Enel SpA · MIL:ENEL
Enel SpA — 9M2007 Earnings Presentation
64 slides from Enel SpA's earnings presentation, Nov 8, 2007
Slide 1: 9M2007 Results and strategic update on Russia
9M2007 Results and strategic update on Russia November 8, 2007
Slide 2: Agenda
Enel SpA Investor Relations Agenda 2007 9M results Strategic update on Russia Q&A Annexes 2
Slide 3: Financial highlights: Consolidated
Enel SpA 9M2007 Results Investor Relations Financial highlights: Consolidated €mn 9M06 9M07 % Revenues 28,621 28,760 0.5% EBITDA 6,264 6,711 7.1% EBIT 4,885 4,751 -2.7% Group net income 2,640 2,678 1.4% (1) Net debt 11,690 24,769 111.9% 1. As of December 31, 2006 3
Slide 4: EBITDA evolution (€mn)
Enel SpA 9M2007 Results Investor Relations EBITDA evolution (€mn) +447 +447 +256 -276 6,711 +234 6,264 +25 +208 191 166 2,861 2,653 Market G&EM N&I 2,758 2,524 International 1 S&H 617 873 304 28 9M06 Market G&EM I&R International S&H 9M07 1. Including intercompany adjustments 4
Slide 5: EBITDA evolution: domestic market division (€mn)
Enel SpA 9M2007 Results Investor Relations EBITDA evolution: domestic market division (€mn) +25 +25 +122 -113 +16 191 166 9M06 Regulated Free Other & 9M07 market market non recurring 5
Slide 6: EBITDA evolution: domestic G&EM division (€mn)
Enel SpA 9M2007 Results Investor Relations EBITDA evolution: domestic G&EM division (€mn) +208 +208 +106 -92 2,861 +194 2,653 9M06 Generation Fair value Non 9M07 margin Bilateral recurring contracts with SB 6
Slide 7: Fuel cost evolution
Enel SpA 9M2007 Results Investor Relations Fuel cost evolution -11.3% -11.3% 52.4 Average fuel cost 46.5 (€/MWh) 9M06 9M07 -7.3% -7.3% -6.9% -6.9% +12.6% +12.6% 307.1 27.36 57.9 65.2 284.6 25.47 9M06 9M07 9M06 9M07 9M06 9M07 Oil Oil(€/ton) (€/ton) Gas Gas(c€/mc) (c€/mc) Coal Coal(€/ton) (€/ton) 7
Slide 8: EBITDA evolution: domestic I&N division (€mn)
Enel SpA 9M2007 Results Investor Relations EBITDA evolution: domestic I&N division (€mn) +234 +234 +292 +27 -85 2,758 2,524 2,816 2,758 2,524 9M06 Electricity Gas Non 9M07 recurring 8
Slide 9: EBITDA evolution: international division (€mn)
Enel SpA 9M2007 Results Investor Relations EBITDA evolution: international division (€mn) +256 +256 -30 +25 -19 873 +260 +7 108 12 617 -14 -4 5 83 444 184 Iberia South-Eastern Europe 143 Centrel 139 Russia America 202 France & Belgium 188 -18 9M06 Iberia South- Centrel Russia Americas France and 9M0
Slide 10: EBITDA evolution: services & holding (€mn)
Enel SpA 9M2007 Results Investor Relations EBITDA evolution: services & holding1 (€mn) -276 -276 304 -210 -23 -43 28 9M06 Import Non Other 9M07 recurring 1. Including intercompany adjustments 10
Slide 11: Focus on renewables
Enel SpA 9M2007 Results Investor Relations Focus on renewables Capacity (MW) Production (GWh) +29.8% +29.8% +36.7% +36.7% 1,602 3,758 45 Other 230 1,234 7 21 Geothermal 2,749 919 47 622 Wind 254 537 Hydro 963 2,588 650 928 1,532 9M06 9M07 9M06 9M07 +34 +34 +20 201 167 +14 Ebitda Evolution 9M06 9M07
Slide 12: Net debt evolution (€mn)
Enel SpA 9M2007 Results Investor Relations Net debt evolution (€mn) -13,079 -13,079 Cash flow Net Extra-ordinary from Capex financial Taxes Dividends 30/9/2007 31/12/2006 activities operations charges -2,518 -11,690 +5,358 -12,665 1 -668 -789 -1,798 -24,769 1. Including net debt of acquisitions 12
Slide 13: Agenda
Enel SpA Investor Relations Agenda 2007 9M result Strategic update on Russia Q&A Annexes 13
