Rwe Ag · XETR:RWE
Rwe — Investor Presentation (April 2014)
38 slides from Rwe's investor presentation, April 2014
Slide 1: Focus on financial strength
Focus on financial strength (as of April 2014)
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains certain forward-looking statements within the meaning of the US federal securities laws. Especially all of the following statements: > Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other
Slide 3: RWE – an attractive value proposition
RWE – an attractive value proposition Attractive portfolio Stable financials > Leading market position and > Progress in strengthening balance regionally focused strategy sheet > Pure utility play – exit of upstream > Streamlined and disciplined activities investment approach > Balanced asset portfo
Slide 4: Milestones in 2013
Milestones in 2013 Performance in line with expectations: EBITDA in the order of € 9 bn; operating result in the order of € 5.9 bn; recurrent net income in the order of € 2.4 bn Impairment charge of € 4.8 bn taken mainly in the conventional power generation business due to deteriorating market envir
Slide 5: From commodity driven earnings development to attractive regulated profile
From commodity driven earnings development to attractive regulated profile RWE develops towards an attractive stable downstream business profile with additional focus on renewables and upside potential from conventional power generation Operating result in € bn 6.4 Upstream Gas & Oil 5.9 Renewables
Slide 6: RWE's mid-term business profile drivers
RWE’s mid-term business profile drivers GENERATION TRADING DISTRIBUTION SUPPLY > Selective growth in > Ongoing focus on value > GER: Stable regulatory > Focus on efficiency renewable energy extraction in commercial environment for the next enhancements asset optimisation regulatory period > Increasi
Slide 7: Conventional Power Generation: mark-to-market earnings perspective
Conventional Power Generation: mark-to-market earnings perspective € bn 3.5 3.3 3.0 2.5 Mark-to-market (m-t-m)1 2.0 1.5 1.4 1.0 OR m-t-m 0.5 before efficiencies 0.0 2012 2013 -0.5 Efficiencies Operating result (OR) Depreciation EBITDA 2012-2016 1 Mark-to-market as of November 2013 at market prices o
Slide 8: RWE Generation assets under review
RWE Generation assets under review Profitability of RWE’s conven- Capacity measures tional generation portfolio1 > Additional measures for ~3.2 GW decided OR2 > c. > 50% – 60% > Mothballing of Claus C (gas, 1,300 MW) WACC > Summer mothballing of CCGT Lingen (gas, 880 MW) > Contract termination (hard
Slide 9: RWE Innogy will provide mid-term earnings growth despite reduced capex volume
RWE Innogy will provide mid-term earnings growth despite reduced capex volume Steady increase of operating result by 2016 expected Commissioning: Commissioning: First generation: NSO (295 MW), Onshore and hydro Gwynt y Môr (576 MW), Onshore and hydro projects ~70 MW Commissioning: projects ~160 MW D
Slide 10: Excellent access to debt capital market is key
Excellent access to debt capital market is key Leverage target mid-term: < 3.0x; more flexibility short-term € bn 29.9 33.0 30.7 In the order of 2013 Net debt 3.5x 3.5x 3.5x Significantly >3.5x Leverage factor1 19.9 19.4 16.9 13.0 13.1 11.2 2011 2012 2013 2014e Net financial debt incl. 50% of hybrid
Slide 11: Full benefit of deleveraging measures mainly after 2014
Full benefit of deleveraging measures mainly after 2014 > Leverage ratio 2014: declining earnings trend overlays efforts to reduce debt > Continued pressure on earnings and cash flows induced from falling commodity prices 3.5 > Prime objective is to maintain excellent access to capital markets 3.0 >
Slide 12: RWE well on track to reach target of a positive cash balance
RWE well on track to reach target of a positive cash balance Cash flows from operating activities to cover investments and dividends by 2015 € bn -3.3 -3.8 -2.7 -0.4 >0 Cash balance 9.3 8.8 7.1 6.2 5.8 5.5 5.5 4.4 ≤ 2010 2011 2012 2013 2014e 2015e Capex in property, plant & equipment and financial a
Slide 13: Current building blocks to improve balance sheet
