Slide 1: Endesa FY 2011 results
29 | 02 | 2012 endesa FY 2011 results
Slide 2: Market context in 2011
consolidated results FY 2011 Market context in 2011 Demand Latam countries where Endesa operates average growth weighted by TWh +3.9%(3) Latin Spain: demand 7.5% America: solid 0.2%(2) decrease 5.9% growth in all Services Residential 5.1% mainly due to countries Industry 3.4% mainly in Chile, reside
Slide 3: Solid result supported by a well diversified assets portfolio
consolidated results FY 2011 Solid result supported by a well diversified assets portfolio Spain&Portugal&Others Latin America Total Endesa 106,148 175,701 69,553 62,767 GWh FY 2011 75,947 138,714 Hydro 33,635 Hydro + 64,991 Hydro + Nuclear 31,356 Nuclear Production Electricity Sales(1) Production E
Slide 4: 2011 results affected by a number of extraordinary effects
consolidated results FY 2011 2011 Results affected by a number of extraordinary effects • A 2.1% drop in electricity demand and -7% drop in gas Spain& demand Portugal • Lower nuclear and hydro ~ 5.5 TWh Challenging environment • Argentina inflation brought higher costs while there was no Latam tarif
Slide 5: Positive operating results on a like-for-like basis
consolidated results FY 2011 Positive operating results on a like-for-like basis €M FY 2011 FY 2010 Change Like-for-like Revenues 32,686 31,177 +5% Gross margin 11.004 11,409 -4% EBITDA 7,265 7,474 -3% +2% Spain&Portugal&Others 4,024 4,079 -1% +5%(1) Endesa Latin America 3,241 3,395 -5% -1%(2) EBIT
Slide 6: Regulation update in Spain
consolidated results FY 2011 Regulation update in Spain • A very complex issue inherited from previous administrations • A top priority for the Government • Governmental analysis and debate is taking the adequate timing • First Government moves indicate increasing understanding and determination to
Slide 7: Regulation update in Spain – Renewable energy (1/2)
consolidated results FY 2011 Regulation update in Spain – Renewable energy (1/2) Tariff deficit vs. renewable subsidy evolution Cost vs. energy contribution €Bn €Bn RES accumulated premiums / year RES premiums 2011 1 & tariff deficit 5 Solar thermal Wind Ordinary regime PV 2 0 69% Wind CHP . Others
Slide 8: Regulation update in Spain – Renewable energy (2/2)
consolidated results FY 2011 Regulation update in Spain – Renewable energy (2/2) Suggested principles forward: • Confirm commitment to renewable and Spanish technological leadership • Take advantage of being ahead of schedule concerning EU targets • Adopt a sound economic rationale, fostering more c
Slide 9: Regulation update in Spain – Regulated activities
consolidated results FY 2011 Regulation update in Spain – Regulated activities There are significant asymmetries in the remuneration of regulated activities Distribution Islands Transmission Solar thermal Premiums per Investment 80% 99.9% >100% MWh independent recognition of real investment Rate of
Slide 10: Regulation update in Spain – Economics of utility sector (1/2)
consolidated results FY 2011 Regulation update in Spain – Economics of utility sector (1/2) • 2010 industry ROA after-tax (4.6%) below WACC level (5.8%)(1) • In addition reported earnings do not reflect real cash flows due to tariff deficit Tariff deficit creates distortions in utilities(2) economic
Slide 11: Regulation update in Spain – Economics of utility sector (2/2)
consolidated results FY 2011 Regulation update in Spain – Economics of utility sector (2/2) Suggested principles forward: • Distortions are to be avoided, ensuring that all agents receive fair, balanced and equal treatment • ROA level of liberalized activities can not be structurally below WACC and
Slide 12: Regulation update in Spain – financial efforts to solve the tariff deficit issue
consolidated results FY 2011 Regulation update in Spain – financial efforts to solve the tariff deficit issue Sizeable contributions by the utilities to mitigate tariff deficit To continue TOTAL (2006-12): €8,910 M in future... Bilat. contracts at fixed • Based on current €270 M price (2006) rules,
