Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Galp Energia — FY2008 Earnings Presentation
36 slides from Galp Energia, Sgps S.a. Class B's earnings presentation, Mar 5, 2009
Slide 1: Fourth Quarter & Full Year 2008 Results
FOURTH QUARTER & FULL YEAR 2008 RESULTS Lisbon, 5 March 2009
Slide 2: Full Year 2008 Highlights
FULL YEAR 2008 HIGHLIGHTS © aan nea
Slide 3: Full Year 2008 Net Profit RCA of €478 Million, Up 14% YoY
FULL YEAR 2008 NET PROFIT RCA OF €478 MILLION, UP 14% YoY 1 2 IFRS Replacement Cost Adjusted 2007 2008 % Ch. € Mln 2007 2008 % Ch. 12,560 15,086 +20% Turnover 12,556 15,062 +20% 1,213 449 (63%) EBITDA 891 975 +9% 936 167 (82%) EBIT 620 693 +12% 60 48 (19%) Associates 60 48 (19%) 720 117 (84%) Net Pr
Slide 4: Inventory Effect Impacted by Steep Decline in Crude Price
INVENTORY EFFECT IMPACTED BY STEEP DECLINE IN CRUDE PRICE Net profit RCA 2008 € Mln 355 6 478 117 Net profit IFRS Inventory effect Non recurrent items Net profit RCA 4 FOURTH QUARTER & FULL YEAR 2008 RESULTS
Slide 5: R&M Posting a Strong Performance in 2008
R&M POSTING A STRONG PERFORMANCE IN 2008 EBIT RCA 2008 • EBIT RCA in 2008 was up € Mln 12% YoY, fuelled by the 121 R&M division, which more than offset the weaker 693 results in G&P (39) • R&M operating result was up 620 47% YoY, helped by a (9) positive time lag effect of €78 Mln and by the good pe
Slide 6: Capex Mostly Fuelled by the R&M Segment
CAPEX MOSTLY FUELLED BY THE R&M SEGMENT 2008 Capex • The majority of E&P investment € Mln programme channelled to development activities in Block 14 and exploration works in offshore 116 1,560 1,247 Brazil • R&M responsible for 80% of total capex, due to Iberian acquisitions • Investment in G&P focu
Slide 7: Net Debt Increase Driven by Iberian Acquisitions
NET DEBT INCREASE DRIVEN BY IBERIAN ACQUISITIONS Balance Sheet items € Mln Dec. 2007 Dec. 2008 Change Fixed Assets 2,584 3,881 1,297 Strategic Stock 582 480 (103) Other assets (liabilities) (151) (29) 122 Working Capital 89 (249) (338) Net Debt 734 1,864 1,129 Equity 2,370 2,219 (151) Capital Employ
Slide 8: Fixed Debt Hedges Against Volatile Environment
FIXED DEBT HEDGES AGAINST VOLATILE ENVIRONMENT Debt structure as of December 2008 • Net debt totals €1,864 Mln • Average debt maturity of M/L- 68% 66% term debt of 3.7 years 32% 34% • M/L-term debt accounts for 66% Floating Fixed of total, up from 53% in 3Q08 M/L-term M/L-term Short-term M/L-term •
Slide 9: Dividend Proposal of €0.32 per Share
DIVIDEND PROPOSAL OF €0.32 PER SHARE 1 Dividend proposal 2008 €0.32 €0.17035 €0.14965 1 2 3 To be Already paid in To be paid until proposed in October 22, 2008 the end of May the next AGM, on April 27 9 FOURTH QUARTER & FULL YEAR 2008 RESULTS 1 Based on a payout of 56% on net profit RC and subject t
Slide 10: Full Year 2008 Highlights
FULL YEAR 2008 HIGHLIGHTS EXPLORATION • EBIT RCA in 2008 reached €141 Mln & PRODUCTION • Net entitlement production down 20% YoY REFINING • R&M posted a great performance, reaching €373 Mln in 2008 & MARKETING • Refining margin decreased 19% YoY, impacted by fuel margins GAS • Natural gas volumes in
Slide 11: Fourth Quarter 2008 Business Overview
FOURTH QUARTER 2008 BUSINESS OVERVIEW
Slide 12: Rebound of Net Entitlement Production in 4Q08, Up 6% QoQ
REBOUND OF NET ENTITLEMENT PRODUCTION IN 4Q08, UP 6% QoQ • BBLT’s operational delays solved and Tômbua-Lândana gradual increase more than offset Kuito’s natural decline • 4Q08 net entitlement production benefited due to PSA effect Net Entitlement Production by Field Realized Sale Price Mln bbl Usd/b
