Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — 9M 2018 Earnings Presentation
44 slides from Engie Energia Chile's earnings presentation, 2018
Slide 1: Presentation to investors 9M18 Results
ENGIE ENERGÍA CHILE S.A. Presentation to investors 9M18 Results
Slide 2: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 9M 2018 2
Slide 3: Snapshot: ENGIE S.A. – A global energy player
SNAPSHOT: ENGIE S.A. ENGIE: A GLOBAL ENERGY PLAYER LOW CO2 POWER GLOBAL CUSTOMER GENERATION NETWORKS SOLUTIONS World leading independent European leader in gas 24m customers in Europe power producer infrastructures €27bn(3) regulated asset Global leader in energy 103 GW(1) installed base in France s
Slide 4: Snapshot: Chilean electricity industry
SNAPSHOT: CHILEAN ELECTRICITY INDUSTRY SISTEMA ELÉCTRICO NACIONAL (SEN) TWO MAIN GRIDS RECENTLY INTERCONNECTED Gross installed Generation capacity (MW) 9M18 (GWh) Solar Hydro 10% 27% Wind Wind Hydro 6% 7% 28% Solar 7% 24,095 MW 57,419 GWh Thermal Thermal 55% 60% SEN 3,300 Km Clients Market Share (%
Slide 5: EECL: a relevant player in the Chilean power industry
SNAPSHOT ENGIE ENERGÍA CHILE EECL: A RELEVANT PLAYER IN THE CHILEAN POWER INDUSTRY RELEVANT PLAYER IN THE ENERGY CONTRACTED INDUSTRY GROWTH UNDERWAY BUSINESS Leader in northern mining New 15-yr regulated PPA Capacity contracted under region, 4th largest electricity w/distribution companies lon
Slide 6: A diversified asset base to meet our clients' energy needs
SNAPSHOT: ENGIE ENERGÍA CHILE’S ASSETS A DIVERSIFIED ASSET BASE TO MEET OUR CLIENTS’ ENERGY NEEDS Technology Coal Chapiquiña (10MW) Diesel/FO 1,928 MW (*) in Natural gas operation & 375 MW El Aguila I (2MW) Renewables in construction Pampa Camarones (6MW) Diesel Arica (14MW) 2,293 kms HV + MV transm
Slide 7: 2018: the beginning of a new era
SNAPSHOT: EECL IN 2018 2018: THE BEGINNING OF A NEW ERA NEW PPA: NEW POWER REVENUE & EBITDA INTERCONNECTION SUPPLY GROWTH Contracted revenue growth TEN: 600-km, 500 kV, IEM + Puerto Andino • ~8,200 GWh p.a. in 2017 ~US$0.8bn, transmission project ~US$1 bn investment • ~12,000 GWh p.a. in 201
Slide 8: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 9M 2018 8
Slide 9: Key messages
KEY MESSAGES Results in line with guidance Mastering the growth achieved Building our future together with our clients PPA renegotiation, decarbonization & life extension Paving the way for our energy transformation plan Development focused on replacing coal with renewable capacity Robust capital st
Slide 10: Recent events
KEY MESSAGES RECENT EVENTS INDUSTRY COMPANY • SIC-SING interconnection: In operations • Amendments to the Codelco and SING SEN Glencore PPAs signed on April 2: tariff since November 24, 2017, giving birth to the SEN. The TEN project was ready “Sistema decrease, full indexation to CPI starting ahead
Slide 11: 9M18 results in line with guidance
RESULTS IN LINE WITH GUIDANCE: MASTERING THE GROWTH ACHIEVED 9M18 RESULTS IN LINE WITH GUIDANCE • EBITDA increased 39% mainly due to the new PPA with distribution companies • Net income was impacted by non-recurring asset impairments 9M17 9M18 Variation Operating Revenues (US$ million) 782.2 950.7 +
Slide 12: Demand supplied with own generation, spot purchases and bridge contracts
RESULTS IN LINE WITH GUIDANCE: MASTERING THE GROWTH ACHIEVED DEMAND SUPPLIED WITH OWN GENERATION, SPOT PURCHASES AND BRIDGE CONTRACTS US$/MWh 140 Average monomic price 120 US$115/MWh U12 & U13 coal plants: 3% of 9M18 power supply. 100 Authorization to close down Diesel by Apr-19. Average fuel & 80 e
