Endesa S.a. · BME:ELE
Endesa — FY2004 Earnings Presentation
55 slides from Endesa's earnings presentation, Feb 14, 2005
Slide 1: 2004 Financial Results
2004 Financial Results February 14th 2005
Slide 2: 2004: Solid Results supported by a diversified business portfolio
2004: Solid Results supported by a Highlights diversified business portfolio Spain: Reinforce of leadership Strengthened 42% share in Generation position in all 43% share in Distribution business lines Europe: Consolidation of Endesa’s position Latin America: Generation expanded, tariff reviews, dem
Slide 3: Strengthened position in all business lines
Highlights Strengthened position in all business lines Generation (Gwh) Sales (Gwh) 177,812 180,932 155,081 +12.5% Latam 161,500 +12.0% Latam 55,106 52,314 46,480 49,526 +6% +19% 25,012 31,887 17,867 Europe 18,977 +40% +68% Europe 93,734 97,694 96,731 +4% 92,997 +4% Spain & Spain & Port. Port. 2003
Slide 4: 2004 Consolidated Results
Highlights 2004 Consolidated Results €M 2003 2004 % Change Revenues 16,239 17,642 +8.6% EBITDA 4,750 4,885 +2.8% EBIT 3,144 3,242 +3.1% Net Financial Expenses -1,223 -1,134 -7.3% Net FX 383 8 -97.9% Net Extraordinary 277 146 -47.3% Net Income 1,312 1,379 +5.1% Net Financial Debt 17,250 16,505 -4.3%
Slide 5: Diversified portfolio delivers steady growth
Diversified portfolio delivers steady growth €M EBIT +3.1% 3,242 3,144 Latam +10.3% 1,071 1,181 268 +47.0% 394 Europe -6.1% 1,780 1,672 Spain & Port. 2003 2004 5
Slide 6: 2004 Results: Spain and Portugal
2004 Results: Spain and Portugal 6
Slide 7: 2004 Spain and Portugal Results
Spain 2004 Spain and Portugal Results and Portugal €M 2003 2004 % Change Revenues 10,574 11,061 +4.6% EBITDA 2,824 2,726 -3.5% EBIT 1,780 1,672 -6.1% Net Financial Expenses -516 -494 -4.3% Net Extraordinaries 380 -131 -134.5% Net Income 1,207 871 -27.8 % Recurrent Net Income up by 15% 7
Slide 8: Strong Growth in Generation and Sales
Spain Strong Growth in Generation and Sales and Portugal Generation Mainland: +3.9% 84.5 TWh +4.2% to 97.7 Islands: +6.1% 13.2 TWh TWh(1) Renewable/CHP: +15.1% 1.8 TWh Sales Regulated: -2.9% 65.8 TWh +4% to 96.7 TWh Liberalized: +22.4% 31.0 TWh 8 (1) Not including generation share in Portugal
Slide 9: Output Reflects Strong Generation Portfolio
Output Reflects Strong Generation Spain and Portfolio Portugal Endesa Mainland Generation (GWh) Endesa’s mainland utilization factor 2004 +3.9% 81,345 84,544 Var (%) 99.9% Renew 1,541 1,773 +15.1% 3,226 6,039 +87.2% 86.7% 1,917 1,637 -14.6% CCGTs 65.5% Fuel oil 35,416 37,203 +5.0% Coal Hydro 11,548
Slide 10: Higher Fuel Prices and Output in Procurement Costs
Higher Fuel Prices and Output in Spain and Procurement Costs Portugal Breakdown of unit fuel costs by technology in 2004 €/MWh 14.1% Increase 29.4 in unit fuel costs 26.3 CCGT from €15.7/MWh Nuclear 3.5 3.4 to €17.9/MWh 2003 2004 2003 2004 18.2% Increase in Imported Oil gas fuel costs in Coal 11.8 1
Slide 11: Islands Operations in 2004
Spain Islands Operations in 2004 and Portugal • Under Royal Decree 1747/2003, ENDESA has booked €122 M in 2004 revenues for higher generation costs in the Islands. • New regulation (MO) for islands remuneration expected to be announced in 1Q 05 • 240 MW higher capacity in the islands Generation (GWh
Slide 12: Renewables/CHP: Strong growth in wind generation
