conference call 2q12

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1 Conference Call 2Q12

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Conference Call 2Q12. Highlights. Consumption growth of 1.5% compared to 2Q11, mainly driven by the commercial class with a consumption increase of 8.4%; On June/12, non-technical losses ratio reached 42.3% over the low-voltage market, due to the criteria change of longtime default clients; - PowerPoint PPT Presentation

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Page 1: Conference Call 2Q12

1

Conference Call2Q12

Page 2: Conference Call 2Q12

DISTRIBUTION

2

Highlights

Consumption growth of 1.5% compared to 2Q11, mainly driven by the commercial class with a consumption increase of 8.4%;

On June/12, non-technical losses ratio reached 42.3% over the low-voltage market, due to the criteria change of longtime default clients;

Collection reached 103.9% on 2Q12 , 1.9 p.p. above the 102.0% reached on 2Q11;

The quality indicators ELC and EFC, without removals, decreased from 3.29 to 2.74 and 1.40 to 1.68 respectively, when comparing the quarters;

In the first half, investments in distribution amounted R$ 302.3 million, 3.5% above the same period of the previous year.

GENERATION

Strong performance of the generation segment in the quarter, reflecting the increase in the spot prices and higher sales volume in the Free Market Environment;

SHPP Paracambi, in partnership with Cemig, with 25 MW of installed capacity started its operation in May;

The wind farm complex Alto Sertão I, the largest in Latin America, belonging to Renova Energia, with 14 wind farms and 294,4 MW of installed capacity in Bahia, started its operation in July;

Considering the stakes on the new plants, total installed capacity increased to 955 MW.

Page 3: Conference Call 2Q12

3

Highlights

Operating cash flow (before interest payments and taxes) rose 16.4% to R $ 293.6 million in 2T12, R$ 41.3 million higher than operating cash generated in 2Q11. Including interest payments and taxes, the increase was 21.9%, or $ 34.3 million;

Net debt of R$ 3,516.6 million, with net debt / EBITDA of 2.8x.

RESULTS

CAPITALSTRUCTURE

12.1% increase in Net Revenue (without construction revenue) that reached R$ 1,635.7 million in 2Q12, highlighting the 48.3% increase in the net revenue generation segment.

PMSO consolidated cost reduced 3.9% in the quarter, down 5.3% in the distribution segment;.

R$ 255.8 million EBITDA in 2Q12, 6.2% increase, with 15.4% margin. Considering the effect of regulatory assets and liabilities, EBITDA would be 34.5% higher than 2Q11.

Net Income of R$ 39.8 million in 2Q12, a 12.3% reduction when compared to 2Q11. Considering the effect of regulatory assets and liabilities, Net Income would be 83.0% higher than 2Q11.

On August 7, the Federal Administrative Council of Tax Appeals (“Carf”) judged the case related to the foreign subsidiaries Light Overseas Investment Limited (“LOI”) and LIR Energy Limited (“LIR”), liquidated in 2008 and 2010, respectively. With a favorable judgment to the subsidiary Light Serviços de Eletricidade (“Light SESA”), the tax assessment in the adjusted amount of R$529.4 million was dismissed, including fine and monetary restatement. There was no provision, therefore there is no effect on results.

Page 4: Conference Call 2Q12

ELECTRICITY CONSUMPTION¹

TOTAL MARKET (GWh)

1Note: To preserve comparability in the market approved by Aneel in the tariff adjustment process, the billed energy of the free customers Valesul, CSN and CSA were excluded in view of these customers’ planned migration to the Basic Network.

4

Energy Consumption Distribution

RESIDENTIAL34%

INDUSTRIAL 7%OTHERS15%

FREE15%

COMMERCIAL29%

2T09 2T10 2T11 2T122T09 2T10 2T11 2T12

Série1

+1.5%

5,6695,460

22.7ºC

23.5ºC

2Q112Q10

5,2285,754

2Q09

22.7ºC

23.4ºC

+3.2%

2Q12

Page 5: Conference Call 2Q12

FREECAPTIVE

RESIDENTIAL INDUSTRIAL COMMERCIAL OTHERS TOTAL

2Q11 2Q12

ELECTRICITY CONSUMPTION (GWh)

