Rwe Ag · XETR:RWE
Rwe — Investor Presentation (August 2014)
37 slides from Rwe's investor presentation, August 2014
Slide 1: Focus on financial strength
Focus on financial strength (as of August 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: Main messages
Main messages Performance in H1 2014 line with expectations: EBITDA -32%, operating result -40%; recurrent net income -62% Group outlook for 2014 confirmed EU Commission approves RWE Dea transaction; closing expected by the end of 2014 RWE enters Romanian market for electricity supply activities Ref
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: Overview of capacity measures
Overview of capacity measures Measure Plant MW1 Fuel Location Date Decom- Amer 8 610 Hard coal NL Q1-2016 missioning Goldenbergwerk 110 Lignite DE Q3-2015 Westfalen C 285 Hard Coal DE Q1-2016 Gersteinwerk K2 610 Hard Coal DE Q1-2017 Long-term Claus C 1,300 Gas NL Q3-2014 mothballing Moerdijk 2 430 G
Slide 9: Impact of our capacity measures on our total conventional generation portfolio
Impact of our capacity measures on our total conventional generation portfolio Net decrease in RWE Generation’s portfolio1 to substantially materialise after 2015 43,716 MW 2,449 MW 42,324 MW 3,224 MW 5,698 894 1,892 110 MW MW MW 41,430 MW MW 41,256MW 2,318 MW Decom- 5,698 764 5,698 Decom- missionin
Slide 10: RWE Innogy will provide mid-term earnings growth despite reduced capex volume
RWE Innogy will provide mid-term earnings growth despite reduced capex volume Development of operating result by 2016 First generation: Commissioning: Commissioning of Gwynt y Môr (576 MW), NSO (295 MW), onshore projects1 Commissioning: Gwynt y Môr (fully), Düshorner Heide (26 MW), Onshore projects1
Slide 11: More customers will produce self-generated power and manage consumption
More customers will produce self-generated power and will be enabled to manage their consumption Changing Energy Landscape Trends in retail markets Household » Increase in decentral energy customer production from household customers Virtual » Higher incentivisation of power plants “prosumers” to ma
Slide 12: 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 26.0 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 2014e2 Net financial debt incl. 50% of hybri
Slide 13: 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 14: Deliveries on our measures to improve the leverage situation
Deliveries on our measures to improve the leverage situation Measures > Earnings improvement through efficiency Efficiency enhancement measures; at least €1.5 bn by 2016 enhancements > Reduction of discretionary investments Capex > Optimisation of maintenance capex reduction > Sale agreement signed
Slide 15: 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 16: Efficiency measures of €2 bn implemented
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 17: 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 18: Capex programme reduced to maintenance level
Capex reduction Capex programme reduced to maintenance level € bn > Approx. €8 bn capex programme ~1.0 Renewable projects for 2014 – 2016 excluding RWE Dea: ~ 0.9 Completing €1.9 bn for major projects conventional power plants ~5.6 day-to-day of which c. ~3.1 for €5.6 bn day-to-day incl. grids ~
Slide 19: Disposals focus on RWE Dea and Urenco
Disposals Disposals focus on RWE Dea and Urenco > Strategic decision, not for deleveraging purposes RWE Dea > Agreement signed with LetterOne Group in March to sell RWE Dea at an EV of c. €5.1 bn > EU Commission approves RWE Dea transaction; closing expected by the end of 2014 > Non core asset Urenc
Slide 20: Outlook for 2014
Outlook for 2014 In € million EBITDA 8,762 7,904 6,400 – 6,800 Operating 5,881 result 5,369 3,900 – 4,300 Recurrent 2,314 2,314 1,200 – 1,400 net income Dividend €1.00/share Payout ratio of 40% – 50% 2013 2013 2014e reported RWE Dea DCO1 RWE Dea DCO1 1 Based on the sale agreement, RWE Dea will be so
Slide 21: Back-up Charts
Back-up Charts 20
Slide 22: 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 23: 2014 divisional outlook for the operating result
2014 divisional outlook for the operating result € million 20131 2014 forecast versus 2013 Conventional Power Generation 1,384 Significantly below 2013 Supply/Distribution Networks Germany 1,626 Moderately above 2013 Supply Netherlands/Belgium 278 Significantly below 2013 Supply United Kingdom 290 M
Slide 24: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 30 June 2014 >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% >60% >50% >80% >60% 2015 forward >
Slide 25: Contango has been reinstated in the front of the curve
Contango has been reinstated in the front of the curve Spread between implied versus front year (EUR/MWh)1 Implied Year (FY0)2 Front Year (FY1) Second Year (FY2) Risk premium (right scale) 2012 2013 1 German power baseload 2 Implied Cal as weighted average of spot settlements and balance-of-year for
Slide 26: Germany: Clean Dark and Spark Spreads
Germany: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward 2015 forward 16 12 Ø 9.96 Ø 7.86 8 Ø 5.94 4 0 -4 Ø -2.37 -8 Ø -11.63 -12 Ø -13.07 -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 27: NL: Clean Dark and Spark Spreads
NL: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward1 2015 forward1 20 15 Ø 11.43 10 Ø 8.58 5 Ø 7.63 0 -5 Ø -4.55 Ø -8.79 -10 Ø -7.46 -15 -20 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 2 3 4 -1 -1 -1 -1 -1 -1 l- 1 l- 1 l- 1 1 1 1 n- n- n- kt kt kt r r r
Slide 28: UK: Clean Dark and Spark Spreads
UK: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward1 2015 forward1 28 Ø 22.49 24 20 Ø 19.51 Ø 17.36 16 12 8 4 Ø 3.07 Ø 3.12 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 29: Development of net debt
Development of net debt € billion Cash flows Capex on Dividends1 Divestments/ Change Others from property, deconsoli- in pension, including f/x operating plant and dations/ nuclear, effects and activities1 equipment capital mining change of and intangible measures1 provisions1 net debt from assets a
Slide 30: 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 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 € bn Fully committed syndicated loan For liquidity 2,5 20 (€4.0 bn up back-up to March 2019) €0.0 bn 2,0 16 1,5 12 Commercial paper $0.0 bn ($5.0 bn) (up to 1 year) 1,0 8 €0.0 bn (30 J
Slide 32: RWE's major investment projects
RWE’s major investment projects RWE Capex share (€ bn) 2013 2014 2015 2016 2017 2018 Conventional new build power plant 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% 3.1 Units A B RWE Innogy: major projects under constructio
Slide 33: By 2015 we will have renewed more than 25% of our fleet
By 2015 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 34: The fuel mix of European electricity generators 2013 (capacity)
The fuel mix of European electricity generators 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 plant
Slide 35: The fuel mix of European electricity generators 2013 (output)
The fuel mix of European electricity generators 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 electricity
Slide 36: 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 37: Keep up with RWE …
Keep up with RWE … Follow us on twitter@RWE_IR and have a look at www.rwe.com/ir Financial 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 Confer