Edp S.a. · EURONEXT:EDP
Edp — Energias de Portugal — Debt Investor Presentation (December 2019)
49 slides from Edp's debt investor presentation, December 2019
Slide 1: Credit Presentation
Credit Presentation December 2019
Slide 2: Disclaimer
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 this date and its purpose is merely of informative nature and, as such, it may be amended and supplemented. By attending the meeting where this presentation
Slide 3: Leading integrated energy utility with a global footprint
Leading integrated energy utility with a global footprint, present in 16 countries and leading position in renewable energy 2018 FY ~65% Renewables Wind Solar Hydro ~25% Networks ~39% Distribution Transmission ~32% ~10% Client Solutions & ~20% Energy Management Clients Trading Thermal ~9% Key figure
Slide 4: We are already a leading green energy utility
We are already a leading green energy utility Distinctive positioning among European utilities… …supported by strong intrinsics European utilities´ share of Renewables in total EBITDA1, % ~2.5x more renewables than integrated peers and ~35pp higher renewables EBITDA share than average of peers 93 >2
Slide 5: Privileged position to capitalize on the energy transition
We are in a privileged position to capitalize on the energy transition given our early-mover advantage We are a global leading renewables player… ... prepared for the future Source of generated electricity, TWh ~21 GW of renewables capacity1 deployed worldwide Non-renewables Top-5 global wind player
Slide 6: Our 2030 Vision
OUR 2030 VISION Leading the energy transition to create superior value Decarbonization >90% renewables Reduce 90% specific Become generation emissions (vs 2005 levels) coal-free Digitalization Decentralization >4 Mn decentralized >1 Mn clients with 100% smart grids (in Iberia) solar PV panels instal
Slide 7: Sustainability is part of EDP's DNA
Our growth plans are fully aligned with sustainable strategy in place. Sustainability is part of EDP’s DNA Our approach EDP principles of sustainable development More than a simple goal, continuing to grow while meeting the challenges of sustainable development is a pledge we made to our stakeholder
Slide 8: Targeting a greener and lower-risk portfolio
We are targeting a greener and lower-risk portfolio coupled with upfront value crystallization Investment with strong focus on renewables… … growing mostly in North America and Europe 2019-22, € Bn Client Solutions & Energy Management Expansion net investment by geography Networks ~12 Renewables ~5%
Slide 9: We will triple our growth in renewables
We will triple our growth in renewables, mostly focused on wind onshore and solar… Step up growth in renewables Additions 2019-22 Gross GW/year GW1 Share 5.0-5.5 ~70% Wind onshore additions will be focused in the US for 2019/20 3x 2.2 Wind onshore and also in Brazil for 2021/22 1.5-2.0 ~25% Solar PV
Slide 10: Secured 70% of 7 GW renewables target additions
We have already secured 70% of our 7 GW renewables target additions for 2019-22 Renewables Capacity LT contracts secured for 19-22 Projects already secured Build-out GW; Oct-19 +2.4 GW, of which 1.8 GW 4.9 GW 4.9 GW since Jul-19 1.7 1.3 0.2 1.0 0.5 0.9 0.1 0.4 1.3 0.7 0.9 0.6 Dec-18 Oct-19 2019 2020
Slide 11: 50:50 JV with Engie for global offshore wind
We are establishing a 50:50 JV with Engie for global offshore wind, creating a Top 5 global player Top players Global Offshore Wind1 EDP/Engie JV for offshore wind: Projects with PPA/FiT secured (by capacity secured with PPA/FiT for 2025E) GW, as of Jun-19 Project CoD MW JV Stake (%) Floating offsho
Slide 12: Growth visibility in Networks Brazil
Growth visibility in Networks Brazil: new regulatory period in distribution and deployment on track of new transmission projects Distribution: Regulatory review Transmission lines rollout moving forward Regulated Asset Base Previous Reg. Period 6 projects: 1,441km R$ Bn New Regulatory Period R$3.9 B
Slide 13: Proven asset rotation model to create value
