Successful Strategy. Performance reflects balanced portfolio structure 2017

Transcription

1 Successful Strategy Performance reflects balanced portfolio structure 2017

2 Disclaimer Some statements and estimates in this material may represent expectations about future events or results that involve risks and uncertainties known and unknown. There is no guarantee that the events or results referred to in these expectations will occur. These expectations are based on present assumptions and analyses from the viewpoint of our management, based on their experience, the macroeconomic environment, market conditions in the energy sector and our expected future results, many of which are not under Cemig s control. Important factors that can lead to significant differences between actual results and projections about future events or results include Cemig s business strategy, Brazilian and international economic conditions, technology, Cemig s financial strategy, changes in the energy sector, hydrological conditions, conditions in the financial markets, uncertainty regarding future results of operations, plans and objectives as well as other factors. Because of these and other factors, our actual results may differ significantly from those indicated in or implied by these statements. The information and opinions contained herein should not be understood as a recommendation to potential investors and no investment decision should be based on the truthfulness, or completeness as of the date hereof of this information or these opinions. None of Cemig s professionals nor any of their related parties or representatives shall have any liability for any losses that may result from the use of the content of this presentation. To evaluate the risks and uncertainties as they relate to Cemig, and to obtain additional information about factors that could lead to different results from those estimated by Cemig, please consult the section on Risk Factors included in our Formulário de Referência filed with the Brazilian Securities Commission CVM, and in Form 20-F filed with the U.S. Securities and Exchange Commission SEC. In this material, financial amounts are in R$ million (R$ mn) unless otherwise stated. Financial data reflect the adoption of IFRS 2

3 Brazil s Leading Power Utility #1 Integrated Power Utility in Brazil #4(2) Market cap US$ 2.6 (1) B. #1 Market share in the free market Leading consolidator Role in industry In the Power Industry since 1952 (1) As of November 13 th, 2017 (2) In the Brazilian Energy Industry 3

4 Cemig: in Numbers 117 Power plants GW Total installed capacity 540,000 km Electricity Distribution lines 8,200 km Power Transmission lines 4

5 Cemig at a Glance Based in State of Minas Gerais, controlling shareholder Assets in 23 Brazilian states Strong financial profile: 9M17 Net revenues: R$15.0 bn EBITDA: R$14.1 bn 2016 Net revenues: R$18.7 bn EBITDA: R$2.6 bn 2015 Net revenues: R$21.9 bn EBITDA: R$5.5 bn Among the most liquid stocks in Brazil s electricity sector listed on 3 stock exchanges New York, São Paulo, Madrid More than 120,000 shareholders in more than 40 countries Average Daily Trading Volume (last twelve months up to June) R$66.7M in Bovespa and US$13.1M in NYSE Solid dividend policy established in the bylaws Minimum 50% payout ratio Every two years, may pay extra dividends, if cash conditions permit Shareholder Structure: A G C E n e r g i a S. A. B N D E S P A R O t h e r s t o c k h o l d e r s ON 51% PN 0% ON 16% PN 0% ON 13% PN 3% ON 20% PN 97% 5

6 Cemig is Uniquely Positioned The Brazil advantage An Emerging Powerhouse Economy #1 #9 R$6.3 Trillion Latin American economy Ranking of economy in world (1) GDP % 207 M GDP growth 2017 (2) Population (1) World Bank (2) Brazil s Central Bank Focus Report, November 3 rd

7 Cemig is Uniquely Positioned Unmatched scale Largest Integrated Utility in Brazil * #1 Electricity Distributor #2 Largest Power Transmission Group #3 Largest Power Generation Group RR AP #1 Integrated Power Utility in Brazil Power Generation Power Generation (under construction) Power Transmission AC AM RO MT PA DF GO TO MA PI BA MG CE AL SE RN PB PE Power Transmission (under construction) Electricity Distribution Cemig Free Consumer Clients Wind Power Generation Natural Gas Distribution Presence in 23 states MS RS SP PR SC ES RJ Telecom Backbone Provider * In terms of length of electricity distribution lines 7

8 Cemig is Uniquely Positioned Diversified portfolio Diversified, Low Risk Business Portfolio Breakdown of Ebitda Generation Transmission Distribution Others Most of the revenues are inflation protected 8

9 Leader in Renewable Hydro Power Energy Renewable Leader Power Generation by Source 28% 6% 3% 17% 64% 11% 95% 2% 44% 28% World 2014 Brazil % Cemig 2016 Fossil Source Fuels Nuclear Hydro Others Source: EPE [BEN 2011 Preliminar Results and IEA [Key World EnergyStatistics-2010] 9

