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Results Presentation 1H 2011 27th July, 2011

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  • Results Presentation1H 2011

    27th July,

  • 2


    This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on the 27th July 2011. By attending the meetingwhere this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the following limitations and restrictions. Therefore, thispresentation may not be distributed to the press or any other person, and may not be reproduced in any form, in whole or in part for any other purpose without the expressconsent in writing of the Company.

    The information contained in this presentation has not been independently verified by any of the Company's advisors. No representation, warranty or undertaking, express orimplied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither theCompany nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of thispresentation or its contents or otherwise arising in connection with this presentation.

    This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of theCompany or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, northe fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Any decision to purchaseany securities in any offering should be made solely on the basis of the information to be contained in the relevant prospectus or final offering memorandum to be published indue course in relation to any such offering.

    Neither this presentation nor any copy of it, nor the information contained herein, in whole or in part, may be taken or transmitted into, or distributed, directly or indirectly tothe United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation does not constitute and should not be construedas an offer to sell or the solicitation of an offer to buy securities in the United States. No securities of the Company have been registered under U.S. securities laws, and unless soregistered may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of U.S. securities laws andapplicable state securities laws.

    Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. Thewords “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may”, "continue," “should” and similar expressions usually identify forward-looking statements. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for futuregrowth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; developments of the Company’s markets; the impact of regulatoryinitiatives; and the strength of the Company’s competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based,in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and otherdata available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significantknown and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks,uncertainties, contingencies and other important factors could cause the actual results, performance or achievements of the Company or industry results to differ materiallyfrom those results expressed or implied in this presentation by such forward-looking statements.

    The information, opinions and forward-looking statements contained in this presentation speak only as at the date of this presentation, and are subject to change without noticeunless required by applicable law. The Company and its respective agents, employees or advisors do not intend to, and expressly disclaim any duty, undertaking or obligation to,make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this presentation to reflectany change in events, conditions or circumstances.

  • Key Messages

  • 4

    Key Messages

    Is EDPR being able to convert capacity growth into higher cash-flows?

    1•Production 8.8 TWh: +27% YoY

    •Net Income €90m: +2.1x YoY

    •Op. Cash-Flow €353m: +49% YoY

    Sound headline growth fromtop-to-bottom

    and solid cash-conversion

    Is EDPR capturing alternative funding sources and

    controlling financial costs?

    2 •Cash-Flow exceeded Capex in 1H

    •€0.4bn through Project Finance and Tax Equity

    •Stable net interest expenses over the last 5 quarters

    Quality projects enabling increased cash-generation capabilities and access to local

    project finance and tax equity

    Is wind becoming a cost-adequate source within national energy plans?

    3•Lower capex per MW (-10%)

    •Enhanced turbine productivity

    • Increased asset longevity (25y)

    A new cycle for the wind businesswith a lower Cost of Energy and

    increased competitiveness

    EDPR in the 1H 2011

  • 1H11 Operating and Financial Performance

  • 6

    Installed capacity increased 24% YoY to 7.2 GW

    • Ongoing growth: 1.4 GW installed in the last 12 months (+24% YoY)• 486 MW added in the 1H11 represent almost 60% of the expected additions for 2011• 376 MW under construction provide visibility towards the execution of expected capacity growth (800-900 MW)






    1Q11 2Q11 1H11 Under Const.

    2011E Additions

    2011 Quarterly Additions(EBITDA MW + Eólicas PT (1))

    YoY Capacity Increase(EBITDA GW + Eólicas PT (1))

    Notes: (1) Equity consolidated: 127 MW as of Jun-2010 and 275 MW as of Jun-2011; 36 MW installed in the 1H11



    1H10 1H11

    +24%% of 2011E Additions


  • 7

    Top-class assets continuously deliveringpremium load factors

    Load Factor: Quarterly Evolution(%)

    Load Factor(%)

    1H10 1H11

    US 32% 36%

    EU 29% 26%

    EDPR 31% 32%

    • EU: lower wind resource in the 1H11, but clearly above market average (2Q in Spain: +400bps spread over Mkt.)• US: load factor increased 400bps to 36% on higher wind resource and an outstanding 38% load factor in the 2Q• EDPR: delivering a sound top-sector net capacity factor of 32%



    34% 33%31%

    2Q10 3Q10 4Q10 1Q11 2Q11


  • 8

    Capacity growth and strong load factors contributed to the 27% YoY production growth

