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Edp — Energias de Portugal — 9M13 Earnings Presentation

37 slides from Edp's earnings presentation, Nov 1, 2013

  1. Slide 1: Results Presentation 9M13

    Results Presentation 9M13 Lisbon, November 1st, 2013 0

  2. 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 the 1ts of November 2013 and its purpose is merely of informative nature and, as such, it may be amended and supplemented. By attending the meeting where th

  3. Slide 3: 9M13: Highlights of the period

    9M13: Highlights of the period EBITDA 9M13: €2,799m, +2% YoY Iberian operations ex‐wind: EBITDA ‐5% YoY impacted by adverse regulatory and market developments partially offset by strong hydro volumes, good energy management and tight cost control (Opex ‐1% YoY) EBITDA in Brazil: +42% YoY in local cu

  4. Slide 4: 9M13: Highlights of the period

    9M13: Highlights of the period Regulatory receivables in Portugal & Spain: +€0.3bn YTD to €3.0bn by Sep‐13 ~€1.0bn of securitisation deals cashed‐in by EDP in 9M13, 75% of which from Portugal Capex €1,166m (‐3%): execution of new hydro capacity in Portugal and Brazil; wind capacity outside of Iberia

  5. Slide 5: Weather and market conditions in Iberia

    Weather and market conditions in Iberia Hydro & Mini‐Hydro Power Production – Portugal (1) Avg. Pool Price in Spain (TWh) (€/MWh) 10.5 Hydro Coefficient 50.0 3Q13 48.6 1H13 41.5 2.9 37.3 9M12 9M13 9M12 9M13 0.35 1.23 Portugal wind production factor EDP: electricity production as % of sales to client

  6. Slide 6: Electricity consumption in Portugal in 3Q13: +1.9% YoY

    Electricity consumption in Portugal in 3Q13: +1.9% YoY consistent with other leading economic indicators Electricity consumption in Portugal (1) (Var %) Real Adjusted (2) VAT increase in Oct‐11 8% 6.7% from 6% to 23% 6% 5.1% 4% 3.6% 3.0% 1.9% 2% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 0% 3

  7. Slide 7: 9M13 Operating Headlines: Hydro & wind represented 69% of EDP's power production

    9M13 Operating Headlines: Hydro & wind represented 69% of EDP’s power production Installed Capacity Generation Breakdown by Technology (GW) (TWh) +0% +14% 44.8 22.7 22.7 39.2 1.8 Other (1) Other (1) 7% 3% ‐23% 13% 2.4 11.1 Coal Coal 12% ‐3% 0.9 CCGT CCGT 16% 16% 11.5 ‐61% 2.3 Hydro 34% 16.7 Hydro 33

  8. Slide 8: EBITDA 9M13: Breakdown by division

    EBITDA 9M13: Breakdown by division EBITDA Breakdown by division (€ million) % Chg. YoY +2% €2,742m €2,799m Liberalized 10% +0% 10% Activities Iberia EDP Brasil 14% +25% 18% EDP Renováveis 25% +5% 25% 90% Regulated 28% ‐1% Networks Iberia (1) 28% LT Contracted 22% ‐11% 19% Generation Iberia 9M12 9M13

  9. Slide 9: 9M13 EBITDA: Breakdown by market

    9M13 EBITDA: Breakdown by market EBITDA Breakdown by Major Subsidiaries: 9M13 vs. 9M12 EBITDA Breakdown by Geography (2): 9M13 vs. 9M12 (%) (%) ∆ % 9M12‐9M13 Rest of Europe 4% +1% 4% 9M12 9M13 Var. % Var. Abs. Brazil 15% +24% 18% USA 9% +6% EDP in Portugal & other (1) 1,177 1,125 ‐4% ‐52 9% EDP Espa

