Naturgy Energy Group, S.a. · BME:NTGY

Naturgy Energy — H1 2018 Earnings Presentation

35 slides from Naturgy Energy's earnings presentation, Jul 26, 2018

  1. Slide 1: First Half 2018 Results

    First Half 2018 Results July 26, 2018

  2. Slide 2: Agenda

    Agenda 1. Key highlights 2. 1H18 consolidated results 3. 1H18 results by business unit 4. Conclusions Appendix 2

  3. Slide 3: Key highlights

    01 Key highlights 01

  4. Slide 4: Key highlights

    Key highlights  Activity growth offset by non-recurrent items 1H18 1H17 Change  Positive evolution in Gas & Power notably in 1Q18 (€M) 1H18 1H17 recurrent recurrent (%; €M)  Stable performance of infrastructure businesses EBITDA 2,004 2,030 2,105 1,991 +6%  Start up of efficiencies in 2H18; capt

  5. Slide 5: Non-recurrent items & FX

    Non-recurrent items & FX EBITDA Net income €M 1H18 1H17 €M 1H18 1H17 Gas transport & procurement retroactivity (38) 20 Gas transport & procurement retroactivity (28) 15 Chile extraordinary expenses (32) - Chile extraordinary expenses (20) - Restructuring costs (24) (16) Restructuring costs (22) (12)

  6. Slide 6: Asset write-down

    Asset write-down €M 9,310 Main impacts from write-down Other 769 UF Gas 888 write-down 4,851 1,538 Cash Flow (€M) In 2018 (Goodwill) FCF (one-off) ~200 4,459 Spain 385 P&L (€M) From 2019 conventional 6,115 350 power Yearly average net income accretion >100 generation 3,724 Book value Book value post

  7. Slide 7: Update on business positioning

    Update on business positioning  Completion of disposals:  Gas distribution and supply in Italy in 1Q18: Cash proceeds of €766M1  Nedgia Spain (20%) in 1Q18: Cash proceeds of €1,500M  Colombia gas distribution and supply disposal on June 30, 2018: Cash proceeds of €334M  Moldova, Kenya and Kangr

  8. Slide 8: Shareholder remuneration

    Shareholder remuneration Dividend 2018 accrued vs. cash (€/share) 2018 dividend 1.30 0.67 0.28 0.45 0.57 2017 final: 2018 1st interim: 2018 2nd interim: 2018 final: July 5, 2018 July 31, 2018 November 2018 April 20191 2018 cash payment 1.40  Share buy-back to start in 2H18 Commitment to an attracti

  9. Slide 9: 1H18 consolidated results

    02 1H18 consolidated results 01

  10. Slide 10: EBITDA evolution (€M)

    EBITDA evolution (€M) +6% 135 5 2,105 2,030 2,004 1,991 (7) (18) (39) (101) €-17M €-17M €-58M €-14M Total FX impact: €-106M EBITDA 1H17 Non-recurrent Recurrent Gas & Power Infra. EMEA Infra. LatAm Infra. LatAm Recurrent Non-recurrent EBITDA 1H18 items EBITDA 1H17 South North EBITDA 1H18 items Recurr

  11. Slide 11: Net income evolution (€M)

    Net income evolution (€M) +22% 550 29 20 532 48 435 (115) (3,813) (3,281) Net income Non-recurrent Recurrent Activity Financial result Associates/ Recurrent Write-down Net income 1H17 items net income post-tax minorities/ net income and others 1H18 1H17 other 1H18 Solid recurrent net income supporte

  12. Slide 12: Cash flow and net debt evolution

    Cash flow and net debt evolution Cash flow (€M) Net debt (€M) Avg. cost of Change vs. 3.4% 3.0% 1H18 debt 1H17 (%) EBITDA 2,004 -1% Financial result (306) -12% Variation in working capital (286) -42% (111) (2,555) (126) Operating cash flow 1,412 +19% Investments1 (771) +4% 12,362 15,154 Divestments

  13. Slide 13: 1H18 results by business unit

    03 1H18 results by business unit 01

  14. Slide 14: Gas & Power

    Gas & Power EBITDA evolution (€M) Highlights +27%  Gas, Power & services sales: Higher margins in power supply driven by lower pool prices; higher margins in gas 70 639 supported by improved scenario 3 77 595 549 (15)  International LNG: Strong results due to higher sales and (44) 504 margins, mos

  15. Slide 15: Infrastructure EMEA

    Infrastructure EMEA EBITDA evolution (€M) Highlights +1%  Higher sales in Spain gas networks due to lower 893 6 898 temperatures partially offset by lower gas meters 879 14 4 891 (5) remuneration (7)  Spain electricity networks supported by investments - - €-17M  EMPL benefits from activity incre

  16. Slide 16: Infrastructure South LatAm

    Infrastructure South LatAm EBITDA evolution (€M) Highlights -2%  Higher sales in Chile electricity offset by ordinary tariff adjustments 407 407 23 400 0  Positive performance in Chile gas supported by (9) (4) 362 (17) distribution, countered by higher opex from expansion plan (38) and lower suppl

  17. Slide 17: Infrastructure North LatAm

    Infrastructure North LatAm EBITDA evolution (€M) Highlights -13%  Mexico gas affected by lower sales and ongoing 0 review of the commercial strategy into higher 139 139 margin clients 121 2 123 (11) (7)  Panama electricity affected by lower temperatures and higher distribution losses €-8M €-6M FX

