, -4% YoY penalised by 52% decline YoY of hydro production in Iberia OPEX IV efficiency programme achieved savings of €103m in 9M17 (23% above target) Opex in Iberia: -1% YoY; OPEX/MW EDPR -2% YoY; OPEX in

  3. Slide 3: Strong decline in EBITDA in Iberia, partly offset by renewables and Brazil

    Weight on Recurring Recurring EBITDA EBITDA YoY change ▪ EBITDA growth driven by US, Mexico, Brazil and 1st farm down in UK offshore 37% EDPR +17% ▪ Production +10%, supported by +8% avg. capacity (mostly US, Mexico) and higher load factor Regulated ▪ Deconsolidation of gas distribution Spain from J

  4. Slide 4: EDP hydro production Iberia in 9M17 vs. historical average

    Hydro Production: Hydro Coefficient in Portugal Hydro reservoirs in Iberia: Oct-17 (Deviation vs. avg. hydro year) (%, historical average 1999-2016) Historical avg. Storage Portugal Spain +66% 52% 45% 49% 41% 42% 28% -43% Oct-16 Oct-17 Oct-16 Oct-17 -66% -70% 9M16 9M17 4Q16 Oct-17 1.4TWh 5.2TWh EDP

  5. Slide 5: Additional financial flexibility from lower EDPR tender acceptance

    Net investments(1) 2017E: geographical breakdown (€bn) 0.5(3) 0.6(2) -2.1 -0.5 0.3 -1.2 New hydro and Sale of gas ~0.6GW of Acquisition of wind with PPA; distribution and renewables with Sale of gas assets; 5.1% stake in Regulated 49% in some PPA/FiT EDPR networks wind farms Additional financial fle

  6. Slide 6: S&P upgrade: investment grade with stable outlook by 3 agencies

    Net Interest Cost Marginal Cost of Debt (€ million) (%) Weight on Consolidated net debt -13% -57% 584 1.3% 511 EUR EDP 5Y 0.5% Bond Yield 65% Dec-16 Oct-17 9M16 9M17 Avg. Cost EDP 5Y -17% of Debt (%) 4.5 -40bp 4.1 USD 3.7%(1) 3.1% Bond Yield 25% Dec-16 Oct-17 Last update LT credit rating Outlook S&P

  7. Slide 7: Clear regulatory framework for 2018-20

    Regulated Revenues: 2018E Return on RAB in H&M Voltage: Methodology for 2018-20(2) (€m) (%; bp) Each 2.5% chg. in avg. 10Y PT bond 1,076 RoR yield, implies 1% chg. in RoR ▪ Avg. RoR ~5.85% Cost of capital(1) (6% Low Voltage; 5.75% H&MV) 10% Accepted ▪ Fully based on IFRS depreciation(1) ▪ End of PT

  8. Slide 8: CMEC final adjustment and generation tax changes

    CMEC Final Adjustment Changes in generation Previous years (receivable over 2018-2027) taxes adjustments ERSE calculation: +€154m Government decided to exclude Government decided to revise Recent no detail on methodology paid social tariff and CESE(1) “Clawback tax” paid in 2015-17 Developments assu

  9. Slide 9: Targeting to double outperformance vs. OPEX IV target for 2018

    Annual cost savings: 2018E Additional Cost Savings Key Drivers: (€m) 180 ▪ On the wave of successful previous programmes Zero Base in EDP Brasil and generation in Portugal Doubling of outperformance Budgeting 25 ▪ Launch of new Zero Base Budget across divisions vs. Opex IV savings target O&M ▪ Optim

  10. Slide 10: Strong visibility in organic growth; asset rotation model

    2018 2019 2020 Strong visibility 5 transmission lines in Brazil Capex at EDPR R$3.1bn o.w. 95% in 2019-21 ~0.8GW EDPR already secured growth with PPAs/FiT: committed avg. 0.2GW/year Asset Rotations EDPR asset rotations: flexibility on timing (€0.6bn) Other levers Built-Operate-Transfer (majority sta

  11. Slide 11: Guidance: Recurring EBITDA €3.5-3.6bn

    Previous Guidance New Guidance Key highlights Recurring ▪ Generation & supply Iberia in 2H17 marked by: ~€3.6bn €3.5-3.6bn 1) Weaker than expected hydro volumes EBITDA 2) Increase of electricity pool prices (Nuclear France, coal) 3) Higher regulatory costs Recurring ≥€919m €850-900m Net Profit(1) ▪

  12. Slide 12: Results Analysis

    rede Results Analysis

  13. Slide 13: Electricity demand and supply in Iberia

    Electricity Demand and Supply in Iberia (1) (TWh) +0.7% 225 226 CCGT 20 +63% ▪ Electricity demand: +0.7% 33 Coal 30 +35% 40 ▪ Hydro production: -56% Hydro(1) 42 -56% 18 Wind 48 -9% 44 ▪ Wind production: -9% Nuclear 43 Other 43 ▪ Coal and CCGT production: +47% (2) Net imports 42 44 1 5 ▪ Net imports

  14. Slide 14: Strong increase of sourcing costs on weak hydro

    EDP Generation Iberia – Production (1) EBITDA Generation & Supply Iberia (TWh) (€ million) -9% -39% 27.9 4% 25.5 856 Nuclear, -5% 4% Cog. & Waste 23% 52% -59% 518 Hydro(1) 49% +34% Coal 33% CCGT +103% 23% 10% 9M16 9M17 9M16 9M17 Avg. production 17 +95% 33 cost (€/MWh) Strong increase of sourcing cos

