Post on 14-Jul-2020
December, 2011
Agenda
2
Chilean electricity sector
overview
Company overview
Financial profile
General Highlights
SING Close to 100% of installed capacity based on coal, diesel and gas (including LNG). No exposure to hydrology
Unregulated clients (mainly mining co’s) represent over 90% of total demand
Growth could be slower in near term: Large investments in green-field copper projects take time to structure
Exposure to mining sector growth
Chile is a global, low-cost copper producer
Low correlation between copper prices and SING demand for electricity
Attractive industry
Mature, 100% privatized market
Stable, investor friendly regulatory framework
Increasingly demanding environmental requirements and public opposition to generation projects
Strong industry growth prospects
Installed capacity
AES Gener: 1,032 MW. Has an additional 416MW capacity in the gas turbine of its 643MW CCGT in Salta, Argentina, which is currently unavailable for dispatch to the SING
ENDESA: 963 MW. 182MW from 100% Endesa-owned Celta, and 781MW from Gas Atacama CCGTs (50% Endesa/50% Southern Cross)
ECL: 2,126 MW of which 53% is coal, 32% is gas/diesel and 15% is fuel oil/diesel
SING
SIC
Aysén and Magallanes
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
1994 1996 1998 2000 2002 2004 2006 2008 2010³
SING copper production (kt) SING demand (GWh)
1,5
1,8
1,4 1,4
1,0 1,0
1,1
0,9 0,9 1,0
1,5
1,8
3,2 3,2
2,9
2,3
3,3
17 18 22 20
14
19
30 26 26
31
41
57
67
72
100
62
78
Exposure to mining sector growth ∎ Chile is a global, low-cost copper producer ∎ Low correlation between copper prices and SING demand for electricity.
4
SING copper production (kt), SING Generation (GWh) and commodity prices (US$/lb, bbl)
Source: Cochilco, CNE, Bloomberg ¹ Measured as the standard deviation of the annual changes; ² Calculated as the correlation of the annual changes; ³ Annualized September 2010 data
kt GWh
Volatility¹ Correl. with
energy output²
Copper Production 11.2% 0.87
Copper Price 28.2% (0.40)
Annual average copper price (US$/lb) Annual average WTI price (US$/bbl)
US$ 0
US$ 50
US$ 100
US$ 150
US$ 200
US$ 250
US$ 300
US$ 350
0
200
400
600
800
1.000
1.200
1.400
2004 2005 2006 2007 2008 2009 2010
Coal Nat. Gas Diesel + Fuel Oil
Hydro Spot Contract average¹
SING: installed capacity and generation mix
5
Gross installed capacity by technology - 2011 (MW)
Source: CNE, CDEC ¹Average of contracted energy prices as published by the CNE 2Gas restrictions started in 2004, but were more strictly enforced starting in 2007
Monthly generation (GWh) and energy prices (US$/MWh)
GWh
US$/MWh
Gas restrictions from Argentina²
Source: CDEC-SING (1) AES Gener has an additional 416MW of capacity from the gas turbine in its
643MW CCGT in Salta, Argentina, which is currently unavailable for dispatch to the SING.
(2) Includes 182MW from 100% Endesa-owned Celta, and 781MW from Gas Atacama CCGTs (50% Endesa/50% Southern Cross). (3) LNG supply arrangement between mining companies, GNL Mejillones, E.CL, and
Gas Atacama in place from 05-2010 through 07-2012.
10
781
158 277
330
518
488
531
227
200
250
317
24
21
0
500
1000
1500
2000
2500
E.CL Endesa AES Gener Other
Diesel + Fuel oil
LNG ST
Nat. Gas-Arg.
LNG + Diesel
New coal
Coal
Hydro
1 2
3
Agenda
6
Chilean electricity sector overview
Company overview
Financial profile
37%
32%
15%
0%
16%
Coal
Gas/Diesel
Diesel & F.O.