  18. Slide 18: Conclusions

    04 Conclusions 01

  19. Slide 19: Summary 1H18 results

    Summary 1H18 results  Activity growth…  Positive evolution in Gas & Power, notably in 1Q18  Stable performance of infrastructure businesses  …offset by non-recurrent items…  …and affected by FX  Strategic review leads to €4.9bn write-down and a one-off impact on Net income of €3.8bn  New repo

  20. Slide 20: Outlook 2H18

    Outlook 2H18 +  Start up of Efficiency Plan  Efficiencies capture costs  Europe power generation  Power supply margins  Renewable growth  FX impact  Algerian gas contract renewal  Financial results  Write-down EPS accretion Share buy back to start in 2H18 20

  21. Slide 21: Value creation pillars 2018-22

    Value creation pillars 2018-22 Simplicity & accountability Optimization  Simplified governance and organization ✓  ✓ Opex/gross margin target of 30% by 2022  Higher accountability and autonomy of BUs ✓  Launch of Opex and Capex Committee ✓  Focused business positioning with ongoing divestment p

  22. Slide 22: First Half 2018 Results Q&A

    Naturgy by First Half 2018 Results Q&A

  23. Slide 23: Appendix

    Naturgy y Appendix

  24. Slide 24: Financials

    i. Financials Financials

  25. Slide 25: Consolidated income statement

    Consolidated income statement (€M) 1H18 1H17 1H18 recurrent 1H17 recurrent Change (%) Net sales 12,176 11,569 12,176 11,546 +5% Purchases (8,907) (8,263) (8,860) (8,283) +7% Gross margin 3,269 3,306 3,316 3,263 +2% Personnel costs (464) (469) (440) (453) -3% Taxes (237) (225) (237) (225) +5% Other e

  26. Slide 26: EBITDA breakdown

    EBITDA breakdown (€M) 1H18 1H17 1H18 recurrent 1H17 recurrent Change (%) FX impact Gas & Power 595 549 639 504 +27% (17) Gas, power and services sales 55 41 98 21 n.m. - International LNG 233 163 233 163 +43% - Europe power generation 166 207 167 182 -8% - International power generation 141 138 141

  27. Slide 27: Investments

    Investments 1H18 1H17 (€M) Total Growth Maintenance Total Growth Maintenance Gas & Power 623 547 76 169 114 55 Gas, power and services sales 35 25 International LNG 3801 - Europe power generation 109 54 International power generation 99 90 Infrastructure EMEA 185 108 77 190 86 104 Spain gas networks

  28. Slide 28: Financial structure

    Financial structure Maturities As of June 30, 2018 (€M) 8.302 Net financial debt: €12.4 billion Selected credit ratios 1H18 FY17 Net debt/ LTM EBITDA 3.2x 3.9x Adjusted Net debt1/ LTM EBITDA (S&P) 4.1x 4.7x 1.696 731 955 438 FFO/adjusted Net debt1 (S&P) 18.3% 15.7% 240 2018 2019 2020 2021 2022 2023+

  29. Slide 29: Operating figures

    ii. Operating figures Operating figures

  30. Slide 30: Gas & Power

    Gas & Power Gas, power and services and LNG international sales Gas sales (GWh) Power sales (GWh) 123,024 126,587 18,328 17,524 21,308 2,619 19,098 2,610 8,246 7,317 Third parties 15,793 17,535 CCGT PVPC Residential Spain 14,914 15,709 Liberalized market1 79,887 80,427 Industrial clients 1H17 1H18 1

  31. Slide 31: Gas & Power

    Gas & Power Europe and International power generation Europe power production (GWh) Europe renewable power production (GWh) Pool fwd prices1 1,431 (€/MWh) 47.0 54.3 1,266 36 Pool Price2 51.3 50.1 39 316 (€/MWh) 240 Cogeneration 13,161 13,280 Small hydro 1,266 1,431 Cogen. and Ren. 987 1,079 737 Wind

  32. Slide 32: Infrastructure EMEA

    Infrastructure EMEA Gas sales Spain (GWh) Electricity sales Spain (GWh) Connection points (‘000) TIEPI 67 25 (mins) Opex/km 1,981 1,950 9,048 9,121 102,730 (€/km) 98,913 16,294 15,977 3,712 3,730 5,336 5,391 1H17 1H18 1H17 1H18 1H17 1H18 Gas Electricity 32

  33. Slide 33: Infrastructure South LatAm

    Infrastructure South LatAm Gas sales (GWh) Connection points (‘000) 6,341 6,506 95,688 94,024 224 231 1,642 1,659 34,880 34,575 1,058 1,109 593 614 37,197 35,461 2,824 2,893 23,611 23,988 1H17 1H18 1H17 1H18 Chile Brazil Argentina Chile elec. Chile gas Brazil gas Argentina gas Argentina elec. Electr

  34. Slide 34: Infrastructure North LatAm

    Infrastructure North LatAm Gas sales Mexico (GWh) Electricity sales Panama (GWh) Connection points (‘000) Losses Network (km) 21,385 22,204 distribution 11.96 11.81 (%) 28,787 2,460 27,343 2,344 2,545 2,528 656 628 1,716 1,804 1H17 1H18 1H17 1H18 1H17 1H18 Mexico gas Panama electricity 34

  35. Slide 35: Capital Markets contact

    This presentation is property of Naturgy Energy Group, S.A. Both its content and design are for the exclusive use of its personnel. ©Copyright Naturgy Energy Group, S.A CAPITAL MARKETS tel. 34 912 107 815 e-mail: ir@naturgy.com website: www.naturgy.com

Naturgy Energy Group — H1 2018 Earnings Presentation on 6ix