Slide 13: Favourable Trend from Simple Refining Margins
FAVOURABLE TREND FROM SIMPLE REFINING MARGINS Galp Energia vs Benchmark Refining Margin • Fuel oil margin posted a 52% Usd/bbl QoQ, or +16.5 Usd/bbl (4Q08 Spread over Benchmark fuel oil’s yield of 18%) Benchmark 25% 7% • Base oils margin continued favourable in 4Q08 5.8 5.4 4.6 1.2 2.8 • 4Q08 volume
Slide 14: Volumes to Direct Customers Increased by 17% YoY
VOLUMES TO DIRECT CUSTOMERS INCREASED BY 17% YoY Mln ton 4Q08 % QoQ % YoY • The recent Iberian Agip Refining throughput 3.0 (1.1%) (2.0%) acquisition, consolidated from October 1st 2008, had a positive contribution Total volumes of products sold 4.3 +12.4% +12.9% of 0.6 Mln ton on volumes sold to di
Slide 15: Natural Gas Volumes Affected by Inter Fuel Competition
NATURAL GAS VOLUMES AFFECTED BY INTER FUEL COMPETITION Liberalized & Regulated markets • Volumes in the regulated market posted a growth Bcm Liberalized of 19% QoQ, due to a Regulated steady increase in the (24%) number of new clients (16%) 1.6 1.5 • 4Q08 liberalized volumes 1.2 impacted by both 1.0
Slide 16: Fourth Quarter 2008 Financial Overview
FOURTH QUARTER 2008 FINANCIAL OVERVIEW
Slide 17: 4Q08 EBIT RCA Up 89% YoY Backed by Strong R&M
4Q08 EBIT RCA UP 89% YoY BACKED BY STRONG R&M EBIT RCA 4Q 2008 • Operating performance of E&P € Mln hit by lower crude realization price 213 179 • Favourable refining margin (52) contribution and a positive time lag effect of €105 Mln, more than offset Sines’ programmed outage impact of €10 Mln cost
Slide 18: 4Q08 Net Profit RCA Hit by Higher Interest Cost
4Q08 NET PROFIT RCA HIT BY HIGHER INTEREST COST Net Profit RCA 4Q 2008 € Mln • Higher level of interest costs due to increase 15 179 in total debt (16) 125 • Effective tax rate of (51) (1) 29%, was lower than last year’s level due to lower IRP paid in Angola EBIT RCA ASSOCIATES FINANCIAL INCOME TAX
Slide 19: 4Q08 RCA Results Posting Positive Variations YoY in All Layers
4Q08 RCA RESULTS POSTING POSITIVE VARIATIONS YoY IN ALL LAYERS 1 IFRS Replacement Cost Adjusted 4Q07 4Q08 % Ch. € Mln 4Q07 4Q08 % Ch. 3,437 3,579 +4% Turnover 3,437 3,579 +4% 289 (557) n.m. EBITDA 179 244 +36% 206 (628) n.m. EBIT 95 179 +89% 14 15 +12% Associates 14 15 +12% 134 (451) n.m. Net Profit
Slide 20: Fourth Quarter 2008 Highlights
FOURTH QUARTER 2008 HIGHLIGHTS EXPLORATION • Stable average working interest production QoQ & PRODUCTION • Operating result hit by lower realization crude price REFINING • Refining margin up 24.8% YoY to $5.8/bbl & MARKETING • Positive contribution of time lag effect with €105 Mln GAS • Arbitrage pr
Slide 21: Appendix
APPENDIX © galp energia
Slide 22: Fourth Quarter 2008
FOURTH QUARTER 2008 © aan nea
Slide 23: Volatility in Crude Prices Led to Reversed Impacts from Time Lag
VOLATILITY IN CRUDE PRICES LED TO REVERSED IMPACTS FROM TIME LAG Time lag effect vs crude price • The volatility of prices and the steepness of the trend impact the amount of the time lag effect 133 104 98 • A positive trend in prices leads to a $82/bbl negative time lag effect and a negative trend
Slide 24: Net Impact of €103 Mln Related to Gas Sourcing
NET IMPACT OF €103 MLN RELATED TO GAS SOURCING Galp Energia sourcing base NLNG+ • Change of pricing formula to a more energetic LNG-cost to Brent price curve illustrative LNG Cost New Old Brent NLNG II • LNG cost passed to regulated market • Contract under negotiation • Impact of €112 Mln due to sal
Slide 25: 4Q08 Capex Driven by Iberian Acquisitions
