Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — FY2018 Earnings Presentation
46 slides from Engie Energia Chile's earnings presentation, 2019
Slide 1: Engie Energía Chile Presentation to Investors Full Year 2018 Results
ENGIE ENERGÍA CHILE S.A. Presentation to investors Full year 2018 Results
Slide 2: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 4Q 2018 2
Slide 3: Snapshot: ENGIE, 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) 2018 (GWh) Solar Hydro 10% 30% Wind Wind 5% 7% Hydro 28% Solar 7% 24,211 MW 76,526 GWh SEN 3,300 Km Thermal Thermal 55% 57% 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/Fuel oil 1,928 MW (*) in Natural gas operation & 375 MW El Aguila I (2MW) Renewables in commissioning Pampa Camarones (6MW) Diesel Arica (14MW) 2,293 kms HV + MV
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 company ~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 – 4Q 2018 8
Slide 9: Key messages
KEY MESSAGES Solid results meeting the high end of 2018 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 capa
Slide 10: Recent events
KEY MESSAGES RECENT EVENTS INDUSTRY COMPANY • SIC-SING interconnection: In operations • Amendments to Codelco and Glencore since November 24, 2017, giving birth to SING PPAs signed on April 2: new tariff scheme, the SEN. The TEN project was ready SEN full indexation to CPI starting 2021, and ahead o
Slide 11: 2018: Our achievements
RESULTS IN LINE WITH GUIDANCE 2018: OUR ACHIEVEMENTS PROFITABLE LONG-TERM GROWTH; IMPROVED RISK PROFILE OUR PERFORMANCE New PPA w/distribution companies and Free Clients • Growth in contracted portfolio reaching ~10 TWh of contracted demand • Portfolio diversification (regulated vs. unregulated) 201
Slide 12: 2018: Our first steps in the decarbonization path
RESULTS IN LINE WITH GUIDANCE 2018: OUR FIRST STEPS IN THE DECARBONIZATION PATH DECARBONIZATION: OUR PERFORMANCE A DECISIVE, GRADUAL AND RESPONSIBLE PATH Early steps towards decarbonization • Development of TEN project => procurement of low-carbon energy sources • Decision not to build any new coal
Slide 13: 2018 results in line with high end range of guidance
RESULTS IN LINE WITH GUIDANCE: MASTERING THE GROWTH ACHIEVED 2018 RESULTS IN LINE WITH HIGH END RANGE OF GUIDANCE • EBITDA increased 36% mainly due to the new PPA with distribution companies • Recurring Net income almost doubled, while Non-recurring income was impacted by asset impairments 2017 2018
Slide 14: Demand supplied with own generation and energy purchases
RESULTS IN LINE WITH GUIDANCE: MASTERING THE GROWTH ACHIEVED DEMAND SUPPLIED WITH OWN GENERATION AND ENERGY PURCHASES US$/MWh 140 Average monomic price 120 US$115/MWh U12 & U13 coal plants: 2% of 2018 power supply. 100 Authorization to close down Diesel by Apr-19. Average fuel & 80 electricity purch
Slide 15: 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.) ● Unregulated contracts • 2019-2032: Up to 5,040
Slide 16: Building the future together with our clients
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 17: 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 18: Renewable capacity development projects
PAVING THE WAY FOR OUR ENERGY TRANSFORMATION PLAN RENEWABLE CAPACITY DEVELOPMENT PROJECTS Project development focused on energy transition: Geographic and power source diversification and gradual replacement of aging coal plants Nueva Chuquicamata Antofagasta Arica & Parinacota Biobío Los Lagos Alga
Slide 19: 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 Wind Algarrobal El Rosal Sectioning SS 22
Slide 20: New port: cost savings and 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 21: Infraestructura Energetica Mejillones (IEM)
A PLANT COMMITTED TO SUPPLY DISTRIBUTION COMPANIES INFRAESTRUCTURA ENERGETICA MEJILLONES. “IEM” Thermal contracted + port Synchronization Oct. 29: 120 GWh injected to grid in 2018 • 375MWe gross capacity => • Developed to supply distribution 337MWe net base-load capacity companies • Turnkey EPC cont
Slide 22: 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 will 2.5 increase to
Slide 23: Key drivers for our projected results
GUIDANCE: MASTERING THE GROWTH ACHIEVED & STARTING OUR TRANSFORMATION KEY DRIVERS FOR OUR PROJECTED RESULTS Demand & prices Solid results meeting the high end of 2018 + New PPA w/distribution co’s. US$ 350-370 mln EBITDA guidance + New PPA w/free Clients - Client migration US$ 160 to - PPA renegotia
Slide 24: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 4Q 2018 24
Slide 25: Regulated revenue from new PPA explains 36% EBITDA increase
FINANCIAL UPDATE REGULATED REVENUE FROM NEW PPA WITH DISTRIBUTION COMPANIES LARGELY EXPLAINS THE 36% EBITDA INCREASE By main effect In US$ Million +5 +4 (9) (72) +173 +12 TEN Insurance Sales to Contract result recovery free prices (net) (50% share) (BI) clients (9) Renegotiation (-24) (4) 376 (end R
