JUNE

Transcription

1 JUNE

2 INDEX BUSINESS RESULTS COUNTRY ANALYSIS BUSINESS OUTLOOK CONCLUSIONS

3 BUSINESS

4 Highlights One of the largest private power producers in Latin America, with plants in Argentina, Brazil, Chile, Colombia and Peru Highly competitive generation assets (69% hydropower) Solid operational performance (steady margin improvement) Stable growth (the energy consumption is growing) Strong and stable Cash Flows from Chilean operations (lowest country risk in the region) Part of a global operator (Endesa Spain)

5 Generating Energy For Latin America COLOMBIA Installed Capacity: 2,608.6 MW 20% of Colombia LATIN AMERICA Installed Capacity: 12,332.8 MW Number of Plants: 46 BRAZIL PERU Installed Capacity: MW 22% of Peru Installed Capacity: 658 MW + 2,000 MW (Interconnection) 1% of Brazil CHILE Installed Capacity: 4,476.7* MW 38% of Chile ARGENTINA Installed Capacity: 3,623 MW 15% of SADI * Including Ralco 690 MW Source: Company files

6 Endesa Chile s s Key Themes for 2005 Business model and financial strategy Increasing efficiency and capacity to absorb demand growth Improvement in operating performance Latin American business, but anchored by Chilean cash flow Optimization of Endesa Chile s s asset portfolio in accordance to market opportunities Environmental regulatory certifications Implementation of Corporate Governance rules

7 Improving Efficiencies 10,000 8,000 6,000 4,000 2,000 0 Hydro $0/MWh MW 69% Hydro Thermo (efficient) <$20/MWh MW 28% Thermo (efficient) Thermo (peakers) >$20/MWh 367 MW 3% Thermo (peakers) Parameter Evolution Benchmark Availability (1) Reliability (2) 95,10 % 04 98,90% % NERC 03 (3) % Capacity per employee (MW/employee) 67% /3 of ENDESA Chile s facilities are the lowest cost producers in the markets in which operates NERC 03 O&M Cost per KW ($/KW) 75% (1) Availability (1-hours unavailable/total hours) (2) Reliability (Probability of the power plant to dispatch on demand) (3) NERC : North American Electric Reliability Council (182 operators with 850 GW, meaning 92% of installed capacity in EEUU y Canada)

8 RESULTS

9 Results as of March 2005 Income Statement $ 424 $ 486 Market Value: US$ 5.4 billion US$ MM $ 217 $ 262 $ 157 $ 181 Total Assets: US$ 9.2 billion Number of shareholders: 24, SALES EBITDA (*) OPERATING INCOME 1Q04 1Q05 Number of Employees: Indicator Unit As of Dec As of March 2004 As of March 2005 Change March Liquidity Times % Acid ratio test * Times % Leverage ** Times (3.8%) Short-term debt % (23.7%) Long-term debt % % * Current assets net of inventories and pre-paid expenses ** Compounds to the ratio = Total debt / (equity + minority interest) (*) EBITDA = Operating Income + Depreciation + Amortization

10 Portfolio strategy with increasing solid operational performance MMUS$ EBITDA(*) EBITDA(*) / Net Financial Expense Leverage (**) Yearly figures from December 2001 to March 2005 at historical US$ (*) EBITDA = Operating Income + Depreciation + Amortization (**) Leverage = Total Liabilities/(Total equity + Minority Interest) Since December 2001: 11% debt reduction 27% improvement of EBITDA(*) over net financial expenses 28% improvement in EBITDA(*) 17% leverage (**) reduction US$542 million debt reduction Source: FECU

11 Latin American business anchored in Chile 1Q05 EBITDA(*) (US$262 million) 1Q05 EBITDA(*) ADJUSTED BY OWNERSHIP Peru 15% Brazil 5% Chile 37% Peru Colombia 9% Brazil 7% 14% 57% Colombia 28% Argentina 15% Argentina 13% Chile (*) EBITDA = Operating Income + Depreciation + Amortization

12 ANALYSIS BY COUNTRY

13 Highlights in Argentina Energy demand increasing at 4.0% during 1Q05 Electricity spot prices for generators are expected to be adjusted according to natural gas price increases and will subsequently turn into an unregulated market in 2007 In December the agreement with the Government to invest in future thermal capacity was defined. Each company s investment would be based on a percentage of accounts receivable with Cammesa Due to gas restrictions in Argentina, Costanera has involuntary incurred in the impossibility of fully complying with the energy supply agreement related to the energy exports to Brazil, appealing to Force Majeure in conformity with its contracts Capacity Mix Hydro 36% Thermo 64% Photo: Central Costanera S.A. Spot market 83% Sales Mix 54 Unregulated 53 prices 17% Total Debt: MMUS$ Operating Performance (MMUS$) Q04 Sales % 1Q05 EBITDA EBITDA MARGIN %