Slide 14: Enel has built Russia's first vertically integrated position in the energy sector
Enel SpA Investor Relations Enel has built Russia’s first vertically integrated position in the energy sector Upstream gas Power generation Supply o 40% of a JV with ENI 37.15% of OGK5 49.5% of RusEnergoSbyt • At full production 40%-50% of • Public offer filed • 35TWh expected to be sold in 2007 OGK
Slide 15: Enel's experience and track record in Russia
Enel SpA Investor Relations Enel’s experience and track record in Russia Power generation Three year contract with RAO UES: On time completion of 450 MW unit 2 and Russia’s longest heat pipeline Generation EBITDA growth from 5 €Mn (2004) to 30 €Mn (2007F) St. Petersburg Thermal efficiency increase 4
Slide 16: Strategic rationale: upstream gas
Enel SpA Investor Relations Strategic rationale Upstream gas Developing a robust presence Entry in a key strategic sector in the entire value chain Participating in a worldwide High profitability major project Generation hedging Partnership with E&P leading companies Security of supply Value of gas
Slide 17: Acquisition overview: upstream gas
Enel SpA Investor Relations Acquisition overview Upstream gas Acquisition (2007, April 4th) of undeveloped upstream gas assets by a JV ENI - Enel (60%-40%) Enel Enel Investment Investment Holding Holding Eni Eni International International B.V. B.V. B.V. B.V. Gazprom Call Option Agreement: 40% 60% 9
Slide 18: Asset overview: upstream gas
Enel SpA Investor Relations Asset overview Upstream gas Acquired companies holding hydrocarbon licences for the exploration and production of oil and gas Fields located in West Siberia Urengoy Area 9 Next to the giant fields being developed by Gazprom 9 Connected with the “unified” national transpor
Slide 19: Strategic rationale: power generation
Enel SpA Investor Relations Strategic rationale Power generation Russia is one of the most attractive power markets to invest in OGK-5 owns some of the most competitive assets in this market A clear path to full independent control by 1Q 2008 is available OGK-5 will benefit from Enel’s vertical inte
Slide 20: Russia, the fourth largest power market in the world
Enel SpA Investor Relations Russia, the fourth largest power market in the world Power generation Over 1,000 TWh of demand growing at 2.5 – 4.2% per year 40 GW new capacity required by 2010 Urals IES Center IES South IES 13 48 56 44 52 12 40 48 36 11 44 2004 2005 2006 2007 2008 2009 2004 2005 2006 2
Slide 21: Russia: non households electricity market scenario
Enel SpA Investor Relations Russia: non households electricity market scenario Power generation 5-10% 10-15% Deregulated market 15-20% (marginal price) 25-30% 30-35% 50-55% Regulated market 60-65% (tariff) 80-85% 100% 01/01/07 01/07/07 01/01/08 01/07/08 01/01/09 01/07/09 01/01/10 01/07/10 01/01/11 L
Slide 22: Marginal nodal pricing is used
Enel SpA Investor Relations Marginal nodal pricing is used Power generation European Russia Siberia Far East & Urals 76% of demand (~750TWh) 21% of demand (~ 205 TWh) Isolated regions Gas-dominated Hydro and coal dominated 3% of demand (~30 TWh) Highest growth rates (4-6%) Growth 2-3% No liberalizat
Slide 23: Expected upsides from deregulation
Enel SpA Investor Relations Expected upsides from deregulation Power generation Russian government guidelines: gas prices to reach European net back by 2011 Coal prices to increase with inflation Fuel price index Increasing dark spread 2.5 gas 2 coal 1.5 1 2007 2008 2009 2010 2011 Coal assets in gas
