teleconference 2q12
TRANSCRIPT
Rio de Janeiro | August, 2012
2Q12 Earnings Release
DISCLAIMER
The material that follows is a presentation of general background information about MPX Energia S.A. and its subsidiaries (collectively, “MPX” or the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MPX that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “may”, “plan”, “believe”, “anticipate”, “expect”, “envisages”, “will likely result”, or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents or employees nor any of the placement agents shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
Recipients of this presentation are not to construe the contents of this summary as legal, tax or investment advice and recipients should consult their own advisors in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research, publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MPX, the placement agents and the underwriters do not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MPX’s prior written consent.
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HIGHLIGHTS 1
Drill-stem test in well OGX-88 (Bom Jesus) in the Parnaiba Basin concluded with 36 meters
of net pay, supporting future development
Acquisition, through JV with E.ON, of 1,200 MW of greenfield wind developments in
northeast Brazil
363.2 MW of gas fired generation and 158.7 MW of wind registered for 2012 A-3 and A-5
Auctions
Takeover of construction works at Pecém I & II and Itaqui Power Plants
Cash injection of R$ 421 million by previous EPC contractor
Accelerated EPC progress
E.ON AG acquired 11.7% of MPX through a R$1.0 billion capital increase, becoming a
strategic investor at the company
2Q12 HIGHLIGHTS & SUBSEQUENT EVENTS
4
GREENFIELD PROJECTS 2
João Câmara
RN
VENTOS: A 1,200 MW WIND COMPLEX IN ONE OF
BRAZIL’S BEST WIND RESOURCE AREAS
Total Capacity: 600 MW + call option on
additional 600 MW
Estimated Load Factor: 48% (P50)
Location: Rio Grande do Norte, NE Brazil
Grid connection 30km from Complex
All land rights secured
158.7 MW registered for 2012 energy auctions
Environmental licensing in process
High-quality greenfield assets in northeast Brazil
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GAS POWER PLANTS AND TREATMENT UNIT
3
TPP Parnaíba
Electromechanical construction of 4 out of the 6 gas turbines completed
4 turbines on-site and 2 additional (Phase II) to be shipped to Brazil by the end of 3Q12
Natural Gas E&P
Drill-stem test in well OGX-88 (first appraisal well of the Bom Jesus accumulation) demonstrated the
potential for future development:
36 meters of gas net pay
Low gas condensate ratio (CGR) indicating dry gas, similar to the results of Gavião Real Field
Gavião Real Field project: 14 production wells drilled to date
Commissioning of the GTU is expected to begin in 4Q12 and commercial production in January, 2013
Gavião Real Development Plan revised to support registration of 363.2 MW for 2012 A-3 and A-5 Auctions
PARNAÍBA COMPLEX
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Gas E&P and Power Plants Under Construction (TPP Parnaíba)
PARNAÍBA TPPWork Progress
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PARNAÍBA TPPWork Progress
10
PARNAÍBA TPPWork Progress
11
12
PARNAÍBA TPPWork Progress
12
PARNAÍBA E&P
13
PARNAÍBA E&P
14
COAL POWER PLANTS4
TAKEOVER OF CONSTRUCTION WORKS
In July 2012, MPX and EDP announced the joint acquisition of MABE, the EPC consortium formed by
Tecnimont and Efacec to build the Pecém and Itaqui TPPs
As part of the agreement:
Tecnimont and Efacec injected R$421MM at MABE, relinquished the R$185MM cash
retention withheld by the projects and paid in full all liabilities preceding Apr 30, 2012
Performance guarantees remained unchanged
Contractor pending claims and legal actions were eliminated
PECÉM I PECÉM II ITAQUI TOTAL
Cash injection at MABE 196 110 115 421
Cash retention relinquished 100 47 38 185
Performance guarantees 200 104 107 411
Guarantees for claims and contingencies 83 42 41 166
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More effective management of Pecém and Itaqui TPPs
Pecém I: Unit #1Repair turbine rotor bearings and machine turbine rotor journals. Restart unit –> first synchronization –> electrical load tests –> DCO.
Itaqui
Steam blowing –> reinstatement –> by-pass operation –> steam to turbine –> electrical tests –> first synchronization –> electrical load tests –> DCO.
Pecém I: Unit #2Cold commissioning –> first fire –> steam blowing –> reinstatement –> by-pass operation –> steam to turbine –> electrical tests –> first synchronization –> electrical load tests –> DCO.