Current building blocks to improve balance sheet Measures to improve leverage headroom > Earnings improvement through efficiency enhancement Efficiency measures; at least €1.5 bn by 2016 enhancements > Reduction of discretional investments Capex reduction > Optimisation of maintenance capex > Sales
Slide 14: Efficiency improvements 1 year ahead of plan – At least €1.5 bn net benefit
Efficiency enhancements Efficiency improvements 1 year ahead of plan – At least €1.5 bn net benefit to be achieved by 2016 Net benefit to operating result In € million > Total programme consists of measures amounting to €2 bn (= gross effect) > Efficiency improvements to be fully earnings enhancing
Slide 15: Efficiency measures of €2 bn implemented by the end of 2016
Efficiency enhancements Efficiency measures of €2 bn implemented by the end of 2016 Net benefit by division Conventional Power Generation ~ 10% Holding, other divisions ~ 50% > ~40% reduction of overhead costs and cross divisional Conventional > Reduction of O&M costs effects Power Generation > Impr
Slide 16: Focus on total controllable costs (TCC)
Efficiency enhancements Focus on total controllable costs (TCC) 60% of the efficiency programme will be achieved through a reduction of TCC € 10.8 bn € 10.1 bn ~€ 9.0 bn 0.5 0.2 0.4 0.7 5.5 4.9 4.3 5.3 5.2 4.7 2012 2013 2016e Personnel costs Other TCC Operational cost improvement Portfolio and other
Slide 17: Capex programme reduced to maintenance level
Capex reduction Capex programme reduced to maintenance level € bn > Approx. €11 bn capex programme for 2014 – 2016; c. €2 bn less than ~1.0 Renewable projects last year’s programme for 2013 – 2015 > Completion of new-build power plant ~2.1 Upstream ~6.5 Day-to-day programme in 2014 gas & oil project
Slide 18: Disposals focus on RWE Dea and Urenco
Disposals Disposals focus on RWE Dea and Urenco > Strategic decision, not for deleveraging purposes RWE Dea > Agreement with LetterOne Group in March to sell RWE Dea at an EV of c. €5.1 bn > The transaction is expected to close later this year > Non core asset Urenco > Reviewing potential exit route
Slide 19: Outlook for 2014
Outlook for 2014 In € million 8,762 7,600 – 8,100 EBITDA 5,881 4,500 – 4,900 Operating result Recurrent 2,314 1,300 – 1,500 net income Dividend €1.00/share Pay out ratio of 40% – 50% 2013 2014e1 1 The outlook is before the disposal of RWE Dea and Urenco. For RWE Dea we expect for fiscal 2014 an EBIT
Slide 20: Back-up Charts
Back-up Charts 19
Slide 21: Major earning drivers post 2013
Major earning drivers post 2013 Further decline in realised electricity Efficiency enhancement programme margins (realised outright power (2014 to 2016: at least € 500 million) price 2013: € 51/MWh) Earnings growth in renewables (target Disposal of RWE Dea to reach ROCE/WACC break even in 2016) Disp
Slide 22: Development of operating result
Development of operating result … … by division (-€535 million; -8.3%) … by major value drivers1 € million € bn Fiscal year 2012 6,416 Fiscal year 2012 6.4 Conventional -1,892 Efficiency programme +0.8 Power Generation Supply/Distribution +48 Networks Germany New CO2-regime -1.2 Supply NL/B +88 Gene
Slide 23: Reconciliation of (recurrent) net income
Reconciliation of (recurrent) net income € million Fiscal year 2013 +/- Non-operating result shows the impairments, mainly in our Conventional Power Generation EBITDA 8,762 -552 division and significant restructuring charges Depreciation -2,881 +17 Financial result improved due to Operating result 5
Slide 24: 2014 Divisional outlook for the operating result
2014 Divisional outlook for the operating result € million 2013 2014 forecast versus 2013 Conventional Power Generation 1,383 Significantly below 2013 Supply/Distribution Networks Germany 1,626 Moderately above 2013 Supply Netherlands/Belgium 278 Significantly below 2013 Supply United Kingdom 290 Mo
Slide 25: Operating result outlook for fiscal year 2014
Operating result outlook for fiscal year 2014 Trend for major value drivers in fiscal year 2014 Operating result 2013 €5.9 bn Efficiency programmes c. €150 million envisaged for 2014 Depreciation Trend for higher depreciation as a result of investment programme Electricity generation margins (D;