Slide 24: OGK-5 owns some of the most competitive assets in Russia
Enel SpA Power generation Investor Relations OGK-5 owns some of the most competitive assets in Russia Location Capacity Generation Capacity factor Fuel mix 1 Exposure to Transaction multiple 2 2006 European Russia & (MW) (TWh) ( %) Urals Coal 9,531 13% 47.2 57% 100% - Gas 87% OGK-1 Coal 26% 8,695 48
Slide 25: OGK-5 allows a clear path to control: Key events
Enel SpA Power generation Investor Relations OGK-5 allows a clear path to control: Key events Stake Purchase Enel’s OGK-5 price stake 6.6.2007 RAO UES sale of an OGK-5 stake 25.03% 1.12 €bn 25.03% 6.22.2007 Enel purchase of OGK-5 shares 4.96% 0.21 €bn 29.99% August 2007 FAS approval to reach 100% Se
Slide 26: OGK-5 asset overview
Enel SpA Power generation Investor Relations OGK-5 asset overview Tver Region Sverdlovsk Region Konakovskaya GRES Sredneuralskaya GRES Installed capacity 2,400 MW Installed capacity 1,182 MW Main fuel gas Main fuel gas Share in OGK-5 electricity sales 21% Share in OGK-5 electricity sales
Slide 27: OGK-5 investment plan
Enel SpA Power generation Investor Relations OGK-5 investment plan Increasing capacity and efficiency Reducing environmental impact Nevinnomysskaya GRES 2.37 €bn Investment Plan (2007-2012) CCGT • 670 €mn New capacity Fuel Gas • 495 €mn Safety and Environmental Installed capacity 400 MW Capex
Slide 28: OGK-5 fuel supplies
Enel SpA Investor Relations OGK-5 fuel supplies Power generation OGK-5 gas suppliers (2006) GAS 4% • Total gas consumption: ~6.5 bcm (2006) 34% • Five year take-or-pay contract with Gazprom (2008- 2012) 62% • Diversified portfolio of gas suppliers • At full gas production up to 50% of OGK-5 demand w
Slide 29: RusEnergoSbyt
Enel SpA Investor Relations RusenErgoSbyt A first mover in independent electricity trading Supply 49.5% held by Enel since 2006 in partnership with ESN Significant growth since Enel entry: from 22.7 TWh (2006) to 35 TWh (2007F) 33 regions served in 2007, growing to 47 in 2008 260,000 households serv
Slide 30: Conclusions
Enel SpA Investor Relations Conclusions Russia is one of the most attractive power markets worldwide Current status of liberalization makes investing in Russia similar to investing in Western Europe at the end of the 1990’s OGK-5 is best positioned to take advantage of the new framework Enel integra
Slide 31: Agenda
Enel SpA Investor Relations Agenda 2007 9M result Strategic update on Russia Q&A Annexes 31
Slide 32: Enel's electricity sales
Enel SpA Annexes – 9M2007 Results Investor Relations Enel’s electricity sales Volumes sold (TWh) +8.8% +8.8% 127.3 117.0 20.8 International 10.0 Italy 107.0 106.5 9M06 9M07 32
Slide 33: Italian electricity market overview (TWh)
Enel SpA Annexes – 9M2007 Results Investor Relations Italian electricity market overview (TWh) +0.2% +0.2% 252.2 252.6 Import 31.4 35.7 Net production 147.2 152.5 Enel Net production 80.1 69.9 Pumped storage -6.5 -5.5 consumption 9M06 9M07 33
Slide 34: Enel's domestic electricity sales (TWh)
Enel SpA Annexes – 9M2007 Results Investor Relations Enel’s domestic electricity sales (TWh) Electricity – Total market sales1 Free customers2 (thousand) 236.0 +0.2% +0.2% 236.4 827.0 107.0 106.5 free 15.2 +87.5% 28.5 +87.5% Enel eligible3 91.8 -15.0% -15.0% 78.0 120.5 129.0 129.9 9M06 9M07 free 98.