Pecém II
Construction completion –> cold commissioning –> first fire –> steam blowing –> reinstatement –> by-pass operation –> steam to turbine –> electrical tests –> first synchronization –> electrical load tests –> DCO.
MILESTONES LEADING TO COMMERCIAL OPERATIONS
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Coal Plants Under Construction
3Q12 4Q12 1Q13
360
1,080
1,445
360
360
365
Pecém I #1 Pecém I #2Itaqui Pecém II
Capacity Ramp-up (MW)
Overview
PECÉM I & II
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19
Overview
PECÉM I & II
19
ITAQUIOverview
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ITAQUIITAQUIOverview
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FINANCIAL HIGHLIGHTS5
NET OPERATING REVENUES
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1H10 2H10 1H11 2H11 1H12
41,431
57,023
84,491 83,788
141,609
Increased net operating revenues
driven largely by increased volume
of energy sold by our MPX Power
Trading unit.
Consolidated Net Operating Revenues (R$ thousand)
Obs: MPX Power Trading unit was fully-transferred to the JV at the end of April, 2012 and thus consolidated figures presented here reflect only 50% of the unit’s results for May and June, 2012.
Operating expenses Parent Consolidated*
(R$ thousand) 2Q12 2Q11 % 2Q12 2Q11 %
Personnel (16,316) (19,571) -16.6% (25,252) (28,906) -12.6%
Outsourced services (15,320) (10,288) 48.9% (21,090) (16,266) 29.7%
Leases and Rentals (2,187) (1,976) 10.7% (2,262) (2,512) -10.0%
Other expenses (2,782) (2,172) 28.1% (4,906) (3,651) 34.4%
Total (36,604) (34,008) 7.6% (53,510) (51,335) 4.2%
Depreciation and amortization (395) (253) 56.0% (803) (375) 113.9%
Total (36,999) (34,261) 8.0% (54,313) (51,711) 5.0%
OPERATING EXPENSES
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Decrease in Personnel Expenses at the Parent Company:
• Reduced payroll expenses resulting from the transfer of employees to the Company’s projects
• Lower expenses related to outstanding stock options plans
• Engineering, financial and legal consulting related to the closing of transaction with E.ON, the spin-off of CCX
and the takeover of construction works at the Pecém I & II and Itaqui TPPs.
Increase in Consolidated Expenses with Outsourced services, resulting from:
* excluding CCX
NET FINANCIAL RESULTS
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* excluding CCX
Financial Result Consolidated
(R$ thousand) 2Q12 2Q11 %
Derivatives (Hedge) 7,302 (44,685) -116.3%
Fair Value - Debentures 49,555 - -
Interest - Debentures (20,065) - -
Costs - Debentures (81,465) - -
Other (30,809) 1,004 -3167.2%
NET FINANCIAL RESULT (75,482) (43,681) 72.8%
Increased financial expenses related to
the Company’s convertible debentures
(R$ 101.6 million):
Interest: R$ 20.1 million
Costs: R$ 81.5 million
CONSOLIDATED CASH POSITION
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Consolidated Cash & Cash Equivalents
* cash withheld by projects transferred to JV (50%) and CCX (100%)
1,325.1
78.8 78.9
686.4
151.9
445.0
610.9 394.5
178.0 14.8
1,113.3
Debt Maturity Profile*
(R$ million)
CONSOLIDATED DEBT
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Total Consolidated Gross Debt: R$ 5,103.8 million
Short term: R$ 1,662.2 million
R$ 825 million bridge loan to Parnaíba I and R$ 325 million to
Paraníba II => to be paid-off with draw down from long-term financing
expected in 2H2012
With the conclusion of CCX’s spin-off, a balance of R$ 422.5 million in
short-term debt was transferred to CCX
Long term: R$ 3,441.6 million
Average amortization: 14 years
Average cost of debt: 9.4%
Average tenure: 5.6 years
Debt (R$ million)
*Values incorporate principal + capitalized interest + charges and exclude outstanding convertible debentures. ** R$ 258.7 million in 2012 and R$ 1,168.4 million in 2013 of bridge loan to Parnaíba, to be paid-off with draw down from long-term financing expected for 2H12.
Cash & Cash Equivalents
2012 2013** 2014 2015 From 2016 on
1,113.2
541.9
1,288.8
262.0 228.5
2,803.7
For more information, contact:Investor Relations (55 21) 2555-9215