  15. Slide 15: EBITDA - Regulated networks

    EBITDA - Regulated networks (€ million) Gas Spain and Portugal Electricity Portugal and Spain ▪ Gas Spain: sold on July 27th -4% 749 ▪ Gas Portugal: sold on October 4th 717 ▪ Electricity Portugal and Spain EBITDA~-1% YoY: -1% – Negative adjustments from previous years – OPEX -1% YoY 9M16 9M17 Decons

  16. Slide 16: EDPR installed capacity and production

    EDPR Installed Capacity Production (GW) (TWh) Brazil North America Europe Avg. installed vs. Long +8% 675MW Under -1% -1% capacity term avg. Construction +10% +10% +0.2 +0.1 10.3 19.8 9.4 +0.6 2% 18.1 2% 49% 45% 53% 49% Sep-16 Sep-17 9M16 9M17 Installed capacity +10%, due to US and Mexico; more 0.7G

  17. Slide 17: EDPR EBITDA growth driven by US, Mexico, Brazil and UK offshore

    EDPR EBITDA (€ million) Other Iberia North America ▪ EBITDA North America +24% YoY: capacity + 20%, +17% higher load factor, flat avg. price 991 ▪ EBITDA Iberia flat YoY: +4% in Spain (higher avg. 847 20% 16% +47% price); -5% in Portugal (lower wind resources) 36% ▪ EBITDA Other markets +47% YoY: 43

  18. Slide 18: EDP Brasil recurring EBITDA and hedging strategy

    EDP Brasil Recurring EBITDA Key operating indicators (BRL million) Distribution Pecém I Hydro Gen., Supply & Other +1% Excluding 9M16 9M17 3Q17 R$278m gain on 1.621 1.640 Pantanal Hydro 612 -2% 598 34 19 19 Reservoirs (%) 426 -21% 338 GSF (%) 87 86 62% +21% 705 PLD 583 71 298 436 (R$/MWh) 9M16 9M17

  19. Slide 19: Opex by business area and OPEX IV savings

    Weight on Opex Business area Indicator YoY Change Main drivers ▪ Avg. MW: +6%; Customer contracts: +5%; 56% Iberia Opex -1% ▪ Thermal production: +51%; ▪ Inflation Portugal +1.3%(1) Core Opex/MW ▪ Average installed capacity: +8% 25% EDPR -2% (ex-forex): ▪ Opex ex-forex: +6% Opex in BRL ▪ Opex in BRL

  20. Slide 20: Portugal electricity system regulatory receivables

    Portugal: Electricity System Regulatory Receivables (€bn) Share of total receivables in the system -0.1 -0.4 5.2 -0.7 5.1 4.9 4.7 3.9 Other 73% creditors EDP 2.2 1.3 27% 1.0 Dec-15 Dec-16 Sep-17 Dec-17(E) (1) Dec-18(E) (1) Total system debt to decrease €0.4bn in 2017, €0.7bn in 2018 EDP stake by Dec

  21. Slide 21: Change in net debt: Sep-17 vs. Dec-16

    Change in Net Debt: Sep-17 vs. Dec-16 (€ billion) 15.9 -1.0 +0.7 -1.0 1.0 +0.4 +0.1 15.1 Regulatory Receivables 1.3 Includes portfolio reshuffling: €0.6bn one-off taxes 15.0 Net impact of €1.9bn -€0.5bn ForEx 13.8 Net Debt Organic FCF (1) Dividends EDP Expansion Regulatory Other Net Debt Dec-16 Shar

  22. Slide 22: €5.5bn available liquidity covers refinancing needs beyond 2019

    Financial liquidity as of Oct-17(1) EDP consolidated debt maturity profile as of Sep-17 (€bn) (€bn) EDP S.A., EDP Finance B.V. and Other EDP Brasil Cash & Equivalents: €1.4bn Avg. Debt Maturity: 4.7Y 5.8 Available Credit Lines: €4.1bn Revolving Credit Facility maturing on Oct-22(1) €3.3bn 3.5 Other

  23. Slide 23: Financial results and associates: 9M17 vs. 9M16

    Financial Results & Associates: 9M17 vs. 9M16 (€ million of net cost) One-offs(1) -9% ▪ Net interest costs: -13% YoY 638 ▪ Lower revenues from regulatory receivables (73) 42 14 7 582 20 due to lower interest rates ▪ Lower capitalised interest following full 618 607 commissioning of hydro plants in P

  24. Slide 24: Recurring net profit -4%

    Net Profit (€ million) 9M16 9M17 ∆% ∆ Abs. (€ million) % Chg. YoY EBITDA 2.893 3.269 +13% +376 Net Depreciations and +86% 1.100 1.056 -4% -44 Provisions 1,147 EBIT 1.792 2.213 +23% +421 Financial Results & 514 (638) (582) +9% +56 Associated Companies 615 Income Taxes 300 175 -41% -124 Extraordinary

  25. Slide 25: IR Contacts and Next Events

    IR Contacts Miguel Viana, Head of IR Sónia Pimpão João Machado Maria João Matias Sérgio Tavares Noélia Rocha E-mail: ir@edp.pt Phone: +351 210012834 Visit EDP Website Next Events Site: www.edp.pt Nov 2nd: Release of 9M17 Results Link Results & Presentations: Nov 7th: Roadshow Brussels (Kepler) http:

  26. Slide 26: Disclaimer

    This document has been prepared by EDP - Energias de Portugal, S.A. (the "Company") solely for use at the presentation to be made on the 3rd of May, 2017 and its purpose is merely of informative nature and, as such, it may be amended and supplemented. By attending the meeting where this presentation

EDP - Energias de Portugal — 9M17 Earnings Presentation on 6ix