Hydro
New Coal
44%
38%
18% 1%
CT Hornitos2 (165MW)
Tocopilla port
CT Andina2 (165MW)
TE Mejillones (592MW)
Diesel Arica (14MW)
Diesel Iquique (43MW)
Chapiquiña (10MW)
Mantos Blancos1 (29MW)
C. Tamaya (104MW)
TE Tocopilla (1,004MW)
1 Owned by a mining company but operated by ECL; ² Commercial operations commenced in 2011.
2,126 MW 2011 Gas transmission and
distribution operations
1,796 MW 2010
Collahuasi
Chuquicamata
Escondida
7
El Abra
Gaby
Largest electricity generator in Chile’s mining dominated northern grid (~ 50% market share)
Installed capacity E.CL assets
Coal Diesel/derivatives Natural Gas Hydro
Technology
Norandino pipeline to Argentina (Salta region)
2,449 kms of high voltage transmission
lines
New ownership structure
1 Considers the 0.7% equity reduction due to retirement of treasury stock acquired by E.CL from shareholders that exercised their dissenter’s rights in relation to the December 2009 merger.
² 60% owned by E.CL, with the remaining 40% owned by Inversiones Punta de Rieles (Antofagasta Railway PLC).
Chilean Pension
Funds
52.77% 1
CTH²
(165 MW) Distrinor
Electroandina
(1,105 MW)
CTA
(165 MW)
GNAA
(4.5mm m³/day)
GNAC
(4.5mm m³/day)
Electricity generation Gas distribution Gas transportation
(691 MW)
Other Chilean
Institutional
Investors
Foreign
Institutional
Investors
Other
20.70% 12,18% 12.53% 1.82%
8
9
Long-term contracts with creditworthy customers
¹ Average demand based on 2010 energy consumption except for (a) Esperanza (Antofagasta plc) estimated using an 85% load factor over 150MW of contracted capacity and (b) Emel, calculated using average contracted energy over the life of the contract
² Contract with Esperanza (started in 2011) and Emel (starting in 2012)
Codelco (A+)
Freeport-MM
(BBB) Barrick (A-)
BHP Billiton
SQM Anglo
American
Xstrata
(BBB)
Other Antofagasta plc
Emel
(BBB)
0
50
100
150
200
250
300
350
400
450
500
0,0 3,0 6,0 9,0 12,0 15,0 18,0
Avera
ge d
em
and (
MW
)
Remaining life of contracts (years)
Average demand¹ (MW) and remaining life (years) of current contracts
● Current contracts ● Committed contracts²
Contracts average remaining life of 10
years
10
Contracts pass-through main costs
E.CL’s leading position and the system’s growing energy requirements has allowed E.CL to include attractive pass-through clauses in most of its contracts significantly reducing its gross margin volatility
Long-term power Purchase Agreements (“PPAs”) indexed to coal, LNG, fuel oil n°6, CPI and SING marginal cost
PPA indexation matches E.CL’s generation capacity
Pass through of PPA risks (based on contracted energy and capacity)
99%
67%
100%
65%
39%
86%
1%
33% 35%
61%
14%
0%
20%
40%
60%
80%
100%
Fuel Maintenance NCREs RM-39 Changes in law Monthly indexation
Pass through Exposure
Source: E.CL
Long- term contracts , reducing exposure to the volatility of spot market
prices
Tariffs indexed to fuel prices to mitigate the risk of potential cost
increases.
Definition of optimal level of contractual obligations, taking into account
our generation capacity by type of fuel.
11
Driver’s of E-CL ´s commercial policy
Investment highlights: Exposure to mining sector growth
Current challenges:
Growth could be slower in near term: Large investments in green-field copper projects take time to structure;
Significant electricity demand growth expected for 2015/2016 will require new capacity (and/or use of existing CCGTs) for at least 800MW:
Quadra FNX’s Sierra Gorda; Teck’s Quebrada Blanca; Collahuasi’s Phases I & II.
Action / Effects:
Ongoing development of new 375MW coal plant and other projects: Subject to sign PPA for at least 50%
Capitalize on near-term growth: 135MW of new demand from Minera Esperanza starting 2011; 200MW under EMEL contract starting 2012.