10 Best-in-Class Corporate Governance Strong governance Minas Gerais, controlling shareholder a positive influence One of the fastest growing, investor-friendly states in Brazil Growth and profitability interest aligned with minority shareholders 7 from a total of 15 members are appointed by minority shareholders Pro-market corporate bylaws include Minimum 50% dividend payout Capex limited to 40% of EBITDA Net debt limited to 2.5x EBITDA Minas Gerais Net debt limited to 50% of total cap. Leader in sustainability Only Latin American utility in DJSI Dow Jones since 1999 Included in the ISE Bovespa Sustainability Index since 2005 Present in the Global Dow Index 10

11 The blend of shareholders provides long term perspective Our shareholders diversity provides a global business management vision focused on sustainability of the company's activities Listed in major stock exchanges BOVESPA (Brazil),NYSE (USA) and LATIBEX (Spain) Total Shares PN 67% ON 33% Common - ON 420,764 thousand Free float 151,814 thousand(36.1%) Total shares 1,258,841 thousand Preferred - PN 838,076 thousand Free float 805,890 thousand (96,17%) 30% 3% ON 51% PN 1 29 ADR CIG.C thousand ADR CIG 191,262 thousand 16% 70 Share nominal value = R$5.00 ADR outstanding approximately 22% of total shares and 34% of PN shares 1 ADR = 1 share in Bovespa ON shares have voting rights MG government Local Investors AGC Energia SA International Investors 11

12 EBITDA R$ million adj LTM Adj LTM Last twelve months after adjusting the effects of non-recurring items: Generation Indemnity Revenue, VAT (Novo Regularize) 12

13 Net Income R$ million 4,272* adj LTM adj LTM adj - Last twelve months after adjusting the effects of non-recurring items: Generation Indemnity Revenue, VAT (Novo Regularize) *Includes non-recurring gain of R$1,572 million with the CRC s (Accounts receivable from Minas Gerais State government) anticipated settlement. 13

14 Dividend Payout Dividend Payout Dividend Yield (%) (% of Net Income) Paid Average Policy ,0 23, ,4 9,2 4,6 10,

15 Balance Sheet to Support Growth 6.2x Net debt to EBITDA 9M17 0.2% Debt in foreign currency ( * ) R$1.3B Cash on hand R$15.1B Net Revenue 9M17 *Net of financial hedging 15

16 EBITDA Guidance 2017/2021 Main assumptions Free Market to remain as at present ( ) Jaguara, São Simão, Miranda and Volta Grande plants operate under Regime of Quotas until Dec/2017 Without indemnity for the 4 plants above Without indemnity for the 14 plants of Lot D No sales of assets 4.99 Net debt / Ebitda 5,542 5,780 *3.52 (Adjusted Ebitda) < 3.5 < 2.0 4,491 4,784 4,986 4,985 5,200 * Excludes effect of the adjustment for loss of value in Investments Renova. Breakdown of Ebitda 4,042 4,305 4,484 Equity holdings Figures in constant 2017 currency 16

17 Disinvestment program Strategy was designed to deleverage Cemig Total 8,046 17

18 Cemig - consolidated debt profile R$ million Maturities timetable Average tenor: 2.2 years Total net debt: R$ 12.8 billion Main indexors 4% CDI % IPCA After 2023 Each 1 p.p. reduction in Selic rate estimated to reduce debt cost by R$ 112mn Financial expenses are already lower due to reduction in the Selic rate: R$ 222 mn lower in 3Q17 compared to 3Q16 Cost of debt % 72% Leverage % Other 14,28 3,74 15,82 15,89 15,95 6,90 8,40 8,29 12,03 8,97 10,39 7,22 Net debt Ebitda Net Debt Stockholders equity + Net debt 4,98 4,21 3,98 50,4 49,5 48,9 6, ,0 Net debt Ebitda Adjusted 2015 set/ mar/17 jun/17 set/17 Real Nominal 2016 mar-17 jun-17 set-17 18