Slide 35: Enel's net production (TWh)
Enel SpA Annexes – 9M2007 Results Investor Relations Enel’s net production (TWh) -2.7% -2.7% 98.6 95.9 International 18.5 26.0 Italy 80.1 69.9 9M06 9M07 35
Slide 36: Group production mix (%)
Enel SpA Annexes – 9M2007 Results Investor Relations Group production mix (%) -2.7% -2.7% 98.6 TWh 95.9 TWh 11.8% 22.2% 17.4% Oil & Gas 14.6% ST/OCGT Gas CCGT 29.8% Coal 27.7% Nuclear 11.1% Other renewables 6.4% 5.1% 5.3% Hydro 24.0% 24.6% 9M06 9M07 36
Slide 37: Enel's electricity distribution (TWh)
Enel SpA Annexes – 9M2007 Results Investor Relations Enel’s electricity distribution (TWh) +0.6% +0.6% 199.9 201.0 International 9.3 9.4 Italy 1 190.6 191.6 9M06 9M07 1. Net of energy dispatched in the previous years 37
Slide 38: Italian gas market overview (bcm)
Enel SpA Annexes – 9M2007 Results Investor Relations Italian gas market overview (bcm) -5.0% -5.0% 1.7 61.6 58.5 1.7 Other Thermoelectric 23.5 24.9 Industrials 15.2 13.9 Residential & Commercial 21.2 18.0 9M06 9M07 Source: Ministry of the Economic Development and Enel estimates 38
Slide 39: Enel's gas sales
Enel SpA Annexes – 9M2007 Results Investor Relations Enel’s gas sales Volumes sold (bcm) Customers (thousand) -9.4% -9.4% +6.3% +6.3% 3.2 2,434 2.9 2,289 9M06 9M07 9M06 9M07 39
Slide 40: Enel's gas distribution
Enel SpA Annexes – 9M2007 Results Investor Relations Enel’s gas distribution Volumes distributed (bcm) End users (thousand) -15.4% -15.4% +0.2% +0.2% 2,001 2,005 2.6 2.2 9M06 9M07 9M06 9M07 40
Slide 41: Net Production: Geographical breakdown
Enel SpA Annexes – 9M2007 Results Investor Relations Net Production : Geographical breakdown (GWh) 9M06 9M07 % Italy 80,132 69,862 -12.8 Spain 4,825 4,627 -4.1 Bulgaria 2,188 2,492 13.9 Slovakia 9,627 15,991 66.1 N America 1,020 922 -9.6 S America 826 1,996 141.6 Total 98,618 95,890 -2.8 41
Slide 42: Net production: source breakdown
Enel SpA Annexes – 9M2007 Results Investor Relations Net production : source breakdown Oil & Gas Other (GWh) Gas CCGT Coal Nuclear Hydro ST/OCGT renewables Italy 11,310 16,680 20,616 - 4,241 17,015 Iberia 2 - 3,136 - 485 1,004 South-Eastern Europe - - 2,492 - - - Centrel - - 2,319 10,681 - 2,991 Ame
Slide 43: Domestic net production mix (%)
Enel SpA Annexes – 9M2007 Results Investor Relations Domestic net production mix (%) -12.7% -12.7% 80.1 TWh 69.9 TWh 16.2% 27.0% Oil & Gas 23.9% ST/OCGT 17.9% Gas CCGT Coal 29.5% Other renewables 25.7% Hydro 5.2% 6.1% 24.2% 24.3% 9M06 9M07 43
Slide 44: International net production mix (%)
Enel SpA Annexes – 9M2007 Results Investor Relations International net production mix (%) +40.5% +40.5% 18.5 TWh 26.0 TWh 1.2% 30.5% 36.5% Oil & Gas ST/OCGT Coal Nuclear 41.0% Other renewables 34.1% Hydro 4.9% 3.2% 23.3% 25.3% 9M06 9M07 44
Slide 45: Domestic G&EM division: CO2 emissions vs. allowances
