2Q19 Results
Disclaimer
This presentation may contain statements that represent expectations about future events or results according to Brazilian and international securities regulators. These statements are based on certain assumptions and analyses made by the Company pursuant to its experience and the economic environment, market conditions and expected future events, many of which are beyond the Company's control. Important factors that could lead to significant differences between actual results and expectations about future events or results include the Company's business strategy, Brazilian and international economic conditions, technology, financial strategy, developments in the utilities industry, hydrological conditions, financial market conditions, uncertainty regarding the results of future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the Company's actual results may differ materially from those indicated or implied in forward-looking statements about future events or results.
The information and opinions contained herein should not be construed as a recommendation to potential investors and no investment decision should be based on the truthfulness, timeliness or completeness of such information or opinions. None of the advisors to the company or parties related to them or their representatives shall be liable for any 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 may include projections of economic growth, demand, energy supply, as well as information about its competitive position, the regulatory environment, potential growth opportunities and other matters. Many factors could adversely affect the estimates and assumptions on which these statements are based.
2
2Q19 Highlights
Increase of0.9% in load in the concession area
EBITDA ofR$ 1,505 million, growth of9.9%
Net Income ofR$ 574 million, growth of27.4%
Net Debt ofR$ 11.0 billion and leverage of1.93x Net Debt/EBITDA1
Investments of R$ 521 million, growth of 23.5%
- RGE-RGESul's tariff adjustments, inJun-19:(i) increase of7.14% of RGE's parcel B, and (ii) increase of9.10% of RGE Sul's parcel B
-
CPFL Energia'sRe-IPO,inJun-19:R$ 3.7 billion @R$ 27.50/share;
total offering: 134.3 MM shares; since the offering - price: +22.3%2
and ADTV: R$ 109.5 MM(from Jun 13 to Aug 13) - Financial covenants criteria; 2) From R$ 27.50/share to R$ 33.62/share on Aug 13.
3
2Q19 Energy Sales
Load1in the concession area | GWh | Sales(2)in the concession area | GWh | Sales by consumption segment | GWh | |||||||||||
-0.8% | |||||||||||||
+0.9% | -0.8% | ||||||||||||
16,754 | 16,626 | 16,754 | (49) | ||||||||||
16,398 | 16,539 | (56) | |||||||||||
13 | (37) | 16,626 | |||||||||||
5,469 | +2.5% | 5,604 | Free Client | ||||||||||
5,467 | 5,637 | Free Client | |||||||||||
+3.1% | |||||||||||||
-2.3% | Captive | -1.0% | -0.9% | +0.5% | -1.3% | ||||||||
10,930 | -0.3% | 10,902 | Captive | 11,285 | 11,021 | ||||||||
2Q18 | 2Q19 | 2Q18 | 2Q19 | 2Q18 | Resid. | Indust2 | Commerc. | Others 2Q19 | |||||
Losses|2Q19 | Breakdown in the concession area|2Q19 | Main impacts by segment | % | |||||||
9,02% | 9,01% | ||||||||
17% | 29% | ||||||||
Resid | Ind | Com | Total | ||||||
8,27% | 17% | ||||||||
8,24% | |||||||||
Billing calendar | -1.6 | -0.5 | -1.4 | -1.1 | |||||
38% | |||||||||
Temperature | -1.3 | - | -0.4 | -0.5 | |||||
2Q18 | 2Q19 | Migr. National Grid | - | -1.8 | - | -0.7 | |||
CPFL Energia | Limit ANEEL | Residential Industrial Commercial Others | |||||||
4
1) Load net of losses; 2) If excluding the consumption of two large consumers that migrate to the National Grid, the sales within the concession area in 2Q19 would have the following variation: -0.1%.
Macroeconomic scenario still not favorable and weather also affecting negatively the market performance
Rainfall in RGE1(mm) | Temperature1(°C) | 2Q18 | 2Q19 | No need | ||||
2Q18 2Q19 | ||||||||
No need | of heaters | |||||||
22.1 22.3 | ||||||||
of irrigation | 21.2 | 21.9 | ||||||
464 | 20.3 | 20.8 | ||||||
333 | 239 | 282 | 19.2 | |||||
18.1 | ||||||||
131 | ||||||||
41 | ||||||||
April | May | June | Paulista | Piratininga | Santa Cruz | RGE | ||
Unemployment rate2(%)
12.4
12.0
Jun-19
May-19
Apr-19
Mar-19
Feb-19
Jan-19
Dec-18
Nov-18
Oct-18
Sep-18
Aug-18
Jul-18
Jun-18
May-18
Apr-18
Mar-18
Feb-18
Jan-18
1) Source: Somar; 2) Source: IBGE.
