Endesa S.a. · BME:ELE
Endesa — FY2001 Earnings Presentation
86 slides from Endesa's earnings presentation, Feb 27, 2002
Slide 1: Endesa 2001 Focus: Core & Value
Endesa 2001 Focus: Core & Value Analyst presentation Madrid, 27 february 2002
Slide 2: Index
Index 1. Review of Year 2001 Results 2. Strategy Overview 3. Conclusions 2
Slide 3: Index
Index 1. Review of Year 2001 Results 2. Strategy Overview 3. Conclusions 3
Slide 4: Year 2001 At a Glance
Year 2001 At a Glance • 7.1% growth in EBIT pro-forma • 5.1% increase in net income to Eur 1.50 Bn after Eur 84 M impact from Argentinean devaluation • Spanish electricity business (*): • EBIT: +6.3%. Q4: +30.2% • Generation + supply EBIT up 4%. Distribution EBIT +9.9% despite tariff reduction due t
Slide 5: Year 2001 At a Glance
Year 2001 At a Glance • Latin American electricity business: • EBIT: +9.3% (+14.9% ex-Transelec in 2000). Q4 EBIT: +18.8%. Despite currency devaluation throughout the year • Favourable outcome of negotiations on regulation in Brazil • Cost control: workforce reduction of 5%, better than initial targ
Slide 6: Financial Highlights for 2001
Financial Highlights for 2001 Euro million CONSOLIDATED RESULTS FY 2001 FY 2000 Change (%) Revenues 16,085 15,682 +2.6% EBITDA Pro-forma (1) 5,004 4,799 +4.3% EBIT Pro-forma (1) 3,175 2,966 +7.1% Net Income 1,479 1,407 +5.1% EPS 1.40 1.33 +5.1% DPS 0.6825 0.6500 +5.0% Employees year end 26,889 29,06
Slide 7: Strong operating performance in 4Q 2001
Strong operating performance in 4Q 2001 +24% 734 • Domestic EBIT +30% pro-forma, 594 +19% despite reversal of island 398 compensation in 4Q 336 • Distribution EBIT + 44% growth +44% due to strong cost reduction 193 134 +15% • Generation + supply EBIT +15% 124 143 • International EBIT +19%, 4Q00 4Q01
Slide 8: Consolidated EBIT 2001
Consolidated EBIT 2001 • 7.1% growth at operating level - despite difficult environment in Spain and Latin America • Domestic EBIT represents 77% of total EBIT on proportional consolidation BREAKDOWN OF EBIT BY DIVISION (1) BREAKDOWN OF EBIT BY COUNTRY (%) Euro Million Peru 7.1% Col 3,175 6% 2,966 6
Slide 9: Domestic Business EBIT 2001
Domestic Business EBIT 2001 DOMESTIC EBIT BREAKDOWN Euro Million • Despite lower tariff, distribution + 6.3% 1,799 EBIT increased by 9.9% 1,692 supported by strong cost + 9.9% reduction in Q4 of Eur 61 M 664 730 4.0% • Generation & Supply EBIT increased by 4% affected by: • higher average generation
Slide 10: Domestic Electricity Controllable Cost Reduction 2001
Domestic Electricity Controllable Cost Reduction 2001 • Headcount -10.2% to 15,027, • Controllable cost decreased by surpassing 2001 target. 3.2%, in line with the 2001 • Reduction in Q4: 2.7% target • -10.6% reduction in Q4 WORKFORCE EVOLUTION CONTROLLABLE COST EVOLUTION Euro Million 16.739 -10.2%
Slide 11: Endesa Italia 2001: Successful performance since takeover
Endesa Italia 2001: Successful performance since takeover Q4 EBITDA (M Eur) Q4 NET INCOME +52.9% X 3.4 133 41 87 12 Takeover Business Actual Business Actual plan plan 20 Sep-31 Dec FY GENERATION TWH Q4 WORKFORCE -11.5% Exceeding +1.7 % 1,580 business plan 16.0 16.2 1,398 Hydro & 1.9 others 2.0 Therm
Slide 12: Latin America: EBIT Breakdown 2001
Latin America: EBIT Breakdown 2001 • Difficult environment: devaluation, economic recession, Argentinean crisis and rationing in Brazil • Generation EBIT +23%. Higher prices and hydro output, cost cutting • Distribution: EBIT +14%. Cost cutting+compensation Brazil (Eur 160 M) • Genesis plan continue
Slide 13: Impact of Argentinean devaluation in 2001