Potential future mining projects in the SING
12
Company Proyect Capacity Demand-
MW
Full Capacity-
yr
Antofagasta Minerals Esperanza 130MW Apr-2011
Antofagasta Minerals Antucoya 45MW 2014
Codelco Ministro Hales 80MW 2015
BHP Escondida OGP 80MW 2015
Collahuasi Collahuasi expansion Phase I-II
50-170MW 2015-2018
Quadra FNX Mining Sierra Gorda 190MW 2015
Teck Quebrada Blanca Hip.
210MW 2016
International PBX Ventures
Copaquire 80MW 2017
Investment highlights: Attractive expansion plan
790
2.146
330
651
375
0
500
1000
1500
2000
2500
Current coal and hydro
capacity
CTA/CTH LNG Mejillones Expected base load
capacity
330 MW of coal base generation in 2011
Approx. 200MW commited LNG capacity to supply EMEL, starting 2012; Availability to commit remainder gas capacity at LNG market price beyond 2012.
Environmental approval for 2 x 375MW coal fired power plant in Mejillones + a port facility
Current and expected base capacity (MW)
13
14
Central Termoeléctrica Andina (“CTA”) Central Termoeléctrica Hornitos (“CTH”)
96%
US$ 876 mm
4%
0%
25%
50%
75%
100%
Invested as of June-11 Pending Total
CTA and CTH Capex breakdown (USD m, %)
Characteristics
Gross capacity 165 MW
Location Mejillones
Total capex (inc.
contingencies) US$496mm
COD July 15, 2011
Contract
Codelco: 150MW / 21
years
Ownership 100%
Characteristics
Gross capacity 165 MW
Location Mejillones
Total capex (inc.
contingencies) US$380mm
COD Aug 5, 2011
Contract
Esperanza: 150MW / 15
years
Ownership 60%
New plants during 2011…already in commercial operations
15
Agenda
16
Chilean electricity sector overview
Company overview
Financial profile
E.CL: Financial Results
17
USD millones FY 10 9M10
9M11
Var. 9M%
Revenues 1.121 802 918 14%
Operating income 240 179 158 (11%)
Operating margin 21% 22% 17% -
EBITDA 340 250 242 (3%)
Net income 200 149 104 (30%)
Energy sales (GWh) 7.335 5.454 5.592 3%
2011:
The SING has been characterized throughout 2011 by the generation under test mode and later entry into commercial operation of new efficient coal projects.
Since the end of July, marginal costs in the SING have decreased as a result of two main factors: (i) the decrease in the average electricity generation cost explained by the commercial operation of new and more efficient power plants and (ii) a temporary drop in demand from mining companies in July and August due to labor conflicts and weather factors.
April 2011 CTH’s PPA with Minera Esperanza commenced.
July 15, 2011 CTA started commercial operations. Codelco PPA began.
August 15, 2011 CTH began commercial operations.