Industrial production - Brazil2(% YoY)
2.8 | Weak | ||||
1.7 | 1.2 | performance | |||
-1.2 | -2.3 | ||||
-1.0 | |||||
1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 |
Retail sales2(% YoY)
4.3
2.2
1.7
1.10.8
0.3
1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 |
5
Delinquency
ADA | R$ MM | Collection actions | Power Cuts | |||
(thousands) | +31.4% | |||
+53.7% | ||||
15.3% | 536 | |||
-5.6% | 465 | |||
68,0 | ||||
64,3 | 408 | |||
41,8 |
2Q18 | 1Q19 | 2Q19 | 2Q18 | 1Q19 | 2Q19 |
Benchmarking - 2Q18 X 2Q19 (% ADA/Billed Revenue)1
Actions in progress - 2019
- Increase of power cuts in the 2Q19 and expectation of keeping the same level until the end of the year (meter and circuit braker)
- Intensification of other collection actions: 2.9 million negativity in 2Q19 (641k higher than 1Q19)
- New payment options (debit and credit) for the negotiation of overdue accounts
1,53
0,92 | 0,90 | 0,98 | 1,00 |
1,55
1,06
1,73
0,64
2Q18 x 2Q19 | 2Q18 | 2Q19 | 2Q18 | 2Q19 | 2Q18 | 2Q19 |
Disco1Disco2
1) Source: Earnings Release.
0,62
2Q18 2Q19 2Q18 2Q19
Disco3Disco4
6
Hydrological Scenario
Reservoir Evolution
- Maximum Storable Energy| National Interconnected System (SIN)
80 | |||||||||||||
70 | |||||||||||||
60 | |||||||||||||
50 | |||||||||||||
40 | |||||||||||||
30 | |||||||||||||
20 | |||||||||||||
10 | |||||||||||||
0 | |||||||||||||
Dec | Jan | Febr | Mar | Apr | May | June | July | Aug | Sept | Oct | Nov | Dec | |
2001 | 2002 | 2015 | 2016 | 2017 | 2018 | 2019 | Hist. Average | ONS Proj. |
- 2019:due to rainfall in the last October and November, the SIN storage began 10% higher than 2018
- Jan-Feb2019:typical storage recovery of this period was not observed
- As of March:near-normal rainfall in the SE/CW and above in the South allowed a significant storage recovery
- Solving transmission lines problems(Madeira)and the commissioning of new lines (Belo Monte)also contributed to the storage recovery
Expectations for PLD
450 | 1,80 | ||||||||
400 | 1,60 | ||||||||
350 | 1,40 | ||||||||
300 | 1,20 | ||||||||
250 | 1,00 | ||||||||
200 | 0,80 | ||||||||
150 | 0,60 | ||||||||
100 | 0,40 | ||||||||
50 | 0,20 | ||||||||
0 | 0,00 | ||||||||
Jan | Febr | Mar | Apr | May June July | Aug Sept | Oct | Nov | Dec | 2019 |
PLD | GSF "seasonal" | GSF "flat" |
- 2019 PLDexpected avg:R$ 185/MWh
- GSF:-15.7%(Jul-Sep are the more critical months, when GSF reaches -45% considering the seasonal MRE assured energy)
- In the coming years, the expansion of renewable sources and hydroelectricity is much lower than the demand growth:expect a smaller impact of GSF
7
Renewable Generation - Performance
Generation by source (GWh)
+5.8%
1,558
1,4720.4
+21
GWh
•More favorable climate conditions enabled higher crushing |
volume in 2Q19, resulting in higher generation. |
0.3
330
351
314447
827760
2Q182Q19
Wind SHPP BIO SOL
+132
GWh
-67
GWh
•Boa Vista 2 SHPP start-up in November 2018; |
•Better inflow in the southern region and in the states of |
Mato Grosso and São Paulo, which offset the lower inflow |
in the state of Minas Gerais. |
•Lower winds in Ceará and Rio Grande do Norte, despite |
the improved availability in 2Q19 of the farms operated |
by Suzlon. In the Rio Grande do Sul wind farms, the |
performance was similar in both periods. |
8
2Q19 Results
Distribution | Conventional | Renewable | Commercialization, | ||||||||||
Generation | Generation | Services & Others | |||||||||||
EBITDA | Net Income | ||||||||||||
R$ 1,505 MM | R$ 135 MM | R$ 873 MM | R$ 106 MM | R$ 334 MM | R$ 35 MM | R$ 251 MM | R$ 5 MM | R$ 46 MM | R$ 1 MM | R$ 574 MM | R$ 123 MM | ||
9.9% | 13.8% | 11.8% | 1.9% | 2.3% | 27.4% | ||||||||
Highlights
EBITDA by Segment
Renewable | Commercialization, |
Generation | |
Services & Others | |
17% | |
3% | |
Conventional Distribution
Generation58%
22%
-
Market / tariff
(+R$ 235 MM) - Concession financial asset (+R$ 63 MM)
- RAB appraisal report in 2Q18(-R$93 MM)
- PMSO1(-R$ 86 MM):
- Assetswrite-off/opex rel. to capex (-R$25 MM)
- ADA(-R$ 22 MM)
- Inflation(-R$17 MM)
- Legal and judicial expenses(-R$8 MM)
- Private Pension Fund(-R$6 MM)
- Inflation effect over the contracts (+R$ 22 MM)
- Higher hydro and thermal generation (+R$ 13 MM)
- PIS/Cofins credits recovery in 2Q18(-R$17 MM)
- Lower wind farms generation(-R$16 MM)
- O&M - ACL payments(-R$6 MM)
- PPA seasonalization (+R$ 28 MM)
- GSF (+R$ 13 MM)
- Commercialization: margin loss - volume(-R$12 MM)
- Services: margin gain - new contracts - CPFL Serviços (+R$ 11 MM)
- EBITDA (+R$ 135 MM)
- Financial Result (+R$ 34 MM):
- Debt charges2- mainly due to the reduction in the indebtedness (+R$ 22 MM)
- Additions and late payment fines (+R$ 25 MM)
- Deprec. & Amortiz.(-R$6 MM)
- Income Tax & Social Contrib.(-R$51 MM)
1) Includes Private Pension Fund; 2) Net of income from financial investments, including sectoral financial assets and liabilities.