Impact of Argentinean devaluation in 2001 Argentina January 2002 devaluation accounted for in 2001 at 1 US$ = 1.7 AR$ Exposure to Argentina Dec. ’01 Impact of Argentinean Peso devaluation in year 2001 figures Assets * 687 1.4% EBIT * 134 4.2% In Net Income Eur (84) M Net Income -17 -1.1% US$ debt Ar
Slide 14: Telecommunications: Financial Performance in 2001
Telecommunications: Financial Performance in 2001 • AUNA: •AUNA reached Eur 129 Mn EBITDA, Eur AUNA Results 811 Mn increase from 2000, exceeding its Euro Million business plan. 2,362 •Customers:10 Million, 44.5% higher +60% 1,481 • SmartCom: •Revenues up by 67% to Eur 113 M •EBITDA increased by 50%
Slide 15: Evolution of Financial Result 2001
Evolution of Financial Result 2001 • Financial expenses -2% • Unrealised FX losses Eur 674 M , 39% from Argentina 231 139 150 141 163 Financial Expenses Net FX Monetary Other Diff Correction -398 2000 2001 Average interest cost 5.85% -1,663 -1,628 15
Slide 16: Others
Others • Extraordinary results • Total net extraordinary results amounted to Eur 579 M • International Eur 435 M profit from Eur 494 M gain from Edenor disposal. Eur 114 M provision in CERJ • Domestic Eur 151 M profit: Eur 152 M gain from the sale of 12.5% of Viesgo • Taxes • Effective tax rate of 5
Slide 17: Cash Flow and investments in 2001
Cash Flow and investments in 2001 Sources of funds Uses of funds (Eur Bn) 8.40 0.73 Other Debt 2.42 1.51 Provisions Pensions Early retirements: 1.4 0.71 Dividends Other 1.40 2.20 Equity Invest Europe: 1.45 Disposals 1.24 AUNA: 0.50 0.70 Financial Invest 1.14 New Capacity Domestic: 1.30 Cash Flow 3.3
Slide 18: 2001 results: conclusions
2001 results: conclusions • Operating growth in all lines of business in 2001 • Strong operating performance in 4Q in Spain and Lat.America. • Positive regulatory outcome in Brazil in 4Q • Continued cost reduction throughout 2001 • Endesa Italia outperforms expectations • AUNA full year EBITDA posit
Slide 19: Index
Index 1. Review of Year 2001 Results 2. Strategy Overview 3. Conclusions 19
Slide 20: Key elements for Strategy Focus on Core & Value
Key elements for Strategy Achieved targeted size Our priorities excellent & competitive • Profitability asset base • Strengthen balance sheet Focus on Core & Value High potential Strong organic for growth improvements 20
Slide 21: Endesa has reached a solid and well balanced business platform
Endesa has reached a solid and well balanced business platform... Installed Capacity Mix 2002 EBITDA Year 2001e GW 8,3 Eur Million 12,4 12,4 Enel 8.112 8,112 Suez 7.434 7,486 22,9 22,9 20,3 Endesa 5,004 5,004 E.ON 4,117 1997 2000 2002 RWE 3.947 7,905 Spain Latam Europe Electrabel 2,222 2,397 Iberdro
Slide 22: ... in markets with solid organic growth
... in markets with solid organic growth... Customers (Million) Spain Latin America +12.7% 11.2 +17.0% 11.7 10.0* 10.0 9.4 8.6 1997 2001 2006 1997 2001 2006 * Excluding Viesgo Expected Accumulated growth in Demand 2001-2010 source: WEO Europe 23% Spain 35% Latin 46% America World 31% 22
Slide 23: …with a high potential for improvements
…with a high potential for improvements GENERATION O&M (Eur/MWh) O&M (US$/MWh) 8.9 4.2 -17% 8.0 -33.8% -25% 5.4 4.5 5.3 2.4 1.8 1996 2001 2006 2001 2006 1998 2001 2006 Spain Europe Latin America DISTRIBUTION O&M + capex (Eur/MWh) O&M + capex (US$/MWh) 28.0 22.7 -36% 17.7 -30% 12.6 14.5 8.9 1996 2001
Slide 24: A focused strategy to maximize the value of our core business
A focused strategy to maximize the value of our core business 1. Profitability 4. Strengthen Core 2.Portfolio . 2.Portfolio balance sheet & management management Value 3.Expansion based on organic growth 24
