March 2003 World Bank

Transcription

1 SABESP Cia. de Saneamento Básico do Estado de São Paulo March 2003 World Bank

2 Contents Section 1 Introduction 3 Section 2 Operational Overview 9 Section 3 Regulatory Framework 18 Section 4 Financial Information 22 1

3 Introduction SECTION 1

4 Shareholder Base Formed in 1973 from the merger of state-owned companies, Sabesp today is the largest water utility company in the Americas and the third largest in the world, by number of customers 25.4% 3.1% 71.5% Sabesp listed on Bovespa in June The State of São Paulo is legally required to own two-thirds of Sabesp s shares 3

5 Operational Overview SECTION 2

6 Business Overview Year 2002 Water production Water distribution Sewage collection Sewage treatment Capacity: 88 m 3 /s Vol.: 1,431 Vol.: 1,106 Capacity: 357 million of m 3 million of m 3 m 3 /s Avg. Tariff: R$ 1.38/m 3 Wholesale water Vol.: 339 million of m 3 Avg. Tariff: R$ 0.67/m 3 5

7 Sabesp s Regional Organization São Paulo State São Paulo Metropolitan Region: Metropolitan Distribution Management 1 Center Business Unit 2 North Business Unit 3 East Business Unit 4 South Business Unit 5 West Business Unit 6 Regional Systems Management RIBEIRA VALLEY Business Unit SANTOS METROPOLITAN REGION Business Unit NORTHERN COASTAL Business Unit PARAÍBA VALLEY Business Unit UPPER PARANAPANEMA Business Unit LOWER PARANAPANEMA Business Unit Production and Technology Management MIDDLE TIETÊ Business Unit - Water Production Business Unit LOWER TIETÊ AND RIO GRANDE Business Unit - Sewage Treatment Business Unit 14 RIO PARDO AND RIO GRANDE. Business Unit RMSP Coastal and Interior Regions: 6

8 Areas of Operation SABESP operates in 366 of the 645 municipalities in the State of São Paulo and sells water on bulk to 7 municipalities of the São Paulo Metropolitan Region. Interior Region 16% Revenue by Region Coastal Region 8% 9% 2002 Government 10% Revenue by Consumer Category Wholesale 6% Residential 55% Água Water Metropolitan Region 75% Cobertura: Coverage: ,7 million milhões people de pessoas Volume billed: faturado: 1, million milhões m 3 m 3 Número Number de of connections: ligações: 5,95.9 milhões million Rede: Network: ,310 km km Industrial 6% Sewage Coverage: 16.8 million people Treatment ratio: 63% Number of connections: 4.3 million Network: 34,237 km Commercial 23% 7

9 Areas of Operation (continued) The Metropolitan Region of São Paulo is Sabesp s main market, accounting for 75% of revenues; the Municipality of São Paulo accounts for 58% of revenues Production Systems - Metropolitan Region of São Paulo F. MORATO F. DA ROCHA MAIRIPORÃ STA. ISABEL P. B. JESUS CAJAMAR R. Juqueri CAIEIRAS R. Águas ARUJÁ Claras GUARULHOS GUARAREMA S. DO ITAQUA MOGI DAS CRUZES PARNAÍBA BARUERI POÁ R.Paraitinga JANDIRA OSASCO FERRAZ SALESÓPOLIS ITAPEVI CARAPI- SÃO PAULO VASC. CUÍBA. BIRITIBA S. C. SUZANO R.P. Nova SUZANO MIRIM V.GDE. T.DA DO SUL R. R. do PAUL. COTIA EMBU SERRA STO. MAUÁ R.Taiaçupeba R.Biritiba Campo DIADEMA. ANDRÉ R. da R.Jundiaí Mirim Graça R.PIRES R.Guarapiranga ITAP. DA R. GDE. piranga SERRA R. P. Beicht SERRA EMBU S.B.DO S. LOURENÇOGUAÇU CAMPO DA SERRA R.Billings Barr. do França R. Juquitiba JUQUITIBA Key Data Metropolitan region Coverage: direct: 14.1 million people bulk: 3.8 million people 39 towns: 8,051 km 2 (3,220 square miles) Second largest metropolitan region in the Americas Interior region 5.4 million people served, in 298 municipalities Coastal region 1.8 million people served, in 29 municipalities SOURCE: Sabesp Sabesp serves 25 million of the State s 38.4 million inhabitants (65% market share) 8