We will use our proven asset rotation model to create value and accelerate renewables growth Asset rotation – Proven model with continuous delivery… …and clear execution visibility Minority stake Majority stake Proceeds1, € Bn First asset rotation Track-record (since of majority stake 2012) of signi
Slide 14: Adjusting our portfolio to align with strategy
We will keep adjusting our portfolio to better align it with our strategy Our diversified portfolio… …to be further optimized Share of EBITDA 2018 Share of EBITDA 2018 Client solutions Renewables / Networks ~90% Growth businesses & Energy mgmt. Merchant Merchant <25% Networks Decrease exposure while
Slide 15: Asset rotation and disposals in Iberia moving forward
Asset rotation and disposals in Iberia moving forward as planned, with visibility provided on 25% of 2019-22 asset rotation target Asset rotation Asset Disposals Iberia Europe Brazil Announcement Apr-19 Jul-19 Potential disposal of a portfolio of merchant generation assets in Portugal (~1.7 GW) Capa
Slide 16: Driving efficiency across the organization
We will keep driving efficiency across the organization… We are committed to keep taking action… …to reduce OPEX/ gross margin, building on solid past delivery Recurring OPEX, € Mn ~1,650 Keep implementing OPEX efficiency programs ~1,625 (including zero based budgeting) Maintain generational replace
Slide 17: OPEX 1% decline in 9M19
… OPEX 1% decline in 9M19 is aligned with our targets for 2019-22 xx% Weight on Opex Operations Indicator YoY Change Main drivers Iberia Inflation +0.4% in PT and +0.8% in ES Opex1 0% 55% Avg. headcount -4% YoY EDP Brasil Avg. Inflation: +3.9%2 Opex1 in BRL +3% 16% DisCos # Customers: +2% YoY EDPR A
Slide 18: Sources and uses of cash 2019-22
We will commit our funds to support attractive shareholder remuneration, deleverage and significant growth 2019-22, € Bn Sources of cash Uses of cash >8 >12 ~3 Organic cash flow ~2 (before maintenance CAPEX) >7 >2 Disposals Expansion ~2 Maintenance Other1 2019-22 Dividends Deleverage Net investments
Slide 19: Net debt at €13.8 Bn in Sep-19
Net debt at €13.8 Bn in Sep-19, with a Net debt/EBITDA of 3.8x Change in Net Debt: Sep-19 vs. Dec-18, € Bn New Hybrid (50% equity): -€0.5 Bn Forex: +€0.1 Bn Reg. Receivables: +€0.1 Bn Weak hydro resources: -~€0.2bn -0.3 13.8 13.5 0.7 -1.0 0.9 Annual Dividend paid in May Net Debt Recurring Organic Ne
Slide 20: Over 89% of financial debt raised at holding level
Over 89% of EDP’s financial debt is raised at holding level, yielding efficient management of sources and uses of funds EDP Consolidated net debt position | Sep-19 (€bn) EDP debt position(2) | Sep-19 (€bn) 13.8 1% EDPR 10% EDP Brasil 6% Commercial Paper 8% Bank Loans 61% 39% EDP S.A., EDP Fixed Floa
Slide 21: Financial results and cost of debt
Financial results adjusted for non-interest items up by 4% following 20bp increase of avg cost of debt and slight decline of avg. debt Net Financial Costs: 9M19 vs. 9M18 Nominal debt by currency3 € Mn +4% Euro 545 denominated 527 19 Hybrid 510 17 55% 63% 66 443 USD 32% 27% BRL Other 8% 11% 2% 2% 9M1
Slide 22: Refinancing costs significantly lower than plan
Over 9M19 refinancing costs have moved significantly lower vs. our 2019-22 business plan assumptions Market yields of 5y1 EDP Bonds, % (Jan-Sep 2019) EDP consolidated debt maturities in 4Q19-2022 € Bn and Senior bonds’ coupon rate Other debt6 EUR2 USD3 BRL4 BRL debt 1.8 USD bond 6 1.7 EUR bond 5 ∆ J
Slide 23: We have a prudent financial policy
We have a prudent financial policy Strong liquidity position, preferring committed Active Debt & facilities – liability management to improve cost of 12-24 months Liquidity Management debt and optimize capital of refinancing ahead Centralized Financial Centralized funding management except for ring
Slide 24: EDP Green Bond Framework
EDP Green Bond Framework is aligned with the Green Bond Principle 2018 and it was externally verified by Sustainalytics Eligible green projects: Includes design, construction, installation and maintenance of renewable energy production projects, such as: Use of proceeds wind power plants (onshore an