Slide 25: A focused strategy to maximize the value of our core business
A focused strategy to maximize the value of our core business 1. Profitability 4. Strengthen Core 2.Portfolio . 2.Portfolio balance sheet & management management Value 3.Expansion based on organic growth 25
Slide 26: Profitability
Profitability Extracting value through efficiency & growth “ENERGY:Our core business” Spain Europe Latin America •Reinforce leadership •Consolidate current •Consolidate current business Business •Cost reduction plan •Achieve Business •Strong organic growth •Optimise asset Plan portfolio new capacity
Slide 27: Profitability
Profitability Extracting value through efficiency & growth “ENERGY:Our core business” Spain Europe Latin America •Reinforce leadership •Consolidate current •Consolidate current business Business •Cost reduction plan •Achieve Business •Strong organic growth •Optimise asset Plan portfolio new capacity
Slide 28: Spain an attractive market: Strong demand has tightened reserve margin
Spain an attractive market: Strong demand has tightened reserve margin Expected evolution of reserve Annual demand increase margin * Percent Installed 6.6 6.5 Coverag Capacity e Index (GW) 5.8 5.5 1,45 Forecast 70 4.3 1,40 60 1,35 2.8 50 1,30 1,25 40 2.0 1.7 1,20 1.3 1.2 30 1,15 20 1,10 10 1,05 1997
Slide 29: Tariff reductions in Spain have placed them amongst the lowest in Europe
Tariff reductions in Spain have placed them amongst the lowest in Europe Electricity prices for different Annual tariff reduction customer categories in 2001 Percent (Index = 100) 6% CPI growth 4.0% Yearly reduction rate (%) 4% 3.2% 250 2.9% 2.7% 2.0% 2.0% Spain EU Max EU Min 1.4% 2% 200 0% 0.3% 150
Slide 30: Recent Regulation Shows Some Positive Signals
Recent Regulation Shows Some Positive Signals • Highlights of the 2002 tariff: • First increase in tariffs in 6 years • New methodology defined for TPA* tariffs • Compensation for extrapeninsular generation increased by 55% • Pending regulatory issues: • Objective calculation methodology for integra
Slide 31: Optimizing asset portfolio: Hedge volatility in the market
Optimizing asset portfolio: Hedge volatility in the market Volatility in the wholesale Balanced market position market GWh/month 12 8.000 Production Daily pool price evolution 10 7.000 6.000 8 C Eur /kWh 5.000 4.000 Supply 6 3.000 2.000 Net position 4 1.000 0 2 -1.000 1998 1999 2000 2001 -2.000 0 1/
Slide 32: Optimizing asset portfolio: Well-balanced generation mix
Optimizing asset portfolio: Well-balanced generation mix Diversified Generation mix* MW • Strong low-cost generation (hydro & nuclear): 21,723 • Same size as main competitor 19,094 Cogen and in base-load generation 1,880 renewables 3,600 • Hydro production less volatile CCGT+ 2,800 than average impo
Slide 33: Optimizing asset portfolio: Efficient existing generation plan
Optimizing asset portfolio: Efficient existing generation plan Availability of thermal Generation O&M cost Remaining life and nuclear (%) Eur/MWh Years 92,1 39 8,9 91,0 -39% 22 5,4 -17% 17 4,5 1997 2001 1996 2001 2006 Hydro Nuclear Thermal Current generation portfolio has improved its performance an
Slide 34: Optimizing asset portfolio: CCGTs will improve asset mix
Optimizing asset portfolio: CCGTs will improve asset mix Variable costs by fuel type Full cost of Endesa plant Percent Eur/MWh % 210 Current Endesa plant 39.0 32.5 100 21.0 88 66 Domestic Imported CCGT Oil-gas coal (*) coal Cash cost Full cost CCGT CCGTs will replace obsolete oil-gas plants in the m
Slide 35: In the distribution business, Endesa has also improved its performance
