EDP (EDP) H2 2013 earnings summary

Executive summary

• Resilient 2013 results amid regulatory and market pressure: EBITDA was €3.617bn, essentially flat YoY, while net profit declined 1% to €1.005bn.

• Cost control, energy management, strong hydro output and Brazil growth offset weaker Iberian regulated and contracted activities.

• More than 85% of EBITDA came from regulated and long-term contracted activities, supporting a low-risk portfolio profile.

Financial highlights

• EBITDA declined 0.3% YoY; excluding a €97m negative FX impact, it would have increased 2%.

• Net profit was €1.005bn, down 1% YoY; EPS was €0.275.

• Net debt fell €800m, or 4%, to €17.5bn; free cash flow was €1.9bn.

• CapEx declined 2% to below €2bn, including €1.3bn of expansion investment.

Outlook and guidance

• 2014 EBITDA outlook was ~€3.5bn; management was comfortable with consensus and expected net profit slightly above consensus.

• CapEx guidance: €1.7bn in 2014 and €1.5bn in 2015; Opex targeted flat in 2014 despite activity and capacity growth.

• Net debt was expected to be lower in 2014 than 2013 on a pro forma basis; reaching 3x net debt/EBITDA by 2015 was not expected absent sizable disposals.

• Portuguese system receivables were expected to peak at €5.3bn by Dec. 2014, flatten in 2015 and converge to zero by 2020; management targeted securitizations of €700m or more in 2014.