TOTAL MARKET – QUARTER

Total Market

5

2Q11 2Q12 2Q11 2Q12 2Q11 2Q12 2Q11 2Q122T11 2T122T11 2T12 2T11 2T12 2T11 2T12 2T11 2T12

+1.5%

4.8804.916

5,669

789 837

5,754

+3.5%

857 889

905

48 48

937

+8.4%

1.5541.685

1,721

167180

1,866

-1.8%

426 373

1,000

574 609

982

-3.6%

2,043 1,969

Page 6: Conference Call 2Q12

set/09' set/10'

6

Collection

COLLECTION RATE12 MONTHS

COLLECTION RATE BY SEGMENTQUARTER

2Q11

2Q12

PUBLIC SECTORLARGE CLIENTSTOTAL RETAILTotal Varejo Grandes Clientes

Poder Público

2T11 2T12

102.0%103.9%

105.0%100.7%

101.4%

100.1%

108.3%

107.4%

97.5% 98.2%

Jun/11 Jun/12jun-11 jun-12

Page 7: Conference Call 2Q12

Technical losses GWh

jun/11 set/11 dez/11 mar/12 jun/12

7

Loss Prevention

INCORPORATIONGWh

1H121H11

ENERGY RECOVERYGWh

1H121H11

LOSS (12 MONTHS)

% Non-technical losses/ LV Market

% Non-technical losses / LV Market - Regulatory

Jun/11

Non-technical losses GWh

Sep/11 Dec/11Dec11 Mar/12

Reflets the change on

treatment's criteria in the

approach to long term

delinquent customers, based on

Aneel Resolution 414.

41.3%

41.3% 40.4

% 34.2%

5,247

2,293 2,335

5,326

7,6277,6197,582

40.7%

2,328

5,229

42.3%

5,466

2,372

7,839

5,316

2,349

7,665

1S11 1S12

56.7

82.3-31.0%

1S11 1S12

43.136.8

+16.9%

Page 8: Conference Call 2Q12

2T11 2T12 1S11 1S12

Net Revenue

NET REVENUE (R$MM)

8

Generation 6.9%

Distribution 88.9%**

NET REVENUE BY SEGMENT (2Q12)*

Comercialization 4.2%

* Eliminations not considered

** Construction revenue not considered

NET REVENUE FROM DISTRIBUTION (2Q12)

Commercial 30.4%

Industrial 6.7%

Others (Captive) 13% Network Use (TUSD)

9.8%(Free + Concessionaires)

Residential 40.1%

Construction RevenueRevenue w/out construction revenue

+9.8%

1,637.9

1,797.9

2Q122Q11

162.2

1,458.7

1,635.7

179.2

+6.6%

1H121H11

3,146.3

3,402.5

299.7326.3

3,472.6

3,702,.2

Page 9: Conference Call 2Q12

9

Operating Costs and Expenses

Manageable (distribution): R$ 321.8(21.8%)

Generation and Commercialization: R$ 104.5(7.1%)

Non manageable (distribution): R$ 1,053.0(71.2%)

* Eliminations not considered

DISTRIBUTION MANAGEABLE COSTS (R$MN)

COSTS (R$MM)*2Q12

Não gerenciáveis;

1.053,0; 71,18%Gerenciáveis; 321,8; 21,75%

Geração e Comercialização; 104,5; 7,07%

2T12

2T11 2T12 1S11 1S12

356.8321.8

-9.8%

2Q122Q11 1H121H11

661.5 651.6

-1.5%

R$ MM 2Q11 2Q12 Var % 1H11 1H12 Var %

PMSO 179.4 169.9 -5.3% 348.0 337.6 -3.0%

Provisions 99.3 84.0 -15.4% 159.6 170.5 6.8%

PCLD 79.5 72.2 -9.2% 143.9 133.9 -7.0%

Contingencies 19.8 11.8 -40.5% 15.7 36.7 133.1%

Depreciation 78.0 67.9 -13.0% 15.9 143.6 -6.7%

Total 356.8 321.8 -9.8% 661.5 651.6 -1.5%

Page 10: Conference Call 2Q12

EBITDA

CONSOLIDATED EBITDA (R$MM)

10

EBITDA BY SEGMENT*2Q12

Generation 33.4%

(EBITDA Margin: 75.9%)

Commercialization 2.9% (EBITDA Margin: 10.9%)

Distribution 63.7%

(EBITDA Margin: 11.3%)