In the distribution business, Endesa has also improved its performance significantly Customers Consumption per Distribution O&M + customer Capex Thousands kWh/year Eur/MWh 17,7 11,242 8.674 -29% 8.327 12,6 9,974 -30% 8,9 8,926 (*) 7.428 1997 2001 2006 1997 2001 2006 * Excluding Viesgo 1996 2001 2006
Slide 36: Ensuring a profitable supply activity
Ensuring a profitable supply activity 2001 has shown a significant Focus for the future improvement in profitability Prices to eligible customers (Euro cent/kWh ) 4,98 Profitable leadership, through increasing unit margins Enlarge our customer 4,67 + 6.6% relationship: Cross-selling of services (Ega
Slide 37: Becoming a credible competitor in gas
Becoming a credible competitor in gas • Participation in regasification plants and import Upstream pipelines to avoid potential bottlenecks • Diversification of supply sources • Leverage on significant purchase power Sourcing • Focus on flexibility of conditions and sources • Regulated business Tran
Slide 38: Gas sourcing: competitive and flexible conditions
Gas sourcing: competitive and flexible conditions Endesa’s expected needs in Endesa´s gas procurement Spain vs. current supply contracts (bcm) needs for Europe 2007-2010 6.6 Expected consumption (bcm) 5.0 Spain CCGT (4,000 MW) 3.4 Islands 1.8 3.2 Supply 3.3 Total 8.5 2.1 Rest of Europe 0.9 3.0 CCGT
Slide 39: Expected position in gas market
Expected position in gas market (on total gas consumption in Spain) Current situation Rest Gas Natural • ENDESA is the electric utility with 20% the broadest presence in the Endesa 5% Spanish natural gas market • ENDESA’s market share in supply 75% of gas is higher than Gas Natural’s share in supply
Slide 40: Profitability
Profitability Extracting value through efficiency & growth “ENERGY:Our core business” Spain Europe Latin America •Reinforce leadership •Consolidate current •Consolidate current business Business •Cost reduction plan •Achieve Business •Strong organic growth •Optimise asset Plan portfolio new capacity
Slide 41: Figures for European Investments 2001
Figures for European Investments 2001 European EBITDA Eur 249 M = 8.5% of Domestic EBITDA > Viesgo EBITDA Total Company Endesa • Production: 16.2 TWh Italia • Revenues: Euro 1,210 M 45% • EBITDA: Euro 361 M E. Italia+SNET % Share of +Tejo Endesa • Production: 7.6 TWh Production 27.8 TWh 11.0 TWh SNE
Slide 42: Italy
Italy • Successful performance Expected evolution of since takeover operating parameters • Focus on extracting value 2002/06 through: 2001 2006 • Improving assets 5,720 MW 6,200 MW efficiency • Enhancing gross margin 16 TWh 30TWh • Reducing fixed costs 12.3 GWh/ 27 GWh/ • Tax optimisation employee e
Slide 43: France and Portugal
France and Portugal FRANCE: SNET 2001 PORTUGAL: 2.600 MW: Flexible mid-merit 600 MW coal-fired+ 61 MW 2900 GWh supply to eligible renewals customers (3% market share) Gas distribution (Setgas, Portgas) Focus for the future Focus for the future •Extracting value from current •Extracting value from cu
Slide 44: Supply and Energy Management
Supply and Energy Management A fundamental part of our balanced portfolio and the key to leveraging value Energy Management Flexible portfolio management •60 TWh traded - 2001 •90% of the trading physical, mostly in the German and French markets •Energy movement activities across all III countries C
Slide 45: Profitability
Profitability Extracting value through efficiency & growth “ENERGY:Our core business” Spain Europe Latin America •Reinforce leadership •Consolidate current •Consolidate current business Business •Cost reduction plan •Achieve Business •Strong organic growth •Optimise asset Plan portfolio new capacity
