Apresentação 3 t15_master_inglês_final v2
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The document discusses 3Q15 results for an energy company. It summarizes key financial highlights including a 25.7% increase in EBITDA, 188.5% increase in net income, and 7.6% increase in adjusted net income. It also discusses factors influencing results such as conventional generation performance, currency effects, and lower gains in the spot market. The document further analyzes the company's debt profile, hydrological conditions, and regulatory developments.
Apresentação 3 t15_master_inglês_final v2
- 1. 3Q15 Results
- 2. 2 This presentation may contain statements that represent expectations about future events or results according to Brazilian and international securities regulators. These statements are based on certain assumptions and analyses made by the Company pursuant to its experience and the economic environment, market conditions and expected future events, many of which are beyond the Company's control. Important factors that could lead to significant differences between actual results and expectations about future events or results include the Company's business strategy, Brazilian and international economic conditions, technology, financial strategy, developments in the utilities industry, hydrological conditions, financial market conditions, uncertainty regarding the results of future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the Company's actual results may differ materially from those indicated or implied in forward-looking statements about future events or results. The information and opinions contained herein should not be construed as a recommendation to potential investors and no investment decision should be based on the truthfulness, timeliness or completeness of such information or opinions. None of the advisors to the company or parties related to them or their representatives shall be liable for any losses that may result from the use or contents of this presentation. This material includes forward-looking statements subject to risks and uncertainties, which are based on current expectations and projections about future events and trends that may affect the Company's business. These statements may include projections of economic growth, demand, energy supply, as well as information about its competitive position, the regulatory environment, potential growth opportunities and other matters. Many factors could adversely affect the estimates and assumptions on which these statements are based. Disclaimer
- 3. 3 3Q15 Highlights • Sales dropped 5.3% in the concession area - residential (-5.1%), commercial (-2.9%) and industrial (-7.4%) • Investments of R$ 219 million in 3Q15 and R$ 931 million in 9M15 • Conclusion of CPFL Piratininga’s tariff revision in October 2015: (i) increase of 5.31% of the parcel B (in relation to the RTE), from R$ 717 million to R$ 755 million; and (ii) pass through of R$ 475 million of accumulated CVA and other financial components • CPFL Energia’s shares were maintained in the Dow Jones Sustainability Emerging Markets Index (DJSI Emerging Markets), for the 4th consecutive year • CPFL Energia were maintained in the MSCI Global Sustainability Index Series, which include companies with the highest sustainability standards in their sectors, for the 2nd consecutive year • CPFL among the 150 best companies to work for by Exame Você S.A. Guide 2015, for the 14th consecutive year • CPFL among the 20 more innovative companies of Brazil in 2015 Best Innovator Award • CPFL Energia was selected as the best practice of water risks management in the 2015 edition of the CDP in Latin America
- 4. Resid. -2.9% -7.4% -2.2% -5.3% Commerc. Indust. Others3Q14 3Q15 -5.1% Sales in the concession area | GWh Sales by consumption segment | GWh Sales growth in the concession area | Comparison by region | % 14,516 13,749 -5.9% TUSD Captive Market (Distribution) -5.3% -5.0% Generation Installed Capacity¹ | MW 3,091 3,129 +1.2% -0.6% +5.7% Renewable Conventional 4 Market Breakdown in the Concession Area | 3Q15 3Q15 Energy Sales 1) Take into account CPFL Energia’s 51.6% stake in CPFL Renováveis Contracted Demand l % same month of 2014
