2q08 results
TRANSCRIPT
1
2Q08 Results
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.
3
Highlights of 2Q08
█ Consolidated EBITDA reached R$ 323.4 MM in 2Q08, a growth of 3.8% compared to 2Q07
█ Generation segment’s EBITDA grew 19.0% reaching R$ 118 MM in 2Q08. Generation contributed with 35% of consolidated EBITDA
█ Generation’s energy sales grew 9.0% reaching 1,428 GWh in 2Q08
█ Energy distributed reached 6,444 GWh, a growth of 2.8% yoy.
█ Significant reduction of manageable expenditures (-15.9%, excluding depreciation & amortization)
█ Net financial expenses decreased -26.4%
█ Acquisition of 2 wind farms with 13.8 MW of installed capacity by EDP Renováveis Brasil
█ Asset swap between Energias do Brasil and Grupo Rede
4
Highlights of 2Q08Asset Swap
EBITDA Breakdown
Operating Highlights
2007
2007 2007 Consolidated Post-Transaction¹
1 Assuming consolidation of 100% of Investco, Rede Lajeado and EDP Lajeado2 Assuming Enersul’s EBITDA of R$193 MM, excluding extraordinary items
EBITDA: R$1,123 MM EBITDA: R$1,139 MM
Impact on Net Debt - 2007
2007 Consolidated Post-Transaction¹ ²
Generation 39%
Distribution61%
Generation 57%
Distribution43%
Generation
Installed Capacity (MW) 1,043
Firm Energy (average MW) 645
Distribution
Distributed Energy (GWh) 25,029
# Clients ('000) 3,207
Generation
Installed Capacity (MW) 1,696
Firm Energy (average MW) 1,026
Distribution
Distributed Energy (GWh) 21,756
# Clients ('000) 2,497
1,957 603
23
426 1,803
ENBR's NetDebt
Enersul EDPLajeado (net
cash)
Lajeado ENBR Pro-Forma
+63%
+59%
-13%
-22%
5
Parte Interna – Separação de áreas de trabalho
Generation
6
Higher energy sales and average tariff increase resulted in strong EBITDA and Net Income growth
EBITDA
(R$ MM)
Net Income*
(R$ MM)
Net Revenue
(R$ MM)
275
384
135 163
1H07 1H08 2Q07 2Q08
193
294
99 118
1H07 1H08 2Q07 2Q08
85
145
42 52
1H07 1H08 2Q07 2Q08
+20.1%
+39.4%
+51.9%
+19.0% +23.3%
+69.4%
* D
oe
s n
ot
co
nsid
er i
ntr
a-g
roup
elim
ina
tion
s
Volume Energy Sales
(GWh)
2,966
1,311 1,428
2,663
1H07 1H08 2Q07 2Q08
+11.4%
+9.0%
7
New projects already underway will sustain a potential 102.3% growth in installed capacity until 2012
Installed capacity
(MW)
Concluded projects since IPO
Projects in progress
* Asset swap depending solely on BNDES and BASA approval
** Includes 5 MW of power upgrades in UHE Suíça and PCH Rio Bonito under Aneel's approval
50 25
29 25** 360
1,067
2,110
516
452
1,043 1,043
2009 20092012
Expected Start-Up
2005 Peixe Angical HPP
4th turbine Mascarenhas
São João SHP
Current Santa FéSHP
Repowering PecémTPP
2012
653*
Lajeadoadditional capacity
8
Parte Interna – Separação de áreas de trabalho
Distribution
9
In distribution, despite the market growth...