Slide 46: Consolidating current business: positive track record
Consolidating current business: positive track record An extraordinary tough environment: - Excellent Asset Base • Asian / Latin American Crisis •“El Niño” effect in Chile - Strong Operating and • Crisis in Argentina, Colombia and Peru Financial improvements • Rationing in Brazil Positive track reco
Slide 47: Strong organic growth
Strong organic growth DEMAND GROWTH DESPITE ENVIRONMENT COMSUMPTION PER CUSTOMER (KWh/year) and CUSTOMERS (000) Demand (GWh) SPAIN: 8,327 KWh/year 69,537 Without rationing 55,899 Without rationing 5,384 51,766 53,747 53,260 4,878 4,908 4,959 11,703 9,688 10,005 4.0% 9,414 3.8% 4,689 1999 2000 2001 2
Slide 48: Genesis Project: strong financial and operating improvements
Genesis Project: strong financial and operating improvements Generation Workforce D IEVE IEVE D ACH O&M (US$/kW) 13.4 Employees (end year) ACH 16,880 8.7 9.2 3,884 11,400 (2,157) 10,409 1,727 2,129 12,996 (4,314) 1998 2001 Initial Target 2003 8,682 9,271 Distribution SE N COUR June 99 2001 Initial T
Slide 49: Proven skills deliver significant improvements in distribution
Proven skills deliver significant improvements in distribution Efficient Cost Management Investments (Capex) O&M (US$/MWh) - 24.5% 16.21 12.24 8.5 CAPEX (US$/MWh) 11.13 - 12.0% CONSTANT INITIAL 11.97 1998 2001 TARGET 10.53 2003 LOSSES (%) 5.0 = with initially expected sales volume 14.3 Rationing 9.5
Slide 50: Genesis Project new outlook and targets
Genesis Project new outlook and targets We maintain our targets adapting them over time in an... COST/BENEFIT BALANCE O&M (US$/MWh) LOSSES (%) INVESTMENT (US$/MWh) DISTRIBUTION 13.1% Initial Target 03: 8% Initial Target 03: 12.0 Initial Target 03: 11.9% 16.2 10.6% 8.5 US$/MWh 10.5 9.4% 5.0 US$/MWh 1
Slide 51: Proactive management of regulation to offset country risk
Proactive management of regulation to offset country risk Average Generation Sales Price (Euro/MWh) Average Value Added for Distribution (VAD) (US$/MWh) 34.3 33.1 30.7 30.3 30.9 31.8 28.3 31.2 30.6 1999 2000 2001 Average latam generation sales price (US$/MWh) 1999 2000 2001 Chile Node Price (Mill/kW
Slide 52: Profitability
Profitability Extracting value through efficiency & growth “ENERGY:Our core business” Spain Europe Latin America •Reinforce leadership •Consolidate current •Consolidate current business Business •Cost reduction plan •Achieve Business •Strong organic growth •Optimise asset Plan portfolio new capacity
Slide 53: Telecoms expected performance
Telecoms expected performance Customer Base Market Shares Fixed Mobile Internet Dec. 2001 2006 E (Million) 24.4 ?Mobile 17.7% 21% AUNA 43% 10.0 12.6 ?Fixed 4.5% 10% 7.0 2.3 1.4 ?Internet 40% 43% 8.6 3.7 5.2 1.9 2.6 3.2 Amena share in new adds in 2001: 2006 E 29% 2000 2001 (Thousands) 1,600 2001 12.6
Slide 54: Auna: investment to date and returns
Auna: investment to date and returns Endesa´s investment in telecoms in Spain The capital gain from the disposal of Airtel and Netco amounts to 71% of the accumulated investment in AUNA. Euro million 918 Investment Expected equity in Auna contribution as of 2001 to Auna 2002-2006 Airtel and Netco di
Slide 55: Auna's shareholder structure
Auna´s shareholder structure • TI’s 26.9% is being purchased by SCH plus ING (22,9%), accompanied by Endesa (2%) and Unión Fenosa (2%), AUNA’s core shareholders • Endesa will continue to support the AUNA project and seek to extract value in the medium term Before After Others Others 17.6% Endesa 17.
