EDP (EDP) H2 2011 earnings summary

Executive summary

• 2011 results reflected diversified markets and regulated activities: EBITDA rose 4%, with 58% generated outside Portugal; net profit increased 4%.

• Long-term contracts and regulated activities represented 85% of EBITDA; hydro and wind made up two-thirds of generation fleet.

• Portfolio expansion and efficiency remained focused on wind, hydro and Brazil, alongside lower CapEx and a target to reduce leverage by 2015.

Financial highlights

• EBITDA increased 4% YoY; excluding the €88m reclassification of pension and medical-care carry costs, pro forma EBITDA growth was 2%.

• Net profit rose 4% to €1.125bn and EPS was €0.31; the proposed dividend was €0.185 per share.

• CapEx fell 19% to €2.2bn, in line with guidance; expansion spending was allocated to wind, hydro and Brazil generation.

• Operating costs rose 2% overall; Iberian costs fell 4%, while Brazil costs rose 12% and EDPR costs rose 14%.

Outlook and guidance

• 2012 guidance: mid-single-digit EBITDA growth and low-single-digit net income growth, assuming a 4.3% average interest rate and ~20% tax rate; no capital gains included.

• 2012 CapEx target remained €2bn, with expansion focused on Brazil hydro and wind; 2012 liberalized unit margins were expected to show no material change from 2011, subject to market conditions.

• The target remained net debt/EBITDA below 3x by 2015; financing needs were covered until mid-2015 after the CTG deal.

• A 2012–15 business plan was scheduled for May, including partnership and privatization impacts and medium-term free cash flow outlook.

• Portuguese distribution regulated revenues for 2012 were set at €1.38bn, 71% above 2011; higher rates were expected to outweigh weaker demand.