Slide 13: Regulation update in Spain – electricity prices (1/2)
consolidated results FY 2011 Regulation update in Spain – electricity prices (1/2) Electricity represents 2.5% for Electricity represents 1.3% of total operational cost average family budget (2011 1H. c€/ kWh) for average industrial consumers (2011 1H. c€/ kWh) Price without taxes VAT Other taxes Pr
Slide 14: Regulation update in Spain – electricity prices (2/2)
consolidated results FY 2011 Regulation update in Spain – electricity prices (2/2) Suggested principles forward: • Gradual increases in TPA(1) tariff are considered • Cost components not related to electricity to gradually be moved out of the tariff structure • TPA increases are accompanied by a spe
Slide 15: Regulation update in Spain – Green Cent
consolidated results FY 2011 Regulation update in Spain – Green Cent Renewable costs should not be supported % annual renewable premium as exclusively by electricity consumers % share of 2012 consumption Impact on final consumer €M 6,500 • 10.8 € / MWh saving on access tariff (-20%) Price increase:
Slide 16: Regulation update in Spain – Towards tariff equilibrium (1/2)
consolidated results FY 2011 Regulation update in Spain – Towards tariff equilibrium (1/2) Main suggested available options • Sharing the cost of supporting renewables (ie. green cent) • Financing tariff deficit with borrowings from ECB through the ICO • Going beyond RDL1/2012 (renewable moratorium)
Slide 17: Regulation update in Spain – Towards tariff equilibrium (2/2)
consolidated results FY 2011 Regulation update in Spain – Towards tariff equilibrium (2/2) Suggested principles forward: • Confirmation of commitment on renewables • Implementation of a sound economic rationale • Adequately share within society cost of support to renewables • Ensure that all agents
Slide 18: Spain: progress of tariff deficit securitization
consolidated results FY 2011 Spain: progress of tariff deficit securitization Balance of rights committed to FADE Total balance of rights committed to for securitization in 2010 (first tranche) FADE for securitization(1) €bn €bn 20.7 13.7(2) 1.5 0.6 3.0 3.3(3) 2.5 7.1(2) 10.2 0.3 0.7 1.3 1.7(3) 1.1
Slide 19: Regulation update in Latam
consolidated results FY 2011 Regulation update in Latam Brazil: 3rd cycle distribution tariff review (Coelce): • Tariff revision has been postponed to April 2012, effects will apply retroactively from April 2011 • Positive evolution of pending aspects of the 3rd cycle: 9 WACC: 11.4% (real pre tax) a
Slide 20: Consolidating leadership
consolidated results FY 2011 Consolidating leadership Expansion Capex in Generation Under construction: 9 Bocamina II: coal 370 MW Chile (2012) 9 Talara: gas 183 MW Peru (mid 2013) Latin America 9 El Quimbo: hydro 400 MW Colombia (end of 2014) 9 Moralets: pumped storage 400 MW extension Iberia 9 I
Slide 21: 2011 Efficiency and synergy targets exceeded
consolidated results FY 2011 2011 Efficiency and synergy targets exceeded Synergy Plan Zenith Plan (€M) (€M) 1,029 100% 181 100% Distribution Distribution 2011 Target 840 33% 54% 2011 Target 137 Generation & energy management 37% Generation & energy management IT & Others 46% 30% Achieved Breakdown
Slide 22: Strengthening our financial position
consolidated results FY 2011 Strengthening our financial position Net debt evolution in 2011 (€M) 15,336 5,838 1.5x Enersis 4,188 2,453 345 11,002 Pending 2,602 7 1,693 3,883 1.2x 5,380 regulatory assets Spain& Tariff Def. -€1,880 M Portugal 11,148 Securitization(1): €4,370 M & others 7,119 1.8x Deb
Slide 23: Spain&Portugal&Others FY 2011
spain&portugal&others FY 2011
Slide 24: Highlights in 2011
spain&portugal&others FY 2011 Highlights in 2011 Weak low voltage electricity demand(1) based on current economic environment Higher generation output (+17%)(2) with lower nuclear and hydro Fixed costs reduction in O&M and personnel expenses: -13% Higher fuel costs (higher thermal output +96%) Incre
