energias de portugal 1H2004 Results

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1 energias de portugal Results July 29th 2004

2 Main facts for IBERIAN ENERGY Signed agreements for the acquisition of control of Galp Energia s natural gas business EDP awarded 12.8 of 20 million tons CO 2 licenses granted to electrical sector, pending EU approval BRAZIL In April, ANEEL granted Enersul an annual average tariff increase of 17% 1

3 Sound fundamentals 1H2003 Var. % Electricity Generation (GWh) 21,481 23, % Portugal 12,721 15, % Spain 7,068 6, % Brazil 1,629 1, % Electricity Distribution (GWh) 35,787 34, % Portugal 20,385 19, % Spain 4,525 4, % Brazil 10,877 10, % Gas Distribution - Spain (GWh) 12,581 1,080 - Electricity Clients 9,296,880 9,044, % Portugal 5,775,815 5,688, % Spain 569, , % Brazil 2,951,534 2,797, % Number of Employees 17,354 18, % Portugal (Electricity) 8,202 8, % Spain (Electricity) 1,292 1, % Spain (Gas) Brazil (Electricity) 3,732 3, % Other 3,830 3, % 2

4 Strong operating performance 1H2003 Chg. % GROSS PROFIT 1, , % OPERATING COSTS % EBITDA % Chg EBIT % FINANCIAL RES % EXTRAORDINARY RES NET PROFIT %

5 Gross profit up 6% Gross Profit Breakdown 1H04/1H03 YoY Change +30% +5% +6.4% +12% -86% 58m 34m +72% -0.1% 4m 1m +27% 25m 48m 3m 8m 1H2003 1,490m EDPP 534m EDP Energia 6m Enernova & Bioeléc. 9m EDPD 605m HC (40%) 117m Brazil 205m Oni 77m Other 1,586m Swings in EDPP and EDP Energia due to transfer of Energy Management Dep. Start-up of TER operation benefits Gross Profit Tariff revisions in Brazil was one of the main contributors to growth The Iberian core businesses account for 80% of Gross Profit 4

6 Cost cutting continues Personnel Costs Supplies & Services * Other Operating Costs. 1H m 325m -5.9% 1H m 218m -7.9% 1H m % 57m * Adjusted for ONI s Direct Costs that are accounted under Supplies & Services on EDP Group Consolidated accounts EDP Group Operating Costs decreased 2.1% The 830 reduction in headcount was mainly at EDPD, EDPP and Edinfor Transfer of responsibilities with early retirees to social security saved 6.5m Supplies and Services fall 8% following tight cost control Other costs reflect increase in concession rentals (+ 7m) and lower cost capitalisation following the completion of TER group I 5

7 HR Restructuring Program Negotiated Dismissals & Early Retirements Transfer of Responsibilities with Early Retirees to Social Security EDPD Costs Empl m Total 407m Total 1,350 NPV Average Cost (1) Average Benefit (1) m 302 th 485 th Costs (2) Empl m NPV Average Cost (1) Average Benefit (1) 21m 119 th 147 th EDPP Benefits Costs Empl. Benefits m 66m 370m Total 300 Total 98m Total 149m Total 655m NPV Average Cost (1) Average Benefit (1) 24m 326 th 497 th Benefits (2) Costs (2) Empl. Benefits (2) 109m m 23m NPV Average Cost (1) Average Benefit (1) 5m 115 th 147 th (1) Per employee (2) Present Values Until Target 6

8 EBITDA up 12%... EBITDA Breakdown 1H04/1H03 YoY Change +11.3% n.m. +131% -1.2% +24.4% +49.5% n.m. 15m +2.2% 0.5m % 987m 878m 46m 34m 5m 3m 15m 43m EBITDA 1H03 EDPP EDP Enernova EDPD HC Brazil Brazil ONI Energia & Bioeléc. (40%) (Op.) (Forex) IT Other EBITDA 1H04 878m 451m - 1m 9m 262m 77m 130m 13m 22m 25m 987m Start-up of TER operation impacted EBITDA Despite currency translation, 40% of the improvement came from Brazil Healthy growth in demand and strict cost control lead to 12% rise in EBITDA 7

9 while Net Profit up 51% Net Income 1H04/1H03 YoY Change + 12,4% 182m 109m -7,6% -0,6% n.m. 1m -6,6% - 36m 7m 19m 79m 38m* + 51% 275m Net Profit 1H m EBITDA Depreciation & Provisions Financial Results Extraordinary Results Income Taxes Minority Interests 987m 435m - 181m - 20m 103m 28m Net Profit 275m Debt reduction led to flat Financial Results despite lower Investment Income Depreciation and provisions reflect a 38 million accounting change * Compensation of depreciation of subsidised assets is now accounted for as an operating item 8