10 Operational Productivity Operational improvements have made Sabesp the leader in coverage in Brazil Connections/Employee Coverage Indices (%) Number of water and sewage connections/ employee 370 CAGR: 5.9% Source: Sabesp Sabesp Cedae Copasa Sanepar Corsan Water Supplied Sewage Collected Sewage Treated Source: SNIS

11 Costs Reduction Salaries and Payroll Charges Expenditures x Revenues 45,1% 25,5% 7,1% 3,7% % salaries and payroll expenditures x revenues % benefits expenditures x revenues 10

12 Costs Reduction Number of Units in the Organizational Structure nº Units

13 Strong Cash Generation Sabesp today has significant and stable cash generation with gross margins of over 50% EBITDA CAGR: 10.1% 58% 56% 52% 51% EBITDA (R$ m) 51% % % % EBITDA Margin (%) * EBITDA EBITDA Margin Note: (*) estimated values Source: Sabesp Among the largest companies in Brazil, in EBITDA terms 12

14 Organic Revenue Growth Sabesp s revenues have almost doubled in a 7-year period (mm m³) Revenues, Water and Sewage Volumes * Water Volume Billed Sew age Volume Billed Net Revenues (R$ mm) Sabesp s revenues increased at a CAGR of 9,9% from 95 to 2002 Sewage sales volumes have increased at a CAGR of 2,1% in the same period Source: Sabesp Notes: Includes Retail customers and Bulk Sales (*) estimated values State s intention to review charging structure and tariff adjustments may also contribute to an increase in future revenues 13

15 Operational Efficiency Reduction of losses and automation of services will result in continued reduction in operating costs and rising productivity EBITDA/Connection (R$) 2001 EBITDA/Employee (R$ 000) EBITDA/Employee (R$ 000) CAGR: 10.6% SABESP CEDAE COPASA SANEPAR CORSAN Source: Company reports Note: (*) estimated values 2002* Sabesp should benefit from continued economies of scale 14

16 Expanding the Operational Area Sabesp s expansion will be driven by directly serving municipalities that currently buy bulk water Municipalities Served Barr. do França Source: Sabesp & SNIS 2000 CAJAMAR P. B. JESUS S. DO PARNAÍBA BARUERI ITAPEVI V.GDE. PAUL. R. da Graça JANDIRA R. P. Beicht JUQUITIBA COTIA S. LOURENÇO DA SERRA R. Juquitiba F. DA ROCHA CARAPI- CUÍBA. ITAP. DA SERRA OSASCO F. MORATO CAIEIRAS T.DA SERRA EMBU EMBU GUAÇU MAIRIPORÃ R. Juqueri R. Águas Claras SÃO PAULO R.Guarapiranga piranga R.Billings GUARULHOS ARUJÁ ITAQUA POÁ FERRAZ VASC. STA. ISABEL MOGI DAS CRUZES S.C. DO SUL SUZANO SUZANO MAUÁ STO. R.Taiaçupeba DIADEMA ANDRÉ R.PIRES R.Jundiaí R. GDE. SERRA S.B.DO CAMPO GUARAREMA BIRITIBA MIRIM R.Biritiba Mirim Directly served Bulk R.Paraitinga SALESÓPOLIS R.P. Nova R. R. do Campo Population 14.1 millions 3.8 millions The new fiscal responsibility law and increased enforcement of environmental regulation will be catalysts 15

17 Regulatory Framework SECTION 3

18 Sector Regulation Brazil s water utility sector is passing through a phase of redefinition, with a new regulatory framework before Congress Two key points under discussion are: (1) concession ownership and (2) tariffs Legislative proposals on the question of concession ownership and tariff adjustments have been in Congress since 1999, but the proposals have yet to be voted The main proposal of regulation shall be removed of the Congress voting agenda for revision and redefinition (PL 4147) Sabesp has concession contracts or written agreements with 354 of the 366 municipalities it serves substantially all of Sabesp s concessions or agreements have 30 year terms, one of which expires in 2004 and the rest of which expire between 2005 and 2030 Sabesp does not have a concession contract with the City of São Paulo. However, the State of São Paulo / Sabesp has had full ownership of the assets in the city of São Paulo for over 100 years 17