Slide 25: Resilient results despite disposals & margin normalization
spain&portugal&others FY 2011 Resilient results despite disposals & margin normalization FY 2011 FY 2010 Change Like-for-like (3) €M Revenues 22,650 21,191 +7% Gross margin 6,458 6,811 -5% EBITDA 4,024 4,079 -1% +5% EBIT 2,244 2,483 -10% Net finance expenses(1) 287 465 -38% Net attributable income 1
Slide 26: Gross margin impacted by energy costs & perimeter
spain&portugal&others FY 2011 Gross margin impacted by energy costs & perimeter €M 6,811 6,554 +4% 6,458 €257 M -9% -1% FY 2010 Perimeter FY 2010 Liberalized business Regulated business FY 2011 ex-perimeter Perimeter Higher production & Distribution (renewables, gas, sales to final customers Non-mai
Slide 27: Lower liberalized margins despite higher generation volumes
spain&portugal&others 9M 2011 Lower liberalized margins despite higher generation volumes Market margins evolution: wholesale price Endesa mainland output(1) vs. price to final customers GWh 58 €/MWh +17% 60 57 €/MWh 60,287 5,851 CCGT 51,583 Fuel: 0 50 2011 3,915 51 €/MWh Fuel: 55 23,080 40 10,786 C
Slide 28: Margin optimization thanks to competitive generation mix and leadership in supply
spain&portugal&others FY 2011 Margin optimization thanks to competitive generation mix and leadership in supply activity Gross electricity sources Gross electricity sales 125 TWh 125 TWh 12 Pool sales Energy purchases 45 Unit purchase 29 LRT (2) cost €51/MWh LRT Auctions (2) 20 51% 74 TWh Mainland o
Slide 29: Latin America FY 2011
latin america FY 2011
Slide 30: Highlights in 2011
endesa latin america FY 2011 Highlights in 2011 Chile: impacted from drought Distribution sales: +3.4% with outstanding performance in Peru (+7.3%) and Chile (+4.6%) Argentina: book value adjusted Colombia: one-off net worth tax EBITDA FX impact 30
Slide 31: Operating results affected by non recurrent items and drought
endesa latin america FY 2011 Operating results affected by non recurrent items and drought €M FY 2011 FY 2010 Change Like-for-like Revenues 10,036 9,986 +0% Gross margin 4,546 4,598 -1% EBITDA 3,241 3,395 -5% -1%(1) EBIT 2,409 2,548 -6% Net finance expenses(2) 353 430 -18% Net income 1,428 1,613 -11
Slide 32: Chile: margins affected by drought and higher distribution sales
endesa latin america FY 2011 Chile: margins affected by drought and higher distribution sales Generation output Distribution sales -1% GWh Lower generation due to +5% drought (-6% hydro) compensated by higher thermal generation Growth in distribution sales after 2010 earthquake FY 2010 FY 2011 F
Slide 33: Brazil: stable results after an extraordinary 2010
endesa latin america FY 2011 Brazil: stable results after an extraordinary 2010 Generation output Distribution sales GWh Lower generation (-18%) due to +2% lower hydro in Cachoeira and lower dispatch in Fortaleza Good performance in Ampla 18,777 19,194 -18% (+3%) and Coelce (+1% despite 4,155 ex
Slide 34: Colombia: higher volumes & margins offset by net worth tax
endesa latin america FY 2011 Colombia: higher volumes & margins offset by net worth tax GWh Generation output Distribution sales +7% +3% Increase in generation due to wet hydro conditions High distribution sales FY 2010 FY 2011 FY 2010 FY 2011 Gx EBITDA Dx EBITDA €M Gx: -2% +13% -8% One-off ne
Slide 35: Peru: higher activity and lower fixed costs
endesa latin america FY 2011 Peru: higher activity and lower fixed costs Generation output Distribution sales +8% GWh Higher generation due to better hydro conditions, +7% market conditions and higher thermal availability Strong economic growth led to 7% increase in demand FY 2010 FY 2011 FY 201
Slide 36: Argentina: unsustainable regulatory conditions
endesa latin america FY 2011 Argentina: unsustainable regulatory conditions Generation output Distribution sales GWh +3% -0% Output in line with 2010 Increase in distribution sales FY 2010 FY 2011 FY 2010 FY 2011 €M Gx EBITDA Dx EBITDA Gx: higher fixed cost (-€12 -8% M) and FX (-€12 M) more th
