EDP Renewables SA · EURONEXT:EDPR
EDP Renewables SA — EDP Renováveis — FY2009 Earnings Presentation
42 slides from EDP Renewables SA's earnings presentation, Feb 25, 2010
Slide 1: 2009 Results
2009 Results 25th February, 2010
Slide 2: Agenda
Agenda I A top global leading company II 2009: delivering strong double digit growth through 3 strategic pillars III Business review and 2010 outlook
Slide 3: A top global leading company
‘ A top global leading company SJ
Slide 4: EDPR: a top global leading company in a growing sector
EDPR: a top global leading company in a growing sector Top wind players: 2009 capacity growth (1) (%) An industry delivering strong growth pace in a very demanding financial and economical environment EDPR is executing its superior growth plan through the +26% addition of 1.2 GW to its quality asset
Slide 5: 2009: delivering strong double digit growth through 3 strategic pillars
2009: delivering strong double digit growth through 3 strategic pillars
Slide 6: EDPR: has a clear strategy based on three pillars
EDPR: has a clear strategy based on three pillars… Superior Solid Growth Profitability Controlled Risk …enabling premium performance through challenging environments 5
Slide 7: Superior growth
Superior growth… growth… 2009 highlights Strong operating • Capacity added: +1.2 GW YoY performance… • Production increase: +40% GWh YoY …reflected by • EBITDA increased 24% YoY achieving €543m top-to-bottom financial • Net Income grew 10% to €114m growth… • +34% YoY of free cash flow before capex …
Slide 8: Solid profitability
Solid profitability… profitability… 2009 highlights • Continuously delivering above market average load factors: High quality assets with 26% in Europe and 32% in the US premium load factors… • Asset base with an average life of 2.1 years …with higher efficiency • EBITDA margin continued to be top-n
Slide 9: Controlled risk
Controlled risk… risk… 2009 highlights • Selective geographical diversification reducing regulatory and Balanced portfolio… wind risk profile thus contributing to cash flows’ stability …coupled with an active • 84% of 2009 electricity production with no or limited exposure to risk management market
Slide 10: Consistent delivery of strong growth in installed capacity
Consistent delivery of strong growth in installed capacity Historic Capacity Growth 2009 Additions Profile (Gross MW) (Gross GW) 6,227 +1.2 CAGR >40% 5,052 +0.7 3,639 2,127 +0.3 +0.1 +0.1 2006 (PF) 2007 2008 2009 1Q 2Q 3Q 4Q 2009 • Consistently delivering targets and a robust growth over the past 4
Slide 11: Strong 40% production increase driven by stable load factor and capacity growth
Strong 40% production increase driven by the stable annual average load factor and additional installed capacity growth Load Factor Electricity Output (%) (EBITDA GWh) (1) 2008 2009 +40% 10,907 US 34% 32% 7,807 54% EU 26% 26% 50% US EDPR 30% 29% 46% EU 50% 2008 2009 • EDPR continues to deliver stabl
Slide 12: Managing portfolio risk to support low risk profile and cash flow stability
Managing portfolio risk to support low risk profile and cash flow stability 2009 Production Breakdown 2009 Avg. Selling Price (GWh weighted by revenue source) (€/MWh or $/MWh) 2009 2008 % 10,907 10,907 Feed-in Solid feed-in tariffs 16% Tariff / PPA €93 €89 +4% 82% in Spain was Fixed / Market + Premi
Slide 13: Pioneer hedging decision in Spain driven by active risk management
Pioneer hedging decision in Spain driven by active risk management practice in support of cash- cash-flow stability 2009 Spanish production 2009 Pool price and EDPR hedging (%) (€/MWh) No market exposure or protected 70 3,275 GWh EDPR fwd price quarterly breakdown 60 21% EDPR avg. fwd 50 price €47/M
Slide 14: Long-term PPA contracts in the US offsetting weak merchant prices
Long- Long-term PPA contracts in the US offsetting the weak merchant prices Production Breakdown in US (%; GWh) PPA: Avg. Selling Price ($/MWh) +8% Enhanced porfolio mix reflecting the latest PPAs A A signed in the US for projects 48 52 in operation over the last 12M PPA(1) 81% 2008 2009 Merchant: 2
Slide 15: EDPR's Gross Profit increased by 25% in 2009
EDPR’s Gross Profit increased by 25% in 2009… Gross Profit Evolution (€ million) +25% +72 +22 -6 +47 +19 GWh +51% -10 GWh +34% Price -2% GWh +24% Price +4% 725 581 Price -17% Spain US (1) Gross Profit PT & RoE Other Gross Profit 2008 2009 Non-hedged Hedged Revenues TEI • US: figures enhanced by stro
Slide 16: ...which combined with the maintenance of top efficiency ratios...
