ENGIE Energia Perú Corporate Presentation

Transcription

1 ENGIE Energia Perú Corporate Presentation March 2018

2 KEY MESSAGES 2017 Solid results in a volatile context Limited commercial risk in a highly competitive environment Value proposition for our clients and portfolio optimization Solid financial discipline ENGIE Energía Perú - Corporate Presentation / March

3 HIGHLIGHTS 2017 Solid results in a volatile context Our business - FY 2017 EBITDA reached 325.0MUSD while Net Result totalized 129.7MUSD, growing 5% and decreasing 1% compared to FY On March 31 st EEP announced the commercial operation of Intipampa solar project. Industry & regulation - Total energy generation (SEIN) grew 1.4% compared to As of December, EEP was the first private player of the sector accounting for 21% of the total capacity and 16% of the total energy generation of the system - End of DU049 - Natural gas Price declaration norm was modified Financial discipline - At the end of 2017, total debt reached 837MUSD, decreasing 17% with respect to Bond issuance in local capital market for 10/7 years at an attractive rate below 3.5% year Corporate Loan with Scotiabank for up to - Net debt / EBITDA (12m): Dec/2017 Awards - ENGIE s good environmental, social and governance practices were once more recognized. EEP was appointed by Capital Finance International as The Best ESG Power Producer in Peru in 2017 for a consecutive year ENGIE Energía Perú - Corporate Presentation / March

4 SNAPSHOT 2017 Operation Excellent availability & reliability of our operating assets Main focus in efficiency and Health & Safety standards through all internal processes (ENGIE previene app) Commercial New commercial contracts with free clients, regulated and extensions for 380 MW Net buyer position in the spot market for FY 2017, net seller position in Q Very competitive conditions in the PPA market due to oversupply continues Finance Successful 100MUSD bond issuance in local capital market: 7 years and 10 years, at final rates in USD of 3.15% and 3.55%, respectively Average cost of debt reduction (4.5%) & maturity extension Sustainability 2.9MUSD investment in infrastructure (education & basic services), access and productive areas that benefited +12,000 people Lima PV rooftop project, 31 kwp in our corporate building that reduces our CO2 footprint Support campaigns for communities affected by niño costero ENGIE Energía Perú - Corporate Presentation / March

5 AGENDA Energy market ENGIE Energia Peru overview Financial update Capital structure ENGIE Energía Perú - Corporate Presentation / March

6 ENERGY SYSTEM Composed by three different sectors Generation 12,001 MW Total Capacity Transmission 27,358 km Basic transmission Distribution 7.1 million clients Energy Sales 44,500 GWh % Private Free market market prices Two type of clients: Free clients: Mainly mining and industry. Consumption > 0.2 MW. Private auctions Regulated Distribution companies. Public auctions 100% Private Exclusive concession Regulated tariff Open Access Main players: ISA (56%), Abengoa (11%) & Red Electrica (3%) 38% Private Exclusive concession Two type of clients: Free clients: Industries with consumption below 2.5 MW. Households and industries with demand below 0.2MW Mining and smelting Industry Residential Commercial Main players: Government (62%), Enel disco (20%) & Luz de Sur (15%) ENGIE Energía Perú - Corporate Presentation / March

7 ENERGY GENERATION MARKET An energy matrix with strong natural gas and hydro components Market Clients Generation matrix Market share 16% 3% Installed capacity 12,000 MW 55% 45% 37% 3% 57% 34% 13% 22% 16% Peak demand 6,596 MW Annual energy Generation 48,993 GWh -1% +2% +1% Regulated Clients Free Clients Main regulated clients are Enel Distribución and Luz del Sur (Distribution companies in Lima) Main free clients are Mining and industrial companies Clients with a consumption above 0.2MW are able to contract directly with generation companies (free clients) Hydro Non Conventional Renewables Natural Gas Coal & diesel Natural Gas generation is concentrated in Chilca district (60km from Lima) Diesel plants dispatch in case of emergency and transmission congestion ENGIE Enel Generación Others Government IC Power Market share as of December in terms of energy generation Others include: Colbun, I Squared, Statkraft, Termochilca, among others ENGIE Energía Perú - Corporate Presentation / March