Renewables/CHP: Strong growth in wind Spain and generation Portugal Renewable/CHP Generation (GWh) ECYR Main Financial Data +15.1% 1,773 CHP 1,541 199 64 €M 2004 2003 %Chg Wind +16% 822 953 EBITDA 63 55 +15% EBIT 32 27 +19% Mini-hydro 573 528 Other Net Income 26 16 +63% 82 92 2003 2004 New Wind Capa
Slide 13: Supply: higher prices and sales
Spain Supply: higher prices and sales and Portugal Price to liberalized Total sales to final customers customers (€/MWh) (GWh) +4.0% 92,997 96,731 +6.8% 60.4 Liberalized 25,295 30,969 56.1 Regulated 67,702 65,762 2003 2004 2003 2004 • ENDESA´s market share (regulated+liberalized): 41.5%, maintaining
Slide 14: Distribution: Endesa present in high growth regions
Distribution: Endesa present in high Spain and growth regions Portugal Most dynamic markets Sustained investment in Interruption Time (04/03 Growth) distribution (€M) 1 (hours)2 -19% 4.5% 1,055 3h 38' 2.9% 698 2h 56' Endesa Rest of comp. 2003 2004 2003 2004 % Invest. 193% 288% Over Deprec. Strategic
Slide 15: Gas: Gaining Share in the Gas Market
Spain Gas: Gaining Share in the Gas Market and Portugal Net Sales to Regulated Market(1) Total Gas Supply: GWh +7.2% GWh 3,825 4,098 +43.4% 31,976 22,306 2003 2004 Sales to Liberalized Market: GWh +69% 11,728 6,957 2003 2004 2003 2004 • 5.9% total market share in Gas sales Gas consumed in generation
Slide 16: 2004 Fixed Operating Expenses
Spain 2004 Fixed Operating Expenses and Portugal Personnel Expenses Increase in personnel costs €M 832 +6.7% 888 • Salary rise for year 2004 and difference in the CPI for 2003 • Impact of renewables/CHP reallocation: €6 M 2003 2004 Increase in other operating expenses Fixed Operating Expenses •Highe
Slide 17: 2004 Spain and Portugal EBIT
Spain 2004 Spain and Portugal EBIT and Portugal 7.9% increase in net revenues limits impact of 25% higher procurement costs EBIT by Business Domestic EBIT -6.1% €M • €471M increase in net revenues(1) 1,780 from: -6.1% 1,672 – Generation output +4.2% – Tariff increase +1.7% 586 Distribution -5.1% 556
Slide 18: Lower Financial Expenses and Improvement in Quality of Earnings
Lower Financial Expenses and Spain and Improvement in Quality of Earnings Portugal 2003 2004 Total Net Extraordinaries before Taxes + €380 M - €131 M Extraordinary / PBT 22.4% -12.5% Net Financial Expenses and FX Extraordinary Results €M FX Gains/Losses €M 380 Net Financial Expenses 543 42 Prov&othe
Slide 19: 2004 Results: Endesa Europa
2004 Results: Endesa Europa 19
Slide 20: 2004: Delivering Growth and Consolidating Business Platform
2004: Delivering Growth and Endesa Europa Consolidating Business Platform Operating Generation: + 40% to 25 TW parameters Sales: + 68% to 32TWh Italy: increasing share in an outperforming business to 85% Increased asset base in Italy: • 800 MW CCGT repowering in Tavazzano • 20 MW wind farm in Sardin
Slide 21: 2004 European Results
Endesa 2004 European Results Europa €M 2003 2004 (1) % Change Revenues 1,973 2,559 +29.7% EBITDA 384 557 +45.1% EBIT 268 394 +47.0% Net Financial Expenses -48 -74 +54.2% Net Extraordinaries -4 41 1,125% Net Income 52 (2) 145 +178.9% (1) Full consolidation of Snet from September 1st, 2004 (2) Includi
Slide 22: Italy: Improved Mix and Boost in Sales
Endesa Italy: Improved Mix and Boost in Sales Europa Energy Sales (GWh) 26,246 • Revenues + 34% boosted +38% by 38% increase in energy Purchases 18,977 5,371 sales 1,110 CCGT 643 6,338 Hydro 1,664 3,341 • Delibera 20 appealed. €30 Coal 2,402 Oil gas million, already collected 5,642 Wind but not book
