Energias de Portugal targets 11 pct EBITDA CAGR in 2005-2008
LISBON (AFX) - EDP - Energias de Portugal SA said it is targeting a combined annual growth rate of more than 11 pct in EBITDA in the 2005-2008 period, up from 10.4 pct in 2002-2005.
Over the same period, it is aiming to increase the dividend by at least 8 pct a year, with net debt falling below 3.8 times EBITDA in 2008 from 4.6 times last year.
In a presentation of its new strategy in London, the power company said it plans to make annual savings of 70-90 mln eur by 2008 from a cost-cutting programme called Opex.
EDP intends to divest 800 mln eur in non-strategic assets and will step up investment on renewable energy to 46 pct of total spending in 2006-2008 from 22 pct in 2003-2005.
EDP will spend 2.1 bln eur on renewables, 1.4 bln on other generation projects, 890 mln eur in Brazil, 860 mln on distribution and 250 mln on its gas business.
The company intends to retain its place in the world's top five wind energy producers, despite the rapid growth of the sector. The plan should also help it 'manage and reduce (its) CO2 emissions factor with clean generation capacity.'
EDP hopes to have 2,802 megawatts of wind farm capacity by 2008 and has another 1,180 mw in the pipeline for beyond that date.
'EDP's wind farms should be valued at higher multiples than the Spanish average' as they 'have higher utilisation rates than its peers due to its better locations,' the company said.
'EDP is proactively looking for attractive international wind power opportunities and assessing other emerging technologies,' it said.
EDP is evaluating two tidal and wave power projects and six solar energy schemes.
By the end of 2008, EDP expects renewables to form 17 pct of its generating capacity, up from 4 pct last year, with oil and diesel dropping to 13 pct from 16 and coal falling to 18 pct from 26 pct.
Gas-fired power stations will provide 17 pct, up from 13 pct, while hydroelectric capacity will shrink to 33 pct from 41 pct and nuclear will expand to 15 pct from 12, according to EDP projections submitted to CMVM, the stock market regulator.
EDP said it will seek a 'lower risk portfolio and regulatory exposure vis-a-vis its Iberian peers', while targeting 'superior efficiency' through 'leaner operations, capital discipline and stronger performance culture'.
It plans to make 'selective investments' in order to develop a 'leading position on renewables, Brazil and Iberian core business.'
Proposed disposals include the projected sale of a 25 pct holding in national grid operator Rede Electrica Nacional, which EDP aims to carry out before year-end 2007, and the divestment of its telecoms and telecable businesses, both of which which the company hopes to complete this year.
In Brazil, EDP said it is targeting generation after 'having delivered' on distribution. It hopes to gain from an expected upward trend in electricity wholesale prices, with a balance of generation and distribution reducing regulatory risk.
Brazil is a 'ring fenced' growth strategy, with exposure limited to 20 pct of EBIDTA, the company said.
EDP will 'roll out international expansion'. It plans to 'assess midstream or upstream opportunities' and is seeking 'leadership in the Portuguese liberalised gas market.' It also proposes to 'aggressively market' new products and services to its existing customer base.
EDP shares rose in the wake of the release of the new strategy and at 11.56 am the shares were up 0.06 eur or 2.05 pct at 2.99 eur.