8 BUSINESS MODELS IN ENERGY GENERATION After the privatization of the sector in the 90 s, the government developed different mechanisms to increase energy generation sources looking for i) hydro and natural gas power balance, ii) diversification of non conventional renewable sources, iii) geographic diversification of natural gas thermoelectric generation and iv) increase reserve for emergencies Traditional model Investments are repaid by long term commercial contracts (PPAs). Private auctions & negotiations Commercial margin & Producer margin Capacity (fixed fee) and energy (variable charges) charges Contractual and physical position determines buyer or seller position in spot market Non Conventional Renewables Government auctions every 2-3 years. Lower tariff projects are awarded The project commits to generate a certain amount of energy per year and receives a fixed tariff ($/MWh) for ~20 years Electricity consumers are charged an additional fee in their electricity bill (charge is the difference between the auctioned tariff and the spot prices) Hydro Hydro investment cost is higher than natural gas thermoelectric investment and operational cost Pro-inversion auctions to promote hydros Given hydrological seasonality, hydro power plants are normally net sellers in the spot market during wet season Cold reserves & Nodos Geographic diversification of natural gas generation Public auctions for dual fuel (Natural gas / diesel plants) Projects are available for the national system and receive an annuity for ~20 years Electricity consumers are charged an additional fee in their electricity bill ENGIE Energía Perú - Corporate Presentation / March

9 MAIN REGULATION FRAMEWORK Centralized generation 2 markets: PPA market and the spot market PPA market Private negotiations or private / public auctions Protection against short term volatility Generators Distribution companies Free clients Spot market (physical exchange) Goal of the dispatch system is to minimize total cost for the system Marginal cost or spot price is the result of the system optimization and reflects the cost to generate an additional unit of electricity at a given time Spot settlement between generators (sellers and buyers depending on contractual positions) Natural Gas generators declare prices to optimize its fixed cost structure Free clients SEIN Generators Interconnected Energy System ENGIE Energía Perú - Corporate Presentation / March

10 SUPPLY AND DEMAND IMBALANCE Oversupply generates low spot prices Peruvian electricity generation system is based mainly on hydro and natural gas from Camisea Field 2 seasons: wet (from November to April) and dry (from May to October) Electricity demand increased on average 7% annually between 2005 and 2016 (YTD). Based on these conditions and forecasts, the Government incentivized new generation projects for more than 4000MW that started operations between In 2016/2017, demand growth diminished its expected pace (2% in 2017) due to delays in investment and lower consumption. Currently, demand is expected to have an average annual growth of 5-6% between 2018 and 2023 As a result, a temporal imbalance between supply and demand has generated strong competition in the PPA market and very low levels of spot prices Incremental supply by mechanism (MW) Market (Demand / Supply) RER Other incentive mechanisms MW Balance Supply - Demand - Dry Season Reserve 14, % 12,000 80% 10,000 8,000 60% 6,000 40% 4,000 2,000 20% - 0% Hydro Dry Season Renewable Natural Gas (CC) Natural Gas (OC) Coal Oil and Fuel Oil Max Demand Reserve Dry Season (%) Source: COES, OSINERGMIN a Sep-2017 ENGIE Energía Perú - Corporate Presentation / March

11 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 MARGINAL COST RESULTING FROM SETTING UP DISPATCH ORDER GWh 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Generation mix by fuel and Marginal Cost (energy only) USD/MWh Source: COES Hydro Renewable Natural Gas Coal Fuel Oil Marginal Cost ENGIE Energía Perú - Corporate Presentation / March

12 AGENDA Energy market ENGIE Energia Peru overview Financial update Capital structure ENGIE Energía Perú - Corporate Presentation / March