Enel SpA Annexes – 9M2007 Results Investor Relations Domestic G&EM division: CO2 emissions vs. allowances CO2 Emissions (Mt) Allowances Deficit 9M06 31.2 7.6 38.8 9M07 31.6 2.0 33.6 45
Slide 46: International sales (TWh)
Enel SpA Annexes – 9M2007 Results Investor Relations International sales (TWh) +108% +108% 20.8 10.0 9M06 9M07 46
Slide 47: Domestic electricity distribution (TWh)
Enel SpA Annexes – 9M2007 Results Investor Relations Domestic electricity distribution (TWh) +0.5% +0.5% 190.6 191.6 9M06 9M07 Net of energy dispatched in the previous years 47
Slide 48: Income statement
Enel SpA Annexes – 9M2007 Results Investor Relations Income statement € mn 9M06 9M07 % Operating revenues 28,621 28,760 0.5% Operating costs 21,813 22,049 1.1% EBITDA 6,264 6,711 7.1% % of revenues 21.9% 23.3% EBIT 4,885 4,751 -2.7% % of revenues 17.1% 16.5% 48
Slide 49: From EBIT to EPS
Enel SpA Annexes – 9M2007 Results Investor Relations From EBIT to EPS € mn 9M06 9M07 % EBIT 4,885 4,751 -2.7% Net financial charge - 491 - 324 EBT 4,394 4,427 0.8% Net income (including third parties) 2,720 2,753 1.2% Group net income 2,640 2,678 1.4% EPS (€) 0.43 0.43 49
Slide 50: Balance sheet
Enel SpA Annexes – 9M2007 Results Investor Relations Balance sheet € mn FY06 9M07 % Net financial debt 11,690 24,769 111.9% Shareholders' equity 19,025 18,976 -0.3% Net capital employed 30,715 43,745 42.4% 50
Slide 51: Debt structure
Enel SpA Annexes – 9M2007 Results Investor Relations Debt structure Average debt maturity: 7 years and 8 months Average cost of debt: 4.9% (Fixed+hedged)/Total long-term debt: 81% (Fixed+hedged)/Total net debt: 68% Rating: S&P’s = A/A-1 C.W. negative; Moody’s = A1/P-1 C.W. negative € mn FY06 9M07 %
Slide 52: Debt evolution
Enel SpA Annexes – 9M2007 Results Investor Relations Debt evolution Average cost of debt Average residual maturity 6.2% 5.9% 7:8 7:7 7:7 5.5% 5.2% 4.9% 6:4 4.7% 4.6% 4.4% 4.4% 4.3% 5:4 5:2 4:1 4:9 4:4 3:11 1 1 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005
Slide 53: Financial debt evolution
Enel SpA Annexes – 9M2007 Results Investor Relations Financial debt evolution €m 12.31.2005 06.30.2006 12.31.2006 09.30.2007 Bank loans – maturities > 12 months 2,782 2,975 3,677 5,807 Bonds – maturities > 12 months 8,043 8,293 8,375 15,780 Other loans – maturities > months 142 219 142 101 Long-term
Slide 54: EBIT by business area (€mn)
Enel SpA Annexes – 9M2007 Results Investor Relations EBIT by business area (€mn) -134mn 4,885 4,751 -2.7% 1,969 2,162 +9.8% gem i&n intl 1 sh 1,922 mkt 2,124 +10.5% 415 494 +18.3% 491 85 18 9M06 9M07 -44 1 Including elisions 54
Slide 55: Domestic Market division details
Enel SpA Annexes – 9M2007 Results Investor Relations Domestic Market division details € mn 9M06 9M07 % Revenues 15,914 16,066 1.0% EBITDA 166 191 15.1% EBIT 85 18 -78.8% Capex 22 24 9.1% Headcount 5,176 1 4,991 -3.6% 1. As of December 31, 2006 55
Slide 56: Domestic Generation & Energy Management division details
