Rwe Ag · XETR:RWE
Rwe — Investor Presentation (May 2010)
32 slides from Rwe's investor presentation, May 17, 2010
Slide 1: Maintaining robustness and growth in a challenging environment
Maintaining robustness and growth in a challenging environment Spring 2010 (as of 17 May 2010) 1
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: A good start to 2010
A good start to 2010 Strong operating performance: EBITDA +16%, operating result +14%, recurrent net income +15% Successful integration of Essent – strong earnings contribution in Q1 2010 With the commissioning of the Lingen CCGT in April the first of our major power plant projects has been finished
Slide 4: The environment has become more challenging
The environment has become more challenging Challenging demand > Unprecedented demand reduction in 2009 versus 2008 outlook > Subdued economic recovery Ambitious but unclear > Strong political commitment to reduce CO2 emissions but regulatory boundary failure in Copenhagen conditions > No clarity on
Slide 5: Strong political commitment to achieve ambitious climate targets
Strong political commitment to achieve ambitious climate targets Climate > EU target of 20% CO2 emissions reduction by 2020 strongly commitments supported by all member states and renewable > Pioneering role by Germany and UK with national renewable energy energy targets exceeding EU commitment > Ec
Slide 6: Our strategy to reduce the impact of CO2 on our P&L in 2013
Our strategy to reduce the impact of CO2 on our P&L in 2013 Certificates to be Operating Result Offsetting purchased1 2009 – 2013 factors in million t p.a. Organic growth/ 160 – 170 +100 2013 above 2009 High earnings visibility > Expected higher level of power and gas wholesale prices > New build to
Slide 7: Growing number of cancellations increases efficiency gap and value of new-build projects
Growing number of cancellations increases efficiency gap and value of our new-build projects Flexibility of generation system (Germany) > Rising share of renewables generation will lead to: GW Ramp-up capability of power + 70 plant portfolio in GW per hour – Increase of load swings in the system + 6
Slide 8: Price volatility keeps increasing in Germany
Price volatility keeps increasing in Germany – opportunities for a flexible portfolio like RWE’s Growing proportion of renewables leads to higher price volatility. October 2008 to October 2009: 60 hours with negative prices; highest price reached + € 500/MWh, lowest - € 500/MWh 494.26 300 270 Daily
Slide 9: Dramatic changes in the gas market create risks but provide opportunities
Dramatic changes in the gas market create risks but provide opportunities for a well-managed portfolio The old days The new market > Distributors closed long term contracts: > Hybrid situation: – Producers aim to cover investment cost – long-term oil-indexed gas contracts, and – Linkage to substitut
Slide 10: Essent further increases robustness of our portfolio
Essent further increases robustness of our portfolio – integration is well underway Generation Retail Essent’s stand-alone > Increased exposure to EBIT and EBITDA CAGR > Integration of RWE’s Dutch flexible mid-merit portfolio customer portfolio into 2008 – 2012 of > Transfer of Eemshaven Essent appr
Slide 11: Continuous investment commitment: €28 bn capex programme 2010 – 2013
Continuous investment commitment: €28 bn capex programme 2010 – 2013 €7.0 bn p.a. Committed capex +/- 10% 95% Other €100m p.a. 80% 55% 50% Upstream €1,000m p.a. Renewables €1,400m p.a. 2010 2011 2012 2013 Up to half of annual capex remains flexible in outer years CEE €900m p.a. Netherlands/ German v
Slide 12: Focus on low carbon organic growth and efficiency enhancement
Focus on low carbon organic growth and efficiency enhancement Day to day investments 9.5 Mainte- thereof grid 4.6 nance 9.5 Growth and replacement projects 18.5 Electricity generation Hard coal and lignite plants 4.5 Upgrades Gas plants 3.6 Replace- approx. 4.5 Pump storage 0.1 ment 20% 0.9 Renewabl
Slide 13: Diverse new-build programme will enhance flexibility and reduce specific CO2 exposure
Diverse new-build programme will enhance flexibility and reduce specific CO2 exposure Generation portfolio 2009 vs. power plants under construction Renewables Low 0 g/kWh Nuclear 0 g/kWh 2.0 GW 6 GW 0 g/kWh 350 g/kWh 2.5 GW 6.5 GW (2009) Gas 480 g/kWh 9 GW Pumped CO2 intensity (2009) Storage Greener
Slide 14: Strategy for fossil fired generation: growth, higher flexibility, less CO2 emissions
Strategy for fossil fired generation: growth, higher flexibility, less CO2 emissions Comparison of ramp capacities New hard coal-fired 1,600 MW plant – (old and new hard coal / CCGT) 2 flexible 800 MW units for mid-merit regime MW Hard coal Old New Max. cap. Max. ~600 cap. MW ~800 MW 800 Min. cap. M
Slide 15: Renewables: RWE Innogy on the way to significant carbon-free profits
Renewables: RWE Innogy on the way to significant carbon-free profits Ramp-up capacities until 2013 > Capacity of 4.5 GW in operation or under construction by 2012 Target capacity: 4.5 GW > Targeted operating result of €500 million p.a. by 2013 2.6 GW > Risk diversification across geographies, techno
Slide 16: RWE Dea: Defined development projects secure future earnings growth
RWE Dea: Defined development projects secure future earnings growth Ramp-up of gas/oil production > Doubling of gas and oil production by 2015 at the latest Algeria Libya > Organic growth through designated Egypt Poland development projects Norway > Increasing production volumes leading to UK econom
Slide 17: Managing CO2: physical measures complemented by financial optimisation