4Q08 CAPEX DRIVEN BY IBERIAN ACQUISITIONS Capex 4Q 2008 • E&P investment was focused to operations not only in Angola € Mln but also in Brazil 37 1,132 1,051 • Sines’ refinery had relevant maintenance and upgrade works in 4Q08 • AGIP and ESSO iberian downstream acquisitions 44 dictate 4Q08 capex gro
Slide 26: Full Year 2008 Overview
FULL YEAR 2008 OVERVIEW © aan nea
Slide 27: Net Entitlement Production Hit by Increase in Brent Price
NET ENTITLEMENT PRODUCTION HIT BY INCREASE IN BRENT PRICE • BBLT’s operational delays in the beginning of the year impacted working interest production • Increase in average brent price, up 34% YoY, drove net entitlement production down Net Entitlement Production by Field Realized Sale Price Mln bbl
Slide 28: Fuel Cracks Impacted Refining Margin Most of the Year
FUEL CRACKS IMPACTED REFINING MARGIN MOST OF THE YEAR Galp Energia vs Benchmark Refining Margin Usd/bbl Spread over Benchmark Benchmark • Fuel oil cracks with unfavourable trend and (19%) devaluation of Usd/Eur 5.5 impacted Galp Energia refining margin 4.4 3.3 2.4 • Volumes processed slightly impact
Slide 29: Volumes Sold to Direct Clients Increased 3%
VOLUMES SOLD TO DIRECT CLIENTS INCREASED 3% Mln ton 2008 % YoY • Volumes benefited from Refining throughput 13.1 (5.1%) integration of Iberian Agip operations, with a 0.6 Mln Total volumes of products sold 16.0 +0.5% ton added to direct customers Direct customers – Portugal 6.2 (3.7%) • Exports incr
Slide 30: Best Year Ever in Terms of Natural Gas Volumes
BEST YEAR EVER IN TERMS OF NATURAL GAS VOLUMES Liberalized & Regulated markets Bcm Liberalized • NG volumes increase with Regulated important contribution 5% from electrical segment 5.6 and industrial sales in 5.4 Spain 3.2 3.0 • Liberalized market accounts for 57% of total volumes 2.4 2.4 2007 2008
Slide 31: Capex Mostly Fuelled by the R&M Segment
CAPEX MOSTLY FUELLED BY THE R&M SEGMENT 2008 Capex • The majority of E&P investment € Mln programme channelled to development activities in Block 14 116 1,560 and exploration works in offshore 1,247 Brazil • R&M responsible for 80% of total capex, due to Iberian acquisitions • Investment in G&P focu
Slide 32: Full Year 2008 Net Profit RCA of €478 Million, Up 14% YoY
FULL YEAR 2008 NET PROFIT RCA OF €478 MILLION, UP 14% YoY 1 IFRS Replacement Cost Adjusted 2007 2008 % Ch. € Mln 2007 2008 % Ch. 12,560 15,086 +20% Turnover 12,556 15,062 +20% 1,213 449 (63%) EBITDA 891 975 +9% 936 167 (82%) EBIT 620 693 +12% 60 48 (19%) Associates 60 48 (19%) 720 117 (84%) Net Prof
Slide 33: Net Debt Increase Driven by Iberian Acquisitions
NET DEBT INCREASE DRIVEN BY IBERIAN ACQUISITIONS Balance Sheet items € Mln Dec. 2007 Dec. 2008 Change Fixed Assets 2,584 3,881 1,297 Strategic Stock 582 480 (103) Other assets (liabilities) (151) (29) 122 Working Capital 89 (249) (338) Net Debt 734 1,864 1,129 Equity 2,370 2,219 (151) Capital Employ
Slide 34: Basis of Presentation
BASIS OF PRESENTATION • In 2008 the inventory cost method has • The acquisition of Iberian subsidiaries changed from FIFO to Average Cost. of Agip and ExxonMobil, which were Since First Time Adoption of IAS/IFRS in officially concluded on the 1st of 2004, Galp Energia had been using FIFO October 200
Slide 35: Disclaimer
DISCLAIMER Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expres
Slide 36: Investor Relations
Investor Relations Tiago Villas-Boas Tel.: +351 21 724 08 66 Fax: +351 21 724 29 65 E-mail: tiagovb@galpenergia.com Website: www.galpenergia.com