  10. Slide 10: Operating costs: Opex/Gross Profit at 27% in 9M13

    Operating costs: Opex/Gross Profit(1) at 27% in 9M13 Operating costs (2) : 9M13 vs. 9M12 9M13 YoY Inflation (3) (€ million) (%) Brazil EDPR Iberia +1% 1,163 1,151 +2% 220 225 6.4% 230 244 +6% 700 694 ‐1% 1.8% 0.4% 9M12 9M13 Portugal Spain Brazil (IGP‐M)  Iberia: Operating costs ‐1% YoY, below infla

  11. Slide 11: Capex: Execution of Selective Growth

    Capex: Execution of Selective Growth Consolidated Capex by technology (1) (€ million) ‐3% €1,166m €1,197m 173 221 Expansion generation Brazil Expansion Hydro Portugal 315 380 Expansion Wind 267 234 (2) Maintenance 446 422 ‐91 (3) 9M12 9M13 Capex ‐3% YoY, or +5% YoY excluding €91m cash grant in US 5

  12. Slide 12: Net regulatory receivables by Sep-13

    Net regulatory receivables by Sep-13 Regulatory Receivables (€ million) +€279m 2,989 2,656 2,710 2,499 2,055 2,197 Portugal(2) Spain 531 70 424 464 Brazil (1) 89 26 Sep‐12 Dec‐12 Sep‐13 Portugal: +€302m (tariff deficit/deviations of +€1,016m in 9M13, securitisations done by EDP ‐€714m) Spain: +€40m

  13. Slide 13: Regulatory receivables in Portugal: Breakdown of 9M13 evolution

    Regulatory receivables in Portugal: Breakdown of 9M13 evolution Regulatory Receivables in Portugal A (€ billion)  Special regime production: +18% YoY in 9M13 abnormally high wind and mini‐hydro volumes A B C  Low pool price in 9M13: Higher costs with 0.1 0.7 special regime premiums, CMEC deviation

  14. Slide 14: Net debt

    Net debt EDP consolidated net debt position: Sep‐13 EDP consolidated debt by currency: Sep‐13 (€ million) (%) PLN 8% raised at EDP Brasil USD 18,096 1% Bank loans and capital markets; 17% Ring‐fenced policy essentially ‘non‐ EDP Brasil 1,370 recourse’ to EDP S.A. BRL 9% EDP Renováveis 579 73% 3% rai

  15. Slide 15: Change in Net debt

    Change in Net debt Change in Net Debt: Sep‐13 vs. Dec‐12 (€ billion) ‐0.1 Regulatory 18.2 2.1 18.1 Receivables 0.8 0.8 2.7 0.3 3.0 15.5 15.1 Net Debt Free Cash Regulatory Expansion Dividends Paid Net Debt Dec‐12 Flow (1) Receivables and Capex & Sep‐13 Securitizations Net Invest. (2) Net debt ‐€0.1bn

  16. Slide 16: Financial Liquidity position

    Financial Liquidity position (€ million) Sources of liquidity (Sep‐13) Maximum Number of Instrument Utilised Available Maturity Amount counterparties Revolving Credit Facility 2,000 21 0 2,000 03‐11‐2015 Domestic Credit Lines 159 8 0 159 Renewable Underwritten CP Programmes 150 1 0 150 Renewable Ter

  17. Slide 17: Net Debt Profile

    Net Debt Profile EDP consolidated debt maturity profile (€ billion) Impact Jan‐13 Credit Facility (€645m) Adjusted Avg. Debt Commercial paper Maturity (2): 3.9 years Other subsidiaries(1) EDP SA + BV Brazil: €137M Project Finance: €44M 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 2017 2018 20

  18. Slide 18: Main sources and uses of funds

    Main sources and uses of funds Sources of funds Use of funds  Cash & Equivalents (Sep‐13) : €1.8bn  Refinancing needs in 2013: RCF maturing in Nov‐13 €1.1bn  Available Credit Lines (Sep‐13): €3.0bn Bond maturing in Dec‐13 €0.35bn  Underwritten CP (Oct‐13): €0.1bn Loans maturing in 2013: €0.1bn 