Slide 13: PPA renegotiation, decarbonization & life extension
BUILDING OUR FUTURE TOGETHER WITH OUR CLIENTS PPA RENEGOTIATION, DECARBONIZATION & LIFE EXTENSION Sound contract portfolio with average remaining life A GROWTH of 12 years (*) DRIVING PPA • 2018: Up to 2,016 GWh 600 ● Regulated contracts • (230 MW-avg.) 2019-2032: Up to 5,040 ● Unregulated contracts
Slide 14: PPA renegotiations signed April 2, 2018
BUILDING THE FUTURE TOGETHER WITH OUR CLIENTS PPA RENEGOTIATION, DECARBONIZATION & LIFE EXTENSION PPA renegotiations signed by EECL on April 2, 2018: A win-win transaction 200MW Chuqui Price discount, Price discount, PPA life extension @ new, CPI-indexed price coal-indexed CPI-indexed 16MW 34MW 16MW
Slide 15: GWh contracted demand: our vision through 2030
BUILDING THE FUTURE TOGETHER WITH OUR CLIENTS PPA RENEGOTIATION, DECARBONIZATION & LIFE EXTENSION GWh CONTRACTED DEMAND: OUR VISION THROUGH 2030 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free clie
Slide 16: Renewable capacity development projects
PAVING THE WAY FOR OUR ENERGY TRANSFORMATION PLAN RENEWABLE CAPACITY DEVELOPMENT PROJECTS Project development focused on energy transition Nueva Chuquicamata Antofagasta Arica & Biobío Parinacota Los Lagos Araucanía Algarrobal O’Higgins Wind El Rosal Solar PV Geographic and power source Gradual repl
Slide 17: National transmission projects awarded in 2018 auctions
PAVING THE WAY FOR OUR ENERGY TRANSFORMATION PLAN NATIONAL TRANSMISSION PROJECTS AWARDED IN 2018 AUCTIONS Nueva Chuquicamata SS + T.Line 2 x 220kV Ref. I.V. 18.0 MUSD AVI: 0.9 MUSD COD: 24 / 48 months Antofagasta Arica & Biobío Parinacota Los Lagos O’Higgins Araucanía Wind Algarrobal El Rosal Sectio
Slide 18: New port: cost savings + diversification opportunities
PAVING THE WAY FOR OUR ENERGY TRANSFORMATION PLAN NEW PORT: COST SAVINGS + DIVERSIFICATION OPPORTUNITIES New port in Mejillones Puerto Andino • Mechanized port, suitable for Cape- size carriers (of up to 180,000 DWT) • Capacity to transfer +6,000,000 TPY => space for mineral product exports; i.e., d
Slide 19: Ample room to finance energy transformation plan
ROBUST CAPITAL STRUCTURE AMPLE ROOM TO FINANCE ENERGY TRANSFORMATION PLAN • 2018: THE END OF A CAPEX-INTENSIVE PHASE • FREE CASH-FLOW POSITIVE STATUS STARTING 2019 WILL RELEASE FINANCING CAPACITY FOR ENERGY TRANSFORMATION PLAN MUSD 4.0 TEN 30 500 3.5 400 3.0 TEN 35 Debt capacity to finance new CAPEX
Slide 20: Key drivers for our results
GUIDANCE: MASTERING THE GROWTH ACHIEVED & STARTING OUR TRANSFORMATION KEY DRIVERS FOR OUR RESULTS Contractual position + PPA w/distribution co’s. - PPA renegotiation US$ 160 to 180 mln Prices - Coal prices - Hydrologic conditions US$ 450 to US$ 140 to 150 mln 470 mln Power supply - Delay in full int
Slide 21: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 9M 2018 21
Slide 22: Regulated revenue from new PPA explains the 39% EBITDA increase
FINANCIAL UPDATE REGULATED REVENUE FROM NEW PPA WITH DISTRIBUTION COMPANIES LARGELY EXPLAINS THE 39% EBITDA INCREASE By main effect In US$ Million +6 +1 (53) +16 +3 +135 OPEX & Insurance TEN SG&A (18) Contract recovery result prices (net) (BI) (50% share) Spot (10) 278 Renegotiation (-15) Fuel price
Slide 23: Operating results explain the net recurring income increase
FINANCIAL UPDATE OPERATING RESULTS EXPLAIN THE NET RECURRING INCOME INCREASE In US$ Millions Recurring Results 121 +7 minority +4 (52) +2 +2 interest +57 Insurance Financial Other recovery expenses FX Diff. (PD) Depreciation 73 69 Tax effects +7 +6 61 minority minority +6 interest interest (8)