Slide 23: European EBIT: Strong Operating Performance
European EBIT: Strong Operating Endesa Europa Performance EBIT Net Income €M €M 145 €12M Snet (1) +47% 394 €7M Snet 268 €23 M green +179% certificates 52 2003 2004 2003 2004 (1) Before 2004, Equity accounted • Full consolidation of 65% of Snet from September 1st, 2004 • Reversal of provision for wor
Slide 24: Recent Developments set Basis for Future Growth
Recent Developments set Basis for Endesa Europa Future Growth €169 million stranded costs approved by EU to ENDESA Italia Sale of stake in the Moroccan Lydec for €26 M. Net capital gains of €12 M Sale of 5.3% of Endesa Italia to ASM Brescia for € 159 M. Net capital gain of € 24 M 36.4% higher price
Slide 25: 2004 Results: Endesa Latin America
2004 Results: Endesa Latin America 25
Slide 26: Latin America: Main Drivers in 2004
Endesa Latin America: Main Drivers in 2004 Latin America Generation Endesa Fortaleza (310 MW) and Ralco +18.6% to 55.1 (690 MW) on stream. TWh EBIT +22.3% (+34.3% in USD) Strong GDP and electricity demand Disco Sales growth > 5% in 2004 +5.6% to 52.3 Tariff Reviews for Ampla, Coelce, TWh Codensa and
Slide 27: 2004 Endesa Latin America Results
Endesa 2004 Endesa Latin America Results Latin America €M 2003 2004 % Change Revenues 3,545 4,017 +13.3% EBITDA 1,484 1,600 +7.8% EBIT(1) 1,071 1,181 +10.3% Net Financial Expenses -586 -497 -15.2% Net FX 276 -32 -111.6% Net Extraordinaries -100 108 +208.0% Net Income (2) 84 270 +221.4% 27 (1) EBIT i
Slide 28: Latin America: New Generation Plants and Demand Recovery
Latin America: New Generation Plants and Endesa Latin Demand Recovery America Energy sales: Distribution Energy Generation (%) business (%) 2004 vs. 2003 49,5% 2004 vs. 2003 7,6% 7,1% 2003 vs. 2002 41,7% 2003 vs. 2002 6,3% 5,6% 5,3% 4,9% 30,3% 4,3% 4,1% 4,0% 3,8% 20,8% 21,0% 18,6% 2,5% 2,5% 10,1% 8,
Slide 29: Generation EBIT +22% Transmission EBIT -45%
Generation EBIT +22% Endesa Latin Transmission EBIT -45% America EBIT - Generation EBIT - Transmission €M €M +22.3% 663 Brazil Argentina 542 83 Brazil 139 26 100 10 -44.6% 96 Argentina 95 105 77 Peru 177 11 143 129 Colombia 66 172 208 Chile 2003 2004 2003 2004 EBIT +34.3% in USD EBIT – 38.9% in US$
Slide 30: Distribution EBIT +16%
Endesa Distribution EBIT +16% Latin America EBIT - Distribution +16.1% 484 417 118 Brazil 125 45 Argentina 40 44 42 Peru 135 75 Colombia 131 146 Chile 2003 2004 EBIT +27.3% in US$ Distribution business boosted by 5.6% higher sales and tariff increases. Colombia: Increase due to higher sales and tari
Slide 31: Financial Results & Net Income
Endesa Financial Results & Net Income Latin America Net Financial Expenses and FX Net Income FX Gains/Losses €M Net Financial Expenses 276 270 +221.4% 2003 2004 -32 84 -15.2% -497 -586 2003 2004 Substantial decrease in Financial Expenses due Substantial growth in net income of +221% to debt reductio
Slide 32: 2004 Results: Telecoms
A endesa 2004 Results: Telecoms iy
Slide 33: Telecoms: Positive Contribution from both Auna and Smartcom
Telecoms: Positive Contribution from Telecoms both Auna and Smartcom €M 2003 2004 % Var. Revenues 3,815 4,243 +11% EBITDA 923 1,140 +24% Equity Income Contrib. to Endesa (32.7%) -16 10 n.a. Revenues 2,669 3,133 +17% EBITDA 769 1,001 +30% Customers ('000) 8,161 9,275 +14% TLC Revenues 1,049 1,160 +11
Slide 34: 2004 Results: Financial Review