Slide 26: Net recurring income almost doubled
FINANCIAL UPDATE NET RECURRING INCOME ALMOST DOUBLED THANKS TO IMPROVED OPERATING RESULTS In US$ Millions Recurring Results 160 +9 +78 +1 (5) minority +4 (62) interest Financial Other Insurance expenses FX Diff. recovery 101 Depreciation (PD) 103 Tax effects +9 +8 minority 87 minority (9) +8 i
Slide 27: Net debt evolution reveals healthy cash generation
FINANCIAL UPDATE NET DEBT EVOLUTION REVEALS HEALTHY CASH GENERATION Main cash flows In US$ Million +39 (20) (313) +51 +71 Cash +58 Income Accrued Taxes distribution +187 Dividends Interest + from TEN Financial (including var. 842 771 lease 40% CTH) deferred (tolling Operating financial CAPEX (*) agr
Slide 28: 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 2.0 2.2 2.00 1.6 1.7 1.500 Rating confirmed @ BBB (Stable Outlook) 1.00 .500 • Int
Slide 29: 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 56 4.00% 1,500 3.4% 60% 50 47 17 50% 3.00% 40 12 30 2,265 34 30% 30% 72 30% 30% 40% 1,000 2.3% 1,922 2.5% 30 2.2% 1,657 2.00
Slide 30: 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 31: Agenda
AGENDA Snapshots Key messages Financial update Addenda Engie Energía Chile - Presentation to Investors – 4Q 2018 31
Slide 32: 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$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 - - 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Unregulated Regulated Spot Energy+Capaci
Slide 33: Demand supplied with own generation and energy purchases, hedged
ADDENDA DEMAND SUPPLIED WITH OWN GENERATION AND ENERGY PURCHASES, HEDGED BY OUR INSTALLED CAPACITY Renewables Diesel 8% 1% Coal 58% • Increasing spot purchases due to (i) coal, gas and Installed renewable efficient capacity additions in the grid and (ii) Gas capacity start of PPA with distribution c
Slide 34: Generation and spot energy price history in the SING
ADDENDA GENERATION AND SPOT ENERGY PRICE HISTORY IN THE SING • Limited exposure to hydrologic risk until interconnection is fully operative • Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand (bilateral negotiation of prices and supply terms) • Maximum dema
Slide 35: Current regulatory and grid coordination challenges
ADDENDA CURRENT REGULATORY AND GRID COORDINATION CHALLENGES MW Generation North SEN – December 1 to 10, 2018 US$/MWh 3,000 200 180 2,500 160 140 2,000 120 1,500 100 80 1,000 60 40 500 20 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
Slide 36: 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 37: The SEN: a larger market for all players
ADDENDA THE “SEN”: A LARGER MARKET FOR ALL PLAYERS SEN – Dec-2018 24,211 MW 8,693 MW SING SEN “Sistema 6,348 MW 78 Eléctrico 4,714 Nacional” 3,450 SIC 3,400 MW 3,310 MW 21 45 271 1,370 79 127 1,928 MW 1,611 8 10 159 2,033 3,029 623 2,609 (*) 1,304 532 MW 1,127 660 532 350 Enel AES Gener Colbún EECL
Slide 38: 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 December 2018) (2021, proforma PPA renegotiation) Gas 12% U.S. CPI U.S. CPI U.S. PPI U.S. PPI Node Price No
Slide 39: Transmission
ADDENDA TRANSMISSION Infrastructure EECL, a relevant player in the transmission business 2,293 kms. EECL operates 23 substations with total capacity of 844 MVA 844 MVA US$ 16 million regulated revenue p.a., 5 to increase to US$ 18 million p.a. in 2019 due to the Transmission start-up of required exp
Slide 40: Transmisora Eléctrica del Norte (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 41: Transmisora Eléctrica del Norte (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 Dec.31, 2018 FX rates) 2013 FX Rates Chile CPI US CPI AVI (VI annuity): 73.9
Slide 42: Copper industry
ADDENDA COPPER INDUSTRY US¢/lb Copper production in Chile ('000 tons) GWh 6,500 500 8,000 Copper price LME (US¢/lb) SEN electricity demand 450 7,000 5,500 400 6,000 350 4,500 5,000 300 3,500 250 4,000 5,557 5,776 5,761 5,772 5,553 5,761 5,413 5,321 5,361 5,328 5,394 5,419 5,434 5,504 200 2,500 5,263
Slide 43: Ownership structure
ADDENDA OWNERSHIP STRUCTURE Pension funds Local institutions Foreign institutions Individuals 52.76% 23.60% 17.09% 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 44: EECL organizational structure
ADDENDA EECL ORGANIZATIONAL STRUCTURE Shareholders’ assembly Committee Functional committees: Board of directors - Management of directors - Commercial origination - Development - Business knowledge CEO - Stakeholders & Regulation - Change management - Construction - Portfolio & risk management Inte
Slide 45: 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 2018 RESULTS IN OUR WEB PAGE 2018 Presentation Addenda Press Recorded Financial Analyst Release conference report pack audiocast Engie Energía Chile - Present
Slide 46: 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