- 5. 55 Macroeconomic drawdown reinforcing decrease in industrial consumption in 3Q15 1) Source: IBGE; 2) Source: FGV. Industrial Production1 and industrial consumption in CPFL Energia | Growth in last 12 months (%) Industrial Confidence2 Diffusion Index, over 100=positive Utilization of Installed Capacity2 Excessive Inventory| Manufacturing Industry2 (% entrepreneurs)
- 6. Long TermShort Term 66 Currency Devaluation | Possible competitiveness improvement in important sectors of our concession area • Immediate effect on profitability of sectors with export coefficient greater than the import coefficient • Increase of the corporate debt in US dollars • Downturn in global demand, especially China (-16.6% in exports in 9M15)1 1) Source: Fundação Centro de Estudos do Comércio Exterior (Funcex); 2) Source: CNI; 3) Average 2015. • Possible reversal of the increase in imports over the last 10 years (e.g. Chemical and Textile) • Deficient infrastructure • Excessive bureaucracy • High incidence of tax on production • Investments in low level (17.7% of GDP in June/15) Food and Paper/Pulp: 15.5% and 4.5% of the total industry in the concession area of CPFL Energia3 Chemical and Textile: 11.5% and 7% of the total industry in the concession area of CPFL Energia3 Exports Profitability Index1 | August/15 x August/14 Opportunities Difficulties Effective Exchange Rate Difficulties Opportunities Import coefficient (% - Selected sectors) and Real Exchange Rate and Effective (Jan/00 = 100)2 Examples:
- 7. Delinquency Evolution R$ million in D90/Revenues (LTM) Allowance for doubtful accounts R$ million 7 Energy Bills CPFL Energia Energy Bills Group B Delinquency Average 33 3Q14 3.18% 3Q15 3.88% Disregard large industrial customer in bankruptcy (R$ 7 million) Average 2Q15- 3Q15: Average 1Q13-1Q15:
- 8. 1) Disregard construction revenues. 25.7% R$ 220 million Net IncomeEBITDANet Revenue¹ IFRS EBITDA Net Income 3Q14 3Q15 3Q14 3Q15 Proportionate Consolidation of Generation (A) 36 59 3 12 Sectorial Financial Assets & Liabilities (B) 52 45 GSF and Energy Purchase (CPFL Geração and CPFL Renováveis) (C) 123 54 89 37 Total (A+B+C) 139 6 131 25 3Q15 R$ 280 million 3Q14 R$ 97 million 3Q15 R$ 1,080 million 3Q14 R$ 860 million 3Q15 R$ 4,715 million 3Q14 R$ 4,012 million 17.5% R$ 703 million 188.5% R$ 183 million 33.8% R$ 77 million 3Q15 R$ 305 million 3Q14 R$ 228 million 3Q15 R$ 1,074 million 3Q14 R$ 999 million 3Q15 R$ 4,645 million 3Q14 R$ 3,810 million 21.9% R$ 835 million IFRS Proportionate Consolidation of Generation + Sectorial Financial Assets & Liabilities + Non recurring items 7.6% R$ 76 million 8 3Q15 Results
- 9. Resultados 1T15 9 EBITDA | R$ million +25.7% 3Q14 Adjusted EBITDA 3Q14 Reg. A&L 3Q14 Non-rec. 3Q14 EBITDA IFRS 3Q14 Prop. Consol. +7.6% 3Q15 Results Conventional generation +21.7% (R$ 58 million) Seasonality strategy (R$ 29 million) Epasa’s better performance (R$ 23 million) Other effects (R$ 6 million) Distribution +8.3% (R$ 43 million) Itaipu currency variation (R$ 97 million) PIS/Cofins pass-through (R$ 14 million) 5.3% decrease in energy sales in the concession area (R$ 12 million) 5.8% increase in manageable PMSO (R$ 21 million) Allowance for Doubtful Accounts (R$ 18 million) and collection actions (R$ 4 million) Legal and judicial indemnities (R$ 13 million) Distribu- tion Conventional generation Renewable generation Commerciali- zation & Services Renewable generation +6.1% (R$ 9 million) Expenses related to the association with DESA – 3Q14 (R$ 3 million) Insurance indemnity right in TPP Bio Pedra – 1st payment (R$ 2 million) Morro dos Ventos II commercial startup Commercialization, Services and Holding - 53.3% (R$ 34 million) Lower gains in spot market – lower PLD PLD (R$/MWh)1 677.01 204.07 3Q14 3Q15 1) Average PLD in SE/CW. 3Q15 Adjusted EBITDA 3Q15 Prop. Consol. 3Q15 Non-rec. 3Q15 EBITDA IFRS 9.5% Last 12 months IPCA IGP-M 8.4%
- 10. 10 P MSO R$ 279 million (-16.5%) 1,475 1,376 1,689 IGPM: 25.4% 1,346 1,330 1,248 1,362 1,548 P MSO Nominal Adjusted PMSO | R$ Million Real Adjusted PMSO¹ | R$ Million +3.5% -4,5% 1,409 1,409 Manageable expenses | Real adjusted PMSO LTM-3Q15 x 2011 1) June/15. Variation of IGP-M in the period 2015 x 2011= 25.4%; 2015 x 2012 = 16.3% and 2015 x 2013 = 10.3% and 2015 x 2014=8.4%. PMSO disregarding Private Pension Fund. Excludes non-recurring items, acquisition of fuel oil for EPASA power plants, PMSO of Services and CPFL Renováveis segments, Legal, Judicial and Indemnities and Personnel capitalization costs since January 2014, due to the new methodology established by Aneel.
