3q07 results
TRANSCRIPT
Conference Call3Q07 Earnings Results
November 5th, 2007
António Martins da CostaChief Executive Officer
Antonio José SellareChief Financial Officer
Flavia HellerInvestor Relations Officer
2
Disclaimer
This presentation may include forward-looking statements of future events or results according to regulations of the Brazilian and international securities and exchange commissions. These statements are based on certain assumptions and analysis by the company that reflect its experience, the economic environment and future market conditions and expected events, many of which are beyond the control of the company. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the company’s business strategy, Brazilian and international economic conditions, technology, financial strategy, public service industry developments, hydrological conditions, financial market conditions, uncertainty of the results of future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the actual results of the company may be significantly different from those shown or implicit in the statement of expectations about future events or results.
The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and no investment decision is to be based on the veracity, current events or completeness of this information or these opinions. No advisors to the company or parties related to them or their representatives shall have any responsibility for whatever 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 include projections of economic growth and energy demand and supply, as well as information about the competitive position, the regulatory environment, potential opportunities for growth and other matters. Several factors may adversely affect the estimates and assumptions on which these statements are based.
Operating Performance
4
Distribution
Strong growth in Bandeirante (4.8%) and Enersul (3.3%) concession areas
Growth in the volume of energy in transit (3.9%)
756 780
3,351 3,199
2,017 2,059
6,190 5,972
3Q06 3Q07
Bandeirante Escelsa Enersul
Volume of Energy Distributed (GWh) Energy Distributed by Customer Class (% of total volume distributed)
61% 60%
38% 38%1% 2%5,972 6,190
3Q06 3Q07
End Customers Energy in Transit Other
3.7% 3.7%
5
8.5% 8.8% 9.0% 9.1%
4.1% 3.8% 4.1% 4.4%
12.6% 12.6% 13.1% 13.5%
Jun 2005 Sep 2005 Sep 2006 Sep 2007
Technical Commercial
DistributionProgram for Controlling Losses
In 3Q07, R$22 million were invested in programs to control losses.
Evolution of commercial losses (% of distributed energy - last 12 months)
~ 204 thousand inspections were made in 3T07
~ 76 thousand frauds identified
~ 700 thousand inspections scheduled for 2007
2.3 2.5
Sep/05 Sep/07Jun/05
2.22.5
Sep/06
5.4 5.6
Sep/05 Sep/07
6.0
Jun/05
5.2
Sep/06
5.57.4
Sep/05 Sep/06
5.9
Jun/05
8.2
Sep/07
6
Tariff Reset - EscelsaBreakdown of Tariff Readjustment Index
Financial Adjustments
2006 Financial Adjustments to be excluded
Energy Purchase
Sectorial Charges
Transmission Charges
Return on Investment
Assets Reinstatement
Reference Company
Other Revenues
--2.59%2.59%
Parcel
Tariff Realignment Tariff Realignment RateRate
--1.40%1.40% A
--0.89%0.89%
Average tariff Average tariff readjustmentreadjustment
--6.92%6.92%
--1.07%1.07%
Parcel
--9.62%9.62%
--0.74%0.74%B
0.08%0.08%
Variation in Accounts Variation in Accounts of Financial Natureof Financial Nature
--0.31%0.31%
--2.70%2.70%
4.76%4.76%
7.46%7.46%
X Factor = 1.45%
7
Tariff Reset - BandeiranteBreakdown of Tariff Readjustment Index
Financial Adjustments
2006 Financial Adjustments to be excluded
Energy Purchase
Sectorial Charges
Transmission Charges
Return on Investment
Assets Reinstatement
Reference Company
Other Revenues
--1.83%1.83%
Parcel
Tariff Realignment Tariff Realignment RateRate
--3.54%3.54% A
--0.50%0.50%
Average tariff Average tariff readjustmentreadjustment
--8.80%8.80%
--1.84%1.84%
Parcel
--12.47%12.47%
--0.63%0.63%B
0.12%0.12%
Variation in Accounts Variation in Accounts of Financial Natureof Financial Nature
--0.58%0.58%
--3.67%3.67%
--0.52%0.52%
3.15%3.15%
X Factor = 0.74%
8
Generation
950 939
3Q06 3Q07
Volume of Energy Produced (GWh)
1,340 1,433
3Q06 3Q07
Volume of Energy Sold (GWh)
7.0%-1.1%
Installed Capacity (MW)
1,043
645
399
335
35029
452
2050
2005 UHE Peixe
Angical
4th.
