Capital Markets Day Strategic Plan 2019-21 Alberto De Paoli CFO
Agenda Alberto De Paoli (CFO) Capital allocation 2019-21 Our Plan Business line highlights Financial management Risk management Earnings & targets
2019-2021 Our Plan
Our plan 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0-20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0-50.0 0 45.0 0 40.0 0 35.0 0 30.0 0 25.0 0 20.0 0 15.0 0 10.0 0 7.00 6.00 5.00 4.00 3.00 2.00 1.00 - New investment cycle drives growth while debt remains stable Average capex ( bn) +12% Net Debt ( bn) - 8.2 9.2 41-42 41.8 2018-20 Old Plan EBITDA ( bn) 2019-21 2018E 2021 Net income ( bn) +20% +37% 16.2 19.4 4.1 5.6 2018E 2021 2018E 2021 3
Our plan 0.3 5 0.3 0 0.2 5 0.2 0 0.1 5 0.1 0 14.0% 12.0% 10.0% 8.0 % 6.0 % 4.0 % 2.0 % 0.0 % 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0 % 0.0 % Solid improvement in profitability, returns, and credit metrics Profitability Return on invested capital FFO/Net debt +400bps +140bps +460 bps 25% 27% 29% 29% 8.2% 8.8% 9.3% 10.0% 10.2% 25.0% 26.5% 27.4% 28.6% 31.1% 19% 7% 6.3% 6.3% 6.2% 6.2% 2015 2018E 2019 2020 2021 2015 2018E 2019 2020 2021 2015 2018E 2019 2020 2021 Net income/ebitda ROIC WACC 4
2019-2021 Capital Allocation
Capital allocation 35 30 25 20 15 10 5 0 Increased capex plan focused on asset development and customers Capex plan 1 ( bn) EBITDA evolution by investment ( bn) +12% +20% 24.6 6.1 4.1 27.5 6.2 4.8 2.1 1.0 0.1 19.4 14.4 16.5 16.2 2018-20 old plan 2019-21 new plan EBITDA 2018E Asset development Customer Asset management EBITDA 2021 Asset development Customer Asset management Asset management pre-tax cumulated cash generation above 32 bn 1. It includes 1.6 bn BSO capex 6
Capital allocation 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Growth driven by networks and renewables Capital allocation 2019-21 ( bn) Incremental EBITDA 2 ( bn) 16.5 4% 28% 64% Asset development 4.8 9% 66% 25% Customers 6.2 30% 52% 15% Asset management Total by business 1 11.6 11.1 1.1 2.5 1.3 2018 vs 21 +1.0 +1.2 +0.4 +0.5 +0.5 1. It excludes other equal to -0.1 mn. Thermal generation includes nuclear 2. Excluding the impact of our asset rotation programme 7
Capital allocation Beyond plan period, run rate capex grows from 6.7 bn to 8 bn Capex run-rate ( bn) Drivers of run rate by business line +19% Development of 3.5/4 GW per year 6.7 8 Resiliency, digitalization and service quality Infrastructure investments to cope with customers needs 40 43% ~8 bn 42-45% Increased flexibility and restructuring in thermal generation fleet <5% <5% 7% Run rate old plan Run rate new plan Retail 8
2019-2021 Business Line Highlights
Business line highlights 50. 0 40. 0 30. 0 20. 0 10. 0 0.0 140 120 100 80 60 40 20 0 Renewables: diversifying mix, improved visibility Installed capacity and Production by technology 1 CAPACITY (GW) PRODUCTION (TWh) 2019-21 Sales portfolio composition PPA duration (yrs) +23% +32% 48 39 5 2 8 14 28 28 2018E 2021 Hydro Wind Solar Other 132 ~100 2018E 2021 55% ~357 TWh 1% 35% Incentivized Forward sales > 15 38% 10-15 14% 9% 5-10 17% < 5 31% LT PPA contracted Open position ~ 65% of cumulated production sold forward 2 1. Consolidated capacity only 2. Volumes to be sold forward in year n-1 10
Business line highlights Incremental asset development capex fully allocated to renewables Asset development capex evolution ( bn) Incremental renewable capacity by geography and technology 8.3 (~ 2) ~ 4 10.6 1.6 BSO 18% 5% 8% 4% ~5 GW 41% 60% 3.4 BSO 24% 40% Brazil USA Iberia Italy Chile Other Old plan 2018-20 BSO Organic New plan 2019-21 EBITDA/CAPEX 1 IRR spread 13% ~200 bps over WACC 1. Calculated as asset develpoment Ebitda at regime/capex (net of BSO) 11
Business line highlights Renewables: accelerating growth Gross Capex 2019-21 2018-21 EBITDA evolution ( bn) +23% 0.9 0.1 92% 11.6 bn 8% 4.4 5.4 Asset development Asset management 2018E Asset development Asset management 2021 Asset management pre-tax cumulated cash generation for ~12 bn 12