19 Cemig GT debt profile R$ million Maturities timetable Average tenor: 2.0 years Total net debt: R$ 7.2 billion Main indexors 1% % CDI IPCA Others After 2023 Restrictive covenants For details see Note 18 (Loans, financings and debentures) 82% Cost of debt- % Leverage - % 14,41 3,66 15,41 16,03 16,11 6,64 8,59 8,46 12,07 9,85 10,07 7,41 Net debt Ebitda Net Debt Stockholders equity + Net debt 5, ,51 4,53 5, Net debt Ebitda Adjusted 2015 set/ mar/17 jun/17 set/17 Real Nominal 2016 mar/17 jun/17 set/17 19

20 Cemig D debt profile R$ million Maturities timetable Average tenor: 2.5 years Total net debt: R$ 5.6 billion Main indexors 2% CDI % 56% IPCA Others After 2023 Cost of debt- % Leverage % 14,31 4,01 16,46 15,87 15,95 7,12 8,06 8,04 10,97 8,95 9,57 6,90 Net debt Ebitda Net Debt Stockholders equity + Net debt 12,55 66,2 10,39 68,0 13,78 N.A. 69,3 73, Net debt Ebitda Adjusted 2015 set/ mar/17 jun/17 set/17 Real Nominal 2016 mar/17 jun/17 set/17 20

21 Reprofiling of Cemig s debt Million Million Changing debt profile Current Debt profile (R$ MM) (Balance as of December 31, 2016) em on diante Debt profile proposal: Eurobond (7-yr bullet) and banks (3-yr grace period and 5-yr amortization) Debt profile after Refinancing (R$ MM) em on diante Existing debt Refinancing with banks Refinancing with Eurobonds New Debt profile 21

22 Our Credit capacity In June 2017 Solid fundamentals assured by excellent financial management, stable profitability, strong cash generation and robust corporate governance. BB-(bra) Cemig H, Cemig GT and Cemig D B- Cemig H, Cemig GT e Cemig D National Scale Global Scale Investment Grade Grado Especulativo AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC CC C RD/D Investment Grade B2.br Cemig H, Cemig GT and Cemig D National Scale B3 Cemig H, Cemig GT and Cemig D Global Scale Grau Especulativo Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca C brbbb- Cemig H, Cemig GT and Cemig D National Scale B Cemig H, Cemig GT and Cemig D Global Scale Investment Grade Grau Especulativo AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D 22

23 CEMIG GT - Ebitda Guidance 2017/ ,277 2, ,951 2, Source: Cemig. Figures in constant 2017 currency 23

24 CEMIG D - Ebitda Guidance 2017/ , ,427 1, , Source: Cemig. Figures in constant 2017 currency 24

25 Brazilian National Grid: projections for Average MW Made in Surplus % 18,4% 13,1% 12,3% 12,6% 8,2% Surplus Reserve Thermal Wind / Bio Hydro Market Source: PMO (Monthly Operation Program), May 2017, after first four-month review of 2017 Assuming GDP growth of 2.0% in

26 Cemig GT: Supply/demand MW average Excess accounted in the spot market in 2016 Probable renewals Vendas Regulated ACR (Distribuidoras) Market sales (distribution companies) Vendas Free Market ACL (Consumidores sales (Free Livres Consumers e Comercializadoras) and Traders) Sobra Excess, Energia secondary Secundária supply Déficit Deficit Recursos Own generation Próprios Vendas Regulated ACR SPEs market (distribuidoras) sales of SPCs (distributors) Recursos Available Disponíveis for trading para Comercialização base Base... Renovações Renewals (*) Assumes exclusion of the Hydroelectric Plants of which the first or second concession periods expire in coming years; non-inclusion of intermediation in the sales portfolio of Cemig GT; and 100% availability of the supply from the SPCs of Cemig GT. 26

27 Cemig GT: Supply/demand Position on May 16, Own generation 1,047 1,013 1,013 1,013 1,012 1,010 1,010 1, Supply from the SPCs Purchased 2,501 2,022 1,562 1,514 1,426 1,390 1,171 1, Total supply 3,966 3,453 2,993 2,944 2,856 2,818 2,599 2,488 2,048 1,629 Sales: Free Market 3,088 2,951 2,735 2,366 1,731 1, Sales: Regulated Market Total demand: 3,673 3,536 3,282 2,913 2,278 1,969 1,311 1,188 1,188 1,171 Balance available ,300 1,

28 Average prices and the GSF (Generation Scaling Factor) Average price Source: Cemig. Figures in constant 2017 currency 28

29 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Level of reservoirs (%) by region (%)* ,36 21,01 17,61 6,00 Northeast North South Southeast/Midwest *Source: ONS 29