Mascarenhas
Engine
PCH São João Current Capacity PCH Santa Fé Pow er Upgrade UTE Pecém Total Assured
516
1,043
Projects concluded Projects in Course* Includes 2.3 MW of UHE Suiça power upgrade, awaiting for Aneel’s approval
*
2009 2009 2012
Expected Start-Up
25
1,442
980
9
Commercialization
Growth in volume sold to free customers (+23.3%)
1,4061,710
2221961,6291,906
3Q06 3Q07Other ENBR Group companies
Volume of Energy Distributed (GWh)
6772
3Q06 3Q07
Number of customers
7.5%
17.1%
Financial Performance
11
78% 76%
11%11%11%13%
1,0041,166
3Q06 3Q07Distribution Generation Commercialization
114131
3Q06 3Q07
339317
59%74%
36%24% 5%2%
3Q06 3Q07
Distribution Generation Commercialization
Financial Performance
Net Revenues (R$ MM) EBITDA (R$ MM)
Net Income (R$ MM)
16.1% -6.6%
14.6% Eliminating non-recurring effects from 3Q07 and 3Q06, EBITDA would have increased 11.2%
12
Manageable Expenses
R$ million 2007 2006 ∆
Personnel 77.0 66.6 10.4 15.6%
Material 12.1 7.6 4.5 58.9%
Third Party Services 90.2 74.0 16.2 21.9%
Provisions 38.9 15.1 23.9 158.7%
Other 12.8 16.0 -3.2 -20.1%
Total 231.1 179.3 51.8 28.9%
∆ %
3rd
Quarter
Costs and Expenses
Costs and Expenses Breakdown1 - 3Q07
Breakdown of Manageable Expenses
R$ 849.4 millionR$ 849.4 million
Non-manageable
costs
R$ 618.3 million
(73%)
Manageable
costs
R$ 231.1 million
(27%)
Manageable
costs
R$ 231.1 million
(27%)
Note:
1 Depreciation and amortization were excluded
Provisions:
+ R$ 11.4 MM in provisions for bad debt in distribution business
+ R$ 7.7 MM in civil and labor contingencies
+ R$ 3.0 MM in receivables due from Ampla
13
R$ million 3Q07 3Q06 Var.%
Financial Revenue 73.9 66.3 11.5%
Financial Expense (90.6) (136.6) -33.7%
Net Foreign Exchange Result (1.1) (10.6) -89.9%
Net result from SWAP operations (17.0) (15.8) 7.4%
FX gain (loss) 15.9 5.2 203.8%
TOTAL (17.8) (80.9) -78.0%
Reduction in interest rates, positive result from foreign exchange variation and partial reversion of charges over fiscal contingencies booked in 3Q06.
Financial Result
14
Investments and Indebtedness
Long-Term
2,4921,8891,737
Short-Term
365 (759)
(361)
Gross Debt Set.07 (-) Cash and Marktable
Securities *
(-) Regulatory Asset and
Liabilities
Net Debt Set.07 Net Debt Jun.07
39%
57%
2%2%
US$ Fixed Rate
TJLP Floating rates**
Total Debt Index(Sep/07)
** Includes Selic, CDI, IGP-M and INPC
Indebtedness – 3Q07 (R$ Million)Net Debt evolution
* Ratio: Net Debt / EBITDA 12 months
1.5x1.5x**
1.4x1.4x**
Net Debt / Ebitda
Investments* – does not include LFA** (R$ MM) Universalization Program R$MM (includes LFA **)
* Does not include interest capitalization. Includes power upgrades and Pecém **LFA: Light for All
2,857
* includes R$ 11,1 million of deposits related to debt with BNDES
323466 429
33
192
531
9M07 (A) 2007 (E) 2008 (E)Distribution Generation
658
356
960
37
105
166
9M07 (A) 2007 (E) 2008 (E)
15
UTE Pecém – Growth at attractive rates of return
Imported coal-fired plant, located in the state of Ceará
Imported mineral coal: best alternative for expansion of generation capacity in short term. High competitiveness against other fuels
Installed Capacity: 700 MW
Flexibility: 100%
Capacity contracted in A-5 new energy auction: 615 MW
Estimated start-up of operations: end of 2011
Total Capex: US$ 1.3 billion
16
Generation – Creating Growth Opportunities (I)
Small Hydro Plants
Conclusion of Projects
Estimated Date for Issuance of Installation
License
Number of Projects
Installed Capacity (MW)
1H2008 2H2008 6 102
1H2008 1H2009 5 111
1H2008 1H2010 3 66
1H2008 1H2011 2 43
2H2008 1H2010 5 129
1H2009 1H2010 3 87
24 538
17
Generation – Creating Growth Opportunities (II)
Hydro Power Plants
Conclusion of Feasibility Studies
Estimated Date for Issuance of Installation
License
Number of Projects
Installed Capacity (MW)
2H2008 2H2009 2 235
1H2009 1H2010 10 787
12 1,022
18
ENBR3 x Indexes Performance
Base 100: June 29, 2007
65
70
75
80
85
90
95
100
105
110
115
120
6/29/2007 7/6/2007 7/16/2007 7/23/2007 7/30/2007 8/6/2007 8/13/2007 8/20/2007 8/27/2007 9/3/2007 9/11/2007 9/18/2007 9/25/2007
0
20,000
40,000
60,000
80,000
100,000
Volume R$ ENBR3 ENBR3 IBOVESPA IEE IBX
Stock Performance
Market Capitalization: R$5.0 billion
Average daily traded volume (R$ thousand)
3Q07: R$ 16,926
July: R$ 13,783
August: R$ 16,838
September: R$ 20,506
-3.2%
+11.2%
+13.6%
-23.3%
VolumeR$ th
Conference Call
3Q07 Results
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