Slide 25: Excellence Performance in 2019
Excellence Performance in 2019 Second Party Opinion and Verification 22,1 pts | Medium risk 13º in 192 companies Issuance of €2.2 bn of Green Bonds and Green Hybrid since October 2018 First Portuguese company issuing Green Bonds Listed in Euronext Green Bond Sustainalytics ESG risk rating considers
Slide 26: Sustainability targets for 2022/2030
EDP has clear Sustainability targets for 2022/2030, pursuing growth strictly under its sustainable development business model… Priorities EDP strategic objectives 2022 UN Sustainable Development Goals Reach 78% of renewable installed capacity Decarbonising Reach >1 GW of solar installed capacity gen
Slide 27: Ambition for 2030
… And going beyond with its Ambition for 2030 defined Priorities EDP ambition for 2030 UN Sustainable Development Goals 85% of renewable installed capacity Decarbonising 90% of renewable generation generation 90% of CO2eq specific emissions 3 GW of centralized solar installed capacity 50% of custome
Slide 28: Our key targets
Our key targets Our strategic axis Key initiatives Key figures Step-up growth in renewables with >7 GW gross additions >€4 Bn EBITDA 2022 (>5% CAGR) Accelerated and Leverage on asset rotation model as a key complement to our strategy focused growth ~€12 Bn CAPEX 2019-22 Deliver superior execution of
Slide 29: 9M19 steps to deliver 2019-2022 strategic targets
9M19 period marked by important steps to deliver 2019-2022 strategic targets 2019 GUIDANCE 2019-2022 STRATEGIC PLAN On track to delivery Accelerated and focused growth Recurring EBITDA: ~€3.6bn Renewables: target additions for 2019-22 (7.0 GW) 70% secured with LT contracts (4.9 GW) Networks Brazil:
Slide 30: Business Platforms & 9M19 results
Business Platforms & 9M19 results 30
Slide 31: Renewables - Key highlights
Renewables - Key highlights +xx Growth, 2019-22 >€8 Bn investment plan, supported Capacity to increase 17% supported by by >€4 Bn asset rotations wind and solar growth EBITDA to grow by 17% CAPEX, € Bn Installed Capacity1, GW EBITDA, € Bn2 >8 +17% 24.6 +0.4 2.5 21.0 2.13 Asset >4 rotations Net ~4 in
Slide 32: Networks - Key highlights
Networks - Key highlights +xx Growth, 2019-22 ~€0.6 Bn annual CAPEX in Regulated Asset Base to increase EBITDA to grow driven by investments in Networks 15% Brazil CAPEX, € Bn RAB1, € Bn EBITDA, € Bn2 2.4 +15% 6.0 +0.2 1.1 5.2 0.7 0.85 0.6 1.1 2019-22 2018 2022 2018 2022 1 Includes 23.56% of CELESC
Slide 33: Client solutions & energy management - Key highlights
Client solutions & energy management - Key highlights +xx Growth, 2019-22 Strong increase of energy Growth driven from services under management contracts increase Significant EBITDA growth in Iberia TWh # of contracts, Mn EBITDA, € Bn1 +13% 81 +8% 12.5 +0.2 0.5 11.6 72 2.1 1.3 Services Non- 0.31 Re
Slide 34: 2018 results penalized by sector taxes and regulatory decisions
2018 Results penalized by heavy sector taxes and adverse regulatory decisions in Portugal Pre-tax impact in Portugal 2018 € Mn €672 Mn CMEC ONE-OFFS 2018 Retroactive cuts on innovatory aspects (€285 Mn) and final adjustments (€18 Mn) CMEC 303 CESE (Extraordinary Energy Tax) 0.85% on net assets; €25
Slide 35: 9M19 Key Highlights
9M19 Key Highlights EBITDA: +10% YoY Renewables growth (0.9 GW built up YoY) and Asset Rotation deals (0.6 GW agreed YTD) Networks with robust growth in Brazil (Distribution & Transmission) €2,661 Mn EBITDA Hydro resources Portugal in 9M19 -39% vs. historical average Recurring Net Profit: +7% YoY Av
Slide 36: Low hydro resources in Iberia in 9M19
Low hydro resources in Iberia in 9M19, while wind resources stable YoY but still below average EDP Hydro production in Iberia EDP Wind production TWh TWh +6% -47% 11.1 21.7 20.5 5.9 9M18 9M19 9M18 9M19 Hydro resources Wind resources +20% -39% -4% -4% vs. LT Avg.1 vs. LT Avg. (P50) 1) Hydro resources
Slide 37: EBITDA +10%