    Electricity Output Breakdown(%)

    YoY Electricity Output (1)(TWh)

    14% 18% 16%

    39% 36% 42%

    47% 46% 42%

    1H10 2H10 1H11

    6.9 +0.4+1.4


    1H10 EU US 1H11


    Regulated Frameworks


    Spot & Short-term hedges

    • Strong electricity output performance (+27% YoY) on the back of the outstanding US performance (+39% YoY)• US increased its production weight to 58% (vs. 53% in 1H10 and 54% in 2H10)• 84% of 1H11 production sold under long-term stable frameworks

    Notes: (1) Includes 14 GWh in 1H10 and 29 GWh in 1H11 from Brazil

  • 9

    Price evolution unfavorable on higher US production weight and weaker US Dollar


    1H10 1H11

    EDPR Price Evolution(€/MWh)


    Higher prices in Europe in all geographies, while US prices reflect different structures and low spot prices

    • Stable price on regulatory frameworks• Higher contribution from CEE countriesEurope +1.8€

    • New PPA price structures• Lower merchant prices YoYUS -1.7€

    • Higher contribution from US platformOutput Mix -2.7€

    • Unfavorable US$/€ Forex evolution (US Dollar depreciated 5% YoY)US$/€ -1.1€

    Impact onEDPR Price €/MWh

  • 10

    Revenues increased 18% YoY to €547m...



    1H10 1H11


    ...reflecting capacity growth but impacted by unfavorable forex and different production mix

    Strong electricity output increase (YoY)

    US +39%; EU +13%

    Stable top-notch

    net capacity factor of 32%

    Different portfolio mix and

    unfavorable US$/€ Forex evolution

    Revenues(€ million)Main drivers for Revenues performance

  • 11

    EBITDA’s 19% YoY growth to €409mreflects top-line performance and cost control

    EBITDA: Geographic Breakdown (2)(€ million)

    EBITDA (1)(€ million)

    343 +16%+22%


    1H10 EU US 1H11

    256 62%



    EU US 1H11

    Notes: (1) Includes €-6.6m in 1H11 and €-9.6m in 1H10 from Brazil, Other and Adjustments(2) Includes €-6.6m in 1H11 from Brazil, Other and Adjustments

    EDPR continues to deliver a recurrent top-sector EBITDA margin

    80% 72% 75%



    €9m negative impact from


    (+29% in US$)


  • 12

    Net Profit of €90m (x2.1 vs 1H10), outpacing operating performance

    Net Profit(€ million)



    1H10 1H11

    x2.1• Strong operational growth• High efficiency levels (EBITDA mg 75%)EBITDA +19%

    • New installed capacity• Higher useful life (from 20 to 25 years)D&A +7%

    • Net Interests reflect LT fixed funding• Capital gain from SEASA sale

    Financial Results -1%

    • Pre-Tax Profit increased by 88%• Tax rate of 21% vs. 27% in 1H10Taxes +43%

    YoY %

    Notes: D&A includes €17m in 1H11 vs. €9m in 1H10 from PPA (Price Purchase Allocation) amortization.

    Bottom-line reflects strong operating growth, higher asset useful life (+€21m)and the announced capital gain on the sale of a financial stake (+€7m)

  • 13

    Operating assets continuously delivering solid Cash-Flow growth (+49% YoY)

    Operating Cash-Flow (Before Capex)(€ million)

    1H11: Net Profit to Cash-Flow(€ million)



    1H10 1H11





    Net Profit FinancialExpenses




    Solid conversion of assets’ high quality productivity into Cash-Flow


  • 14

    Operating Cash-Flow exceeded 1H Capex

    1H11: Source and Use of Funds (1)(€ million)

    353 393 345


    26 23





    Cash and Equivalents

    Divestments Acquisitions & Investments

    Other Payments


    Notes: (1) Cash and Equivalents include €65m from the reduction and use of restricted cash related to US Institutional partnerships; illustration excludes non-cash Forex impact on Net Debt (€109m)

    1H funding needs covered by Operating Cash-Flow and Cash and Equivalents

    Equipment Suppliers


    Source of Funds Use of Funds

  • Diversifying Funding Sources

  • 16

    Ability to manage debt levels and interests under control over the last 12 months...