Energy in Transit
Volume of Distributed Energy
(GWh)
Energy Distributed by Customer Class
(GWh)
Bandeirante EnersulEscelsa End Customers Other
1H07 1H08 2Q07 2Q08
12,411
6,268
53%
13%
53%
13%
34%
34%
12,731
6,444
1H07 1H08 2Q07 2Q08
12,411
62%
37%
1%
53%
13%
34%
53%
13%
34%
+2.6%
+2.8%
+2.6%
+2.8%
12,731
6,268 6,444
62%
36%
2%
62%
37%
62%
36%2% 2%
10
... financial performance was negatively impacted by tariff reviews
Net Revenue
(R$ MM)
EBITDA
(R$ MM)
Net Income*
(R$ MM)
Bandeirante EnersulEscelsa
-10.8%
37%
* Does not consider intra-group eliminations
1H07 1H08 2Q07 2Q08
2,025
48%
31%
21%
1H07 1H08 2Q07 2Q08
174
41%
37%
22%
1H07 1H08 2Q07 2Q08
454
208
42%
34%
24%
43%
30%26%
2,065
1,025 1,030
48%
31%
21%
49%
29%22%
50%
30%20%
+0.5%
+2.0%
-2.1%
46%
31%
23%
405
204
57%
25%18%
166
80 83
54%
28%
18%
46%
31%
23%
73%
16%11%
-4.6%
+3.6%█ Reduction in 2Q08 EBITDA reflects
tariff review of the subsidiaries
█ However, the growth of the Net Income in 2Q08 reflects significant reduction of manageable expenses and net financial expenses
11
Productivity indicators show continuous improvements
GWh / employee
Customers (th.) / employee
3.6
6.6
10.3
8.1
12.0
4.3 4.4
12.9
8.9
12.9
9.0
4.5 4.5
9.1
12.8
Bandeirante Escelsa Enersul
2005 2006 2007 1Q08 2Q08
0.890.76
0.94
1.07
1.29
1.06
1.36
1.15
0.96
1.36
1.17
0.98
1.37
1.18
1.00
Bandeirante Escelsa Enersul
2005 2006 2007 1Q08 2Q08
12
Actions are being taken to keep losses under control
Commercial Losses*
Total Losses
Escelsa EnersulBandeirante EDB
~ 150 thousand inspections undertaken and 73 thousand frauds detected in 2Q08
~ R$5.7 MM in recovered revenues
Technical Commercial
* 12-month average. For Bandeirante, historical numbers were restated according to Aneel’s new criteria
Dec07
5.86.0 8.98.0 6.26.15.75.7
Jun08 Dec07 Jun08 Dec07 Jun08 Dec07 Jun08
7.6%7.4%
6.2%6.1%
Dec07
13.5% 13.8%
Jun08
13
COMERCIALIZAÇÃO
Parte Interna – Separação de áreas de trabalho
Commercialization
14
Despite the decrease in energy commercialized …
Energias do Brasil Group Companies
Other
Volume of Energy Commercialized
(GWh)
3,122
1,569 1,551
2393,035346
581 457
3,616
1,915
1H07 2Q081H08 2Q07
3,579
1,790
-1.0%
-6.5%
15
298
389
166 178
1H07 1H08 2Q07 2Q08
… financial performance reflects profits from short term high prices in 1H08
Net Revenue
(R$ MM)
+7.2%
EBITDA
(R$ MM)
Net Income*
(R$ MM)
* Does not consider intra-group eliminations
24 29
18
11
1H07 1H08 2Q07 2Q08
1820
128
1H07 1H08 2Q07 2Q08
+30.2%+17.9%
-36.9%
+14.4%
-33.5%
16
Consolidated Financial Performance
17
2,271 2,488
1,157 1,203
1H07 1H08 2Q07 2Q08
Financial performance was positively impacted by the generation segment
Net Revenues
(R$ MM)
EBITDA
(R$ MM)
+3.9% 650 707
312 323
1H07 1H08 2Q07 2Q08
+9.6% +8.7%
+3.8%
18
Net Income was affected by accounting, non-cash adjustments
Net Income
(R$ MM)
241
113
-4
152
1H07 1H08 2Q07 2Q08
1 Non recurring, non cash adjustment. ENBR will propose to its Board of Directors a payout adjustment in order to compensate the negative effect on minimum dividend of extraordinary items.
