Consolidated EBITDA grew 5% (EUR40 million), to EUR849 million in the first quarter of 2009, driven by liberalized activities in Iberia (+EUR63 million) and wind operations (+EUR29 million). EBITDA from LT contracted generation and from regulated networks, in turn, were penalized by lower non-recurrent results in the first quarter of 2009 (vs first quarter of 2008): (1) EUR11 million negative impact mainly from fuel procurement costs above international indexes in the first quarter of 2009 (vs EUR22 positive impact in first quarter of 2008), in LT Contracted generation and (2) EUR31 million positive impact in first quarter of 2008 from previous years’ adjustments in electricity distribution in Portugal. Recurrent EBITDA rose 16%, to EUR867 million.
Operational costs retreated 8.4% Year over year, to EUR412 million, reflecting important efficiency gains. The results achieved by our OPEX program totaled EUR27 million, allowing for a 2% decrease in operating costs. Costs with supplies and services declined 3% Year over year, to EUR166 million, reflecting tight cost control and the positive impact from asset swap in Brazil, on one hand, and increasing activity, on the other hand. Personnel costs declined 4.8% Year over year, reflecting recent HR restructuring effort, namely in Brazil and Portugal distribution. Cost with social benefits increased 22% (+EUR6 million) inflated by EUR4.4 million HR restructuring costs booked in Brazil and by higher pension premium booked in Portugal distribution. Other operating costs decreased 82% (-EUR35 million), reflecting lower CO2 clawback (EUR7.3 million in the first quarter of 2009 vs EUR14 million cost in first quarter of 2008) and higher revenues from PTCs in the first quarter of 2009.
A total of EUR292 million were invested in our liberalized generation activity in Iberia, up by EUR207m Year over year. A total of EUR254 million were invested in hydro generation in Portugal, out of which EUR232 million relate to the payment of Fridao (231 MW) and Alvito (220 MW) hydro power plants concession rights (expected to start operations in 2016). The balance was mostly invested in the construction works of 4 hydro power pants: 3 repowerings (Picote II, Bemposta II and Alqueva II, totaling 696 MW) and 1 new dam (Baixo Sabor with 170 MW). Regarding CCGTs, a total of EUR32m was invested during the the first quarter of 2009 in the construction works of: i) Soto5 in Spain (424 MW), which is expected to start operations in 2011; and ii) and Lares I & II in Portugal (862 MW), due to come on stream in the 3Q09.
Capex at our regulated networks in Iberia increased 8% Year over year to EUR63 million in the the first quarter of 2009, on the back of an increase in capex at our electricity distribution activity in Portugal, in order to expand the network (+5,666 Km) and to improve service quality.
In wind power, total capex amounted to EUR403 million: i) EUR209 million were invested in the 99 MW that started operations in the first quarter of 2009 (including some payments related to capacity installed in late 2008); and ii) EUR195 million were invested in capacity under construction by the end of Mar-09 (1,017 MW) and projects still under development but already with capex committed (namely upfront payments to manufacturers on wind turbines ordered).
In Brazil, capex amounted to EUR40 million in the first quarter of 2009: i) EUR9 million were invested in the expansion of the generation capacity, with the construction of Pecém PPA coal plant (720 MW, 50% owned by Energias do Brasil) due to start operations in Dec-2011, and Santa Fe PPA Hydro power plant (29 MW) that is expected to start operations in Jul-09; ii) EUR22 million were invested in the electricity distribution grid (maintenance capex).
Funds from operations (FFO) rose 3% Year over year to EUR633 million in line with the growth rate showed by EBITDA. Note that FFO does not include the impact of tariff deviations in the regulated or long term contracted activities, reflected at the level of changes in working capital.
Consolidated operating cash flow increase by 2.3x in the first quarter of 2009 to EUR1,514 million reflecting the sale without recourse of the right to receive the Portuguese’s tariff deficit accumulated in 2007 and 2008 in the amount of EUR1.2 billion. Excluding this deal, regulatory receivables generated in the first quarter of 2009 had a negative contribution of EUR161 for EDP’s free cash flow in the period, essentially due to additional tariff deficit in Spain and negative cash flow deviations from the CMECs system in the period to be recovered over the next 2 years. Excluding regulatory receivables investment in working capital increased EUR315 million, reflecting essentially an increase in the accounts of suppliers in the first quarter of 2009.
Expansion capex rose 54% to EUR716 million in the first quarter of 2009 following the payment of EUR232 million regarding the concession rights of the Fridao/Alvito hydro plants in Portugal. The decline of maintenance capex is related to the disco/genco asset swap in Brazil. The increase in “change in working capital related to property and equipment suppliers” is due to payments done in the first quarter of 2009 associated to investments in fixed assets made in 4Q08.
Tangible fixed assets rose by EUR2.9 billion Year over year and by EUR0.6 billion Quarter over quarter to EUR21.7 billion following the investments made in the construction of new generation plants, namely wind power and CCGT plants. TheEUR0.5bn increase Quarter over quarter of intangible assets is related to the EUR232 million payment for the concession right to build and operate the Fridao/Alvito hydro plants in Portugal and a seasonal impact from the increase in the level of inventories of CO2 emission rights (EUR253 million impact, fully balanced by a similar increase on the liabilities side at accounts payable level). Note that in Mar-09 EDP’s balance sheet include EUR4.4 billion of works in progress, (15.5% of total consolidated fixed assets of EUR28 billion) related to investments already made in plants, equipment or concession rights which are not yet operating neither being depreciated.
The book value of financial investments & financial assets amounted to EUR614 million including of essentially our financial stakes at BCP (3%), REN (3.5%), Ampla (7%), Deca (21%), CEM (21%) and Sonaecom (8%).
Accounts receivable – other recorded a strong EUR1.0bn decline Quarter over quarter, following the securitization in Mar-09 of EUR1.2 billion of the Portuguese tariff deficit generated in 2007 and 2008. By Mar-09, EDP’s balance sheet continued to include EUR797 million of net regulatory receivables (ex-Brazil).