2004 Results: Financial Review 34
Slide 35: Lower Consolidated Debt Driven by Higher Cash Surplus and FX
Lower Consolidated Debt Driven by Higher Financial Review Cash Surplus and FX -4.3% €M 17,250 935 16,505 3,024 832 4,630 3,872 4,185 1,930 1,268 1,824 1,639 2,437 2,119 6,429 7,294 Spain & Europe Others E.Latam Enersis Portugal Dec 03 Debt Cash Dividends FX, WC and Investments- Dec 04 Debt Flow Disp
Slide 36: Leverage and Cost of Debt
Financial Leverage and Cost of Debt Review Evolution of leverage Cost of Debt leverage 8.79% 7.77% Enersis Debt 2,01 with preferred 2,03 sec. 5.48% 5.17% Total Cost 1,53 1,25 1,32 Endesa Spain 4.30% 4.29% 1,08 12/31/03 12/31/04 2001 2002 2003 2004 Financial strategic drivers Improved Rating Higher c
Slide 37: Debt structure: currency and interest rate hedge
Debt structure: currency and interest rate Financial Review hedge Debt protected against Interest Hedging FX risk Rate Currencies: US$ Euro Other Interest Rates: Fixed Hedged Floating Total Total Debt Debt €M 4,630 4,185 12,620 12,320 €M 4,630 4,185 12,620 12,320 2% 5% 20% 21% 20% 11% 14% 47% 4% 94%
Slide 38: Cash Flow and Investments
Cash Flow and Investments Financial Free Cash Cash Flow Capex Flow before Investments dividend €M 363 125 2,393 +18.5% 445 1,905 77 967 33 525 178 -30.5% 489 +49.2% 270 Spain & Portugal Europa Latin America Financial investments (€785 M) including: 3% in Auna (€261 M), Loan Capitalization in Smartco
Slide 39: 2004 Final dividend announced
2004 Final dividend announced Financials +5% +3% 0.7382 (*) € per share 0.6825 0.703 +6.2% (*) 0,4390 0,4662 0,4185 Final dividend Interim dividend +3.0% 0,264 0,264 0,272 2002 2003 2004 Final dividend up to €0.4662 per share, +6.2%. To be paid on July 1st, 2005. 2004 Pay-out at 56.7% (estimated) To
Slide 40: 2005: Expected Developments in Regulation
2005: Expected Developments in Spain and Regulation Portugal Islands Completion of new regulation New Remuneration Model to be Distribution implemented in 2006 White Paper Wholesale market review Pool operation Implementation of 2004 RD 40
Slide 41: Summary
Summary Overall positive evolution in 2004, due to balance business portfolio despite weak 4th quarter in Spain Solid growth in generation and energy sales in all businesses Improved quality of results and sound financial position Dividend: Sustainable increase 41
Slide 42: Outlook for the future
Outlook for the future Sustain our #1 position in the Iberian Peninsula Exploit European growth opportunities associated with our current platforms Leverage Latinamerican recovery to significantly increase the region contribution to the Company’s results Capture Telecoms upside Positive outlook for
Slide 43: Appendix
A endesa Appendix iy
Slide 44: Diversified portfolio delivers steady growth
Highlights Diversified portfolio delivers steady growth EBITDA: €4,885 M, +2.8% EBIT: €3,242 M, +3.1% Spain and Latam Portugal 33% Latam 52% (+7.8%) 36% (-6.1%) (+10.3%) Spain and Portugal 56% (-3,5%) Europe Europe 12% 11% (+47%) (+45.1%) Net Income: €1,379 M, Cash Flow: €3,872 M, +5.1% +1.5% Other
Slide 45: 5-year Investment Plan
5-year Investment Plan € bn Total Investment Plan: 2005 2005-09 €14.6 bn (1) Spain and Portugal 2.4 10.3 New capacity 1.0 4.6 Maintenance capex 1.4 5.7 Latam Business European Business 0.5 1.8 17% New capacity 0.4 1.4 Maintenance capex 0.1 0.4 Latam Business 0.5 2.5 European Business New capacity 0.