- 11. 1111 1) Take into account proportionate consolidation of projects 2) Exchange rate (US$) – end of the period. 25.7% increase in EBITDA (R$ 76 million) 7.0% decrease in Negative Net Financial Result (R$ 24 million) Variation of discos’ concession financial asset (R$ 146 million) Restatement of sectorial financial assets/liabilities (CVA) (R$ 39 million) Arrears of interest and fines / installment payments (R$ 32 million) Mark-to-market effect – operations under Law 4,131 – non-cash (R$ 33 million) Increase in CDI and debt (R$ 119 million) Itaipu currency variation (R$ 97 million) PIS/Cofins on financial revenues (R$ 19 million) Others (R$ 10 million) 1.9% increase in Depreciation and Amortization (R$ 5 million) Increase of Income Tax and Social Contribution (R$ 18 million) 11.6% p.a. 14.7% p.a. 3Q14 3Q15 CDI R$/US$² 2.45 3.97 Net Income | R$ million 3Q14 Adjusted¹ Net Income Depreciation Amortization 3Q15 Adjusted¹ Net Income 3Q14 Net Income IFRS 3Q15 Net Income IFRS IR/CSEBITDA Financial Result +188.5% +33.8% 3Q15 Results 3Q14 Reg. A&L 3Q14 Non-rec. 3Q14 Prop. Consol. 3Q15 Prop. Consol. 3Q15 Non-rec.
- 12. Leverage1 | R$ billion Adjusted net debt1/ Adjusted EBITDA2 4,377 3,399 3,736 3,835 3,755 3,971 Adjusted EBITDA1,2 R$ million 12 Evolution of Cash Balance and CVA | R$ billion 5,622 4,8084,8014,999 4,134 2,616 +17% +26% +13% Adjusted with CVA in cash balance Indebtedness | Control of financial covenants 1) Financial covenants criteria. 2) LTM recurring EBITDA. 3) Balance of regulatory assets and liabilities (-) tariff flags not approved by Aneel up to the date. CPFL Piratininga starts to receive R$ 475 million in CVAs from October 2015
- 13. 13 Debt amortization schedule3,4 | Sep-15 | R$ million Cash coverage: 1.70x short-term amortization (12M)) Average tenor: 3.51 years Short-term (12M): 12.4% of total CDI Prefixed (PSI) IGP TJLP Gross debt breakdown by indexer | 3Q15 2,4 Gross debt cost1,2 | LTM Nominal Real 5 Debt profile | on September 30, 2015 1) Adjusted by the proportional consolidation since 2012; 2) Financial debt (+) private pension fund (-) hedge; 3) Considers Debt Principal, including hedge; 4) Covenants Criteria; 5) Amortization from October-2016.