...which combined with the maintenance of top efficiency ratios... Opex breakdown evolution Total Opex / average MW (EBITDA) (€ million) (€ thousand) +28% +41 +4 182 -7 -12% 144 44 39 2008 S&S Personal Other 2009 2008 2009 Costs Opex/ 18.4 -9% 16.7 MWh • Supplies and services as the main contributor
Slide 17: ...builds a continuous EBITDA growth of 24%
...builds ...builds a continuous EBITDA growth of 24%, while maintaining a top tier EBITDA margin EBITDA: contribution by region EBITDA margin: breakdown by region (€ million) (%) 2008 2009 +24% +76 543 Spain 87% 82% +42 -8 438 Portugal 78% 83% -5 RoE 64% 69% US 72% 75% 2008 Spain PT & US Other (1)
Slide 18: EDPR's Net Profit increased by 10% in 2009
EDPR’s Net Profit increased by 10% in 2009 Net Profit: YoY evolution EBITDA to Net Profit (€ million) (€ million) YoY growth +10% EBITDA 543 +24% 114 (1) D&A 312 +51% 104 Financial -6% 68 Costs Taxes & 48 -15% Minorities Net Profit 114 +10% 2008 2009 • Net Profit was up by 10% YoY following a 24% EB
Slide 19: Capex in the period amounted to €1.8bn
Capex in the period amounted to €1.8bn reflecting the execution of growth targets… Capital Expenditures Work in Progress (1) (€ million) (€ million, cumulative on Balance Sheet) Turbine deposits and MW under development MW under construction 826 US 1,116 1,846 364 663 Iberia 752 357 RoE & Other 2009
Slide 20: ...influencing the increase in Net Debt
...influencing the increase in Net Debt Net Debt Evolution and Cash Flow (€ million) +€1,064m -489 +99 ($687m) +1,847 2,134 -392 1,069 Net Debt Operating Cash Investing Institutional Forex Translation Net Debt 2008 Flow Activities Partnership and and Other 2009 Cash Grant Strong cash-flow generation
Slide 21: EDPR successfully monetized $687m of tax incentives in the US
EDPR successfully monetized $687m of tax incentives in the US to maximize projects’ NPV 2009 US tax incentive monetization breakdown ($ million) PTC • $50m: second instalment of the Vento III deal 278 • $111m: sale of an additional stake of Vento III Tax Equity • $117m: Blue Canyon V wind farm Cash
Slide 22: Balance sheet discipline supporting strong investment program
Balance sheet discipline supporting strong investment program Enterprise Value Debt by Type Debt by Currency (%) (%) (%) 52% USD 64% Equity (1) 92% Fixed Rate 4% Minorities (2) 9% TEI 48% EUR 23% Net Debt 8% Variable 2009 2009 2009 • 4.8% avg. cost of debt: 80% debt contracted through shareholders’
Slide 23: Business review and 2010 outlook
Business review and 2010 outlook
Slide 24: Regulatory support has been key to promote renewables growth
Regulatory support has been key to promote renewables growth in the medium- medium-term Visibility on future growth Regulatory support Each country adopts different remuneration schemes and targets: 2020 EU Directive provides • Floor tariffs EU solid long-term support • Feed-in tariffs • Green certi
Slide 25: Europe has been showing regulatory stability and visibility on new investments
Europe has been showing regulatory stability and providing visibility on new investments Supportive regulatory and remuneration …and medium-term visibility on new schemes across Europe… investments profitability Floor price Feed-in tariff Green certificates • Pre-registry fixed new MWs to build unti
Slide 26: Lack of long-term US federal framework led to challenging PPA market
In the US, the lack of enforceable long- long-term federal framework led to a challenging PPA market in the 2nd half of 2009 Current state RPS supply gaps indicate that … which together with a weaker electricity the wind business’ attractiveness is not market and regulatory uncertainty has been homo
Slide 27: Low PPA activity increased merchant exposure among US wind operators
Due to low PPA activity the merchant exposure has increased among the US wind operators in 2009 Total US Wind Market’s merchant exposure (1) EDPR’s current merchant capacity in the US (MW) (MW) US market merchant MW EDPR merchant MW 17% 26% 24% 32% (2) 2008 2009 2008 Current EDPR’s risk profile rema
Slide 28: Merchant exposure risk contribution needs to be controlled
Although merchant exposure is offering strong fundamental value its risk contribution to portfolio needs to be controlled Each selling structure in the US offers strong …that need to be managed fundamental value but different risk profiles… at a consolidated level Merchant PPA 2010E total consolidat