Slide 56: Telecoms expected performance
Telecoms expected performance AUNA Smartcom Revenues (Mill Eur) Revenues (Mill USD) 330 6,605 CAGR= 23% CAGR= 28% 3,255 151 2,362 101 2001 2002 (e) 2006 (e) 2001 2002 (e) 2006 (e) EBITDA (Mill Eur) EBITDA (Mill USD) 152 CAGR= 87% 2,919 620 129 8 2001 2002 (e) 2006 (e) 2001 -25 2002 (e) 2006 (e) Net
Slide 57: A focused strategy to maximize the value of our core business
A focused strategy to maximize the value of our core business 1. Profitability 4. Strengthen Core 2.Portfolio . 2.Portfolio balance sheet & management management Value 3.Expansion based on organic growth 57
Slide 58: Portfolio Management: Divesting Non-Core
Portfolio Management: Divesting Non-Core DIVESTITURE PLAN: 97-01= Eur 5.7 Bn 02-06= Eur 5-6 Bn + Materialise Enhance Enhance value Eva/free cash M/T Extract Extract Restructure value value - i.e. E Viesgo Non-core Adjacent Core 58
Slide 59: A focused strategy to maximize the value of our core business
A focused strategy to maximize the value of our core business 1. Profitability 4. Strengthen Core 2.Portfolio 2.Portfolio . balance sheet & management management Value 3. Expansion based on organic growth 59
Slide 60: Expansion: Enhancement of our Core Business
Expansion:Enhancement of our Core Business Endesa’s expansion plan is focused on the core energy business, profiting from the organic growth of our own markets Investment in Core Maintenance Capex: Eur 6.1 bn Prioritising financial Capacity expansion and replacement : resources Eur 6.9 bn/ 9.3 GW Co
Slide 61: Investment Plan for organic growth 2002-2006
Investment Plan for organic growth 2002-2006 EXPANSION PLAN (Eur Bn ) Actual budget Inital budget 2002 - 2006 2001 - 2005 Dom. (CCGT + gas) 2.9 2.6 Europe 2.1 5.0 Lat America 0.9 4.2 Telecom.& New. Tech. 0.5 0.8 Other 0.5 1.8 6.9 14.4 9 CCGT to be commissioned in 2002-06: SPAIN 1 imported coal plant
Slide 62: Expected new capacity to be installed in 2002-2006
Expected new capacity to be installed in 2002-2006 MW installed per year 3 CCGT 9,271 Latin America 1 Hydro 1,806 Europe Spain 2,534 2,460 3,600 776 9 CCGT 1,782 730 1,533 300 962 800 3,865 400 1,200 1,200 9 CCGT 1 Imported Coal 962 833 930 582 558 2002 2003 2004 2005 2006 Total Excluding co-generat
Slide 63: A focused strategy to maximize the value of our core business
A focused strategy to maximize the value of our core business 1. Profitability 4. Strengthen Core 2.Portfolio . 2.Portfolio balance sheet & management management Value 3.Expansion based on organic growth 63
Slide 64: Debt and Cash Flow in 2001
Debt and Cash Flow in 2001 Euro million 452 25,007 1,906 21,936 3,347 841 23,101 2,902 713 1,236 2,544 Viesgo cash Provisions in 2002 358 560 Dividends Increase Cash flow Capex working Others FX effect capital Financial Divestitures Investments Debt Debt Debt Dec.00 Dec.01 ex-Viesgo • Total investme
Slide 65: Endesa enjoys a high credit rating within the industry
Endesa enjoys a high credit rating within the industry Endesa Enersis Endesa Chile MOODY´S A2 Baa1 Baa1 STANDARD& POOR´S A A- BBB+ FITCH A+ A- A- Endesa vs. European and Resto Aa US utilities: Moody´s 13,1% 12,3% ratings (*) Baa3 12,2% Endesa’s A1-A2 20,9% Baa2 14,0% A3 Baa1 14,0% 13,5% (*) Based in