14 Highlights in Brazil Energy demand increasing at 5.8% during 1Q05 Operating revenues improved 74% because of the final agreement with CELG, higher generation and less energy purchases due to positive hydrology in the period In April 2005, Cachoeira obtained contracts for 133 MW as a result of the last tender for supplying electricity companies in South-East Brazil, in a period of 8 years from 2008 at a reference price of R$83.48 per MWh In May 31, 2005, Endesa Chile s board of directors approved the incorporation of it s assets into a Holding company in Brazil Sales Mix Capacity Mix Hydro 100% Thermo - Regulated prices 60% Spot market 19% Unregulated prices 21% Operating Performance (MMUS$) 12 1Q04 58% 7 Sales 21 EBITDA EBITDA MARGIN 1Q05 62% 13 Photo: Cachoeira Dourada S.A.

15 Holding Company in Brazil 33.6% 23.7% 23.5% 19.2% Strategic rationale: Endesa Chile Endesa Internacional Enersis Chilectra A simplified corporate structure Greater stability to local cash flows Holding Endesa Brazil Better access to third-party financing opportunities 100.0% 100.0% 99.6% % % 2.3% Improvement in the Groups positioning to capture new business investment opportunities 36.4% Investluz 56.6% Operating Synergies Enersis Beneficial Interest in Endesa Brazil: 62.5% Enersis Consolidates the Holding Each company s counted with a fairness opinion provided by an independent investment advisor s, s, which determined the exchange equation

16 Highlights in Colombia Energy demand increasing at 1.4% during 1Q05 Good hydrological conditions during 1Q05 increased revenues by 8% and reduced energy purchases Operating income increased 12%, reflecting in a 15% higher EBITDA Colombian market was able to export energy to Ecuador through the interconnection line A new interconnection line with Ecuador will be built, which will l increase energy demand and prices Capacity Mix Hydro 91% Thermo 9% Photo: El Guavio (Emgesa) Unregulated prices 21% Sales Mix Regulated prices 34% 26 Spot market 45% 96 Total Debt: MMUS$ Operating Performance (MMUS$) Q04 60% Q05 Sales EBITDA EBITDA MARGIN % 88

17 Highlights in Peru Energy demand increasing at 3.6% during 1Q05 Reduction in revenues due to lower average sales price, as a result of better hydrology compared with 1Q04 Lower operating expenses because of a reduction of fuel generation and less energy purchases The last tariff setting process resulted in a US$38.4 per MWh tariff, a 0.3% reduction, which will last for one year During May 2005, Santa Rosa plant finished the conversion of the Westinghouse diesel generation unit into natural gas, resulting in a more efficient generation from an economic and environmental point of view Capacity Mix Hydro 96% Thermo 4% Unregulated prices 34% Regulated prices 38% Sales Mix Spot market 28% Total Debt: MMUS$ Operating Performance (MMUS$) 60 1Q04 63% 38 Sales 55 EBITDA EBITDA MARGIN 1Q05 71% 39 Photo: Callahuanca (Edegel)

18 Highlights in Chile Energy demand increasing at 3.4% during 1Q05 Alto Jahuelnode price increased 7,7% in dollar terms, according to the last node price setting in April 2005 Price of electricity is increasing due to higher fuel prices, gas restrictions from Argentina and changes in the future expansion plan, increasing the value of our water resources Modifications to the Electricity Law were approved in order to reflect the costs of the system more appropriately and to encourage new generation investments Sales Mix Capacity Mix Hydro 76% Thermo 24% Photo: Pehuenche Regulated prices 55% 125 Spot market 19% 374 Unregulated prices 26% Operating Performance (MMUS$) 189 1Q04 79 Total Debt: MMUS$ 3, % 212 1Q05 Sales EBITDA EBITDA MARGIN %