EBITDA +10%, with strong growth in renewables (new capacity and asset rotation) and networks (expansion in Brazil, lower Opex Iberia) EBITDA 9M19 € Mn; YoY growth,% Wind & Solar: Avg. Capacity +3%, avg. selling price +5%, asset rotation gains +10% (+€0.2 Bn) 2,661 Renewables Hydro: Low volumes in Ib
Slide 38: Net Profit +55%
Net Profit +55%, supported by renewables growth, Portuguese operations depressed by low hydro (9M19), one-offs and regulation Net Profit 9M19 € Mn +7% Recurring 545 585 460 YoY Reported +55% 113 -€26 Mn Spain: Deterioration of coal load factors and positive fiscal impact in 2018 297 139 283 +€187 Mn
Slide 39: Annex
Annex 39
Slide 40: Disciplined investment framework
We will grow under a disciplined investment framework Clear investment framework… … with a track record of delivery Leader in renewables …with a selective PPA origination… approach (2016-2018) Threshold Achieved1 Top-3 PPAs secured in ~200 RfPs answered IRR/WACC >1.4x ~1.5x USA 2016-18 Attractive Re
Slide 41: Hydro: 7.2 GW of capacity in Iberia
Hydro: 7.2 GW of capacity in Iberia, of which 4.3 GW with reservoir, 2.8 GW pumping Hydro plants in Iberia1 Installed capacity Net generation1 Avg. concession Hydro plants in Portugal MW % TWh maturity Cávado-Lima Portugal Total 6,767 94% 10.7 2054 Reservoir 4,294 60% Douro Of which pumping 2,806 40
Slide 42: Wind & Solar North America: 5.8 GW
Wind & Solar North America: 5.8 GW of capacity in the US, Mexico and Canada Wind & Solar installed capacity Remuneration framework for wind onshore in the US xx Capacity 2018 Sales can be agreed under PPAs, hedged in forward Minnesota Iowa xx Avg. asset age Washington 101 | - 101 | - 600 | - Wiscons
Slide 43: Networks Iberia: 55 TWh distributed
Networks Iberia: 55 TWh of electricity distributed in Iberia, with superior quality of service Networks portfolio in Iberia Electricity distribution in Portugal 2018 Quality service1 High/Medium Voltage Iberia 2017 Country-level concession up to 2044 Electricity Distributed 46.1 9.4 55.4 TWh RAB €1.
Slide 44: Networks Brazil: stable regulatory environment and transmission
Networks Brazil: Growth driven by the stable regulatory environment and transmission opportunities Networks geographical footprint Distribution assets1 Distribution EDP's Net Next Concession Supply Distributed Transmission Lines Subsidiary stake RAB, regulatory Term points, Th Energy ,TWh Distributi
Slide 45: EDP's track record in sustainability is strong
EDP’s track record in sustainability is strong and results in a well- established position Some of the ESG Indices where EDP is a member(1) Strong extra-financing rating(1) CDP CLIMATE CHANGE Member Member Leadership A- since 2010 CDP WATER since 2012 B List Member since 2013 Listed in Euronext CDP
Slide 46: Dow Jones Sustainability Index 2019 ranking
Our strong commitment with ESG was recognized by Dow Jones Sustainability Index 2019 ranking: #1 Global Integrated Utility Global Leader within integrated utilities 2050 Commitment: Carbon neutrally EDP is one of the 87 global Best-in-Class (score 100/100) in 9 criteria namely: corporations that hav
Slide 47: Corporate Governance
Corporate Governance EDP Shareholder Structure (November 26th, 2019) Corporate Governance Highlights (1) Dual model China Three Gorges (PRC) Executive Board of Directors (EBD) and General and 23.3% Supervisory Board (GSB) All major corporate and strategic decisions scrutinized by the GSB after propo
Slide 48: Key data on EDP securities
Key data on EDP securities Amount Bonds Currency Maturity Coupon Market Price (Bid) Market Yield ISIN Code (million) EDP BV Euro MTN EUR 233 29/06/2020 4.125% 102.8 -0.122% XS0223447227 EDP BV Euro MTN EUR 462 14/09/2020 4.875% 104.3 -0.112% XS0970695572 EDP BV Euro MTN EUR 553 20/01/2021 4.125% 105
Slide 49: IR Contacts / Next Events
IR Contacts E-mail: ir@edp.com Phone +351 210 012 834 Site: www.edp.com Next Events Dec 4th: Soc. Générale Conference (Paris) Feb 20th: YE19 results Dec 10th: Crédit Agricole Sustainability Bonds Conf. (Paris) INVESTOR PRESENTATION 49
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