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EDP Renováveis Management Discusses 1H 2010 Results - Earnings Call Transcript

EDP Renováveis Management Discusses 1H 2010 Results - Earnings Call Transcript

EDP Renováveis SA (EDPR)

1H 2010 Earnings Call

July 28, 2010 9:00 AM ET


Luis Guerra Nunes – Chairman

Ana Maria Fernandes – Chief Executive Officer

Rui Lopes Teixeira – Chief Financial Officer

Rui Antunes – Head, IR


Alberto Gandolfi – UBS

Allen Wells – Morgan Stanley

Laura Trines – BPI

Rupesh Madlani – Barclays Capital

Javier Suárez – Uncredit

Didier Laurens – Société Générale

Michael McNamara – Jefferies

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Chris Rogers – Analyst

Raymond Fernandez – Bascom



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Good afternoon, ladies and gentlemen. And welcome to the EDP Renováveis 2010 First Half Results Conference Call. At this time, all participants are in a listen-only mode until we conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions)

Just to remind you this conference call is being recorded. I would now like to hand over to your Chairperson, Guerra Nunes, who is sitting here. Please begin. I will be standing-by.

Luis Guerra Nunes

Good afternoon, ladies and gentlemen. Welcome to EDP Renováveis First Half 2010 Results Conference Call. As usual, I’m here with Ana Maria Fernandes, our CEO; and Rui Lopes Teixeira, our CFO and Rui Antunes, the Head of IR. We will start usually a briefing about the highlights of the period then the performance of the period and we will end with some conclusion. So I’ll now hand over to Ana.

Ana Maria Fernandes

Hello, everybody, and once again here we are. Once again, I would like to highlight the performance of EDP Renováveis in this very hard environment, but I think that we all as a team as we may able to achieve certain very important goal and one that is very important for our investors and shareholders and stakeholders. In general, it’s certainly value creation that we continue to deliver as usual.

Value creation has been supported in delivering -- continuing to deliver sustainable growth. Once again, improve that we have execution, very good execution capacity. We are meeting the target although, of course, we present very particular profile -- particularly invest in renewals is very particular to us in executing our construction plan, which we are delivering. You will see on numbers on construction capacity, on construction projects. And also we’ve been able to deliver a strong growth in EBITDA on the back of this superior operating performance.

We achieved this by once again using our core competences then looking, again, showing them various geographies where we are and in the we again -- once again say that we presented top-sector load factors as we’ll see also the numbers. At the same time, we’ve done an extensive work in reducing and optimizing CapEx costs and on technology selection in order to maximize the output of our returns.

All this, at the same time, maintaining portfolio risk that we want to be controlled detecting one of our threat so far and this has been once again achieved by using hedging short and long-term in the best way possible, and by diversifying investments and using our expensive pipeline to balance between growth profitability and risk.

So based on these pillars, we were able to deliver strong operating results. As the capacity grew year-on-year more than 1 gig, the output increase was 32% year-on-year increase. Based on the back of quality assets, we were always very demanding on the assets and this is previous results.

Our assets as we consider is top-class delivered an average of 31%, average load factor year-on-year. We believe that in Europe we were able to deliver 29%, so more 4 percentage points. Unfortunately, in the U.S. as we not so much of the room, we have reduced as, let say, less 4 percentage points, that’s when compensation together in terms of volume.

So capacity, delivered, quality, assets and low-risk portfolio with limited market exposure, as always we have a target in terms of risk exposures and before this can be seen because we maintain a high percentage of the portfolio, fixed prices or limited exposure to market, in this case 81%. And so, the average portfolio as the prices didn’t really get excited, maintained itself in terms of prices more as such year-on-year.

So in terms of operating performance, I would say group performance of our portfolio and in terms of financial performance, another 3% -- 30% year-on-year on gross profit, we’ve been delivering this consistently to the market, showing stronger, stable and continuing output growth in electricity output growth in a particular company.

On the back of this 27% more only on EBITDA, being the BITDA margin one of the highest in the sector 74%, so we maintained this performance and this on the basis of a solid margin and the right spending strategy that is our net debt is still 32% of enterprise value, 1 billion of it related to assets under construction and we maintained high percentage of 94% of long-term fixed rate loans, 10 years. So balance sheet discipline and good operational results.

And with this, I leave you with Rui Antunes, back to explain more details how we achieved these numbers. Thank you very much.

Rui Antunes

Okay. Thank you, Ana. Let me explain now in detail EDPR first half performance. So on the next slide, on slide seven, on the last 12 months, our installed capacity increased more than 1,000 megawatts of which 441 megawatts were in Europe and close to 600 megawatts in United States, which represents a year-on-year growth of 22%.

In the first half, we added 174 EBITDA megawatts plus the 42 megawatts through Eólicas de Portugal consortium, which is executive consortium that in our accounts. In the periods, a total of 260 megawatts were added in 2009 year-end installed base. As of June, in terms of under construction and we already had 1.3 gigawatts, which means that we continue on track to deliver strong growth by the year end.

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