Conference Call2Q07 Earnings Results
July 25, 2007
António Martins da CostaChief Executive Officer
Antonio José SellareChief Financial Officer
Flavia HellerInvestor Relations Officer
2
Disclaimer
This presentation may include forward-looking statements of future events or results according to regulations of the Brazilian and international securities and exchange commissions. These statements are based on certain assumptions and analysis by the company that reflect its experience, the economic environment and future market conditions and expected events, many of which are beyond the control of the company. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the company’s business strategy, Brazilian and international economic conditions, technology, financial strategy, public service industry developments, hydrological conditions, financial market conditions, uncertainty of the results of future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the actual results of the company may be significantly different from those shown or implicit in the statement of expectations about future events or results.
The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and no investment decision is to be based on the veracity, current events or completeness of this information or these opinions. No advisors to the company or parties related to them or their representatives shall have any responsibility for whatever losses that may result from the use or contents of this presentation.
This material includes forward-looking statements subject to risks and uncertainties, which are based on current expectations and projections about future events and trends that may affect the company’s business. These statements include projections of economic growth and energy demand and supply, as well as information about the competitive position, the regulatory environment, potential opportunities for growth and other matters. Several factors may adversely affect the estimates and assumptions on which these statements are based.
Operating Performance
4
Distribution
Market recovery in Enersul’s concession area (+6.4%) and stronggrowth in Escelsa’s region (+6.9%)
Growth in the volume of energy in transit (4.0%)
3,218 3,328
1,991 2,128
763 8125,972 6,268
2Q06 2Q07
Bandeirante Escelsa Enersul
Volume of Energy Distributed (GWh) Energy Distributed by Customer Class (% of total volume distributed)
62% 62%
37% 37%1% 1%5,972 6,268
2Q06 2Q07
End Customers Energy in Transit Other
5.0% 5.0%
5
8.5% 9.0% 8.9% 9.0%
4.1% 3.8% 4.0% 4.2%
12.6% 12.8% 12.9% 13.2%
Jun/05 Jun/06 Dec/06 Jun/07
Technical Commercial
DistributionProgram for Curbing Losses
In 2Q07, R$28 million were invested in programs to cut down losses.
Evolution of commercial losses (% of distributed energy - last 12 months)
~ 167 thousand inspections were made in 2T07
~ 72 thousand frauds identified
~ 700 thousand inspections scheduled for 2007
Installation of protected networks and telemetric monitoring
2.3 2.4
Jun/06 Jun/07Jun/05
2.2 2.2
Dec/06
5.0 5.4
Jun/06 Jun/07
6.0
Jun/05
5.4
Dec/06
6.67.6
Jun/06 Dec/06
5.9
Jun/05
7.8
Jun/07
6
Project Vanguarda
Productivity (client/employee)
456 502 462
776654
585
1,071
890762
1,287
1,060943 923
1,236
1,057
Bandeirante Escelsa Enersul
1998 2001 2005 2006 2Q07
171%
111%100%
Savings resulting from the Redundancy Program implemented in 2Q06:
• R$ 8.0 million in 2Q07 vs. 2Q06
• R$ 44.4 million in accumulated annualized savings since the implementation of the program
24.835.6
60.04.0
5.2
8.4
27.738.8
4.2
5.628.8 31.9
40.8 44.4
68.4
D ec/ 0 6 A ccomp lished
t il l D ec/ 0 6
Jun/ 0 7 A cco mp lished t i l
Jun/ 2 0 0 7
D ec/ 0 7
Indirect (Accomplished)
Direct (Accomplished)
Indirect(Estimated)
Direct (Estimated)
PDV – Capture of accumulated annualized savingsCost of Personnel (R$MM/year)
7
Generation
Growth in the volume of energysold
• Beginning of energy contracts for Mascarenhas4th engine and PCH SãoJoão
766
941
2Q06 2Q07
Volume of Energy Produced (GWh)
516
1,043452 50 25
Installed Capacity (MW)
PeixeAngical
4th Eng. Masc.