Slide 24: Net debt evolution reveals strong cash generation
FINANCIAL UPDATE NET DEBT EVOLUTION REVEALS STRONG CASH GENERATION Main cash flows In US$ Million +36 +28 (280) +36 +59 Income +161 Accrued Dividends Taxes Financial (including Interest + 40% CTH) var. 811 771 lease deferred (tolling Operating CAPEX (*) agreement financial cash flow w/TEN) cost + va
Slide 25: Robust financial structure: room for further growth
FINANCIAL UPDATE ROBUST FINANCIAL STRUCTURE: ROOM FOR FURTHER GROWTH Net debt/EBITDA below 3.0x NET DEBT/EBITDA ≤ 3.0 X • Strong cash flow generation 4.00 3.500 2.8 • Proceeds from asset sales (TEN) in 2016 3.00 2.500 2.3 2.0 2.00 1.6 1.7 1.500 Rating confirmed @ BBB (Stable Outlook) 1.00 .500 • Int
Slide 26: Shareholder return
FINANCIAL UPDATE SHAREHOLDER RETURN DIVIDENDS PAID MARKET CAP & DIVIDEND YIELD In US$ Millions In US$ Millions 90 100% 100% 6.00% 78 90% 5.4% 80 7 80% 2,000 5.00% 70 70% 60 56 4.00% 1,500 3.4% 60% 50 47 17 50% 3.00% 40 12 2,265 34 72 40% 1,000 1,941 30% 30% 30% 30% 30 2.3% 2.2% 30 30% 1,536 1,657 2.
Slide 27: Key take-aways: value creation for our stakeholders
FINANCIAL UPDATE KEY TAKE-AWAYS: VALUE CREATION FOR OUR STAKEHOLDERS DELIVERY AND CLIENTS AND DEVELOPMENT OPERATION LEADERS IN ENERGY IEM+PORT COD 1Q19 TRANSITION RENEWABLES PPA PORTFOLIO PORTFOLIO EXTENSION NEW PPA WITH ASSET ROTATION DISTRIBUTION CO’S CAPITAL STRUCTURE & CUSTOMER SOLUTIONS LEAN PR
Slide 28: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 9M 2018 28
Slide 29: Long-term contracts: the basis for stable sales volumes and prices
ADDENDA LONG-TERM CONTRACTS: THE BASIS FOR STABLE SALES VOLUMES AND PRICES ENERGY SALES AND PRICES Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 - - 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Unregulated Regulated Spot Energy+Capacity Pr
Slide 30: Demand supplied with own generation, spot purchases and bridge contracts
ADDENDA DEMAND SUPPLIED WITH OWN GENERATION, SPOT PURCHASES AND BRIDGE CONTRACTS, HEDGED BY OUR INSTALLED CAPACITY Renewables Diesel 8% 1% Coal 58% • Increasing spot purchases due to (i) coal, gas and Installed renewable efficient capacity additions in the grid and (ii) Gas capacity start of PPA wit
Slide 31: Generation and spot energy price history in the SING
ADDENDA GENERATION AND SPOT ENERGY PRICE HISTORY IN THE SING • Limited exposure to hydrologic risk until interconnection is fully operative • Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand (bilateral negotiation of prices and supply terms) • Maximum dema
Slide 32: Current regulatory and grid coordination challenges
ADDENDA CURRENT REGULATORY AND GRID COORDINATION CHALLENGES MW Generation North SEN – September 1 to 10, 2018 US$/MWh 3,000 100 90 2,500 80 70 2,000 60 1,500 50 40 1,000 30 20 500 10 0 0 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13
Slide 33: Recent game changers in the Chilean power industry
ADDENDA RECENT GAME CHANGERS IN THE CHILEAN POWER INDUSTRY More agile, diversified, client-focused approach to face industry change INCREASED TECHNOLOGIC RECOVERY IN COMPETITION DISRUPTION DEMAND GROWTH More flexible power auction Lower investment cost of Mining industry recovery regulations (
Slide 34: The SEN: a larger market for all players
ADDENDA THE “SEN”: A LARGER MARKET FOR ALL PLAYERS SEN – Sep-2018 24,095 MW 7,844 MW SING SEN “Sistema 6,348 MW 78 Eléctrico Nacional” 3,865 3,450 4,133 MW SIC 291 3,310 MW 831 45 1,370 127 1,611 1,928 MW 10 159 2,033 3,011 623 2,609 (*) 1,304 532 MW 1,127 660 532 350 Enel AES Gener Colbún EECL Kela