Enel SpA Annexes – 9M2007 Results Investor Relations Domestic Generation & Energy Management division details € mn 9M06 9M07 % Revenues 11,719 12,383 5.7% EBITDA 2,653 2,861 7.8% EBIT 1,969 2,162 9.8% Capex 526 781 48.5% Headcount 9,573 1 9,518 -0.6% 1. As of December 31, 2006 56
Slide 57: Domestic Infrastructure & Network division details
Enel SpA Annexes – 9M2007 Results Investor Relations Domestic Infrastructure & Network division details € mn 9M06 9M07 % Revenues 4,080 4,137 1.4% Power 3,882 3,924 1.1% Gas 198 213 7.6% EBITDA 2,524 2,758 9.3% Power 2,440 2,647 8.5% Gas 84 111 32.1% EBIT 1,922 2,124 10.5% Power 1,894 2,081 9.9% Gas
Slide 58: International activities details
Enel SpA Annexes – 9M2007 Results Investor Relations International activities details € mn 9M06 9M07 % Revenues 2,125 3,076 44.8% EBITDA 617 873 41.5% EBIT 415 491 18.3% Capex 228 671 194.3% 1 Headcount 13,861 13,359 -3.6% 1. As of December 31, 2006 58
Slide 59: Services & Holding details
Enel SpA Annexes – 9M2007 Results Investor Relations Services & Holding details € mn 9M06 9M07 % Revenues 1,648 1,480 -10.2% Holding 866 660 -23.8% Services and other 782 820 4.9% EBITDA 1 316 34 -89.2% Holding 175 -101 -157.7% Services and other 141 135 -4.3% 1 EBIT 506 -38 -107.5% Holding 428 -113
Slide 60: Services & Holding details - Continued
Enel SpA Annexes – 9M2007 Results Investor Relations Services & Holding details - Continued € mn 9M06 9M07 % Capex 40 41 2.5% Holding 3 5 66.7% Services and other 37 36 -2.7% Headcount 4,585 1 4,412 -3.8% Holding 1,275 721 -43.5% Services and other 4,585 4,412 -3.8% 1. As of December 31, 2006 60
Slide 61: Capex by business area (€mn)
Enel SpA Annexes – 9M2007 Results Investor Relations Capex by business area (€mn) +723mn +40.3% 2,518 24 +9.1% Market G&M 781 +48.5% I&N 22 International 1, 795 Services & Holding 526 1,001 +2.2% 979 671 +194.3% 228 +2.5% 40 41 9M06 9M07 61
Slide 62: 2006 non-recurring items analysis
Enel SpA Annexes – 9M2007 Results Investor Relations 2006 non-recurring items analysis €mn 2006 Green certificates reimbursement Reserve capacity reimbursement Resolution 20/4 Terna 41 Siemens litigation 51 Terna bonus shares 23 Modena capital gain 85 Trento capital gain Energy adjustment 71 Gas adj
Slide 63: Disclaimer
Enel SpA Investor Relations Disclaimer THESE SLIDES HAVE BEEN PREPARED BY THE COMPANY SOLELY FOR THE USE DURING THE CONFERENCE CALL ON ENEL’S 9M2007 RESULTS AND STRATEGIC UPDATE ON RUSSIA. THE INFORMATION CONTAINED HEREIN HAS NOT BEEN INDEPENDENTLY VERIFIED. NONE OF THE COMPANY OR REPRESENTATIVES SH
Slide 64: Contact us
Enel SpA Investor Relations Contact us Investor Relations Team (investor.relations@enel.it) Luca Torchia (Head of IR) +39 06 83053437 Massimiliano Bevignani (Stock analysis and IR reporting) +39 06 83057023 Donatella Izzo (Buy-side) +39 06 83057449 Fausto Sblandi (Sell-side) +39 06 83052226 Visit ou