13 ENGIE ENERGIA PERU OVERVIEW Largest private electricity generation company in Peru 2,497 MW of installed capacity & ~7,600 GWh of annual generation Diversified & decentralized portfolio of generation sources Others; years operating in the country & listed since employees Solid clients AFP s (Peruvian pension funds); 31.6 Shareholders % ENGIE; 61.8 Strong financials to support ambitions, AAA local rating Sponsored by a global leader 13

14 SPONSORED BY A GLOBAL PLAYER 153,090 employees worldwide Activity in close to 70 countries 66.6 bn revenues in bn of growth investment over A- rated by S&P A2 rated by Moody s 3 CORE BUSINESSES SUPPORTING A NEW VISION OF ENERGY FOR THE WORLD ELECTRICITY NATURAL GAS & LNG ENERGY SERVICES GW 21.5 GW 5.2 GW World s leading independent producer st 1st Installed power production capacity Installed renewable production 18.3% of fleet Power production capacity under construction 1 st 1 st 1,082 TWh Europe s leading natural gas distribution network Europe s leading LNG importer Europe s leading seller of natural gas storage capacity Natural gas supply per year 1 st million 140 m m 3 World s leading energy efficiency service provider Urban heating and cooling networks in 13 countries Individual and professional contracts Under management in the tertiary sector ENGIE Energía Perú - Corporate Presentation / March

15 LEADING THE ENERGY REVOLUTION THROUGH 3 PILLARS ENERGY REVOLUTION & MEGA TRENDS Environmental awareness Customer Centricity Energy efficiency New technologies Digitalization 3 pillars DECARBONIZATION Worldwide renewable energies: annual additional capacity to grow by +70% in 2030 vs 2015 DECENTRALIZATION Decentralized solutions to more than double by 2030 DIGITALIZATION Digital changes energy systems and improves customer offers ENGIE Energía Perú - Corporate Presentation / March

16 OUR ROLE IN THE ENERGY TRANSITION Focus on low CO2 Balanced portfolio of assets under development Geographic diversification and proximity to our clients Non conventional renewable pipeline Continue with hydro mapping and studies Studies for natural gas options M&A opportunities Focus on improving operational efficiency of existing assets Reduce exposure to commodity prices Optimum contracting level Balanced portfolio between Regulated Clients (Distribution Companies) and Free Clients Power Purchase Agreements under pass-through scheme Minimize non-manageable risks Develop solutions for clients Customer focus: partnering with our clients to help them finding efficiency gains Value added proposals Integral solutions one shop approach Leverage from worldwide experience to elaborate tailor made solutions ENGIE Energía Perú - Corporate Presentation / March

17 SUPPORTED BY A STRONG PORTFOLIO OF ASSETS Yuncan #1 Largest private electricity company Quitaracsa Hydro 112MW Hydro 136MW Dual fuel; 1110; 44% Coal; Solar; 135; 41; 2% 5% 2,497MW Hydro; 248; 10% Natural Gas; 963; 39% Chilca Complex ChilcaUno - 852MW - Natural Gas ChilcaDos - 111MW- Natural Gas Low Co2 generation base Ilo Complex Nodo - 610MW - Dual Fuel Ilo31 (Cold Reserve) - 500MW - Dual Fuel Ilo21-135MW - Coal Diversified & decentralized asset base across 4 regions Intipampa Solar 41MW 220 km of transmission lines + 1 substation ENGIE Energía Perú - Corporate Presentation / March

18 PROVEN TRACK RECORD IN DRIVING ORGANIC GROWTH 2,497 MW Investments for 1.6 BnUSD in More than 3x capacity in 10 years AVERAGE GROWTH 16% Quitaracsa +112MW Nodo Ilo & Chilca Dos +723MW Ilo 1 105MW Intipampa +41MW 374 MW Chilca MW Ilo MW Hydro Natural Gas Dual Fuel Solar Yuncan +134MW Total Capacity MW ,068 1,860 2,665 2,456 2,497 EBITDA MUSD Market Cap MUSD ,600 2,005 1,611 1,351 ENGIE Energía Perú - Corporate Presentation / March