Slide 26: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 31 December 2013 >30% >10% >40% >10% >50% >20% >50% >30% >60% >40% >70% >50% >80% >60% >80% >80% >90% >90% 2014 forward >30% >10% >40% >10% >40% >20% >50% >30% >60% >40% 2015 forward >30% >20% 2016 fo
Slide 27: Germany: Clean Dark (CDS) and Spark Spreads (CSS)
Germany: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward 2015 forward 16 12 Ø 9.96 Ø 7.86 8 Ø 6.35 4 0 -4 Ø -2.37 -8 Ø -11.63 -12 Ø -12.98 -16 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 12 13 14 -1 -1 -1 -1 -1 -1 l- 1 l- 1 l- 1 n- n- n- kt kt kt r r r
Slide 28: NL: Clean Dark (CDS) and Spark Spreads (CSS)
NL: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward1 2015 forward1 20 15 Ø 11.43 10 Ø 8.33 5 Ø 7.63 0 -5 Ø -4.55 -10 Ø -7.46 Ø -10.24 -15 -20 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 12 13 14 -1 -1 -1 -1 -1 -1 l- 1 l- 1 l- 1 n- n- n- kt kt kt r r r J
Slide 29: UK: Clean Dark (CDS) and Spark Spreads (CSS)
UK: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward1 2015 forward1 28 Ø 22.49 24 20 Ø 19.51 Ø 18.10 16 12 8 4 Ø 3.12 Ø 2.07 0 Ø 2.03 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 12 13 14 -1 -1 -1 -1 -1 -1 l- 1 l- 1 l- 1 n- n- n- kt kt kt r r r Ju Ju Ju A
Slide 30: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change divestitures/dis- from including in pension, posals/(de)con- operating f/x effects nuclear, solidation; capi- activities mining tal measures provisions 40 +1.6 +4.5 35 33.0 -2.5 30 +0.3 30.7 -5.8 -0.4 0 Change i
Slide 31: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Strong sources of financing in € bn Fully committed syndicated loan For liquidity (€ 4.0 bn up back-up to Nov. 2017) € 0.0 bn Commercial paper $ 0.0 bn ($ 5.0 bn) (up to 1 year) € 0.0 bn (11 Feb 2014) MTN program
Slide 32: RWE's major investment projects
RWE’s major investment projects RWE Capex share (€ bn) 2013 2014 2015 2016 2017 2018 Conventional power plant new build programme (capex at 100% share) Hamm (hard coal, 1,528 MW) 77% 2.5 Units E D Eemshaven (hard coal/biomass, 1,554 MW) 100% 3.0 Units A B Denizli (gas, 787 MW) 70% 0.5 RWE Dea‘s larg
Slide 33: Overview of capacity measures
Overview of capacity measures Measure Plant MW1 Fuel Location Date Decom- Amer 8 610 Hard coal NL Q1-2016 missioning Long-term Claus C 1,300 Gas NL Q3-2014 mothballing Moerdijk 2 430 Gas NL Q4-2013 Gersteinwerk F 355 Gas – steam turbine DE Q3-2013 Gersteinwerk G 355 Gas – steam turbine DE Q2-2014 We
Slide 34: By 2014 we will have renewed more than 25% of our electricity generation fleet
By 2014 we will have renewed more than 25% of our electricity generation fleet Gas BoA Neurath 12.5 GW 12.5 GW Lignite 2.1 GW Lignite out of (2011) out of (2013) 49.2 GW 49 GW Hard coal Staythorpe Moerdijk 2 1.7 GW CCGT 0.4 GW CCGT Lingen Claus C Pembroke Denizli Hamm Eemshaven 0.9 GW CCGT 1.3 GW CC
Slide 35: The fuel mix of European electricity generators
The fuel mix of European electricity generators 2012/2013 RWE has one of the most balanced generation portfolios of European electricity generators (installed capacity) 100% 80% 60% Hydro/ Other 40% Gas Hard Coal 20% Lignite Nuclear 0% Centrica CEZ EDF Enel E.On GDF Iberdrola RWE SSE Share in power
Slide 36: The fuel mix of European electricity generators
The fuel mix of European electricity generators 2012/2013 RWE has one of the most balanced generation portfolios of European electricity generators (generation output) 100% 80% 60% Hydro/ Other 40% Gas Hard Coal 20% Lignite Nuclear 0% Centrica CEZ EDF Enel E.On GDF Iberdrola RWE SSE Share in electri
Slide 37: Practical example for efficiency improvements in the lignite business
Practical example for efficiency improvements in the lignite business Availability of our lignite based power generation fleet Measures to improve availability (examples) 100% > Optimisation of coal management > Improvement of commercial availability by shifting planned outages into low-price times
Slide 38: Always be informed about RWE …
Always be informed about RWE … Follow us on twitter@RWE_IR and have a look at www.rwe.com/ir Calendar http://www.rwe.com/web/cms/en/110614/rwe/investor-relations/events/calendar/ Annual and Interim Reports http://www.rwe.com/web/cms/en/110822/rwe/investor-relations/reports/ Investor and Analyst Conf