Slide 66: Debt structure and cost as Dec 2001
Debt structure and cost as Dec 2001 Total debt as of December 2001: Eur 25.0 bn Allocation Cost by currency Domestic 47% Floating Vs. Fixed International 53% Chilean Peso 4% Other 1% Real .B 3% Endesa Euro Fixed Int'l 4.3% 12% US$ Fixed Enersis 7.2% 18% 27% 34% Endesa 10% 47% 11% Euro Hedged 4.9% US
Slide 67: Average cost of debt
Average cost of debt 8.63 8.22 7.9 % International 6,93 6.93 6.9 7.02 Energy Business 6.47 Endesa Group 6.31 Cost of debt 5.85 5.6 5.54 4,96 EU10-Yr 5.10 4.81 4.73 4.6 4.71 4.96 Endesa Spain (*) 3.9 1996 1997 1998 1999 2000 2001 • Financial flexibility: Eur 2.3 bn 5-year credit lines (Euribor + 12.5
Slide 68: Financial Strategy: Reduction of Leverage
Financial Strategy: Reduction of Leverage Cash flow + divestitures will allow to cover investment plan plus significant improvement in leverage EBITDA to Interest Cost Expected evolution of leverage (*) -0.8 6.0 2.0 points 5.0 1.4 3.4 3.5 1.2 1.2 2001 2001 2004 2006 2000 2001 2004 2006 Debt to Marke
Slide 69: Latin American currencies
Latin American currencies No contagion of Argentinean crisis • In the Q4 Chilean and Brazilian currencies have recovered versus the Euro despite the Argentinean crisis • Chilean peso weakness mostly related to 30-year low copper prices 2001-02 CH$ and R$ vs. Euro 10 year CH$ vs. Euro 140 650 135 130
Slide 70: Index
Index 1. Review of Year 2001 Results 2. Strategy Overview 3. Conclusions 70
Slide 71: Conclusions
Conclusions 1. Profitability 4. Strengthen Core 2.Portfolio . 2.Portfolio balance sheet & management management Value 3.Expansion based on organic growth 71
Slide 72: Forward-looking Statements
Forward-looking Statements: Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the United States Private Securities Litigation Reform Act of 1995. The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This presentation co
Slide 73: Core, Focus & Value
Core, Focus & Value Madrid, 27 february 2002 73
Slide 74: Operational Highlights Year 2001
Operational Highlights Year 2001 OPERATIONAL DATA Change % FY 2001 FY 2000 FOR THE GROUP Electricity Produced +3.0% 137,236 133,242 (GWh) Electricity Distributed +2.3% 135,351 132,351 (GWh) Employees (end of - 7.5% 26,889 29,062 period) (*) OPERATIONAL DATA % DOMESTIC INTERNATIONAL ELECTRICITY INTER
Slide 75: Low Hydraulic Reserves Have Resulted in Higher Prices
Low Hydraulic Reserves Have Resulted in Higher Prices Reservoir levels: evolution 2001-2002 18,000 16,000 6.0 14,000 5.0 / /kW The low reserve 12,000 GWh 4.0 h 10,000 cEur margin has resulted 8,000 3.0 in a higher pool 6,000 2.0 price volatility 4,000 2,000 1.0 0 0.0 Pool prices have 2 Ene 27 Feb 24
Slide 76: EGAR: Providing multiple services and products
EGAR: Providing multiple services and products • 3 pilot test succesfully completed in 2001 • Coverage of needs • Wide and growing offer of home services/products • Highest service quality • Guarantee of brand • Global customer • Supported by management Endesa • Single phone • Guaranteed service • G
Slide 77: CCGTs will improve profitability of domestic business