  19. Slide 19: Net Profit breakdown

    Net Profit breakdown (€ million) 9M12 9M13 ∆% ∆ Abs. New capacity in EDPR, EDP Brasil and new EBITDA 2.742 2.799 +2% +57 hydro in Portugal partially offset by decommissioning of Setúbal oil plant Net Depreciations and 1.064 1.126 +6% +62 Provisions EBIT 1.679 1.673 ‐0% ‐5 Cost of debt: 4.3% in 9M13

  20. Slide 20: Business Areas

    Business Areas

  21. Slide 21: Iberia: Electricity and Thermal power demand

    Iberia: Electricity and Thermal power demand Electricity Demand in Iberian Market Thermal Power Production in Iberian market (% YoY) (TWh) % Weight in Iberia in 9M13 ‐37% 86 6 100% 16% 84% 21 10 Iberian 5 54 Market Portugal Spain ‐0.5% ‐2.5% ‐2.8% 9M12 Demand Chg. Hydro Chg. Special Nuclear & 9M13

  22. Slide 22: Liberalised Energy Activities Iberia (10% EBITDA)

    Liberalised Energy Activities Iberia (10% EBITDA) EDP Liberalised Power Plants Iberia – Production EDP Coal vs. CCGT – Load factors in 9M12 and 9M13 (TWh) (%) 9M12 9M13 +3% 9.4 9.6 Nuclear 9% ‐6% 9% Hydro 15% 50 +1.5x 36% 46 Coal 52% ‐9% 46% CCGT 24% ‐61% 9 9% 4 9M12 9M13 Coal CCGT Production +3%; h

  23. Slide 23: Liberalised Energy Activities Iberia (10% EBITDA)

    Liberalised Energy Activities Iberia (10% EBITDA) EBITDA Liberalised Activities in Iberian Market Adverse regulatory developments (€ million) Lower profitability of thermal plants • Regulatory developments: no capacity payments in Portugal (vs. €19m in 9M12) and lower in Spain (€‐4m); +0% New genera

  24. Slide 24: Long Term Contracted Generation Iberia (19% of EBITDA)

    Long Term Contracted Generation Iberia (19% of EBITDA) EBITDA LT Contracted Generation (€ million) PPA/CMEC Special regime ‐11% 608 544 +41% ‐14% 9M12 9M13  PPA/CMEC: decommissioning of Setubal fueloil plant in Dec‐12 (EBITDA 9M12: €78m)  Special regime: +2.1x YoY increase of mini‐hydro production

  25. Slide 25: Regulated Energy Networks Iberia (28% of EBITDA)

    Regulated Energy Networks Iberia (28% of EBITDA) EBITDA Adjusted EBITDA (1) (€ million) (€ million) Gas Iberia Gas Iberia Electricity Spain Electricity Spain Electricity Portugal Electricity Portugal ‐5% ‐6% 809 760 772 716 +6% ‐5% ‐21% ‐8% ‐5% ‐5% 9M12 9M13 9M12 9M13  Electricity Portugal: RoRAB d

  26. Slide 26: EDP Renováveis (25% of EBITDA): Growth from capacity additions

    EDP Renováveis (25% of EBITDA): Growth from capacity additions mitigated by new generation tax in Spain Installed Capacity Wind Power Production EBITDA (MW) (GWh) (€ million) Iberia USA Other (1) +7% +5% +5% 14,244 708 13,345 675 7,770 7,388 +13% 38% 36% +5% 47% 38% 47% 39% +1% 10% +13% 11% 12% +31%

  27. Slide 27: EDP Brasil (18% of EBITDA) EBITDA +42% YoY in local currency

    EDP Brasil (18% of EBITDA) EBITDA +42% YoY in local currency EDP Brasil EBITDA EDP Brasil Normalised(1) EBITDA (BRL million) (BRL million) Generation & Other Distribution Generation & Other Distribution +8% +42% 1,389 1,257 1,160 +14% 585 511 976 801 +125% 355 649 +4% 672 621 ‐5% 588 9M12 9M13 9M12