Business line highlights 45.0 0 40.0 0 35.0 0 30.0 0 25.0 0 20.0 0 15.0 0 10.0 0 5.00-20.0 0 15.0 0 10.0 0 5.00 - Networks: 4% total RAB growth Europe: RAB evolution ( bn) South America: RAB evolution ( bn) - +20% 31 31 11.7 1.3 2.2 1.8 4.9 14.0 1.3 2.7 2.0 5.5 2018E 2021 1.5 2.5 2018E 2021 Argentina Brazil Chile Colombia Peru Energy distributed (TWh) 356 368 116 149 1. WACC nominal pre-tax 2. Blend of Rio, Cearà, Goias and Eletropaulo 13
Business line highlights Networks: profitability supported by asset turnaround and efficiencies Gross Capex 2019-21 2018-21 EBITDA evolution ( bn) +17% 29% 11.1 bn 29% 0.5 0.2 0.5 0.4 (0.3) 8.9 7.6 42% Asset development Customers Asset Management 2018E Eletropaulo Connections Tariff & volumes Efficiency FX 2021 14
Business line highlights Networks: Eletropaulo turnaround doubling EBITDA Eletropaulo asset turnaround (EBITDA mn) Eletropaulo operational KPIs +2x 2018E 2021 0.4 0.7 Electricity distributed (TWh) Quality index 1 (%) Opex/end user ( /cust) 43 +9% -2.8 +170bps 62-30% 0.1 2021 Networks benchmark 0.2 0.3 RAB/end user (k /cust) Eletropaulo 2021 ~255 Cearà 2021 ~275 2018E 6M 2018 pro forma 2018 pro forma Operating improvement 1. Quality on service rewards/penalties and losses reduction economic impact on gross margin 2021 Opex/end user ( /cust) ~44 ~ 36 15
Business line highlights Enel X: capturing new opportunities with customers Gross Capex 2019-21 2018-21 EBITDA evolution 1 ( bn) 59% 1.1 bn 41% 0.1 0.1 0.1 0.2 Customers +0.3 bn 0.5 Asset development Customers 0.1 Asset Development +0.2 bn 2018E e-city e-mobility e-home e-industry 2021 1. Rounded figures 16
Business lines highlights 6.0 5.0 4.0 3.0 2.0 1.0 0.0 60 50 40 30 20 10 0 400 350 300 250 200 150 100 50 0 Retail: further growth on increase in customer base and efficiency 2018-21 EBITDA evolution ( bn) 2018-21 Free market customers (mn) 2018-21 volumes sold 3 (TWh) +17% +64% +29% 0.0 0.1 3.4 2.9 0.7 0.5 0.2 0.3 2.2 2.3 22 36 189 243 2018E 2021 2018E 2021 2018E 2021 Italy South America Iberia Romania EBIT 5% 6% margin 1 Total 64 mn customers 2 69 mn 1. Includes Italy, Spain and Romania 2. Resulated and free market power and gas customers 3. Free market + PPAs 17
2019-2021 Financial Management
Financial management 50. 0 45. 0 40. 0 35. 0 30. 0 25. 0 20. 0 15. 0 10. 0 5.0 0.0 Stable debt throughout the plan Net debt evolution ( bn) Source of funds allocation 2019-21 ( bn) -% 0.3 (27.5) 41.1 (13.9) 41-42 ~41.8 ~42.2 ~41.8 2018E 2019 2020 2021 Sources of funds Incremental Debt Gross capex Dividends 19
Financial management 4.5 0 4.0 0 3.5 0 3.0 0 2.5 0 2.0 0 1.5 0 1.0 0 0.5 0-35% 30% 25% 20% 15% 10% 5% 0% -5% -10% Improving credit metrics Credit metrics Long term credit rating 25.0% 26.5% 27.4% 28.6% 31.1% Standard & Poors Rating BBB+ Outlook Stable 2.5x 2.5x 2.4x 2.3x 2.2x Moody s Baa2 Stable Fitch BBB+ Stable 2015 2018E 2019 2020 2021 Net debt/ebitda FFO/Net debt 20
Financial management 4 3.5 3 2.5 2 1.5 1 0.5 0 5.0 0% 4.5 0% 4.0 0% 3.5 0% 3.0 0% 2.5 0% Continued reduction in cost of debt Financial strategy for 2019-21 ( bn) Net financial expenses on debt ( bn) Amount Expected cost 1 Current total cost -4% Bond refinancing including green bonds Bank loans and other financing Hybrid refinancing 6.2 2.8 1.8 3% 2.5% 4.9% 4.2% 2.3% 6.4% 5.0% 2.6 4.5% 4.6% 4.6% 4.4% 4.4% 2.3 2.3 2.2 2.2 Emerging markets 2.8 7.4% 7.6% Total 13.6 4.1% 4.8% 2015 2018E 2019 2020 2021 Net financial expenses Cost of gross debt Previous plan 1. Enel estimates on current cost associated with financial instruments 21
2019-2021 Risk Management