- 14. 14 22.4 NIPS Reservoir Levels | % Natural Inflow Energy (ENA) | SE/CW | GW average ENA | % LTA 10% below LTA 36% below LTA 32% below LTA November, 11 (current): 28.2% 1) Until November, 11. Reservoir Levels and ENA
- 15. -4.2% -5.6% -8.2% +2.7% -2.6% -7.4% -7.9% -7.6% -5.5% -4.6% 15 NIPS Load Evolution 2015 Deviance NIPS Load Evolution | Load reduction contributes to the preservation of reservoirs levels 2014 65.1 GWavg ONS (PEN 2015) 67.3 GWavg +3.3% ONS (PMO Nov-15) 64.1 GWavg -1.5% CPFL 63.8 GWavg -2.0%
- 16. Dry seasonWet Season 16 2016 | Scenarios for reservoir levels For 2016, the expectation is to reach a reservoir level in November similar to the average in the period 1997-2014, considering 90% of LTA and thermal dispatch of 70% (85% of thermal capacity)
- 17. Higher flexibility of options allows adhesion of agents with different contracting levels and risk perception 17 PM 688 | Hydrological Risk Renegotiation Adhering to the renegotiation, 2015 GSF will be reimbursed Proposal Next steps Protection against GSF, up to 100%, by the payment of a risk premium Regulated Market (ACR) Need of a definition about the regulation of reserve energy contracting Generator contracts hedge to mitigate hydrological risk Free Market (ACL) Approval by Senate ANEEL Regulation Analysis and Internal Approvals Generators adhesion Current text, that is already being discussed in Senate, does not bring significant changes Companies may proceed with analysis If approved, new amendments to the PM688 should be regulated agents still wait for more details
- 18. 18 4th Tariff Review Cycle CPFL Piratininga | Increase of Parcel B and pass-through of accumulated CVA and others financial components 1) CAOM = Administration, Operation and Maintenance Cost and CAIMI = Annual costs for fixtures, vehicles and IT Increase of 5.31% in Parcel B from R$ 717 million to R$ 755 million Increase of Net RAB Increase of WACC from 7.50% to 8.09% Addition of special obligations remuneration Accumulated CVA and other financial components to be passed through to tariffs Pass-through of R$ 475 million in CVA and others financial components 4TRC x ETR 7.13% 0.93% 13.05% 21.11% Tariff Review final result|October, 2015 (R$ million) Gross Regulatory Asset Base 3.020 Depreciation rate 3.65% Depreciation Quota 110 Net Regulatory Asset Base 1,906 Pre-tax WACC 12.26% Capital Return 234 Special Obligations 10 Regulatory EBITDA 354 OPEX1 = CAOM + CAIMI 447 Parcel B 801 Parcel B adjusted by market (-) Other revenues 755 Parcel A 3,649 Required Revenue 4,404 Reconciliation of Regulatory EBITDA | 3rd and 4th Tariff Review Cycle (R$ million)
- 19. 19 Sustainability Performance 4th consecutive year Listed on NYSE The index represents 92 companies based in 14 emerging countries The index covers the companies with the highest sustainability performance in the world DJSI Emerging Markets MSCI 2nd year consecutive MSCI owns more than 500 indexes The index covers the companies with the highest ESG standards in its respective sectors
- 20. 20 Best Innovator 2015 | A.T. Kearney and Época Negócios Magazine Awards and Recognitions Best Companies to work at | Guia Você S.A. Water Risk Management | CDP Latin America Impact Awards | ASUG SAP • Ranking made by A. T. Kearney which has awarded the most innovative companies • CPFL Energia is among the 20 most innovative companies based in Brazil • Evaluation of the 150 best companies to work in Brazil • CPFL Energia is among the 10 best companies in the Electric Sector • Evaluation of successful IT cases • CPFL Energia took the 1st place using the case “Telemedição do Grupo A – Programa Tauron” • Selected the best experiences in water risk management, use of internal carbon price and natural capital management • CPFL Energia was elected as the best water risk management process
- 21. © CPFL 2015. Todos os direitos reservados.