9
Indebtedness
Leveragel Financial covenants criteria | R$ billion
14,5 | 16,3 | 14,9 | |||||
13,0 | 12,2 | 13,2 | |||||
11.0 | |||||||
Adjusted Net Debt1 | |||||||
/Adjusted EBITDA2 | |||||||
2014 | 2015 | 2016 | 2017 | 2018 | 1Q19 | 2Q19 | |
Adjusted EBITDA1,2 | 3,736 | 3,584 | 4,117 | 4,531 | 5,342 | 5,481 | 5,683 |
R$ Million | |||||||
Gross debt breakdown by indexer3
IFRS | 2Q19
15%64%
17%
4%
CDI Pre-fixed TJLP Inflation
Gross debt cost3| IFRS | End of period
Real Nominal
13,5%
8,0%7,5% 7,6% 7,4%
6,8% | 4,9% | |||
3,6% | 2,9% | 3,9% | ||
2016 | 2017 | 2018 | 1Q19 | 2Q19 |
CPFL Energia x CPFL Renováveis Gross debt cost3l IFRS | End of period
CPFL Energia (w/o CPFL-R) CPFL - R
14,3%
11,6% | 8,6% | 8,7% | 8,8% | 8,1% |
7,7%7,0% 7,2% 7,1%
2016 | 2017 | 2018 | 1Q19 | 2Q19 |
Liabilities Management
- 1Q19:CPFL Renováveis debt profile was intense in BNDES indexes (TJLP, Pre-fixed).
- On May 19, CPFL Renováveis issued debentures in a total amount of R$ 838 MM in order to achieve CPFL Energia average debt cost and ensure more adequate costs for the company.
1) LTM EBITDA; 2) Adjusted by the proportional consolidation; 3) Financial debt (-) hedge.
10
Re-IPO
CPFL Energia's Re-IPO,inJun-19:R$ 3.7 billion
- R$ 27.50/share
- Total offering:134.3 MM shares
Roadshow:
- 61meetings
- 14videoconferences
(Asia, Australia, Netherlands, Middle East and Brazil) - 4group events
- Total visited investors:+115
Offering:
- Total orders:135
- 58%Brazilian investors; 42%foreign investors
Shares Performance:
Offering | 33.62 | |
Jun 12 | +22.3% | |
27.50 | ADTV1: R$ 109.5 MM | Aug 13 |
1) Average Daily Trading Volume (ADTV):
from Jun 13 (day after the day of the offer) to Aug 13.
Post-offering
Free Float
83.71% 16.29%
Allocation vs. Demand
R$ billion
3.93x 14.5
3.7
Allocation | Total Demand |
11
Corporate Governance
Advisory Committees to CPFL Energia's Board of Directors -
Related Parties Committee
Related Parties
Committee
Members nominated by State Grid | Independent members |
- The Related Parties Committee shall have in its composition at least 1 independent member, as defined by Novo Mercado Regulation;it has now 2 independent members
- The Committees meeting can only be validly held with the presence of all 3 members (siting or alternate)
Creation of the Corporate Governance Directorship
- Demonstrates to the market the concern regarding Corporate Governance issues, such asaccountabilityand transparency
- Director reports administratively to the Chief Legal and Institutional Relations Officer and functionally to the Board of Directors
ADR
Nível
III
High corporate governance standards
in Brazil and in the U.S.
12
Dividends Policy
Dividend Payout Ratio (%)
95% | 95% | 95% | 95% | 95% | 82% | 98% | 89% | 99% | |||
Average2005-2013: 94% | |||||||||||
Average2005-2018: 71% | |||||||||||
Current | |||||||||||
Minimum | |||||||||||
44% | Payout Ratio: | ||||||||||
50% | |||||||||||
25% | 25% | 25% | 25% |
Considerations
-
On May 21, 2019,CPFL
Energia announced it set a minimum payout ratio of 50%. - The definition of payout ratio will depend on abalancebetween growthand yield.
13
14
© CPFL Energia 2019. All rights reserved.
Attachments
- Original document
- Permalink
Disclaimer
CPFL Energia SA published this content on 14 August 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 August 2019 14:36:02 UTC