19 FIRST STEP IN NON CONVENTIONAL RENEWABLES Intipampa In 2016, ENGIE Energía Perú was awarded as part of the 4th Renewables Auction process the construction of a 40.5 MW solar plant, which will benefit 90,000 households and avoid 50,000t of CO2 Intipampa project successfully entered into operation 31rst March 2018 INTIPAMPA - Key facts Location the project is located in the south of Peru, Moquegua Description: The project will deliver GWh/year to the system Economics: the project is backed by a 20 year Investment Agreement with Ministry of Energy and until 2038 (approx years) Investment: ~52MUSD below initial estimate of 55MUSD Construction: EPC contractor Solaire Direct. Site mobilization started in February, 2017 ENGIE Energía Perú - Corporate Presentation / March

20 NATURAL GAS MEDIUM TERM UPSIDES A. Phase 1: up to 1,110MW of installed capacity serving as emergency plants but able to generate with natural gas once available in the south of Peru Cold Reserve: option granted under the existing concession contract after 2018 Nodo Energético: once Natural Gas arrives to the South (~2022) Similar operation to Chilca 1 plant before it was converted to Combined Cycle No significant investments required B. Phase 2: up to an additional 550MW in steam turbines with the conversion to Combined Cycle Similar operation and economic impact of Chilca 1 Combined Cycle Project Approximately 700MUSD additional investments to convert to combined cycle and 48 months for development and construction Delays in the GSP postpone these options and potential upsides ENGIE Energía Perú - Corporate Presentation / March

21 CONSISTENT COMMERCIAL STRATEGY WE KEEP FOCUSS ON MANTAINING OUR EFFICIENT PORTFOLIO CONTRACTED MW 1 new contracts in 2017 Number of clients growing from 40 to % Our portfolio & contracts Marcobre (84MW), Distriluz (30MW) & Grupo Nexa (62MW) 1. Value quality and new services AGRESSIVE COMPETITORS 2. Relationship plan with clients and new projects The market SLOW GROWING DEMAND REGULATORY UNCERTAINTY Main commercial pillars 3. Internal reorganization to respond quickly to market 4. Continuous communication with authorities, market and media 1- Includes new contracts with free clients and existing expansions ENGIE Energía Perú - Corporate Presentation / March

22 PORTFOLIO APPROACH Resilience in face of unfavorable market conditions Diversification Limited spot market risk Fully contracted capacity for next 2 years and 91% on average for Average PPA life of 6.8 years Most of EEP s contracts do not include termination clauses Strong credit profile +50% of portfolio investment grade clients & +70% above BB- (Or local equivalent) Balanced portfolio 42% Low commodity risk Indexation ~60% of portfolio to Natural Gas prices in line with generation costs 58% Regulated Free clients ENGIE Energía Perú - Corporate Presentation / March

23 ENERGY BALANCE 2017 Lower thermal generation in 2017 due to higher supply from hydro power plants. Seller-position in the spot market in Q GWh FY 2015 FY 2016 FY Q Q Q4 Yuncán HPP % 760 8% % 17% 173 8% % 22% Quitaracsa HPP 88 1% 484 5% 531 6% 10% 112 5% 101 6% -10% Chilca1 CCGT 5,838 66% 5,617 63% 5,303 63% -6% 1,516 71% 1,439 78% -5% Chilca2 0 0% 220 2% 308 4% 40% 88 4% 155 8% 77% Ilo21 (Coal) 248 3% 773 9% 674 8% -13% 191 9% 23 1% -88% Ilo1 (Diesel) 62 1% 210 2% 86 1% -59% 17 1% 0 0% -100% Ilo31 (Cold Reserve) 35 0% 100 1% 7 0% -93% 9 0% 0 0% -97% NEPI 0 0% 18 0% 9 0% -47% 4 0% 1 0% -66% Imports (Ecuador) 0 0% 21 0% 0 0% -100% 0 0% 0 0% 0% Auxiliaries % % % -36% -82-4% -34-2% -59% NET GENERATION 7,072 81% 7,914 88% 7,624 91% -4% 2,028 95% 1, % -6% COES: NET 1,711 19% 1,061 12% 734 9% -31% 117 5% -63-3% -154% CLIENTS DEMAND 8, % 8, % 8, % -7% 2, % 1, % -14% ENGIE Energía Perú - Corporate Presentation / March

