European Utilities Key Player Profiles: Endesa

Table of Contents

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
ANALYSIS 2
European Utilities Key Player Profile: Endesa 2
The Key Players are drawn from across a diverse range of markets 2
Datamonitor' s Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas 3
Key Players dominate power generation capacity market share in the Wmed competitive arena 4
Key Players dominate power generation output market share in the Wmed and CEE competitive arenas 5
Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share 6
Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share 7
The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure 8
The Exposure pillar combines both operational and financial measurements of risk The Performance pillar combines 5 financial metrics to measure business performance 8
The Performance pillar combines 5 financial metrics to measure business performance 9
The Scale pillar combines financial and operational metrics to measure the size of a utility 10
The Growth pillar measures the rate of growth of a utility' s financial and energy resources 11
The Exposure pillar combines both operational and financial measurements of risk 12
Endesa scores 36.5/100 on Datamonitor' s European Utility Scorecard and ranks 10 out of the 31 Key Players covered 13
Endesa scores 36.5/100 on Datamonitor' s European Utility Scorecard and ranks 10 out of the 31 Key Players covered 13
Endesa' s overall ranking is above the Key Player average 14
Endesa scores 14.4/25 on the Performance pillar, and ranks 8 out of 31 on this measurement 14
Endesa scores 5/25 on the Scale pillar, and ranks 8 out of 31 on this measurement 15
Endesa scores 8.9/25 on the Growth pillar, and ranks 14 out of 31 on this measurement 16
Endesa scores 8.3/25 on the Exposure pillar, and ranks 21 out of 31 on this measurement 17
Endesa achieves an overall ranking of 10, with a utility score of 36.5 18
Endesa' s overall ranking is helped by its solid Performance and Scale Scores 19
Endesa has a high level of Performance, with only an average level of risk (an average Exposure score) 20
In terms of Scale and Growth, Endesa is closer to the Key Player average than to the top ten utilities 21
Endesa scores well on operating profit margin, but lags in return on fixed assets and investment for a Performance ranking of 8 22
Endesa scores well on operating profit margin, but lags in return on fixed assets and investment for a Performance ranking of 8 22
Endesa' s overall financial Performance score is 14.4, surpassing the Key Player average of 10.9 23
Endesa' s operating profit margin is a strong 34% compared to the Key Player average of 20% 24
Endesa lags most of its peers on return on investment, but has very strong return on energy volume 25
Endesa outperforms the Key Player average in Scale, attaining a score of 5 26
Endesa outperforms the Key Player average in Scale, attaining a score of 5 27
In terms of Scale Endesa ranks 8 28
In generation capacity Endesa ranks 5 with 33 GW 29
Endesa' s power volume is more than five times its gas volume 30
Endesa has a 6.0% share of Key Player power customers 31
At 123.6 TWh, Endesa ranks 7 in terms of power volume 32
Endesa' s share of the gas market is negligible with approximately one quarter percent of Key Player gas customers 33
Endesa' s Key Player gas volume market share is one quarter percent 34
Endesa ranks 10 and 7 in terms of revenue and net income respectively 35
Endesa' s Growth ranking of 14 is fuelled by above average profit and power volume growth 36
Endesa' s Growth ranking of 14 is fuelled by above average profit and power volume growth 36
Endesa' s operating cash flow and gas volume growth metrics are below average, resulting in a Growth ranking of 14 37
Endesa' s low price earnings ratio relative to operating profit margin indicates that its share price may be undervalued 38
From 2001 to 2005, Endesa' s annual profit growth (22.6%) far exceeded its revenue growth (8.6%) 39
Endesa' s cash flow growth (-7.8%) has fallen behind gas (-2.4%) and power (15%) volume growth from 2004 to 2005 40
Endesa' s high gas net trade requirement and negative operating cash flow growth contribute to its Exposure ranking of 21 41
Endesa' s high gas net trade requirement and negative operating cash flow growth contribute to its Exposure ranking of 21 41
Endesa outperforms the Key Player average only on power NTR 42
Endesa' s positive power NTR is in stark contrast to its negative gas NTR 43
Endesa has a slightly positive (1.5%) power NTR 44
Endesa is more highly leveraged than most top ten utilities 45
Endesa ranks 26 in terms of debt leverage, with a debt to equity ratio of 160.4% 46
Endesa' s cash flow growth has fallen as energy volume has increased 47
The Wmed competitive arena is Endesa' s main geographic area of operations 48
Coal is Endesa' s dominant generation capacity fuel type 48
Endesa has significant power sales in five countries 49
Endesa' s gas sales are focused on its Spanish home market 50
The Wmed region represents the bulk of Endesa' s generation capacity, with Spain having the greatest share 51
Endesa has a market share of 6% amongst Key Players in terms of power customers 52
Endesa has a Key Player market share of approximately one quarter percent of gas customers 53
APPENDIX 54
Glossary 54
Datamonitor consulting 54
Databook 55
List of Tables
Table 1: Return on fixed assets 55
Table 2: Return on sales 56
Table 3: Operating profit margin 57