10 Generation contributes over 70% to Net Profit Net Income Breakdown 1H04/1H03 182m YoY Change +21% n.m 35m 23m x7 3m +29% 14m +64% 8m Adjusted for the deferred tax applied to the tariff adjustment (credit of 33 million in ) n.m. 48m +17% n.m. 11m 2m 14m Adjusted for the forex hedge at EDP through Escelsa s Senior Notes held by EDP - +51% 275m Net Profit 1H2003 EDPP EDP Energia Enernova & Bioeléc. EDPD HC Brazil Oni IT EDP S.A. & Other Net Profit Net Profit 182m 198m - 2m 4m 27m 4m 16m - 53m - 1m 82m 275m 9

11 Invested in generation and in distribution grid Capex by Business Area 1H04 YoY Change 47m 5m 11m 2m 110m 10m 21m 21m 24m EDPP Enernova & Bioeléc. EDPD HC (40%) Brazil ONI Edinfor Other 1T m 31m 123m 51m 114m 14m 7m 7m 447m Capex up 33% YoY concentrated in Core Business EDPD Capex in Distribution Grid is remunerated at 9% pre-tax 50% of HC investments in 124 MW Albacete wind farm Brazilian Capex focused on generation 450 MW Peixe Angical (R$313 m or 83 m) 10

12 Strong operating cash flow Net Debt /YE2003 7,205m 852m 447m 147m 41m 268m 7,256m Net Debt YE2003 Operating Cash Flow Capex Financial interests & other (net) Divestments & other nonoperating CF Dividends paid Net Debt Slight increase in net debt after heavy investment and payment of dividend Core business was the main contributor to EDP Group s cash flow 11

13 energias de portugal EDP Produção

14 Non-binding added 18m to gross profit Electricity Emission (GWh) Electricity Gross Profit +6% ,459 15,148-16% 12, , m 123m 110m 26m 7m 2m 488m 5,440 8,709 5,335 1H2003 Hydro Non-Binding Thermal SRP s PPA Capacity Charge PPA Energy Charge 16% fall in electricity emission due to dry weather conditions, however TER contributed with 1,155 GWh Beginning of TER operations and transfer of energy management activity to EDPP contributed 26m to Gross Profit Fuel Costs (SEP) Trading /TER (Gross Profit) SRP s (Gross Profit) EDPP benefited from efficient fuel acquisition ( 13m) Electrici. Autoconsump. Total 13

15 EBITDA up 11% EBITDA 1H04/1H03 Var. YoY EBIT 1H04 405m + 6.1% 28m % % -0.2% -28.7% 29m 4m 0.1m 7m % 451m + 0.6% 122m % 329m EBITDA 1H03 Electricity Gross Profit Services Provided Supplies & Services Personnel Costs Other Revenues / (Costs) EBITDA 1H04 Depreciation & Provisions EBIT 1H04 405m 488m 36m 31m 60m 19m 451m 122m 329m Energy management activity was 65% of increase in Electricity Gross Profit Electricity purchases for EDP Energia benefited from low Spanish pool prices HR restructuring resulted in flat Personnel costs 14

16 energias de portugal EDP Energia

17 Leadership in the liberalised market Number of Clients 2, m 32.6m 1, H2003 Sales (GWh) Mkt Share ~ 73% 1,906 3,149 EBITDA 1H2003 Electricity Gross Profit -9.4% 0.3m Supplies and Services -8.5% 0.2m 0.4m Personnel Costs % Other Costs / (Revenues) - 1.3m EBITDA 1,531 1,026 1H2003 EDP Energia Other Operators Mkt Share ~ 69% 2, m 5.5m 2.9m 1.6m - 2.3m - 1.3m Transfer of Energy Management Dep. reflected in Electricity Gross Profit Market doubled in size YoY Maintained Market Share in increasingly competitive environment 16

18 energias de portugal EDP Distribuição

19 7.8% increase in Allowed Revenues Change in Allowed Revenues 1H04/1H03 9m 24m 15m 1m 5m 31m +7.8% 633m 40m -0.5% 597m 587m 5.2% Decrease in Consumption UDGr Tariffs Growth UDGr HV/MV -3.7% 593m Gross Profit 1H03 597m Tariff Allowed Adjusts. Revenues Reposition 1H03 9m Allowed Revenues Use of Distribution Grid Allowed Revenues NS Allowed Revenues SPS Tariff Adjusts. Allowed Revenues 1H04 587m 462m 81m 49m 41m 633m Tariff Adjusts. Reposition 40m Gross Profit 1H04 593m 5.2% growth in consumption pushed UDG revenue up 2% despite fall in tariffs Adjustments for differences in fuel costs were the bulk of the increase 18

20 Strong growth in EBIT EBITDA Breakdown 1H04/1H03 YoY change EBIT 1H04-0.5% +10.5% -7.3% +13.7% -1.2% -8.2% Accounting change 265m 3m 10m 15m 5m 262m 197m X 2 37m 102m EBITDA 1H03 Gross Profit S&S Personnel Costs Other Oper. Costs (1) EBITDA 1H04 265m 593m 106m 188m 38m 262m Deprec. & Provisions Comp. of Subs. Assets Amort. EBIT 1H04 102m (1) Other Costs / (Revenues) include: Concession Rentals, OWC, Services Provided and Other Sales Successful cost cutting reflected in a 7.3% drop in personnel costs EBIT up 30% like-for-like, following lower provisions for doubtful clients in improved economic climate 19