Slide 35: PPA portfolio indexation: shifting away from coal
ADDENDA PPA PORTFOLIO INDEXATION: SHIFTING AWAY FROM COAL Overall indexation applicable to Overall indexation applicable to electricity and capacity sales electricity and capacity sales (as of September 2018) (2021, proforma PPA renegotiation) U.S. CPI Gas 11.9% U.S. CPI U.S. PPI U.S. PPI Node Price
Slide 36: Transmission
ADDENDA TRANSMISSION Infrastructure EECL, a relevant player in the transmission business EECL operates 23 substations with 2,293 kms. total capacity of 844 MVA 844 MVA 5 US$ 16 million regulated revenue p.a. Transmission substations EECL operates 2,293 kms. of transmission lines Generation 844 subst
Slide 37: Transmisora Eléctrica del Norte S.A. 'TEN' (page 1 of 2)
ADDENDA TRANSMISORA ELÉCTRICA DEL NORTE S.A. “TEN” (PAGE 1 OF 2) Infrastructure – Regulated ~US$0.8bn investment, 50%-owned by EECL • Regulated revenues on “national • Double circuit, 500 kV, alternate assets” + contractual toll on current (HVAC), 1,500 MW, 600- “dedicated assets” km long transmissi
Slide 38: Transmisora Eléctrica del Norte S.A. 'TEN' (page 2 of 2)
ADDENDA TRANSMISORA ELÉCTRICA DEL NORTE S.A. “TEN” (PAGE 2 OF 2) Infrastructure – Regulated ~US$0.8bn investment, 50%-owned by EECL VI Indexation TEN’s annual revenues: (in USD millions In MUSD @ Oct In CLP to In USD to at Sep.30, 2018 FX rates) 2013 FX Rates Chile CPI US CPI AVI (VI annuity): 75.5
Slide 39: Infraestructura Energética Mejillones 'IEM'
ADDENDA INFRAESTRUCTURA ENERGETICA MEJILLONES. “IEM” Thermal contracted + port Successful plant synchronization on October 29 • 375MWe gross capacity => • Developed to supply distribution 337MWe net base-load capacity companies • Turnkey EPC contracts: • Pulverized coal-fired power plant • IEM plant
Slide 40: Copper industry
ADDENDA COPPER INDUSTRY US¢/lb Copper production in Chile ('000 tons) GWh 6,500 500 6,000 Copper price LME (US¢/lb) SING Electricity demand (GWh) SIC Electricity demand (GWh) 450 5,500 5,000 400 4,500 350 4,000 300 3,500 250 3,000 5,557 5,776 5,761 5,772 5,553 5,413 5,321 5,361 5,328 5,394 5,419 5,2
Slide 41: Ownership structure
ADDENDA OWNERSHIP STRUCTURE Pension funds Local institutions Foreign institutions Individuals 52.76% 25.49% 15.20% 6.12% 0.43% ENGIE ENERGÍA CHILE S.A. Inversiones Punta de Red Eléctrica Chile Rieles Ltda. (“EECL”) S.A. 40% 50% Central Central Gasoducto Edelnor Transmisora Termoeléctrica Termoeléctr
Slide 42: EECL organizational structure
ADDENDA EECL ORGANIZATIONAL STRUCTURE Shareholders’ assembly Committee Functional committees: Board of directors - Origination of directors - Development - Business knowledge - Regulation CEO - Change management - Management - Steering Committees: - IEM Internal auditor Corporate Finance People Lega
Slide 43: For more information about Engie Energia Chile
FOR MORE INFORMATION ABOUT ENGIE ENERGIA CHILE Ticker: ECL +562 2783 3307 inversionistas@cl.engie.com http://www.engie.cl MORE INFORMATION ON 9M 2018 RESULTS IN OUR WEB PAGE 2018 9 months Presentation Addenda Press Recorded Financial Analyst Release conference report pack audiocast Engie Energía Chi
Slide 44: Disclaimer
Disclaimer Forward-Looking statements This presentation may contain certain forward-looking statements and information relating to Engie Energía Chile S.A. (“EECL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan