Apre 1 t07
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Transcript of Apre 1 t07
1st quarter 2007 Results1st quarter 2007 Results
May 14, 2007May 14, 2007
Highlights
Market
Debt Profile
Cash Flow
Operating Performance Conclusion
Financial Performance
HighlightsHighlights
• Adjusted EBITDA of R$ 505.1 million in 1Q07, 13.3% lower
HighlightsHighlights
j ,than 1Q06
• Net Profit of R$ 165.6 million, compared to a net profit of R$25 1 illi i 1Q06
1Q0725.1 million in 1Q06
• End of contingency with CTEEP regarding CETEMEQproperty. Agreement's total amount of R$ 125.3 millionproperty. Agreement s total amount of R$ 125.3 million
• Renegotiation of R$ 300 million in CCB’s valid since May,12th – reduction of average cost from CDI + 1.82% to CDI +1.20% and maturity extension from 6 to 8 yearsSubsequent
• Rating increase by S&P (04/16/2007) – National Scale fromA- to A, keeping the international rating scale in BB-
• Dividends Payment (05/03/2007) - distribution of R$ 130.4
Events
3
y ( )million relative to FY 2006 earnings
Consumption Comparison in GWhConsumption Comparison in GWh
7 840 7 709
Consumption Comparison in GWhConsumption Comparison in GWh
Captive Market Evolution (GWh)
7,5037,2667,241 7,418 7,429 7,590 7,840 7,709• Excluding all free consumers from previousperiods, the captive market increased 4.4% inthe last 12 months.
2 7%2 7%
2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07
3,013 3,181 9,317
9,572
7 859
5.6%
0.5%
2.7%
3,013 3,181 9,317
9,572
7 859
5.6%
0.5%
2.7%
1,500 1,647
2,560
1,7131,512
2,561 7,818 7,859
1.0%
-8.2% 14.2%
1,500 1,647
2,560
1,7131,512
2,561 7,818 7,859
1.0%
-8.2% 14.2%
605599 605599
4
Residential Industrial Commercial Public Sectorand Others
FreeConsumers
1Q06 1Q07
Billed Market Total MarketResidential Industrial Commercial Public Sectorand Others
FreeConsumers
1Q06 1Q07
Billed Market Total Market
NOTE: Charts do not consider own consumption
Free ConsumersFree Consumers
% Total Market (1Q07)
Free ConsumersFree Consumers
18 1%
80.5% Captive Consumers
%
18.1% Free Consumers
Potentially Free Consumers
Net Revenue with TUSD X Free Consumers’ Consumption125.2
0
1.4%
1 5001,654 1,658 1,716 1,713
111.3 113.4117.1 115.2
0
0
0
1
1
1
1,500
0
0
0
8
9
1
5
01Q06 2Q06 3Q06 4Q06 1Q07
7
Free Consumers (GWh) TUSD - R$ million
Operating HighlightsOperating HighlightsOperating HighlightsOperating Highlights
Collection Rate -% over Gross RevenueLoss Evolution (%)
7 0
12.212.813.5 12.9 12.098.799.199.0
97 5
101.2
-4.8% +2.5%
6.5
7.0 6.4 5.5 6.3 5.7
6.5 6.5 6.5 6.5
97.5
2004 2005 2006 1Q06 1Q07
Technical Losses Commercial Losses2004 2005 2006 1Q06 1Q07
Technical Losses Commercial Losses
Fraud Combat and Clandestine Connections (1Q07)
• Reduction of commercial losses in 0.6 percentage points in
Collection Rate (1Q07)
Public Sector: 105.2%the last 12 months
• 75 thousand inspections and 7 thousand frauds detected
• 15.2 thousand clandestine connections regularized
Private Sector: 100.9%
Cuts and Reconnections – monthly average (1Q06 x 1Q07)
Cuts - decrease from 107 thousand to 106 thousand
6
Reconnections – increase from 70 thousand to 71 thousand
InvestmentsInvestmentsR$ illiR$ illiR$ millionR$ million
Investments 1Q07
378404
(R$87.7 million)
3 3
584 9
378
330
6%
28%19%
3 553 19
20%
6%
18%2 9 7 3 19
1788 9%
C usto mer Service and System Expansio n71
2004 2005 2006 1Q07
C apex Self F inanced
C usto mer Service and System Expansio nM aintenanceLo ss R eco veryInfo rmatio n T echno lo gy
7
C apex Self F inancedOthersSelf F inanced
ResultsResultsR$ illiR$ illi
6 4%
R$ millionR$ millionGross Revenue Operating Expenses
1 299 3 1,364.9 1,406.0 1,364.91 032 4 1,083.21,188.0
1,083.2
2,679.1 2,759.82,947.4
2,759.8
+3.0%-2.9%
-6.4%
+5.0%
941.1 1,042.7 1,034.4 1,042.7
1,299.3 ,
1 676 6 1 759 4 1 676 6
1,032.4 , ,
358.2 322.3 371.7 322.3
1Q06 1Q07 4Q06 1Q07
1,646.7 1,676.6 1,759.4 1,676.6
1Q06 1Q07 4Q06 1Q07
Operating Expenses Electricity + Transport
1Q06 1Q07 4Q06 1Q07
Net Revenue Deduction of Operating Revenue
• Increase of 3.0% in relation to 1Q06:
• Tariff adjustment of 11.45% applied since July 4th, 2006
• Increase of 10.8% in non-manageable expenses in relation to1Q06:Tariff adjustment of 11.45% applied since July 4 , 2006
• Increase of 2.7% in the total market (captive + freeconsumers)
• Increase of R$ 140.0 million in energy purchase, due to thereadjustments of contracts with Tietê (0.9%) since July,2006; Itaipu (10.3%) and Auctions (12.1%) since January,2007
8
• Reduction of 10.0% in manageable expenses in relation to1Q06:
• Reduction of 22.5% in Other Expenses and reduction of53.2% in pension expenses
EBITDAEBITDAR$ illiR$ illiR$ millionR$ million
4Q06 x 1Q071Q06 x 1Q07
EBITDA 423.8 391.0 433.1 391.0
Pension Fund
RTE
60.5
81.3
26.7
82.1
60.4
83.4
26.7
82.1
Provision - RTE 16.8 5.3 1.5 5.3
ADJUSTED EBITDA 582.4
ADJUSTED EBITDAMARGIN 35.4%
505.1
30 1%
578.4
32 9%
505.1
30 1%
Reduction of 12.7%
MARGIN 35.4% 30.1% 32.9% 30.1%
Reduction of 13.3%
9
ResultsResultsR$ illiR$ illiR$ millionR$ million
Financial Result Net Profit
1Q06 1Q07 4Q06 1Q07165.6
99.0
165.6
+560 1%
+67.2%
(25.3)(41.5)
(25.3)
25.1
99.0
-79.2%-38.9%
+560.1%
(121.7) 1Q06 1Q07 4Q06 1Q07
Improvement of the financial result due to:
• The decrease of 41.2% in financial expenses:
• Reduction of the average cost of the debt
• Net Margin of 9.9% in 1Q07
• Finalized in 2006, the recognition in the incomestatement of the actuarial liability with the Pension Fund,which stemmed for a gross annual expense of R$ 486.3
• Reduction of 68.6% in Swap expenses, due to theR$ 152.6 million decrease of foreign currency debt
• Credits of R$ 21.7 million of IPTU recognized inCETEMEQ´ t ( t t)
g p $million, recurrent between 2002 and 2006.
10
CETEMEQ s agreement (non-recurrent event)
Consolidated DebtConsolidated DebtR$ illiR$ illiR$ millionR$ million
IGP DI
Short Term x Long Term Gross Debt – 1Q07
-9 6%-25.0%
-9 6%-25.0%
Fixed Rate11.5%
IGP-DI50.0%4,830
4,606 4,6064,774
9.6%
21% 20% 20%27%
3,306
4,411
3,3063,658
lion
4,8304,606 4,6064,774
9.6%
21% 20% 20%27%
3,306
4,411
3,3063,658
lion
Libor1.6%CDI/Selic
36.8%79% 80% 80%73%R
$ m
ill
79% 80% 80%73%R$
mill
• Pension Fund - R$ 2,394 million• Private Creditors - R$ 1,994 million• BNDES - R$ 218 million
4Q06 1Q07 1Q06 1Q07
LT ST Net Debt
4Q06 1Q07 1Q06 1Q07
LT ST Net Debt
• Gross Debt: reduction of 3.5% (R$ 168.5 million)
• Net Debt: reduction of 25.0% (R$ 1,1 billion)
Debt Highlights – last 12 months Average Cost and Average Life
102.63%104.28%97.27%101.18%
91.61%
5.465.485.44
90.00%
110.00%
4
5
Net Debt: reduction of 25.0% (R$ 1,1 billion)
• Foreign Currency: 1.6% of total
• Amendment of CCB (R$ 300 million) – May, 2007:
3.81 3.90
30.00%
50.00%
70.00%
%
1
2
3
4
11
• Reduction of average cost from CDI + 1.82% to CDI + 1.20%
• Increase of average life from 3.5 to 5.5 yearsCDI index at the end of the period
10.00%1Q06 2Q06 3Q06 4Q06 1Q07
0
Avg. Cost - % CDI* p.a. Avg. Life - years
Managerial Cash FlowManagerial Cash FlowR$ illiR$ illiR$ millionR$ million
R$ million 1Q06 2Q06 3Q06 4Q06 1Q07
Initial Cash 492 358 619 767 1,166
Operating Cash Generation 687 653 725 741 634
Investments (101) (88) (75) (85) (95) ( ) ( ) ( ) ( ) ( )
Net Financial Expenses (194) (85) (176) (91) (187)
Net Amortization (245) (45) (158) (111) (71)
Pension Fund Expenses (134) (108) (85) (55) (48) p ( ) ( ) ( ) ( ) ( )
Income Tax (147) (67) (83) - (97)
Free Cash Flow (133) 261 148 399 135
Final Cash 358 619 767 1 166 1 301Final Cash 358 619 767 1,166 1,301
• Operating Cash Flow: payment of R$ 89.7 million to CTEEP, according to the agreement to end the litigation on the
CETEMEQ property
• Net Financial Expenses: semi-annual payments of interest on the 8th debenture issuance (R$ 63.7 million) and Real-
denominated bonds (R$ 45.3 million)
• Pension Fund Expenses: Lower expenses on the pension fund, due to the renegotiation of the debt contracts with
12
p p p , g
FCESP
ConclusionConclusionConclusionConclusion
• Net Profit of R$ 165.6 million in 1Q07, R$ 140.5 million higher than the net profit in
1Q06
R d ti f 25 0% i lid t d t d bt i th l t 12 th• Reduction of 25.0% in consolidated net debt in the last 12 months
• Increase of total debt’s average life from 3 7 to 5 5 years• Increase of total debt s average life from 3.7 to 5.5 years
• Ratings increased by S&P in national scale from A- to ARatings increased by S&P in national scale from A to A
• Dividends payment resumed on May 3rd, 2007 - R$ 130.4 million relative to FY 2006
earnings
13
1st quarter 2007 Results1st quarter 2007 Results
May 14th, 2007May 14th, 2007
14
Hi hli ht D bt P filHighlights
Operating Performance
Debt Profile
Cash Flow
Capex Conclusion
Financial Performance
15
HighlightsHighlights –– 1Q071Q07Highlights Highlights 1Q071Q07
Increase of 15.1% in energy generatedEBITDA of R$ 287.2 million, 4.9% higher than 1Q06Net Income of R$ 160.5 million, an increase of 5.0% incomparison with 1Q061Q07 comparison with 1Q061Q07
Payment of R$ 160.5 million in dividends, whichcorresponds to 100% of the net earnings obtained inp g1Q07:- R$ 1.61 per 1,000 common shares- R$ 1.77 per 1,000 preferred shares
Subsequent Events
16
Energy BalanceEnergy Balance –– 1Q071Q07Energy Balance Energy Balance 1Q071Q07
Generation – MW average Billed Energy - GWh146%
4,0934,093
98%109% 107%
115%112%
146%
625978
177
3153,5573,557 15 %15 %
1,8951,4241,4671,3631,3921,258
1 040
81%
2,800 2,755 1,040
2001 2002 2003 2004 2005 2006 1T07 1Q06 1Q07
El t l t iff R$ 133 87/MWh
Generation - MW Average Generation / Assured Energy Eletropaulo MRE CCEE/Losses
Increase of 15.1% in energy generatedGeneration was 45.6% above the assured energy
(1,275 MW)Growth of 61 2% in volume sold to CCEE/MRE
Eletropaulo tariff – R$ 133.87/MWhMRE tariff – R$ 7.47/MWhCCEE tariff * – R$ 19.27/MWh
17
Growth of 61.2% in volume sold to CCEE/MRE
* 1Q07 average
CAPEXCAPEXCAPEXCAPEX
Capex – 1Q07: R$ 10.2 millionThe main investments made in 1Q07 refer to capacity
Capex Capex –– 1Q071Q07p y
restoration, upgrade in equipments and reforestation.
Forecasted Capex - 2007: R$ 75.5 million:
3.1%51.3%
18.3%
R$ 22.4 million: Construction of three small hydropowerplants located in the interior of São Paulo State. Together,they will boast an installed capacity of 8MW.R$ 36 6 million: Restoration and upgrading of the plants
25.6%1.8%
Equip. Hidroway PCH IT EnvironmentR$ 36.6 million: Restoration and upgrading of the plantsR$ 11.7 million: EnvironmentR$ 4.8 million: SAP Capex Capex –– R$ millionR$ million
Investment in Small Hydropower PlantsAcquisition of License to build three small hydropower plants
S f f
75.5
46.5
in the State of Rio de Janeiro, with a total installed capacity of52MW and average 28.97MW of assured energy, approved byANEEL – forecasted investment of R$ 225 million in 2 years.
10.2
27.521.9
12.4
18
2003 2004 2005 2006 1T07 2007e
Expansion RequirementExpansion RequirementExpansion RequirementExpansion Requirement
Requirement: increase installed capacity by at least 15% (400 MW), until December, 2007:increasing the installed capacity in the State of São Paulo; orenergy purchasing from new plants, located in São Paulo, through long term agreements (at
least 5 years)Restriction to increase the capacity:
State of São Paulo no hydro resource available and environmental restrictions to thermalState of São Paulo – no hydro resource available and environmental restrictions to thermalplants
gas supply“New Model of the Electric Sector” (Law # 10,848/04)( )
Proposal from AES Tietê to the State Government of São Paulo:suspension of the obligation to increase the capacity for 5 years. During this period AES Tietê
would analyze freely any project for investment, regardless of the locationy y y p j , gafter the suspension period, in the case that the restriction continues, a AES Tietê would be
released of this obligationno amount or new obligation would be paid in compensation
The São Paulo State Government and ANEEL are evaluating the following alternatives:extension of the term for 2 yearssuspension of the obligation of expansion, once the non-feasibility of this execution has been
19
provenNeither ANEEL nor the São Paulo State Government have sent a formal reply to AES Tietê with regardto this issue so far
Results Results R$ millionR$ million
Net RevenueNet Revenue Costs and Operational ExpensesCosts and Operational Expenses
9494 8989 8989
360346360349 3%3% 4%4%
20 14
13 165 4
5
13 88
1717
1610
48-5%5% 5%5%85858989
18 16
24 27 32 27
16 16
Power Purchase Others* Operational Expenses
RoyaltiesProvisions Depreciation
1Q06 1Q07 4Q06 1Q07
16 16 16
1Q06 1Q07 4Q06 1Q07
Reduction of 5.3% in costs and operationalexpenses mainly due to higher expenses in 1Q06 :
1Q07 x 1Q06
Net Revenues in 1Q07 up 3% from 1Q06 :(i) 0.9% price adjustment granted in July06 for the
1Q07 x 1Q06
(i) Recognition of an actuarial loss of R$ 3.3million.
(ii) Increase in R&D expenses due to thechange quotes from 0.25% to 1% and the impact of
energy sold under the bilateral contract(ii) Increase of 16.7% in the revenues obtained fromenergy marketed through the MRE/CCEE(iii) greater volume of energy demanded by
20
a change in the rules in the accounting criteria.
*Others: R&D, fiscalization fees, insurance, hydro way and others
(iii) greater volume of energy demanded byEletropaulo in 1Q07
Results Results R$ millionR$ million
EBITDAEBITDA80 2%79 8%78 4% 79 8%
274 287 278 287
80.2%79.8%78.4% 79.8%
3%3%5%5%274 278 287
1Q06 1Q07 4Q06 1Q07
Price readjustment of bilateral contract in July, 2006 ( + 0.9% )16.7% increase obtained from energy marketed through MRE/CCEE
1Q07 x 1Q06
16.7% increase obtained from energy marketed through MRE/CCEELower costs and operational expenses
1Q07 x 4Q06
R bt i d f k t d th h MRE/CCEE
21
Revenues obtained from energy marketed through MRE/CCEEGreater volume of energy sold through bilateral contract
Results Results R$ millionR$ million
Financial ResultsFinancial Results Net IncomeNet Income1Q06 1Q07 4Q06 1Q071Q06 1Q07 4Q06 1Q07
44.6%43.8% 44.6%
47.7%
2%2%5%5%
(23)(29) (35) (29)16%16%
24%24% 161165161153
1Q07 x 1Q06 1Q07 x 1Q06
1Q06 1Q07 4Q06 1Q07Net Income Net Margin
Financial Income: decreased by 6.8% mainlydue to the decline in average CDI rates from17.2% in 1Q06 to 12.9% in 1Q07.
Increase of 0.8 percentage points in the netmargin.
$
1Q07 x 1Q06 1Q07 x 1Q06
17.2% in 1Q06 to 12.9% in 1Q07.
Financial Expenses: increase of 8.9%basically due to an growth of IGP-M from 0.7%to 1.1% .
Payment of R$ 160.5 million in dividends,which corresponds to 100% of the netearnings obtained in 1Q07.
22
DebtDebtDebtDebt
Cash availability = R$ 686 million (March, 2007)
Montante Vencimento Custo Garantia
in R$ millionAmount Ceditor Maturity Cost Collateral1,339.9 Eletrobras May, 2013 IGP-M + 10% p.a. Receivables
$$
11.9 FunCesp III Sep, 2027 IGP-DI + 6% p.a. Receivables
Net Debt Net Debt –– R$ billionR$ billion
1.4 1 3
1.4x2.0x
3.2x
0.7 0.7
1.3
0.7
1.1 0.6x0.7x 0.6x
2002 2003 2004 2005 2006 1Q07
23
Net Debt Net Debt / EBITDA
Cash FlowCash FlowCash FlowCash Flow
CASH FLOW - R$ million 1Q06 2Q06 3Q06 4Q06 1Q07CASH BALANCE - BEGINNING OF PERIOD 797.9 851.7 777.2 673.6 691.0
Operating cash flow 269.8 308.4 289.9 279.6 287.9 Investments (4.5) (6.3) (7.7) (23.6) (9.7) ( ) ( ) ( ) ( ) ( )Net Financial Expenses (21.2) (17.7) (14.6) (18.8) (16.1) Net Amortizations (41.4) (43.7) (50.1) (44.8) (46.4) Income Tax (144.7) (20.2) (15.9) (31.7) (220.1) Dividends and Interest on Equity (4.1) (294.9) (305.3) (143.4) - q y ( ) ( ) ( ) ( )FREE CASH FLOW 53.8 (74.4) (103.6) 17.4 (4.4)
CASH BALANCE - END OF PERIOD 851.7 777.2 673.6 691.0 686.6
The free cash flow in 1Q07 was negative in R$ 4 million, mainly due to thepayment of R$ 220 million of Income Tax and Social Contribution.
Investments 4Q06 – Payment on acquisition of licenses to build three smallhydropower plants in the State of Rio de Janeiro, with a total installed capacity of52 MW and average 28.97 MW of assured energy.
24
ConclusionConclusionConclusionConclusion
Generation was 46% higher than assured energy
EBITDA of R$ 287 2 million in 1Q07 4 9% higher than the same period inEBITDA of R$ 287.2 million in 1Q07, 4.9% higher than the same period in2006. EBITDA margin of 79.8% compared to 78.4% in 1Q06.
Payment of R$ 160.5 million in dividends, which corresponds to 100% of1T07 net earnings.g
AES Tietê has been analyzing new opportunities of investments andexpansion aiming at increasing the Company’s resultsexpansion, aiming at increasing the Company’s results
25
The statements contained in this document with regard to the business prospects, projectedoperating and financial results, and growth potential are merely forecasts based on theexpectations of Company Management in relation to its future performance. Such estimates arehighly dependent on market behavior and on the conditions affecting Brazil‘s macroeconomicperformance as well as the electricity sector and international market and they are therefore
The statements contained in this document with regard to the business prospects, projectedoperating and financial results, and growth potential are merely forecasts based on theexpectations of Company Management in relation to its future performance. Such estimates arehighly dependent on market behavior and on the conditions affecting Brazil‘s macroeconomicperformance as well as the electricity sector and international market and they are thereforeperformance as well as the electricity sector and international market, and they are thereforesubject to change.performance as well as the electricity sector and international market, and they are thereforesubject to change.
May 14th, 2007May 14th, 2007