19 Tariffs Currently, Sabesp s tariffs are effectively determined by the São Paulo State government Tariffs are progressive, based on a minimum consumption of 10 m 3 /month, and increases normally occur in June or July Tariffs (max. consumption of 10 m 3 ) The state government is looking at ways to implement automatic annual adjustments Tariffs (R$ / m3) Sabesp Copasa Corsan Cedae Sanepar Source: Sabesp Note: feb/

20 Tariffs (continued) Sabesp s tariffs have historically been adjusted to maintain the Company s financial-economic equilibrium Tariffs vs Inflation ROA 30,0% 32,3% 21,6% 17,8% 9,8% 7,1% Acummulated : Tariff Adjustment: 154% IPC: 105% IGPM: 147% 3,1% 1,9% 15,8% -0,5% 0,0% 6,9% 13,1% 6,2% 8,2% 6,5% ROA (%) 5.3% 6.0% 7.3% 7.3% 8.5% 8.3% 7.8% Tariff Adjustment Periods: Mo. ending in June Mo. ending in August Inflation Today Sabesp s ROA is 8%; Tariff reviews / restructuring should have a positive impact on ROA 19

21 Financial Information SECTION 4

22 Main Financial Data Financial Statements (R$m) Sep/02 Net Revenues 2,902 3,101 3,236 3,356 3,435 2,802 EBITDA 1,376 1,638 1,873 1,868 1,786 1,410 EBITDA Margin 47% 53% 58% 56% 52% 50% Net Earnings (235) (882) Earnings / Share (R$) (8.28) Dividends Declared Balance Sheet (R$m) Sep/2002 Cash + Financial Credits , Fixed Assets 13,399 13,454 13,626 13,653 Total Assets 15,117 15,192 15,918 16,630 Short Term Loans ,394 Long Term Loans 5,024 5,616 5,921 6,896 Total Liabilities 6,845 6,924 7,921 7,746 Shareholder s Equity 8,272 8,268 7,997 7,027 Source: Sabesp 21

23 Debt Profile US$ denominated debt is long term (10 years on average) and low cost. Today, Sabesp s S&P credit rating is AA- (domestic) and BB- (international) Repayment Schedule Debt by Currency 1 Brazilian currency Brazilian Currency 51% Note: 1 Includes Refis Debt by Contract Debentures 14% Others 5% Caixa 6% Eurobonds 22% Banco do Brasil 30% Foreign Currency 49% IABD 20% Word Bank 3% R$ million Foreign currency 435 1, , Jan-Jun/03Jul- Dez/ or longer Cost of Debt Contracts Avg. cost of debt per year Banco do Brasil TR + 8.5% Eurobonds 10 to 12% + US$ IADB 3,0 to 7.7% + US$ Domestic Debentures IDB + 1.2% to 1.8% CEF (Brazilian state owned bank) TR + 5 to 9.5% WORD BANK 5.3% + US$ Source: Sabesp 22

24 Investment Programs Strong cash generation and the low investment needed will continue to allow a high dividend payout Capex / EBITDA 1.1x 1.0x Investments planned ( ): R$2,1 billion Main Investment Programs: Metropolitan Water Program: R$780m Tietê Project: R$886m 0.3x 0.3x 0.3x Source: UBSW and Santander Note: (*) 2002 estimated values 0.4x 2002* Investments in the interior and the coast: R$654m Main funding sources JBIC - 25 years US$150m IADB - 25 years US$200m CEF - 18 years R$520m BNDES - 10 years R$400m Total of four year investment program of R$ 2.1 billion equals 1.1x EBITDA 2002 (estimated value) 23

25 Dividend Policy Sabesp has adopted an attractive dividend policy, consistently paid in the form of interest on equity Dividends and Dividend yield R$ / 1,000 shares 2.8% % % 13.9% % % of Share Price Dividends per share Dividend yield Source: Sabesp Sabesp s interest on equity dividend payments are tax deductible; the State government uses the dividends to offset its water bills and pension contributions 24