2Q08 1H08
R$ R$
Reported Net Income (4.0) 152.2
129.6 129.6
Enerpeixe subsidy 3.7 11.7
Adjusted Net Income 129.3 293.4
Consolidated Net Income (R$ million)
Elimination of non-recurring effects
Additional amortization of Enersul's goodwill 1
129
+14.5%
293
+21.8%
19
Significant reduction on manageable expenses, excluding depreciation and amortization, especially on provisions and others
2Q07 2Q08 ∆%
Personnel 86.1 79.7 -7.4%
Material 10.0 11.1 10.9%
Third Party Services 84.7 81.5 -3.8%
Provisions 42.1 19.6 -53.5%
Others 22.6 14.5 -36.0%
245.4 206.3 -15.9%
Depreciation and amortization 79.9 83.1 4.0%
Subtotal 325.3 289.4 -11.0%
Enersul's goodwill amortization - 129.6 -
Total 325.3 419.0 28.8%
Manageable expenses (R$ MM)
Provisions
- R$ 4.1 MM in service orders for earlier periods at Bandeirante
- R$ 3.0 MM in recovery of judicial deposits
Others
- R$ 11.7 MM due to the non-transfer of revenues from a collection agent in 2007
- R$ 6.4 MM in reversal of contingencies – Escelsa
- R$ 5.0 MM in reduction of allowance for bad debt in the subsidiaries
IGPM: 13.4%
IPCA: 5.8%
20
The 26.4% reduction of net financial expenses is mainly related to an improvement in the FX result
█ Other factors contributing to the improvement in net financial results were:- Revenue from interest over progress payment and delinquency;
- Extinction of the CPMF.
Financial Result (R$ MM)
2Q07 2Q08 ∆ %
Financial Income 56.8 68.9 21.3%
Financial Expenses (89.7) (95.9) 7.0%
Net Forex Result (8.7) (3.6) -58.7%
Foreign Exchange Rate Variation 29.6 11.6 -60.8%
Swap - net result (38.3) (15.2) -60.3%
TOTAL (41.5) (30.6) -26.4%
21
The Group has an extended debt maturity, low leverage and low currency exposure
2,1311,9571,8791,702
2,345
1.81.71.8
3.0
1.9
0
1,000
2,000
012345
Net Debt/EBITDA (x)
Gross Debt Breakdown
(Jun/08)
Net Debt
(R$ MM)
52%52% 41%41%
6%1%
Dollar
Fixed Rates
Long Term Basic Interest Rate (TJLP)
Floating Rates*
* Includes Selic, CDI, IGP-M and INPC
200620052004 2007
Net DebtNet Debt/EBITDA
Debt Maturity Schedule
736.5
324.0
562.9 553.6
1,042.0
499.1
Cash and Cash Equiv.
(Jun/08)
2008 2009 20112010 After 2011
Jun08
Long-Term
2,315 1,9632,131
Short-Term
667 (736)
(115)
Gross Debt Jun.08 (-) Cash and
Marktable Securities
(-) Regulatory Asset
and Liabilities
Net Debt Jun.08 Net Debt Mar.08
2,982
22
A substantial increase in CAPEX is estimated for 2008, largely allocated to generation projects
Capex Breakdown*
(R$ MM)
Investments - Universalization
(R$ MM)
174355
183
679
11419
2008E1H08Distribution Generation
2654
166
1H07 1H08 2008E
297
* Does not include Capex for Universalization Program** Subject to changes. Includes implementation of SHP projects still in phase of approval by Aneel
1,034
1H07
193
1,200
1,781
1,098
2008E 2009E 2010E
Estimated Investments**
(R$ MM)
23
We are working to create new growth opportunities
█ Creation of EDP Renováveis Brasil (EDPRB) and acquisition of 2 wind farms with 13.8 MW of installed capacity and expansion project of 70 MW;
█ SHP projects under development, with a total installed capacity of 601 MW;
█ 2 CCGT projects, with 500 MW each, and agreements signed with Petrobrás for the supply of natural gas from 2013 on;
█ Potential participation in the expansion of Pecém TPP (360 MW);
█ Partnership with Eletronorte, Cemig and engineering companies for the development of feasibility studies for HPPs (1,439 MW);
█ Partnership with Cemig for the development of wind farms (500 MW); and
█ TPP projects with sugar cane bagasse under development with an installed capacity of 100 MW, with potential expansion to 350 MW.
24
Stock Performance on the 1st semester 2008
Market Capitalization: R$ 5.3 billion*
IBOV = +1,8% IEE = +10,8%ENBR3 = +15,5%
Volume R$ ENBR3 ENBR3 IBOVESPA IEE
IBOV = +1.8% IEE = +10.8%ENBR3 = +15.5%
Volume R$ ENBR3 ENBR3 IBOVESPA IEE
ENBR3 x Indexes Performance
Base 100: 2008
70
80
90
100
110
120
130
Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
0
20,000
40,000
60,000
80,000
100,000
*Updated until June 30, 2008
