ENDESA generated net income of Euro 3,048 million in the first nine months of 2009. On a like-for-like basis this figure is 5.1% higher than in the same period of the previous year (i.e., stripping out net income in the first half of 2008 from the sale of assets to E.On prior to the transaction, the gain realised on the divestment itself - Euro 4,872 million - and Euro 1,001 million of net income from the sale of assets to Acciona in 2009). In absolute terms, net income for the first nine months declined by 55%.

ENDESA's electricity output in this period totalled 105,369 GWh, 6.2% down on the same period in 2008. Electricity sales fell 3% to 126,905 GWh. These decreases were the result of lower electricity demand, mostly in Spain.

Despite the lower output levels, revenue and costs both rose. We provide a detailed explanation of this trend in our section on each business line.  Revenues came to Euro 18,486 million in 9M09, an increase of 5.9%. Variable costs were up 5.5%, while overheads rose 4.3%. Revenue grew at a faster rate than either, thus driving up EBITDA by 6.8% to Euro 5,804 million.

EBIT was Euro 4,301 million or 2.4% higher than in the same period last year. EBIT grew at a slower pace than EBITDA due to the Euro 251 million increase in amortisation and depreciation charges, of which Euro 43 million related to restatement of the amortisation and depreciation charges for the renewable energy assets finally not conveyed to Acciona, Euro 82 million related to the goodwill write-downs for certain wind and hydropower assets in Spain and Portugal sold to Acciona, and Euro 24 million related to a write-down in the value of greenhouse gas emissions allowances.

In 9M09, synergies generated Euro 326 million, accounting for 75% of the new target for the full year. The greatest savings were made through improved distribution practices -- €123 million – and improved generation and fuel practices -- saving €106 million. The remaining synergies were obtained in systems and other areas such as structure and general services.

Investments and debt in 9M09

Investment by ENDESA amounted to Euro 2,608 million in the first nine months of 2009. Euro 1,998 million was capex and investment in intangible assets. The remaining Euro 610 million related to financial investments.

The financial investment figure included Euro 444 million for ENDESA's acquisition on 8 January 2009 of a range of assets from the Irish state utility, Electricity Supply Board (ESB). The acquisition encompassed 1068 MW in operation across four sites, representing close to 16% of Ireland's aggregate nameplate capacity.

ENDESA had net debt of Euro 19,318 million at 30 September 2009, an increase of Euro 5,315 million compared to 31 December 2008. The rise was mainly the outcome of payment of a dividend of Euro 6,243 million, which included payment to shareholders of the full amount of the capital gains resulting from the sale of assets to E.On in June 2008.

When assessing ENDESA's debt levels, it must be remembered that at 30 September 2009, ENDESA had the recognised right to collect Euro 6,172 million in connection with several regulatory matters affecting the Spanish electricity business: Euro 4,145 million for financing the revenue shortfall from regulated activities and Euro 2,027 million in compensation for stranded costs in non-mainland generation.
Stripping out these regulatory items, ENDESA's net debt at the end of September 2009 was Euro 13,146 million.

Two syndicated financial transactions were signed this year for a total of Euro 3,410 million: a syndicated loan for Euro 2,000 million over two years, and the extension to 2012 of a Euro 1,410 million syndicated credit facility, which was originally set to expire in June 2010. In addition, a long-term Euro 150 million loan was arranged with the European Investment Bank, partly for the purpose of financing the investment needed to improve the Spanish electricity distribution network.

Business in Spain and Portugal

Net income from ENDESA's business in Spain and Portugal was Euro 2,599 million 9M09, Euro 580 million (28.7%) higher than in the same period in 2008, contributing 85.3% of the company's total net income. The results of this business in the first nine months of both 2008 and 2009 were shaped by capital gains from the sale of assets to Acciona and E.On respectively.

EBITDA (which excludes the effect of asset disposals) was Euro 3,383 million, 3.5% higher year-on-year.

In the first nine months of 2009, Spain's electricity market saw a 4.8% drop in demand; wholesale electricity prices declined 38.4%, and fuel prices were lower.

ENDESA's electricity output in Spain and Portugal was 14.5% down, at 56,781 GWh. 55,916 GWh of that output was produced in Spain (-14.6%) and 865 GWh was generated in Portugal (-8.6%). Nuclear and hydro-powered energy comprised 57.7% of ENDESA's mainland generation mix, compared with 32.5% for the rest of the sector.

Against this background, ENDESA's gross margin grew by 4.3% due to the strong performance of the deregulated segment and its improved output mix, with increased hydro output and lower thermal output.
Throughout the period ENDESA maintained its leading position, with a 30.2% market share in ordinary regime electricity generation, 43.6% in distribution, 42.8% in sales to deregulated customers and 42.4% in total sales to end customers.

ENDESA reported revenues of Euro 11,050 million from the electricity business in Spain and Portugal in January-September 2009, an increase of 8.2% compared to 9M08. The revenue shortfall from regulated activities in 9M09 was estimated at Euro 3,098 million for the sector as a whole. Of this amount, ENDESA has to finance Euro 1,368 million.

Investments in the period totalled Euro 1,506 million. Of this figure, 90.7% corresponded to capex for the development or improvement of electricity generation and distribution facilities.

Business in Latin America

In Latin America, 9M09 net income rose 29.2% year-on-year to Euro 438 million. EBITDA rose 10.1% to Euro 2,379 million, while EBIT increased by 12.8% compared to January-September 2008, to Euro 1,952 million.

The economic environment in ENDESA's Latin American operating markets led to slower growth in demand. Demand weakened by 2.8% in Brazil, 0.9% in Argentina, and 0.1% in Peru; it advanced by 1.1% in Colombia and 0.5% in Chile.

Against that background, ENDESA's subsidiaries reported electricity sales of 47,142 GWh, a rise of 0.6%. By country, sales growth was more pronounced in Brazil (+2.3%) and Peru (+1.7%), offsetting declines in Argentina (-0.4%) and Chile (-0.3%); sales in Colombia held steady.

Despite only moderate demand growth, ENDESA generation output increased by 4.6% to 47,319 GWh, mainly due to higher hydro generation. Output increased in Argentina (+16.9%), Colombia (+3.3%), and Chile (+2.6%), and fell in Brazil (-9.3%) and Peru (-2.6%).

New capacity development

Investment in Latin America in 9M09 totalled Euro 655 million, of which Euro 570 million was capex.
In September, the 257 MW Quintero open-cycle gas plant in Chile and the 193 MW open-cycle plant in Santa Rosa, Peru, were both completed and brought into commercial operation. Work continued on construction of the Bocamina II 370 MW coal-fired thermal plant and the Canela II 60 MW wind farm, both in Chile.

Additionally, the Quintero regasification terminal (in which ENDESA has a 20% shareholding and the right to buy 33% of regasified output) entered its first operational phase, supplying gas to ENDESA's San Isidro I and II plants. The regasification terminal completed a trial phase in August and started commercial operation in the first fortnight of September. This addition will enhance security of supply, lower Endesa Chile's variable costs and maintain its generation margins.

For more inforamtion:
Endesa Press Oficce
Guillermo Errea
+ 34 91 2134998
guillermo.errea@endesa.es