Table 4: Return on energy volume 58
Table 5: Return on investment 59
Table 6: Net income / Net income of 94 leading utilities 60
Table 7: Net income / Net income of 94 leading utilities 61
Table 8: Net income / Net income of 94 leading utilities 62
Table 9: Net income / Net income of 94 leading utilities 63
Table 10: Revenue / Revenue of 94 leading utilities 64
Table 11: Revenue growth, 2001-2005 CAGR 65
Table 12: Profit growth, 2001-2005 CAGR 66
Table 13: Growth in operating cash flow, 2004 to 2005 67
Table 14: Gas supply volume growth, 2004-2005 68
Table 15: Growth in power supply volume, 2004 to 2005 69
Table 16: Power NTR / Power supply volume 70
Table 17: Gas NTR / Gas supply volume 71
Table 18: Debt leverage 72
Table 19: Growth in operational cash flow - Growth in energy volume 73
List of Figures
Figure 1: The Key Players are drawn from across a diverse range of markets 2
Figure 2: Datamonitor' s Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas 3
Figure 3: Key Players dominate power generation capacity market share in the Wmed competitive arena 4
Figure 4: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas 5
Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share 6
Figure 6: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share 7
Figure 7: The Performance pillar combines 5 financial metrics to measure business performance 9
Figure 8: The Scale pillar combines financial and operational metrics to measure the size of a utility 10
Figure 9: The Growth pillar measures the rate of growth of a utility' s financial and energy resources 11
Figure 10: The Exposure pillar combines both operational and financial measurements of risk 12
Figure 11: Endesa scores 36.5/100 on Datamonitor' s European Utility Scorecard and ranks 10 out of the 31 Key Players covered 13
Figure 12: Endesa scores 14.4/25 on the Performance pillar, and ranks 8 out of 31 on this measurement 14
Figure 13: Endesa scores 5/25 on the Scale pillar, and ranks 8 out of 31 on this measurement 15
Figure 14: Endesa scores 8.9/25 on the Growth pillar, and ranks 14 out of 31 on this measurement 16
Figure 15: Endesa scores 8.3/25 on the Exposure pillar, and ranks 21 out of 31 on this measurement 17
Figure 16: Endesa achieves an overall ranking of 10, with a utility score of 36.5 18
Figure 17: Endesa' s overall ranking is helped by its solid Performance and Scale Scores 19
Figure 18: Endesa has a high level of Performance, with only an average level of risk (an average Exposure score) 20
Figure 19: In terms of Scale and Growth, Endesa is closer to the Key Player average than to the top ten utilities 21
Figure 20: Endesa scores well on operating profit margin, but lags in return on fixed assets and investment for a Performance ranking of 8 22
Figure 21: Endesa' s overall financial Performance score is 14.4, surpassing the Key Player average of 10.9 23
Figure 22: Endesa' s operating profit margin is a strong 34% compared to the Key Player average of 20% 24
Figure 23: Endesa lags most of its peers on return on investment, but has very strong return on energy volume 25
Figure 24: Endesa outperforms the Key Player average in Scale, attaining a score of 5 27
Figure 25: In terms of Scale Endesa ranks 8 28
Figure 26: In generation capacity Endesa ranks 5 with 33 GW 29
Figure 27: Endesa' s power volume is more than five times its gas volume 30
Figure 28: Endesa has a 6.0% share of Key Player power customers 31
Figure 29: At 123.6 TWh, Endesa ranks 7 in terms of power volume 32
Figure 30: Endesa' s share of the gas market is negligible with approximately one quarter percent of Key Player gas customers 33
Figure 31: Endesa' s Key Player gas volume market share is one quarter percent 34
Figure 32: Endesa ranks 10 and 7 in terms of revenue and net income respectively 35
Figure 33: Endesa' s Growth ranking of 14 is fuelled by above average profit and power volume growth 36
Figure 34: Endesa' s operating cash flow and gas volume growth metrics are below average, resulting in a Growth ranking of 14 37
Figure 35: Endesa' s low price earnings ratio relative to operating profit margin indicates that its share price may be undervalued 38
Figure 36: From 2001 to 2005, Endesa' s annual profit growth (22.6%) far exceeded its revenue growth (8.6%) 39
Figure 37: Endesa' s cash flow growth (-7.8%) has fallen behind gas (-2.4%) and power (15%) volume growth from 2004 to 2005 40
Figure 38: Endesa' s high gas net trade requirement and negative operating cash flow growth contribute to its Exposure ranking of 21 41
Figure 39: Endesa outperforms the Key Player average only on power NTR 42
Figure 40: Endesa' s positive power NTR is in stark contrast to its negative gas NTR 43
Figure 41: Endesa has a slightly positive (1.5%) power NTR 44
Figure 42: Endesa is more highly leveraged than most top ten utilities 45
Figure 43: Endesa ranks 26 in terms of debt leverage, with a debt to equity ratio of 160.4% 46
Figure 44: Endesa' s cash flow growth has fallen as energy volume has increased 47
Figure 45: Coal is Endesa' s dominant generation capacity fuel type 48
Figure 46: Endesa has significant power sales in five countries 49
Figure 47: Endesa' s gas sales are focused on its Spanish home market 50
Figure 48: The Wmed region represents the bulk of Endesa' s generation capacity, with Spain having the greatest share 51
Figure 49: Endesa has a market share of 6% amongst Key Players in terms of power customers 52
Figure 50: Endesa has a Key Player market share of approximately one quarter percent of gas customers 53