24 OUR ORGANIZATION, GOVERNANCE & ETHICS Audit Committee Transactions between affiliates Committee Shareholders assembly Board of directors CEO Committees & Task forces Executive Operations Regulatory Commercial Development Acting in accordance with an internal set of values based on honesty, integrity and respect to human rights Ethics Chapter that guides our relationship with clients, suppliers, partners and Government among our main stakeholders Practical approach Construction 1. Annual training plan to all employees Internal Auditor HR Risk & Finance Ethics 2. Practical Guide to Ethics 3. Control systems COO CFO Commercial 4. Anonymous ethical complaints channel Development Corporate Affairs Legal Independent Ethics Officer, appointed by the board of directors The Board of Directors includes three independent members out of a total of 7 directors ENGIE Energía Perú - Corporate Presentation / March

25 AGENDA Energy market ENGIE Energia Peru overview Financial update Capital structure ENGIE Energía Perú - Corporate Presentation / March

26 2017 FINANCIAL KPIS The focus in managing our portfolio of clients and plants, combined with a strong financial discipline, has enabled us to deliver solid financial results, even during periods of instability in the power sector and in the country Main Financial Results (MUSD) FY 2017 FY 2016 FY Income % EBITDA % Net Result % Recurrent EBITDA* % Net Recurrent Result* % Net Debt / EBITDA 12m % Total Debt 837 1,009-17% Net Debt % Net Generation GWh 7,624 7,914-4% Clients Demand GWh 8,358 8,976-7% *No include 2017: Commercial penalty fees and impairment of assets 2016: Impairment of assets and tax non recurrent impacts ENGIE Energía Perú - Corporate Presentation / March

27 EBITDA GROWING 5% (+16MUSD) By effect In US$ millions Marginal cost reduction EBITDA 2016 Non recurrent events (84.0) End of SPCC contract (8.5) Commercial margin decrease mainly due to lower prices Nodo Energético COD Cost optimization and SPCC services EBITDA 2017 EBITDA 2016 Eventos no recurrentes Reducción del costo marginal Fin SPCC Reducción del margen comercial Nodo Energético Otros EBITDA 2017 START OF NODO ENERGETICO PROJECT AND COST OPTIMIZATION PARTILLY OFFSETTING END OF COMMERCIAL CONTRACTS ENGIE Energía Perú - Corporate Presentation / March

28 NET RESULT REMAINS STABLE By effect In US$ millions EBITDA expansion (16.7) NET RESULT 2016 Non recurrent effects in Net Results D&A increase New projects and first major overhaul of Chilca (11.3) Net financial expenses Tax NET RESULT 2017 resultado neto 2016 Eventos no recurrentes Reducción del costo marginal Fin SPCC Reducción del margen comercial Nodo Energético EBITDA 2017 D&A & INTEREST EXPENSES INCREASE DUE TO START OF OPERATIONS OF NEW PROJECTS ENGIE Energía Perú - Corporate Presentation / March