Slide 37: Conclusions 2011
conclusions 2011
Slide 38: Shareholders remuneration
consolidated results FY 2011 Shareholders remuneration €M 2,212 73 Dividend Proposal: 2,139 30% of 2011 Ordinary Income 0.606 €/ share Net Net capital Net 2011 total Attributable gains Ordinary DPS Income Income Prudent pay-out to optimize liquidity under current scenario 38
Slide 39: Final remarks
consolidated results FY 2011 Final remarks Proactivity in regulation continues to be a priority Deficit securitization progress showed continued strong commitments of the Government Effective delivery from efficiency and synergies programs Resilient results in Iberia despite decrease in perimeter an
Slide 40: Appendices FY 2011
appendices FY 2011
Slide 41: Installed capacity and output
appendices FY 2011 Installed capacity and output(1) Spain& Endesa Latin MW at 31/12/11 Portugal&Others America Total Total 24,263 15,832 40,095 Hydro 4,716 8,666 13,382 Nuclear 3,681 - 3,681 Installed Coal 5,805 522 6,326 capacity Natural gas 4,857 3,966 8,823 Oil-gas 5,204 2,592 7,796 CHP/Renewable
Slide 42: Latin America: generation and distribution figures
appendices FY 2011 Latin America: generation and distribution figures Generation Output Distribution Sales GWh GWh +3.4% +0.6% 69,553 62,416 62,767 67,275 15.991 15.960 17.233 -0% Argentina 16.759 +3% 5.095 4.155 -18% Brazil 19.194 +2% 18.777 20.914 20.722 Chile -1% 13.098 13.967 +5% 11.283 12.090 C
Slide 43: Gx & Dx EBITDA affected by Chilean drought, Colombian net-worth tax and Fx
appendices FY 2011 Gx & Dx EBITDA affected by Chilean drought, Colombian net-worth tax and Fx Ebitda Generation Ebitda Distribution €M -3% stripping out net worth tax 0% stripping out net worth tax in Colombia in Colombia -6% 1,865 1,448 -3% 1,748 1,402 128 30 118 -8% Argentina 222 224 +1% Brazil 68
Slide 44: Endesa (excl. Enersis): financial debt maturity calendar
appendices FY 2011 Endesa (excl. Enersis): financial debt maturity calendar Gross balance of maturities outstanding at 31 December 2011: €8,022 M(1) Bonds (2) Bank debt and others ECPs and domestic commercial paper (3) 4,889 1.188 Endesa's Endesa's liquidity liquidityexcl. excl. 2.426 Enersis Enersi
Slide 45: Enersis: financial debt maturity calendar
appendices FY 2011 Enersis: financial debt maturity calendar Gross balance of maturities outstanding at 31 December 2011: €5,416 M(1) Bonds Bank debt and others 2,477 276 Enersis Enersishas has sufficient sufficient liquidity liquidityto to cover cover 849 919 2.201 29 months 702 469 29 months 300 o
Slide 46: Financial policy and net debt structure
appendices FY 2011 Financial policy and net debt structure Structure of Endesa's net debt ex-Enersis Enersis net debt structure €M €M 7,119 7,119 3,883 3,883 US$ 1% Floating 28% Floating 40% Other 51% Hedged 3% Euro 99% Chilean Peso 6%(1) Fixed 69% Fixed 60% US$ 43% By interest rate By currency By i
Slide 47: Well on track on forward sales strategy
consolidated results FY 2011 Well on track on forward sales strategy Spain & Portugal Latin America (% estimated mainland output hedged) (% estimated output hedged) 100% Contracting level in Latin America that 70-75% optimizes margin and risk exposure 60-65% 5-10% 2012 2013 2012 2013 31% of the gene
Slide 48: Endesa has major direct holdings in companies other than Enersis in Latin America
appendices FY 2011 Endesa has major direct holdings in companies other than Enersis in Latin America Proportionate €M % direct Proportionate 31.12.2011 stake 2011 EBITDA Net debt 60.6% Codensa 26.7% 96 69 Emgesa 21.6% 93 139 Direct holdings Endesa Brasil 28.5% 292 217 Ampla(1) 7.7% 6 42 60% Edesur 6
Slide 49: Disclaimer
disclaimer Disclaimer This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and they are subject to material risks, uncertainties, changes and
Slide 50: consolidated results FY 2011
consolidated results FY 2011 50