Managing CO2: We complement physical measures by comprehensive financial optimisation > Our large low carbon new-build programme as well as our investments in renewables will lead to substantial improvement of our CO2 intensity until 2013 > For phase 3 (2013-2020) we aim to reach a “market average”
Slide 18: Physical measures: New-build projects can reduce our CO2 exposure
Physical measures: New-build projects can reduce our CO2 exposure by some 14 % by 2013 CO2 reduction by 2013 Shutdowns / New-build projects load factor reductions Relative Absolute Lingen 887 MW 0.34t/MWh Fossil mix 4 TWh 0.75t/MWh -0.41 t/MWh -2 m t p.a. BoA Neurath 2,100 MW 0.95t/MWh Lignite 2,160
Slide 19: Non-physical measures: Balancing CO2 risks
Non-physical measures: Balancing CO2 risks CDM/JI > Allowance to cover up to 100 million tons via CDM/JI projects > Secured projects to procure 75 million tons of CO2 (44 million tons of CO2 adjusted for project risks) > Average achieved project price below current market price for Certified Emissio
Slide 20: Generation portfolio set to be 75% zero or low carbon by 2025
Prepared for post-Kyoto: Our generation portfolio is set to be 75 % “zero or low carbon” by 2025 Capacity 2009 Capacity 2025: ~65 GW Pump storage, other Pump storage, other RWE generation mix (capacity in %) Renewables Renewables Lignite & hard coal Gas 75% Nuclear Lignite & Nuclear hard coal Gas Ou
Slide 21: Maximising commercial value through asset optimisation of generation capabilities
Maximising commercial value through asset optimisation of generation capabilities T-1 year T-0 T-3 years “Fully hedged” “Real time” Forward Asset Selling Optimisation RWE AG Asset companies RWE Supply & Trading > Overall hedge > Optimise commercial > Integrated optimisation of power plant strategy a
Slide 22: Forward selling: Prudent hedging secures predictable returns
Forward selling: Prudent hedging secures predictable returns of our generation fleet (Base load forwards in €/MWh) 100 90 2010 forward 80 70 60 50 40 >> 90% >> 10% 10% sold sold >> 40% 40% sold sold >> 60% 60% sold sold >> 90% 90% sold sold 90% sold sold 30 100 90 2011 forward 80 70 60 50 40 >> 20%
Slide 23: Asset optimisation: Realising a premium to the forward price
Asset optimisation: Realising a premium to the forward price As the generation fleet margin has already been secured via forward selling, we can decide every day if we produce the contracted power at the locked-in spread or buy the power in the market instead An illustrative example RWE sold forward
Slide 24: RWE's gas procurement portfolio is only partly exposed to the gas-to-oil spread
RWE’s gas procurement portfolio is only partly exposed to the gas-to-oil spread Long-term oil indexed purchase contracts (take-or-pay) Own production 31% Russia NBP 31% Norway approx. 50 bcm p.a. 16% Germany TTF 22% The Netherlands > Our gas procurement portfolio is solely managed by RWE Supply & Tr
Slide 25: We optimise our gas portfolio in a similar way to power generation
We optimise our gas portfolio in a similar way to power generation T-0 T-3 years “Real time” Price Forward Asset revisions Selling Optimisation > Regular price > Locking in spreads by selling the gas > Optimising of contract flexibility: revisions are on the wholesale market and buying – Minimum and
Slide 26: Price revisions and market liquidity determine forward-selling strategy
Price revisions and market liquidity determine forward-selling strategy Illustrative Potential development of gas-to-oil spread between price revisions Long term contract price higher than relevant benchmark ∆ LTC vs. relevant benchmark (gas-to-oil spread) Hedge period of take-or-pay spread position
Slide 27: We can defer volumes to later years via make-up gas
Asset optimisation: We can defer volumes to later years via “make-up” gas Illustrative The LTC gas off-take is The “make-up” gas is deferred lowered and delivery is to the next year and sold at covered by cheaper spot gas. next year’s forward price Monthly off-take (in units) 120 Original off-take s
Slide 28: Outlook for 2010
Outlook for 2010 2009 2010 € million forecast EBITDA 9,165 + 5 – 10% Operating result 7,090 + ca. 5% Recurrent net income 3,532 + ca. 5% Dividend € 3.50 Payout ratio 50% – 60%1 Capex on fixed assets €bn 5.9 ca. 7.0 1 Based on recurrent net income 28
Slide 29: Mid-term outlook: Major assumptions
Mid-term outlook: Major assumptions The mid-term guidance for 2012 and for 2013 is based on the following assumptions as well as the nuclear phase out according to current legislation. 2012 2013 Average realised German electricity price (€/MWh) >60 >60 Carbon costs (€/t CO2) <20 20 – 30 Oil price ($
Slide 30: Mid-term outlook: Update on last year's guidance for 2012
Mid-term outlook: Update on last year’s guidance for 2012 versus 2008 2008 February 2009 February 2010 reported forecast 2012 forecast 2012 € million versus 20081 versus 20081 Operating result 6,826 CAGR + 5 - 10% CAGR + ca. 5% Recurrent net income 3,367 CAGR in the order of + 10% CAGR + ca. 5% Reas
Slide 31: Mid-term outlook: Outlook for 2013 and dividend target
Mid-term outlook: Outlook for 2013 and dividend target 2009 2013 reported forecast € million versus 2009 EBITDA 9,165 above 2009 Operating result 7,090 above 2009 Recurrent net income 3,532 above 2009 Dividend target 2010 – 2013 Payout ratio 50% – 60%1 with goal to at least match Dividend € 3.50 the
Slide 32: Always be informed about RWE…
Always be informed about RWE… To be always updated, please have a look at our webpage www.rwe.com/investorrelations > Calendar http://www.rwe.com/web/cms/en/110614/rwe/investor-relations/calendar/ > Annual and Interim Reports http://www.rwe.com/web/cms/en/110822/rwe/investor-relations/financial-repo