29 NON RECURRENT EVENT IN Commercial penalties & fees accounted as other income in June 2017 Financial Statements (Other income) EBITDA 2017 Net Result MUSD +20.2MUSD 2. Impairment of assets (Other expenses) -1.3MUSD -0.9MUSD Total non recurrent events (1 + 2) +26.7MUSD +19.2MUSD As a result of these non recurrent events, full year Recurrent EBITDA reduces to 298MUSD and Net recurrent Income to 111MUSD ENGIE Energía Perú - Corporate Presentation / March

30 EBITDA BREAKDOWN HIGHER PROPORTION OF INCOME WITH LOWER RISK BUT MANTAINING UPSIDES EBITDA In US$ millions % Market risk + Market margin % % Capacity income 69-1% 68 Market risk - Investment agreements with Government % 81 50% ENGIE Energía Perú - Corporate Presentation / March

31 AGENDA Energy market ENGIE Energia Peru overview Financial update Capital structure ENGIE Energía Perú - Corporate Presentation / March

32 SUCCESSFUL FINANCIAL PLAN EXECUTION IN A HIGHLY VOLATILE ENVIRONMENT Total debt reached 837MUSD as of December 2017, decreasing 17% following expected amortization schedule ENGIE continues with its AAA local credit rating In 2017 EEP successfully closed financial conditions for up to 250MUSD for an average fixed cost of 3.35% and average life of 7 years, issuing 200MUSD of medium and long term debt; 100MUSD in local capital markets ( 7 10 year bonds) and 100MUSD through a 5.5 year Corporate Loan. Through the 2017 financial plan execution EEP was able to: 1. Optimize cost, reducing average long term cost from 4.7% to 4.5% 2. Improve debt structure, increasing debt duration from 2.7 years to 3.6 years 3. Eliminate interest rate risk 4. Maintain flexibility to continue looking for costs optimizations Outstanding debt repayment profile as of December 2017 (MUSD) Financial leases Bonds New bonds New corporate loan ENGIE Energía Perú - Corporate Presentation / March

33 MUSD STOCK PRICE ENGIEC1 2,500 2,000 Market KPIs December 2017 Number of shares 601,307,011 Share price (PEN) 7.29 VWAP (3m) (PEN) week high (PEN) week low (PEN) 6.50 Enterprise Value (EV) (MUSD) 2,151 EV / EBITDA 6.6x P/E 10.4x Average liquidity (mm shares / day) 0.03 EV: Market Cap + Net Debt 1,602 1,759 2,005 2,075 1, ,500 1,000 Dividends ,020 Market cap ,187 Net Result 1,427 1, MUSD Source: SMV & BVL, 31/12/2017 ENGIE Energía Perú - Corporate Presentation / March

34 PEN / Share EQUITY ANALYST VIEW Consensus 18% Upside Price as of December 29th Dec Sell Mantain Buy Credicorp Larrain Kallpa Inteligo Consensus Target price Recommendation Underperform Buy Maintain Buy Date October 2017 February 2018 January 2018 January 2018 ENGIE Energía Perú - Corporate Presentation / March

35 DIVIDEND PAYMENTS MUSD Dividend policy since 2010: Minimum 30% % ENGIE Energía Perú - Corporate Presentation / March

36 THANKS This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Perú S.A. ( Engie Energía Perú or the Company ) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like believe, anticipate, expect, envisage, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a number of significant risks, uncertainties and assumptions. We caution that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In any event, neither the Company nor any of its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages. The Company does not intend to provide eventual holders of shares with any revised forward-looking statements of analysis of the differences between any forward-looking statements and actual results. There can be no assurance that the estimates or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from such estimates. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without ENGIE Energía Perú prior written consent. FOR MORE INFORMATION ABOUT ENGIE ENERGIA PERU Ticker: ENGIEC investor.relations@pe.engie.com Av. República de Panamá 3490, Lima 27, Peru Rocío Vásquez, Head of Corporate Finance & Investor Relations rocio.vasquez@pe.engie.com Marcelo Soares, Chief Financial Officer marcelo.soares@pe.engie.com 36