  28. Slide 28: EDP Brasil Distribution EBITDA: Reconciliation of reported and normalised growth

    EDP Brasil Distribution EBITDA: Reconciliation between +125% growth reported and +14% “normalised” growth EDP Brasil: Distribution EBITDA (R$ million) Tariff Deviations CDE Contributions 9M12 9M13 Gains with real estate disposals 801 53 585 511 335 ‐176 134 ‐128 122 ‐125 ‐172 16 355 Normalised (1) R

  29. Slide 29: EDP Brasil: Generation and Other (42% of EBITDA)

    EDP Brasil: Generation and Other (42% of EBITDA) EDP Brasil: Generation & Other EBITDA (R$ million) Pecém I Adjusted (1) 235 131 207 164 146 20 306 230 230 207 189 178 187 ‐3 ‐25 ‐32 ‐76 ‐72 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13E Energy Sold excl. Pecém (TWh) 2.1 2.1 2.0 2.1 2.4 2.0 1.9 2.0 EBITDA

  30. Slide 30: Outlook

    Outlook

  31. Slide 31: Fiscal measures in Portuguese State budget proposal for 2014

    Fiscal measures in Portuguese State budget proposal for 2014: Expected impact on EDP Extraordinary Contribution by the Energy Sector in Portugal in 2014 Sectors impacted: Electricity, Gas and Oil Power production assets exempted:  Power plants not yet in operation as of January 1st, 2014  0.85% on

  32. Slide 32: Measures to reinforce the financial sustainability of Portuguese electricity system

    Measures to reinforce the financial sustainability of Portuguese electricity system 1st package (May‐12)  2nd package (Oct‐13) Impact on EDP 2014E  Clawback of eventual gains made by Portuguese generators due to €12m  Cut of capacity payments distinct regulatory/fiscal conditions vs. its Spanish

  33. Slide 33: Regulatory Receivables in Portugal: Updated Outlook

    Regulatory Receivables in Portugal: Updated Outlook Regulatory receivables in the Portuguese electricity system (€bn) Tariff deficit tranches available for +0.7 securitisation by EDP: 5.3 4.6 4.7 4.9  €150m deficit created in 2011 (on 3.8 4.0 2.2 CMEC) to be collected in 2014‐15; Owed to 2.4 2.2 fi

  34. Slide 34: Outlook for 2013

    Outlook for 2013 EBITDA Breakdown (%)  4Q13: EBITDA performance dependent on hydro resources and market volatility Liberalized 10% 9% Activities Iberia  2014E: 3 hydro plants transferred from LT contracted; 75% of expected output already hedged (avg. selling price ~€54/MWh); adverse regulatory/fis

  35. Slide 35: Downward revision of Capex guidance for 2014/15

    Downward revision of Capex guidance for 2014/15 Consolidated Capex Breakdown(1) (€ bn) Major Drivers for Capex 2014E‐2015E Expansion Maintenance  New wind & solar capacity: +0.5GW(2) in 2014 and +0.3GW in 2015 2.1 mainly through PPAs in US 2.0 ~2.0  New hydro plants in Portugal: ~1.7 5 hydro plant

  36. Slide 36: A resilient business model in a challenging environment

    A resilient business model in a challenging environment Sound performance  EBITDA: +2% enhanced by  Cost of debt: 4.3% in 9M13 (vs. 4.0% in 9M12) diversification  Net Profit/EPS: +0% Profitable Growth  Expansion capex: Execution of new hydro in Portugal and Brazil; new wind in US (with PPAs)  T

  37. Slide 37: IR Contacts

    IR Contacts Miguel Viana, Head of IR Sónia Pimpão Elisabete Ferreira Ricardo Farinha Pedro Coelhas Noélia Rocha E‐mail: ir@edp.pt Phone: +351 210012834 Visit EDP Website Next Events Site: www.edp.pt October 31st: 3Q13 Results November 11th‐12th: EEI in Orlando Link Results & Presentations: November

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