19 Modifications to the Electricity Law in Chile Modifications to the electricity law in Chile were finally approved and will come into effect in June 10, Main issues are: - The possibility to sign long-term contracts with distribution companies at a fixed price. The indexation formula of these prices will consider changes in fuel costs and other relevant inputs for electricity generation - The spread of the band to calculate node prices, obtained from the average of the unregulated customers prices, expanded from the current 5% to a maximum level of 30%. Alto Jahuel s node price are expected to increase from the current US$45.40 per MWh to US$55.47 per MWh - Sales to distribution companies without contracts will continue until December 2008 at the marginal cost and not at the node price. The over cost pass through distribution companies without contracts will be distributed within all the electricity consumers. The deadline for securing contracts is until the end of 2008 New node prices will consider the higher costs of reliability that the electric system has to incur to ensure electricity service quality and reliability in the medium term

20 Energy in reservoirs 8000 Accumulated energy in reservoirs 7000 OTHERS 6000 Energy [GWh] ENDESA 1000 Drought level, year Jun-05 May-05 Apr-05 Mar-05 Feb-05 Jan-05 Dec-04 Nov-04 Oct-04 Sep-04 Aug-04 Jul-04 Jun-04 May-04 Apr-04 Mar-04 Feb-04 Jan-04 Enough energy accumulated in water reservoirs

21 BUSINESS OUTLOOK

22 Investments Endesa Chile s board approved the signing of a preliminary go-ahead note for the San Isidro plant expansion project and the construction of the Palmucho hydroelectric plant in Chile: - San Isidro s plant expansion (377 MW) would use natural gas or Liquefied Natural Gas in case the LNG project (led by ENAP*) is carried out. Is expected to start its commercial operation in open cycle by March 31, The combined-cycle operation is expected to begin by February The estimated investment is US$200 million - Palmucho (32 MW) is a run of the river hydroelectric plant. The estimated investment is US$32 million and its start-up is planned for the second half of 2007 All the necessary environmental permits have already been approved In Peru, Callahuanca plant renovation consists in the modernization of three of its four generation units, which translates into a more efficient generation plant, with an estimated investment of US$14 million and its completion is expected for March * ENAP: Empresa Nacional del Petroleo

23 Sales strategy 120% 100% 80% 60% 40% 20% 0% 28% 35% 16% 29% 56% 36% Regulated Non-regulated Spot Regulatory Risk : Lower regulated sales Supply Risk : The regulated contract level decreased approx. 20% in order to minimize hydrological risk (or from other sources)

24 Strong regional growth Energy Demand GDP CHILE ARGENTINA PERU CHILE PERU COLOMBIA BRASIL COLOMBIA BRASIL ARGENTINA E E Note: (Base 1993 = 100%)

25 Future potential growth Annual per Capita Electricity Consumption by Country (KWh) KWh 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Peru Colombia Brazil Argentina Chile Spain Germany Belgium USA Source: International Energy Agency

26 Average utilization of generation assets Peru 62% Colombia Chile Brazil Argentina 50% 45% 67% 43% Higher margin to absorb market growth with low investments Year Evolution % % % Average for 1Q05: 48%

27 Endesa Chile s s market and financial evolution 500 ENDESA CHILE 35 (Chilean Peso, $) Share ADR (US$) ADR price increased 44% in 2004, and has increased 29% during Yankee bond Spread decreased approximately 700 basis points since March /3/03 4/3/03 6/3/03 8/3/03 10/3/03 12/3/03 2/3/04 4/3/04 6/3/04 8/3/04 10/3/04 12/3/04 2/3/05 1/1/04 3/1/04 5/1/04 7/1/04 9/1/04 11/1/04 1/1/05 3/1/05 5/1/05 Bond 2006 vs Ref 3 year Bond 2008 vs Ref 5 year Bond 2009 vs Ref 5 year

28 CONCLUSIONS

29 Endesa Chile - Conclusion One of the highest quality power producers in the region Diversified presence in five countries Financial strength Experienced management team focused on maximizing productivity Significant opportunities for steady growth

30 For further contact information: Jaime Montero Investor Relations Director Endesa Chile (56-2) Irene Aguiló Investor Relations Executive (56-2) Tomás González Investor Relations Executive (56-2) Suzanne Sahr Investor Relations Executive (56-2) This presentation may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements may appear in a number of places in this announcement and include statements regarding the intent, belief or current expectations of Endesa Chile and management with respect to, among other issues: (1)Endesa Chile business and cost-reduction plans; (2) trends affecting Endesa Chile financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere; (3) supervision and regulation of the electricity sector in Chile or elsewhere; and (4) the future effects of any changes in the laws and regulations applicable to Endesa Chile and its affiliates. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. Readers are cautionednot to place undue reliance on those forward-looking statements, which speak only as of their dates. Endesa Chile undertake no obligation to release the results of any revisions to these forward-looking statements.