CCGTs will improve profitability of domestic business Plant costs by hours of operation Eur/kW ba 360 Oil-gas Oil-Gas CCGT lower costs lower 240 costs CCGT 120 3,180 hours 0 0 1500 3000 4500 6000 7500 Hours of operation CCGTs will replace obsolete oil-gas plants as their total costs are lower as lon
Slide 78: Endesa's capacity additions in Spain
Endesa’s capacity additions in Spain 930 3,865 Cumulative data in MW 130 800 1,065 Imported Coal 558 158 400 582 CCGT # 5 182 800 400 833 C. Colón 433 962 400 2,800 Island Tarragona 2,000 162 Imported Coal 800 San Roque Mainland CCGTs Besos 2002 2003 2004 2005 2006 Total 2002/06 2002/06 Expected clo
Slide 79: Endesa's gas supply: competitive and flexible conditions
Endesa’s gas supply: competitive and flexible conditions Spain: no foreseeable risk of unavailability in the mid-term 31 bcm Others ELE 18 bcm GN 2006 2001 Needs Announced Market • Total volume of contracts announced by competitors well above expected demand • Likely oversupply in the market • Mid-t
Slide 80: Co-generation and Renewables
Co-generation and Renewables 2001 2006E Others Others 184 MW 324 MW 10% 9% Minihydro Minihydro Wind 319 MW 206 MW 9% 11% 825 MW Wind 44% 2,120 MW Cogen Cogen 59% 837 MW 680 MW 23% 36% Total: 1,895 MW Total: 3,600 MW (*) Capacity in operation and under construction • Endesa designs and markets wind-p
Slide 81: SNET: Examples of Knowledge & Best Practice Transfer
SNET:Examples of Knowledge & Best Practice Transfer • O&M and TPM (Total Productive Maintenance) • 60% reduction in total maintenance hours per year • Reduce overtime • Centralised purchases and renegotiatin of supply contracts • Workforce reduction • Coal + fuel purchases; Coal Stocks • Service con
Slide 82: Latin America: a tough environment
Latin America: a tough environment • Demand Growth despite weaker economy and Brazilian rationing 6.4% 6.0% 5.5% 5.6% Distribution 3.9% 3.8% 1.9% 3.0% 2.1% 2.0% 1.8% Actual sales growth 2001 Initial budget 2001 0.5% GDP (e) growth 2001 Argentina -0.2% Peru Chile Colombia Brazil -1.5% -8.5% Generatio
Slide 83: Argentina: outcome of crisis still uncertain
Argentina: outcome of crisis still uncertain 2002 Macro Scenario Argentina • Negotiations with authorities under way to compensate for tariff freeze and de-dollarisation. Endesa budget Sensitivity to • Additional risks from new assumptions worse conditions conditions: GDP -7.0% -10.0% Exchange rate
Slide 84: Brazil: compensations for rationing and new structural reforms
Brazil: compensations for rationing and new structural reforms ARTE: agreement with authorities • Dec 2001: compensation agreed to Latest developments: distributors for rationing- related losses and setting a new • Power rationing is ending on March methodology for distribution tariff 1st. adjustmen
Slide 85: Activity Levels Electricity Business
Activity Levels Electricity Business Sales to end 164.1 customer, 135.3 CAGR 6.1% 63.0 TWh 48.0 87.3 101.1 CAGR 2.6% 2001 2006 Domestic LatAm Output 197.9 CAGR 100% TWh 44.7 137.3 44.5 62.2 CAGR 7.3% 92.8 91.1 CAGR (0.4)% 2001 2006 Domestic LatAm Europe Total 85
Slide 86: Endesa 2001
Endesa 2001 Focus: Core & Value Analyst presentation Madrid, 27 february 2002