RESULTS PRESENTATION 1H18
- EBITDA stood at €252.4M, an increase of €9.7M (4.0%) when compared with 1H17. This was due to: (1) Portgás' consolidation (€21.2M), which also benefited the Average RAB growth (11.1% YoY) that standing at €3,855.2M; and (2) OPEX contribution (€9.0M), highlighting REN's operational efficiency. However, EBITDA was penalized by the evolution of the average rates of return (RoR), as a result of the lower parameters set for the current regulatory period and the decline in bond yields (-€18.4M);
- Net Profit reached €52.8M, in line with last year (-0.3%), and Recurrent Net Profit was €78.4M, 3.0% below 1H17's number. Both were negatively affected by higher Amortizations (€9.0M), explained by the integration of Natural Gas distribution assets. Additionally, REN's results were penalized by the maintenance of the extraordinary levy on the energy sector (€25.4M in 2018) leading the effective tax rate to 39.0%. The Financial Result (-€27.3M) partially offset these effects, showing an improvement of €0.2M and helped by a steady drop in the cost of debt to 2.3%, from 2.6% in 1H17;
- In May 2018, REN presented its 2018-2021 strategic plan at its "Capital Markets Day" event. REN maintained its commitment to operations in Portugal and willingness to invest at home and abroad;
- In July 2018, REN sold its LPG(1) business to Energyco II, for €4M. This operation is in line with the strategy outlined by REN of focus on regulated businesses.
RESULTS AT A GLANCE
| €M |
2Q18 |
1H18 |
1H17 |
Δ% |
Δ Abs. |
| EBITDA |
124.1 |
252.4 |
242.7 |
4.0% |
9.7 |
| Financial Result |
-10.7 |
-27.3 |
-27.5 |
0.6% |
0.2 |
| Net Profit |
39.8 |
52.8 |
53.0 |
-0.3% |
-0.1 |
| Recurrent Net Profit |
40.0 |
78.4 |
80.9 |
-3.0% |
-2.4 |
| Average RAB |
3,855.2 |
3,855.2 |
3,470.3 |
11.1% |
384.9 |
| CAPEX |
25.5 |
39.4 |
41.0 |
-3.8% |
-1.6 |
| Net Debt |
2,686.7 |
2,686.7 |
2,577.4 |
4.2% |
109.2 |
SOVEREIGN DEBT RISK OF PORTUGAL
Held a descent trajectory
RESULTS PRESENTATION CAPEX WAS €1.6M LOWER YOY In 1H18, Portgás contributed with €8.8M 6.2 €17.0M (n.m.) 19.3 0.7 3.3 3.0 8.8 41.0 €-1.6M (-3.8%) 39.4 CAPEX (€M) TRANSFERS TO RAB (€M)
Portgás
Electricity
Natural gas transmission
37.7
27.6
1H17 1H18
12.4
1H18
1.3
1.0
2.3
1H17
5
1) Portgás accounted for asset returns using ERSE's ex-ante allowed return (6.42%). REN used the effective rate calculated using the 10-Year bond yields (6.55%).
- OPEX variation was impacted by the acquisition of Portgás;
- External Supplies and Services include €1.2M from Electrogas acquisition in 2017.
(1) ITC - Inter Transmission System Operator Compensation for Transits;
CORE OPEX ROSE BY €5.7M (13.4%)
(2) Related to Portgás.
EBITDA GREW UP BY 4.0%
Mainly due to Portgás acquisition (€21.2M)
(1) Includes -Δ€0.6M of NG tariff smoothing effect (natural gas);
(2) Transmission business only;
(3) Includes €1.2M related to the one-off costs with Electrogas (in 1Q17) and Δ€1.8M of OPEX own works.
The Average cost of debt decreased over the last twelve months: 2.3% in 1H18 vs 2.6% in 1H17;
- The FFO/Net Debt ratio went up to 12.2%.
-
(1) Includes Δ€42.4M of positive tariff deviations.
-
In the first semester of 2018, REN showed an improvement at EBI TDAl evel, mainly due to the Portgá s' p urch asein the last quarter of 2017. This July, aligned with its strategic framework of focus on regulated businesses, REN sold to Energyco II its LPG business which was part of Portgás;
- REN's results were penalized by the low er asset rem unerati on resulting from the new regulation in electricity, the decrease in bond y ield sand the ex traord inary l evy on th e energy sectorthat brought the effecti ve corp orate tax rate to39.0%. Fi nanci al Resul twas impacted by an increase in Net Debt, followed by REN's acquisition of Portgás, in 2017, but the average cost of debt maintained its downward trend;
- In 2Q18, REN presented to the market its strategi cp lan for th e2018-2021 p eri od that is based on three pillars: to consolidate its core business and maintain its operational excellence, to preserve a disciplined growth path and to ensure a solid financial performance. Regarding international operations, REN expects a sustainable return from its investments.
DISCLAIMER
RESULTS PRESENTATION
This presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation do not constitute, or form part of, a public offer, private placement or solicitation of any kind by REN, or by any of REN's shareholders, to sell or purchase any securities issued by REN and its purpose is merely of informative nature and this presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation may not be used in the future in connection with any offer in relation to securities issued by REN without REN's prior consent.
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