Slide 29: EDPR's US growth pace to be adjusted to maintain low risk
EDPR’s US growth pace to be adjusted in order to maintain the low risk strategic pillar EDPR’s annual capacity additions (Gross GW(1)) Total -500 MW EDPR to adjust its annual growth 1.4 pace and reduce up to 500 MW in 2010-2011 build-out capacity 1.2 depending on: • Improvement of the PPA market • A
Slide 30: 2010-2011: focusing development on markets with favorable PPA prospects
2010- 2010-2011: focusing the project development and growth targets on markets that offer favorable PPA prospects EDPR’s short term pipeline in the US (expected ready-to-build projects for 2010-2012) Region Weight % Type of market PPA demand level Very strong RPS in Pacific 10% Bilateral California
Slide 31: Under adjusted growth pace EDPR will keep risk profile within limits in 2010
Under an adjusted growth pace EDPR will keep its risk profile within defined limits in 2010 2010 EDPR’s expected production breakdown (GWh weighted by revenue source) 1 16% • Solid selling price visibility 2 • New MWs selling at regulated floor price Secured / Low Risk 30% • 50% of old MWs protected
Slide 32: Strong visibility on Portugal and Rest of Europe selling price
1 Strong visibility on Portugal and Rest of Europe countries’ selling price 2010E production Country and remuneration schemes 2009 Price (% of GWh) (€/MWh) + • Feed-in tariff, adjusted to inflation and operating Portugal hours 95 • Feed-in tariff, adjusted to inflation type index and France operatin
Slide 33: Hedging and floor price protect most of Spanish revenues
2 Proactive hedging and regulatory floor price protect most of Spanish revenues 2010E Spain: production breakdown 2010 market 2010 fixed (GWh) price (€/MWh) premium (€/MWh) • Regime will change to floor 30% Semi- spot mechanism by 2013 onwards price + 38 Merchant • Until 2012, EDPR will continue to
Slide 34: Favorable PPA contracts will support US revenue stability
3 Favorable PPA contracts will continue to support revenue stability in the US and offset the weaker merchant prices 2010E US: production breakdown (GWh) 30% Merchant Electricity REC (forwards 2010(2)) (expected 2010) + $33-$38 $5-$10 PPA Average PPAs avg. portfolio(1) price 70% PPA(1) duration (201
Slide 35: EDPR: a solid business model
EDPR: a solid business model… 2010 production EBITDA and Net expected to Profit to maintain increase >35% strong double digit growth 80% of the portfolio to deliver visible revenues …to deliver premium performances in challenging environments 34
Slide 36: Annex
Annex
Slide 37: EDPR: a pure wind player with a quality asset base
EDPR: a pure wind player with a quality asset base US UK 2,859 - 99 - Poland 1.300 Belgium 19,246 120 France 57 - 13 Romania 220 1,466 62 39 Italy - 1,138 228 Portugal Brazil - 613 680 Spain - 14 53 520 - 2,278 571 1,509 308 4,967 (1) 2009 Gross MW MW Installed Capacity Installed Under Pipeline + MW
Slide 38: US: EDP Renováveis footprint
US: EDP Renováveis footprint 2009 Gross MW Iowa Illinois In operation In operation Pioneer Prairie Ia 115 PPA(1) Minnesota Twin Groves I 198 PPA Indiana Pioneer Prairie Ib 83 Mkt Twin Groves II 198 PPA In operation Pioneer Prairie II 102 PPA In operation Rail Splitter 101 Mkt Prairie Star 101 PPA Lo
Slide 39: EDPR: 2009 Installed Capacity
EDPR: 2009 Installed Capacity 2009 Installed Capacity (MW) Gross (100%) EBITDA Consolidation Net (% Held) Spain 2.278 1.861 1.787 under Transitory Regime 1,414 1,091 1,064 under RD 661/2007 864 770 723 Portugal 680 595 660 under old remuneration 595 595 575 under new remuneration 85 - 85 France 220
Slide 40: Disclaimer
Disclaimer This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on the 25th of February 2010. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by
Slide 41: IR Contacts
IR Contacts Rui Antunes, Head of IR Francisco Beirão Diogo Cabral E-mail: [email protected] Phone: +34 914 238 402 Fax: +34 914 238 410 Visit EDP Renováveis Website Next Events Roadshow Switzerland: March 2nd Site: www.edprenovaveis.com Roadshow Benelux: March 3rd Roadshow Paris: March 4th Link R
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