Slide 46: Fuel Contracted In Current Scenario of High Commodities Prices
Fuel Contracted In Current Scenario of Spain High Commodities Prices and Portugal Cost in €/MWh 2004 2005 (3) Mainland % Cost % Mt Mt contracted contracted Cost Imported Coal 9.42 100% 15.30 9.21 72% 20.6 Domestic Coal 1 10.96 18.21 10.20 100% 19.6 100% Gas (bmc)2 1.36 100% 26.31 1.39 59% 27.6 Mt %
Slide 47: Definitive CO2 allocation for 2005-07
Spain Definitive CO2 allocation for 2005-07 and Portugal Mt CO2 /year % of rights Expected Proposal Allocation allocations emissions (1) Allocation vs. needs MAINLAND Endesa 36,8 27,7 75% 34,1 Iberdrola 10,2 12,4 121% 8,9 U.Fenosa 15,4 12,5 81% 14,2 Hidrocantabrico 12,7 10,4 82% 11,9 Other 7,4 13,6
Slide 48: CO2 allocation: Coal generation will remain competitive
CO2 allocation: Coal generation will remain Spain and competitive Portugal under expected fuel and emission rights prices Coal Price a Oil Price b $/t $/ barrel Variable Generation Cost (€/MWh) 50 66,2 43,1 30,8 40 19% 25,9 2,7 2005 10 2005 30 6,7 Gas Price c Emission Rights Price d €/MWh €/CO2t 20
Slide 49: Gas: Building a Flexible and Sufficient Sourcing Portfolio
Gas: Building a Flexible and Sufficient Spain Sourcing Portfolio Gm3 - bcm Year 2008 Demand Contracts 9.6 9.6 Regulated supply 0.1 0.1 Tarif Spain Spain CCGT Italy 4.0 4.0 Snam Italy Spot CCGT Islands 0.6 0.1 1.0 Nigeria 1.0 Qatar Supply 2.9 0.8 Sonatrach Signed CCGT Mainland 2.6 Gas Natural 2.0 Dem
Slide 50: Endesa's agenda for applying IAS
Endesa’s agenda for applying IAS Retrospective communication of IAS figures to the market before AGM: Quarterly P&L for 2004, BS year-end 2003 - 2004, Quarterly Changes in Net Equity for 2004 ü Full transition to financial reporting using IAS: 1Q 05 Guidance to the investment community Guidance was
Slide 51: CTC Recovery Reflects Different Pool Prices per Agent
Update on regulation Spain CTC Recovery Reflects Different Pool Prices per and Portugal Agent Average price 98-03 of power stations Initial CTCs recovered at Pending amounts at included for CTC 12-31-04 (%) 12-31-04 (€M) calculation 51,7 100% 0 40,3 69% 907 38,1 51% 680 36,6 50% 2,550 36,4 48% 322 3
Slide 52: Endesa Spain Debt Maturity
Financials Endesa Spain Debt Maturity (1) Total outstanding gross debt € 13,750 M as of Dec 04 €M 6,978 Bonds Bank Debt ECP's 2.278 3,081 37 2,040 4.700 1.603 985 1.592 37 666 248 1.441 448 700 556 110 1H05 2H05 2006 2007 2008 + 52 (1) Endesa’s debt ex-Enersis
Slide 53: Enersis Debt Maturity
Financials Enersis Debt Maturity Total outstanding gross debt € 4,880 M as of Dec 04 €M Bonds Bank Debt 3,297 731 856 2.566 331 132 156 264 95 700 263 144 68 37 120 1H05 2H05 2006 2007 2008 + 53
Slide 54: 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 con
Slide 55: 2004 Financial Results
2004 Financial Results February 14th 2005