*Eliminations not considered2T11 2T12 1S11 1S12

255.8240.8

+6.2%

2Q11 2Q12 1H11 1H12

689.6675.7

+2.0%

Distribuição ; 166,2; 63,68%

Geração; 87,2; 33,41%

Comercialização; 7,6; 2,91%

2T12

Page 11: Conference Call 2Q12

11

EBITDA Ajustado -

2T11

Ativos e Passivos

Regulatórios

EBITDA -2T11

Receita Líquida

Custos Não Gerenciáveis

Custos Gerenciáveis

(PMSO)

Provisões EBITDA -2T12

Ativos e Passivos

Regulatórios

EBITDA Ajustado -

2T12EBITDA2Q11

EBITDA2Q12

Net Reven

ue

Non-Managabl

e Costs

Managable Costs (PMSO)

Provisions

6

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities

Adjusted EBITDA

2Q11

Adjusted EBITDA

2Q12

246 241

177

(186)

8 15 256

76 332

EBITDA – 2Q12/2Q11(R$ MM)

EBITDA

+34.5%

+6.2%

Page 12: Conference Call 2Q12

-12.3%

+83,0%

12

Net Income

2Q11 2Q12EBITDA

Financial Result

Taxes Others

Adjusted Net

Income2Q11

Regulatory Assets

and Liabilitie

s

Regulatory Assets

and Liabilitie

s

Adjusted Net

Income2Q12

NET INCOME – 2Q12/2Q11(R$ MM)

Page 13: Conference Call 2Q12

2012 2013 2014 2015 2016 Após 20163T09 3T10 9M09 9M10

1T12

13

Average Term: 3.5 years

AMORTIZATION SCHEDULE* (R$ MM)

Indebtedness

Nominal CostReal Cost

NET DEBT

* Considering Hedge

2007 2008 2009 set/10

Custo Real Custo Nominal

2007 2008 2009 set/10

Custo Real Custo Nominal

* Principal only

COST OF DEBT

US$/Euro 1.3%*

CDI/Selic 77.3%

TJLP 21.4%

Net Debt / EBITDA

2012 2013 2014 2015 2016 After 2016

jan/11 jan/12

2,549.3

3,516.3

2.02.8

Jun/12Jun/11

289

557

803687

788 830

2009 2010 2011 jun/12

Custo Nominal Custo Real

2011201020092007 2008 2009 set/10

Custo Real Custo Nominal

4.13%

9.25%

5.30%

9.84%

4.87%

11.08%

4.51%

11.01%

Jun/12

Page 14: Conference Call 2Q12

2008 2009 2010 2011 1S11 1S12

Investments

14

CAPEX BREAKDOWN (R$MM)

2Q12

CAPEX (R$MM)

Investments in Electric Assets (Distribution)

+32.5%

20102009

563.8546.7

928.6

700.6

2011 1H121H11

328.4337.1-2.6%

292.0

45,1

302.3

26,0

453.8

92.9

446.9

116.9

518.8

181.8 758.7

169.9

2008

Generation Projects

1.3

Quality Improveme

nt56.9

Generation Maintenanc

e7.2

Others33.8

Develop. Of Distribution System

122.5

Losses Combat106,6

Page 15: Conference Call 2Q12

15

Important Notice

This presentation may include declarations that represent forward-looking statements according to Brazilian regulations and international movable values. These declarations are based on certain assumptions and analyses made by the Company in accordance with its experience, the economic environment, market conditions and future events expected, many of which are out of the Company’s control. Important factors that can lead to significant differences between the real results and the future declarations of expectations on events or business-oriented results include the Company’s strategy, the Brazilian and international economic conditions, technology, financial strategy, developments of the public service industry, hydrological conditions, conditions of the financial market, uncertainty regarding the results of its future operations, plain, goals, expectations and intentions, among others. Because of these factors, the Company’s actual results may significantly differ from those indicated or implicit in the declarations of expectations on events or future results.

The information and opinions herein do not have to be understood as recommendation to potential investors, and no investment decision must be based on the veracity, the updated or completeness of this information or opinions. None of the Company’s assessors or parts related to them or its representatives will have any responsibility for any losses that can elapse from the use or the contents of this presentation.

This material includes declarations on future events submitted to risks and uncertainties, which are based on current expectations and projections on future events and trends that can affect the Company’s businesses. These declarations include projections of economic growth and demand and supply of energy, in addition to information on competitive position, regulatory environment, potential growth opportunities and other subjects. Various factors can adversely affect the estimates and assumptions on which these declarations are based on.