18
EBITDA (USD million) Sales (USD million)
Costs breakdown (Sept 2011)
Total = USD 918 million Total = USD 760 million
Sales breakdown (Sept 2011)
1053 1121 1237
0
200
400
600
800
1000
1200
2009 2010 sep-11
12 Months
Moving window
358 340 333
0
100
200
300
400
2009 2010 sep-11
92% 5%
50%
23%
10%
17%
Contracted energy and
capacity sales
Spot energy and capacity
sales
3%
Other operating
Revenues Fuel and lubricants
Spot energy and capacity
purchases
Depreciation and
amortization
Other operating
costs
Strong financial profile…
12 Months
Moving window
19
2,1x 2,2x 2,2x
,0x
1,0x
2,0x
3,0x
2009 2010 sep-11
1,6x 1,7x 2,0x
,0x
1,0x
2,0x
3,0x
2009 2010 sep-11
23,2x 24,1x
17,0x
,0x
5,0x
10,0x
15,0x
20,0x
25,0x
2009 2010 sep-11
Total debt/EBITDA Net debt/EBITDA
EBITDA/Interest expenses Credit ratings
Investment grade international ratings by S&P and Fitch:
S&P: BBB- (Stable Outlook)
Fitch: BBB- (Stable Outlook)
Investment grade local ratings by Fitch, Feller and ICR
Feller: A (Stable Outlook)
Fitch: A (Stable Outlook)
ICR: A (Stable Outlook)
…coupled with a conservative debt structure
12 Months
Moving window 12 Months
Moving window
12 Months
Moving window
Contractual Obligations as of September 30, 2011
USD m Total <1
Year 1-3
years 3-5
years
More than
5 years
Bank debt 285.9 5.8 16.6 22.6 240.9
Bonds (144 A/Reg S Notes)
400.0 400.0
Accrued interest 9.0 9.0
Total…………… 694.9 14.8 16.6 22.6 640.9
• Bank debt: IFC/KfW: MUSD 285.9 (CTA project financing)
• Bond: MUSD 400, 10-year, 144-A/Reg.S notes
Payment due by period Debt breakdown by rate type (only principal amounts)
Fixed rate (92%)
Variable rate (8%)
Total Principal = MUSD 685.9
Low Debt
Conservative maturity profile
Access to different sources of financing
An attractive shareholder return
E.CL Share (as of 12/05/2011):
Market Cap: USD 2,700 bn
Price: CH$ 1,312
Source: Bloomberg
21 21
0,243
0,189
0,15
0,075
0,095
0,024
US$ 0,000
US$ 0,050
US$ 0,100
US$ 0,150
US$ 0,200
US$ 0,250
US$ 0,300 Return and Dividend per share
2009 2010
50% payout ratio: dividend paid in 2011 on account of FY2010 = USD 100 million
30% payout ratio
30% provisional dividend on
account of 1H11 net earnings
USD 25 million
2011E
Note: EPS 2011 anualizado
22
Summary and outlook…
Largest electricity supplier in Chile’s northern grid (SING) with a 52% share of the system’s installed capacity
Long-term contracts: contracts’ average remaining life of 10 years
Largest electricity transmission company in the SING with 2,461 km of
lines (35% of total kms of lines in the SING)
Low Debt, conservative maturity profile and access to different sources of
financing
Commitment with sustainable initiatives
Enhanced shareholder value
Esta presentación puede contener previsiones e información relativa a E.CL S.A. (en adelante “E.CL” o la “Compañía”) que reflejan la visión o expectativas actuales de la Compañía y su administración con relación a su plan de negocios. Las previsiones incluyen, sin limitación, cualquier declaración que pueda predecir, pronosticar, indicar o implicar resultados futuros, rendimientos o logros, y que pueda contener palabras tales como “creemos”, “estimamos”, “esperamos”, “el resultado probable”, “el efecto probable”, “prevemos” y cualquier otra palabra o frase con significado similar. Dichas declaraciones pueden contener un número de riesgos significativos, incertidumbres y suposiciones. Advertimos que un número importante de factores pueden provocar que los resultados efectivos difieran materialmente de los planes, objetivos, expectativas, estimaciones e intenciones expresadas en esta presentación. En cualquier caso, ni la Compañía ni sus filiales, directores, ejecutivos, agentes o empleados serán responsables ante terceros (incluidos los inversionistas) por cualquier decisión de inversión o de negocio o cualquier acción adoptada por éstos tomando en cuenta la información y las declaraciones contenidas en esta presentación ni por cualquier daño derivado de ello. La Compañía no tiene la intención de entregar a los potenciales accionistas ningún análisis comparativo de las previsiones y los resultados efectivos. No puede asegurarse que las estimaciones o los supuestos se concretarán ni que los resultados de las operaciones o eventos futuros no diferirán de las estimaciones o supuestos contenidos en esta presentación. E.CL es dueño de esta presentación y de la información en ella contenida, la cual no puede ser reproducida o utilizada, en todo o en parte, sin el consentimiento previo y por escrito de E.CL.