PCHS. João Current
2005
22.9%
1,1771,303
2T06 2T07
Volume of Energy Sold (GWh)
10.7%
8
Participation in energy auctions
Acquisition of existing assets
Coal and biomass thermal plants: preliminary studies
PCHs under construction: +29 MW (Santa Fé)
Power upgrades: +50 MW (under study)
PCHs projects and studies to be presented to ANEEL: +438 MW
Feasibility studies for 7 hydro power plants: +590 MW (235 MW in
partnership with Eletronorte)
Partnership with MPX Mining & Energy to build coal-fired thermal
plants:+ 525 MW (50% stake in each project)
– UTE Maranhão: +350 MW
– UTE Pecém: +700MW
Generation - Creating Growth Opportunities
9
Commercialization
Growth of volume sold to freecustomers (+13.7%) offset theend of Enerpeixe’s contract
1,400 1,569
446346
1,846 1,915
2Q06 2Q07Other ENBR Group companies
Volume of Energy Distributed (GWh)
63 64
2Q06 2Q07
Number of customers
1.6%
3.8%
Financial Performance
11
909
1,157
76%77%
11%
10%13%
13%
2Q06 2Q07Distribution Generation Commercialization
26
113
2Q06 2Q07
163
312
64%61%
31%
31%
5%
6%
2Q06 2Q07
Distribution Generation Commercialization
Financial Performance
Net Revenues (R$ MM) EBITDA (R$ MM)
Net Income (R$ MM)
27.3% 91.6%
333.0%
12
Manageable Expenses
R$ million 2007 2006 ∆
Personnel 86.1 126.6 -40.5 -32.0%
Material 10.0 11.8 -1.8 -15.0%
Third Party Services 84.7 68.7 16.0 23.2%
Provisions 42.1 15.4 26.6 172.3%
Other 22.6 20.2 2.4 12.1%
Total 245.4 242.7 2.7 1.1%
∆ %
2nd
Quarter
Costs and Expenses
Manageable costs were impacted by non-recurring charges
Costs and ExpensesBreakdown* - 2Q07
Breakdown of Manageable Expenses
R$ 845.7 R$ 845.7 millionmillion
Non-manageable
costs
R$ 600.3 million
(71%)
Manageable
costs
R$ 245.4 million
(29%)
Manageable
costs
R$ 245.4 million
(29%)
Note:
*Depreciation and amortization were excluded
Provisions:
+ R$ 11.7 MM in provisions for non-transfer of revenues by collection agent
+ R$ 6.7 MM in civil and labor contingencies
+ R$ 3.0 MM in receivables due from Ampla
13
Financial Result
R$ million 2Q07 2Q06 Var.%
Financial Revenue 56.8 67.6 -16%
Financial Expense (89.6) (97.8) -8%
Net Foreign Exchange Result (8.7) (16.9) -49%
Net result from SWAP operations (38.3) (18.7) 105%
FX gain (loss) 29.6 1.8 1525%
TOTAL (41.5) (47.0) -12%
Reduction in debt servicing due to the fall of basic interest rates
Financial Result
14
Investments and Indebtedness
Total Debt Index(Mar/07)
** Includes Selic, CDI, IGP-M and INPC
Indebtedness – 2Q07 (R$ Million)Net Debt evolution
* Ratio: Net Debt / EBITDA 12 months
1.6x1.6x**
1.5x1.5x**
Net Debt / Ebitda
Investments* – does not include LFA** (R$ MM)
Distribution Generation2007 (E) 1H07 (A)
192
466
173
19
658
192
Universalization Program R$MM (includes LPT **)
2007 (E) 1H07 (A)
105
26
* Does not include interest capitalization and/or new projects **LPT: Luz para Todos
34%
59%
2% 5%
US$ Fixed Rates
TJLP Floating Rates **
* includes R$ 5.5 million of deposits related to debt with BNDES
1,889
Long-Term
2,2861,850
Short-Term
726(698)
(425)
Gross Debt Jun.07 (-) Cash and
Marktable Securities *
(-) Regulatory Asset
and Liabilities
Net Debt Jun.07 Net Debt Mar.07
3,012
15
IndebtednessExtended Maturity
697.6
582.5
307.4
528.5 511.8 490.8
178.5 157.5 124.0 130.7
Cash and
marketable
securities
2007 2008 2009 2010 2011 2012 2013 2014 After 2014
DebtDebt MaturityMaturity Schedule Schedule –– Jun/07Jun/07 vsvs Jul/07Jul/07 (R$ (R$ millionmillion))**
Debentures Issued in Jul/07Debentures Issued in Jul/07–– EscelsaEscelsa: :
R$250R$250 MMMM
Tenor:Tenor: 7 7 yearsyears
Grace Grace periodperiod ((interestinterest andand principal): 5 principal): 5 yearsyears
Remuneration: 105% of CDIRemuneration: 105% of CDI
ReductionReduction of short of short termterm debtdebt
ExtensionExtension of of averageaverage maturitymaturity
ReductionReduction of of averageaverage costcost of debtof debt
* Debentures issued on July 02, 2007
220.4
307.4
528.5 511.8 490.8
261.8 240.9207.4
130.7
2007 2008 2009 2010 2011 2012 2013 2014 After
2014
Debt Maturity Schedule (R$ MM)
June/07 After debenture issuance and repayment of Senior Notes
16
Stock Performance
+33%
+27%
+19%
+18%
VolumeR$ Th.
Updated until June 29, 2007
Market Capitalization: R$6.5 billion
95
100
105
110
115
120
125
130
135
140
4/2/2007 4/24/2007 5/16/2007 6/6/2007 6/28/2007
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Volume R$ ENBR3 ENBR3 Ibovespa IEE IBX
ENBR3 x Indexes Performance
Base: 04/02/2007
April: R$ 7,178
May: R$ 15,403
June: R$ 13,495
Average daily traded volume (R$ th.)
2Q07: R$ 12,134
Conference Call
2Q07 Results
www.energiasdobrasil.com.br
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