General framework of the businesses

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General framework of the businesses

  1. 1. General Framework of the Businesses José Luis San Pedro
  2. 2. General Framework AgendaGeneral FrameworkNetworksGeneration and SupplyRenewables 2
  3. 3. General FrameworkTargets Group general targets Lowering leverage Strengthening the Balance Sheet Risk minimisation Targets by businesses Investment prioritisation, based on:• Shorter construction periods• Security and transparency of future revenues• Profitability• Investments limited by cash flow generation Efficiency improvement 3
  4. 4. General Framework Investment by Business 2012-2014 investments of Eur 10.5 bn, 37% lower than the Eur 16.7 bn invested in the previous 2009-2011 period Annual investment (Eur M) Cumulative investment (Eur M) 3,700 3,400 3,400 16,700 100 550 150 100 450 400 4,650 10,500 1,000 800 800 600 350 1,750 1,400 5,700 2,600 2,050 2,000 2,100 6,150 4,000 2012 2013 2014 09-11 Actual 12-14 Plan Others Gen&Supply Renewables Renewables NetworksFocused on Networks, with reductions compared to the previous 3 years in Renewables (-54%) and Generation & Supply (-20%) 4
  5. 5. General Framework Investment by Region Regional allocation based on economic outlook and regulatory frameworks Annual investment (Eur M) Cumulative investment (Eur M) 3,700 3,400 3,400 16,700 995 550 Non 865 Organic 4,650 10,500 580 535 580 1,850 3,600 2,400 1,160 1,725 1,700 1,500 2,300 4,400 965 590 4,300 455 2,000 2012 2013 2014 09-11 Actual 12-14 Plan Spain UK USA Latam&RoW Non organic Latam&RoW USA UKFocused on UK, with reductions compared to the previous 3 years in Spain (-53%) and USA (-53%) 5
  6. 6. General Framework Efficiency Iberdrola is already a benchmark of cost efficiency 20111 Benchmark 2011 Ratios Net Op. Expenses / Gross Margin 29.4% Net Op. Expenses / Gross Margin #1 Employees / installed MW #1 Employees / installed MW 0.71 Employees / Clients #1 Employees / Customers 1.07 Net Op. Expenses / Employees #2 Net Op. Expenses / Employees 1111. Source: Ernst & Young research 6
  7. 7. General Framework Efficiency Targets Efficiency measures will absorb the impacts of inflation and the increase in operational activity … N.O.E. Evolution (1) NOE / Homog. Gross Margin (1) 400 29% <28% 3,700 2011 2014 2011 2012 2013 2014 Operating NOE Expenses trend … to achieve annual savings of Eur 400 M in 2014 (Eur 600 M cumulative in ‘12-14) and improve the efficiency ratio by more than 100 bps(1) Consolidation scope and cost capitalization policy homogenized. 7
  8. 8. General Framework Operating Expenses Evolution Savings obtained due to headcount reductions and cost control Personnel (1) Net diff.: External Services (Eur M) (2) CAGR: -1,200 +1.0% 32,000 30,800 2,450 2,500 2011 2014 2011 2014Change in the profile of employees, reduction in Synergies due to business global integration lower qualified personnel and adding higher and One Corporate Centre qualified personnel and contractors (1) On a like-for-like consolidation scope/IBV. (800 pers.) (2) On 8 a like-for-like consolidation scope/Elektro and capitalization cost policy
  9. 9. General Framework EBITDA Maintaining EBITDA at least at 2011 levels 2014 outlook v 2011 EBITDA Networks Renewables Gen&Supply Group Spain UK USALatam & RoW Global = 9
  10. 10. General Framework Cash-flow Evolution* Operating cash flows before dividend payments (FFO) exceeding investments across all businesses …Eur M Networks 3,150 9,300 6,150 7,700 FFO Net investment FCF Gen&Supply 18,200 5,300 3,900 1,400 10,500 FFO Net investment FCF Renewables FFO Net FCF 1,600 investment 4,200 2,600 Global figures include Other Businesses and Corporation FFO Net investment FCF … allowing debt reduction after dividend payments and corporate financial charges 10 *Cumulative figures for 2012-2014 period

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