Risk management 120 % 100 % 80% 60% 40% 20% 0% Operating risk: low EBITDA exposure to merchant risk EBITDA 2019-21 ( bn) Regulated EBITDA by business 2019-21 55.3 Regulated ~ 100% Merchant 28% Retail portfolio hedge Regulated, contracted under long term PPA, incentivized ~ 64% Regulated ~ 46% Regulated & contracted 72% Regulated ~ 23% Regulated ~ 20% 2019-21 EBITDA 23
Risk management 60.0 50.0 40.0 30.0 20.0 10.0-160 % 140 % 120 % 100 % 80% 60% 40% 20% 0% Operating risk: natural margin hedge from retail portfolio Integrated margin Generation GM vs retail GM Hedging position on price driven production Coal & Gas 13% Hedging of CDS-CSS based on scenario/market Pool price indexed Large customers Ren & Nuke hedged price vs 2018 Retail margin vs 2018 +13% = +14% = Renewables + Nuke 87% Natural hedging with retail portfolio Small and medium customers 100% 44% Generation Gross margin A Retail portfolio 2019 2020 24
Risk management Operating risk: low regulatory risk over the plan period Europe 2018 2019 2020 2021 2022 WACC South America 2018 2019 2020 2021 2022 WACC Italy 5.9% Brazil 2 12.3% Iberia 1 Romania 5.5% / 6.0% 5.7% Colombia Chile 11.8% 10% 2019-21 BP Argentina Peru 2019-21 BP 12.5% 12% Stable and mature regulations Highly visible frameworks 1. WACC nominal pre-tax 2. Blend of Rio, Cearà, Goias and Eletropaulo 25
Risk management 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Operating risk: renewables growth already significantly addressed 2019-21 Additional capacity addressed 1 (GW) Pipeline by geography and technology 2 (GW) 11.6 ~60% addressed 2019 Coverage by yr 91% 21% 3% 7% 47% ~7 2020 2021 71% 34% 24% 19 GW 45% 52% ~5 Italy and Iberia Europe & North Africa Target additional capacity Addressed Residual target South America North & C. America Asia/Australia Total pipeline / residual target ~ 4x Short term pipeline 3 / residual target ~ 3x 1. It includes managed capacity 2. As of September 2018 3. Includes 2019-2021 CODs only 26
Risk management Currency risk: low exposure to volatile currencies FX sensitivity 1 Avg. yearly impact 2019-21 ( mn) 2019-21 EBITDA by geography 2019-21 EBITDA by currency EBITDA Group NI BRL (180) 225 (30) 35 63% 63% ARS (35) 40 (6) 8 55.3 bn 55.3 bn CLP (6) 6 - - 32% 5% 26% 11% COP (100) 125 (12) 15 Europe South America North America EUR USD South America PEN (20) 25 (2) ~3 TOTAL (340) 420 (50) 60 % on yearly value (1.8%) 2.3% (<1.0%) 1.1% 1. Sensitivity based on +/-10% USD/LOC (EUR/USD @Plan). Rounded figures 27
Risk management Financial risk: gross debt hedges softening FX swings and rates movements Gross debt by currency at 2021 After swap Interest rate composition 57% 86% 22% 7% 6% 55.1 bn 7% 7% 55.1 bn 55.1 bn 78% 30% EUR USD GBP Other EUR USD GBP Other Floating Fixed + Hedged 28
Risk management 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Financial risk: limited re-financing needs; strong available liquidity Debt maturity by year 1 ( bn) 2019-21 Liquidity available 1 Maturities/Gross Debt 8.5% 8.1% 7.3% 13.1 13.6 23.3 bn 9.7 4.6 4.5 4.0 2019 2020 2021 Total Refinancing on average gross debt New plan Last 3 yrs 8.2% 16.1% Available committed credit lines Cash Total liquidity / Maturities 112% 1. As of September 2018 29
2019-2021 Earnings & Targets
Earnings and targets 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Strategy driving 37% increase in earnings vs 20% increase in EBITDA Group net ordinary income ( bn) 2018E-21 Group net ordinary income evolution ( bn) +37% 4.1 4.8 5.4 5.6 4.1 3.2 (0.4) 0.1 (0.9) (0.5) 5.6 2018E 2019 2020 2021 2018E EBITDA D&A Financial charges Taxes Minorities 2021 31
Earnings and targets Visible value creation for our shareholders Earnings growth 2018 2019 2020 2021 CAGR (%) 2018-21 Ordinary EBITDA ( bn) 16.2 17.4 18.5 19.4 ~+6% Net ordinary income ( bn) 4.1 4.8 5.4 5.6 ~+11% Value creation Pay-out ratio 70% 70% 70% 70% - Implicit DPS ( /sh) 0.28 0.33 0.37 0.39 ~+12% Minimum dividend per share ( ) 0.28 0.32 0.34 0.36 ~+9% Three years minimum dividend per share 32