30 Minas Gerais state - Main Rivers and Plants 30

31 jan/12 fev/12 mar/12 abr/12 mai/12 jun/12 jul/12 ago/12 set/12 out/12 nov/12 dez/12 jan/13 fev/13 mar/13 abr/13 mai/13 jun/13 jul/13 ago/13 set/13 out/13 nov/13 dez/13 jan/14 fev/14 mar/14 abr/14 mai/14 jun/14 jul/14 ago/14 set/14 out/14 nov/14 dez/14 jan/15 fev/15 mar/15 abr/15 mai/15 jun/15 jul/15 ago/15 set/15 out/15 nov/15 dez/15 jan/16 fev/16 mar/16 abr/16 mai/16 jun/16 jul/16 ago/16 set/16 out/16 nov/16 dez/16 jan/17 fev/17 mar/17 abr/17 mai/17 jun/17 jul/17 ago/17 set/17 out/17 Spot price Brazil: electricity spot price - monthly average (R$/MWh) ,52 533, ,92 280,35 303, ,94 115,57 0 SE/CO 23, average 2013 average 2014 average 2015 average 2016 average 2017 average 31

32 Power Generation Auctions # Type Plant Installed capacity (MW) firm output (average MW) Auction 27 september (with 30 years of concession) Winner Price (bn) Premium 1 HPP São Simão 1,710 1,281 SPIC PACIFIC ENERGY PTY LTD % 2 HPP Jaguara ENGIE BRASIL % 3 HPP Miranda ENGIE BRASIL % 4 HPP Volta Grande ENEL BRASIL S.A % TOTAL 2,542 1, ,73% November 7, 2017, has been scheduled for ratification of the result and award of the object of the auction at a Public Meeting of the Council of Aneel. November 10, 2017, date for payment of the CONCESSION GRANT FEE resulting from the AUCTION and for signature of the CONCESSION CONTRACT(S): Transfer to the AWARDED PARTIES of the concession(s) for the HYDROELECTRIC PLANT(S) subject of the AUCTION will take place as follows: At the option of the AWARDED PARTY, counting of the period of the CONCESSION CONTRACT may start from a date up to 180 (one hundred and eighty) days after the date of its signature. The AWARDED PARTY must advise ANEEL, and the company responsible for the provision of generation service designated under Article 9 of Law 12783/2013, of its interest, or not, in using the prerogative mentioned in item , and if so, state the period of transitional time required for the transfer of title to or responsibility for the provision of service, for each LOT, Sub-lot or each HYDROELECTRIC PLANT. The table below shows the companies designated for temporary provision of the generation services in the HYDROELECTRIC PLANTS that are the subject of this AUCTION 32

33 Losses Total Losses ,94% 13,52% 13,46% 13,40% 13,88% 10,83% 10,81% 10,79% 10,80% 10,82% jun/16 set/16 dez/16 mar/17 jun/17 25,00% 20,00% 15,00% 10,00% 5,00% 0,00% Total Losses (GWh) Total Losses / Total Load (%) Regulatory Losses Non-technical losses/total low voltage market ,00% ,75% 12,00% 10,45% 9,18% 9,16% 10,00% 8,16% 8,00% 7,63% 7,63% 7,63% 7,63% 7,63% 6,00% 0 jun/16 set/16 dez/16 mar/17 jun/17 4,00% Non-technical losses (GWh) Non-technical losses/low voltage market (%) Regulatory losses (Low Voltage) 33

34 Strong shareholders base assures liquidity Average daily trading volume of shares in the last twelve months, September 1 st 2017 Bovespa: R$66.7 million NYSE: US$13.1 million North America Canada USA LATIBEX (2015) XCMIG NYSE (2016) 25.3 million CIG US$ 2.45 billion CIG.C US$ 1.7 million EUROPE Austria Belgium Denmark France Finland Germany Guernsey Greece Holland Ireland Italy Malta Jersey Liechtenstein Luxembourg Norway Portugal Spain Sweden Switzerland UK ASIA Brunei Japan India Malaysia Singapore South Korea Taiwan China Central America Bahamas Bermuda Cayman islands Middle East UAE Kuwait Oman Saudi Arabia South America Argentina Brazil Chile Uruguay BOVESPA (2016) CMIG4 R$ 13.3 billion CMIG3 R$ 188 million Africa South Africa OCEANIA Australia New Zeland Shares traded on 3 stock exchanges Over 120,000 stockholders in more than 40 countries 34

35 Investor Relations Tel: +55 (31)