21 Service improving and costs under control Cash Costs per Client Equivalent Interruption Time Operating Costs per Client +3.2% 161 min. -0.9% min H2003 1H2003 1H2003 Total number of clients up 1.5% Cash costs include 22% increase in investments in grid to improve Quality of Service Rentals to municipalities polluted the 7% drop in personnel costs 20

22 energias de portugal Hidrocantábrico

23 Increased market share in dry year Electricity Emission 6, % 493 7, GWh Key Operating Figures Pool Price /MWh 1H % CCGT 4,839 5,052 Coal Nuclear Hydro H2003 HC Price /MWh Fuel Costs /MWh Market Share CTCs m % % 7.4% 7.1% Demand in Spanish electricity market up 4.1% A dry year and a 83% increase in CCGT emission meant 10% higher output Low pool price partly compensated by 14.6m received in CTCs 22

24 Gross profit up 27% thanks to Naturcorp Gross Profit Breakdown 1H04/1H03 231m - 7m + 12m - 29m Pool Price effect and CTCs Higher Electricity Emission (+10%) Fuel costs impact + 5m + 4m Supply sales margin Distributio n gross profit + 60m + 9m Special Regime gross profit Gas gross (new wind profit farms (Naturcorp + 6m) impact) + 8m Other +27% 292m - 18m (Generation + Supply) Gross Profit 1H2003 Gross Profit The hike in imported coal prices depressed Generation s gross profit Supply activity benefited from low pool prices Biggest contribution came from first time consolidation of Naturcorp Investments in Special Regime projects started to bear fruits 23

25 EBITDA up 24% EBITDA Breakdown 1H04/1H03 YoY Change EBIT 1H % % % 7m 7m n.m. +24% +17% 10m 193m 83m 155m 62m +31% 109m EBITDA 1H2003 Gross Profit S&S Personnel Costs Other (net) EBITDA Depreciation & Provisions EBIT 155m 293m 43m 49m 7m 193m 83m 109m Consolidation of Naturcorp contributed 45 million to the EBITDA increase 24

26 energias de portugal Brazil

27 Strong demand and higher tariffs Electricity Distribution and Sales +4.1% Distribution -4.1% 10,877 10,447 Sales 9,182 8,807 1H2003 Operating Data Distribution GWh Gross Profit (R$m) Distribution GWh Gross Profit (R$m) Distribution GWh Gross Profit (R$m) 1H2003 Bandeirante 5,805 5, % % Escelsa 3,555 3, % % Enersul 1,518 1, % % Strong demand in Bandeirante and Enersul s regions let to 4.1% increase in electricity distributed Switch of industrial clients to free market impacted sales Tariff revisions and adjustments resulted in 38% increase in gross profit of Dis.Cos. 26

28 Operating costs under control EBITDA Breakdown 1H04/1H03 YoY Change EBIT 1H % + 1.1% % + 95% +55% -6.3% R$1m R$12m R$15m R$472m R$138m +101% R$305m R$196m R$334m EBITDA 1H2003 Gross profit S&S Personnel costs Other (net) EBITDA Depreciation & Provisions EBIT R$305m R$745m R$120m R$122m R$31m R$472m R$138m R$334m Tariff increases were the most important contributor to EBITDA Operating costs up 11.6% in line with inflation 27

29 energias de portugal Oni

30 Gross profit up 5% thanks to voice Voice Traffic (Million min.) Internet Dial-Up (Million min.) Gross Profit Breakdown YoY Change +14.1% -24.1% 1, , H03 1H04 1H03 1H04 Carriers Residential Corporate 74m Gross Profit 1H03 5m 1m +4.7% 2m 0.3m Voice Internet Data Other 77m Gross Profit 1H04 Success with corporate clients led to a 14% increase in voice traffic Pre-paid cards drove voice revenues 29

31 Positive EBITDA EBITDA Breakdown 1H04/1H03 Cost Cutting Program 3m 2m +15m 13m 7m EBITDA 1H2003 Gross Profit - 3m 3m Supplies & Services Personnel Costs Other Operating Revenues EBITDA - 3m 77m 38m m Strict cost cutting resulted in 13m positive EBITDA Savings in network expenses and advertising led to a 15% drop in S&S Personnel costs fell following a 14% reduction in headcount 30

32 energias de portugal

33 Strong operating performance 1H2003 Chg. % GROSS PROFIT 1, , % OPERATING COSTS % EBITDA % Chg EBIT % FINANCIAL RES % EXTRAORDINARY RES NET PROFIT %

34 energias de portugal

Novembro de EDP Energias do Brasil

Novembro de EDP Energias do Brasil Novembro de 2009 EDP Energias do Brasil Disclaimer This presentation may include forward-looking statements of future events or results according to regulations of the Brazilian and international securities