    Net Interest Costs(€ million)

    Financial Debt(€ billion)

    3.373.53 3.56

    Jun-10 Dec-10 Jun-11

    Nominal Cost of Debt of 5.6% at June-2011 reflecting long-term funding maturity

    44.9 42.348.4

    44.5 46.0

    2Q10 3Q10 4Q10 1Q11 2Q11


  • 0




    2011 2012 2013 2014 2015 2016 2017 >2018


    ...through the right funding strategy on a capital intensive industry...

    Debt Maturity(€ Million)

    1H11: Debt Profile(%)

    9% 7%




    Type Currency






    Long term fixed rate debt structure designed to match business model with Cash-Flow profile

  • 18

    ...and increased cash generation capabilities along with multiple funding sources

    YTD Sources of Funds(€ million)

    Operating Cash-Flow 353

    Cash & Equivalents 486

    Financial Debt (net sources) 23

    1H11 888

    Project Finance Romania I & II (228 MW) 188

    Project Finance Brazil (70 MW) 102

    Tax Equity US (99 MW) 82

    Secured in July 372

    Ability to access to multiple and local funding sources driven byhigh quality assets and a rigorous investment criteria

    Increased cash conversion of thecapital already invested

    Flexible funding and diversified sources to support future growth at competitive cost

    Funding Strategy

    Divestments 26

  • Wind Increased Competitiveness

  • 20

    Wind industry is entering a new cycle and showing a remarkable improved performance...

    …Lower energy cost(per MWh)

    Higher Longevity, and…(years, 1H2011)

    An expected sustainable downward trendof wind energy cost per unit of output

    Detailed technical assessment on EDPR's portfolio performed by an industry expert






    EuropeLower Capex/MW: -10%

    Manufacturing overcapacity and sellerscompetition leading to price pressure

    Higher productivity for the same wind speed

    Manufacturers R&D efforts being reflected intonew generation turbines

    0 20 25

    EDPR Assets Age

  • 21

    ...resulting in a competitive technologyto meet electricity demand

    Levelized Cost of Energy by Technology(€/MWh, European Case for new investments)

    Wind Levelized Cost of Energy (LCoE)(€/MWh on Load Factor scenarios)







    20% 25% 30% 35% 40%

    Notes: Analysis based on: Gas 7.0$/Mmbtu, Coal $80/ton, CO2 €15/ton, €/$ 1.35


    5869 72

    78 79

    Hydro Wind Onshore

    Nuclear CCGT Coal

    Wind is becoming a cost-adequate alternative energy within national long-term electricity system plans

    Lower capex costand higher useful life

    Excludes intermittency


  • 22

    Are the ambitious wind targets sustainable in the current economic and environmental context?

    … ongoing renewable support is justified as a way to reduce imported

    energy, decarbonize economy and to partly cope with nuclear capacity shutdowns

    … wind increased competitiveness vs. conventional technologies place it as the

    most cost adequate renewable option for countries' current energy policy

    … wind is a clean and safe energy source that will provide a predictable

    and stable energy cost for the long-term


  • IR ContactsRui Antunes, Head of IRFrancisco BeirãoDiogo Cabral

    E-mail: [email protected]: +34 914 238 402Fax: +34 914 238 429

    Serrano Galvache 56, Edifio Olmo, 7th Floor28033, Madrid,Spain

    EDP Renováveis online


    Link Results &

    Next Events

    13 Sept.: London Roadshow

    14 Sept.: BBVA Conference (London)

    15 Sept.: Morgan Stanley Conference (London)

    23 Sept.: BPI Conference (Lisbon)

  • Results Presentation�1H 2011DisclaimerSlide Number 3Key MessagesSlide Number 5Installed capacity increased 24% YoY to 7.2 GWTop-class assets continuously delivering�premium load factorsCapacity growth and strong load factors contributed to the 27% YoY production growthPrice evolution unfavorable on higher US production weight and weaker US DollarRevenues increased 18% YoY to €547m...EBITDA’s 19% YoY growth to €409m�reflects top-line performance and cost controlNet Profit of €90m (x2.1 vs 1H10), outpacing operating performanceOperating assets continuously delivering solid Cash-Flow growth (+49% YoY)Operating Cash-Flow exceeded 1H CapexSlide Number 15Ability to manage debt levels and interests under control over the last 12 months......through the right funding strategy on a capital intensive industry......and increased cash generation capabilities along with multiple funding sourcesSlide Number 19Wind industry is entering a new cycle and showing a remarkable improved performance......resulting in a competitive technology�to meet electricity demandAre the ambitious wind targets sustainable in the current economic and environmental context?Slide Number 23Slide Number 24