Rwe Ag · XETR:RWE
Rwe — 8th German Corporate Conference – Cheuvreux 2009
37 slides from Rwe's conference presentation, Jan 20, 2009
Slide 1: Positioning for More Growth and Less CO2
Positioning for More Growth and Less CO2 Winter 2009 20.01.2009
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: Key messages
Key messages Performance ¾ Operating result +5% mainly due to German electricity generation Q1-Q3 2008 ¾ Recurrent net income +20% Strategy ¾ Recommended offer for the leading Dutch utility Essent ¾ Set up of a joint venture with E.ON to develop nuclear energy in UK ¾ Further steps taken to grow our
Slide 4: More growth, less CO2 - Our strategic roadmap for 2012
More growth, less CO2 - Our strategic roadmap for 2012 What we aim to do Target for 2012 Defend and expand existing margins in GER: defend/grow margins on current volumes RWE key markets Germany and UK UK: defend/grow volumes and profitability Share of non-German operating result grows from Increase
Slide 5: Our focus remains Europe – but with a far wider remit
Our focus remains Europe – but with a far wider remit In core and bridgehead markets RWE sells more than 300 TWh electricity and attains a market share in excess of 20%. In gas it is more than 330 TWh and a market share in 0.6 excess of 10%. 1.4 1.5 1.5 In growth markets under strategic monitori
Slide 6: Main strategic steps in European electricity
Main strategic steps in European electricity Germany UK Generation: maintain market Generation: build more than share (output) of > 30% 3 GW CCGT to lay foundation Supply: defend 16% market share (direct for future market share growth sales), improve margin to average EU level Supply: drive
Slide 7: RWE Power: attractive margins locked in for 2009 and 2010
RWE Power: attractive margins locked in for 2009 and 2010 Forward selling of RWE Power in the German market (base load forwards in €/MWh) 100 90 Forward 2008 80 >>10% 10%sold sold >>45% 45%sold sold >>60% 60%sold sold >>85% 85%sold sold >>90% 90%sold sold 70 60 50 40 100 90 Forward 2009 80 70 60 50
Slide 8: Germany: Higher Clean Dark Spreads due to lower hard coal and CO2 prices
Germany: Higher Clean Dark Spreads (CDS) due to lower hard coal and CO2 prices 40 120 Forward 2008 30 90 20 60 10 30 0 0 40 160 Forward 2009 30 120 20 80 10 40 0 0 40 240 Forward 2010 30 180 20 120 10 60 0 0 01.01.2006 01.07.2006 01.01.2007 01.07.2007 01.01.2008 01.07.2008 01.01.2009 CDS Cal 2008-10
Slide 9: Germany – Expected long run marginal cost indicate sustainably high power price levels
Germany – Expected long run marginal cost indicate sustainably high power price levels Required German base load price at full cost of Required German base load price at full cost of hard coal new build1 CCGT new build1 100 100 LRMC2 80 80 Power price in €/MWhel Power price in €/MWhel LRMC2 60 60 40
Slide 10: Scarce generation capacity increases value of existing and future asset base
Scarce generation capacity increases value of existing and future asset base Significant reliable new build needed1 … … but current projects are insufficient to fill gap 100 90 Required secure capacity1 Cancelled/stopped Secure capacity (in GW) 80 Unlikely 15.81 Postponed 11.71 70 Questionable New b
Slide 11: RWE npower has headstart with CCGT new build
RWE npower has headstart with CCGT new build The UK requires in total 20 – 40 GW Baseload forwards & generation cost of new build of firm new generation capacity by 100 2020 Currently >5 GW of new plant is 80 under construction with further projects in the consenting phase 64 £/MWh1 64 £/MWh1 –
Slide 12: Our new build projects are on track – and attractive
Our new build projects are on track – and attractive Project Capacity Capex name (MW) (€ bn) 2005 2006 2007 2008 2009 2010 2011 2012 2013 Lingen CCGT 875 0.5 Staythorpe CCGT 1,650 0.9 Blocks 1 – 4 BoA Neurath Lignite 2,100 2.3 Block G F2) Pembroke1) CCGT 2,000 1.2 Blocks 1 – 5 Hamm HC 1,530 2.1 Bloc
Slide 13: RWE Innogy – on the way to becoming one of the leading European players in renewables
RWE Innogy – on the way to becoming one of the leading European players in renewables Approx. 1.7 GW of renewable energy assets in operation or under construction and a project pipeline of 11.9 GW (pro rata, as of December 2008) Target 2012: installed capacity of 4.5 GW Target 2020: more than
Slide 14: Our nuclear strategy - more growth, less CO2 and a regionally diversified portfolio
Our nuclear strategy - more growth, less CO2 and a regionally diversified portfolio Goal Keep nuclear option in Germany Expansion of nuclear energy-based generation portfolio in other markets, especially UK and CSEE Reduce CO2 exposure and grow more internationally Key Keep German nuclear fl
Slide 15: Main strategic steps in European gas
Main strategic steps in European gas Upstream Double hydrocarbon production by 2012/2013 to 12 bcm p.a. Bring development projects onstream on time and on budget Grow resource base and upgrade identified resources to proven reserves Gain resources in new markets (e.g. Caspian region, Black S
Slide 16: Less CO2: Our vision for RWE's fuel mix 2020
Less CO2: Our vision for RWE‘s fuel mix 2020 Fuel mix 2007 (capacity in %) Vision fuel mix 2020 (capacity in %)* Total generation capacity 2007: 45 GW Total generation capacity 2020e: ca. 60 - 70 GW Pumped storage, oil other Pumped storage, other Lignite & Renewable hard coal energies (including CCS
Slide 17: Less CO2: Our strategy to reduce our exposure physically and financially
Less CO2: Our strategy to reduce our exposure physically and financially CO2-mitigation in RWE Group: Physical and financial measures and potential (m t/a)1) -7 2) of which additional -9 m t from to -7 3) up -7 -18 4) RWE Innogy renewable projects 178 RWE Extension 5) 2) planned up to -6 -6 -8 3) of
Slide 18: Financial liabilities and assets: Solid financing in place
Financial liabilities and assets: Solid financing in place (as of 30.09.2008) Financial liabilities in billion Euros Financial assets in billion Euros Split of securities 15 15 12.5 12.4 11.3 1.2 1.1 0.4 9.7 1.1 1% 10 10 2.5 0.5 1.0 2.5 13% 0.5 1.8 1.8 5 9.2 5 8.7 86% 2.8 7.0 6.6 0.7 0.6 1.1 1.0 0.7
Slide 19: Limited need for refinancing and sufficient sources to finance future investment programmes
Limited need for refinancing and sufficient sources to finance future investment programmes Bond maturities1 in € billion Strong sources for financing Cash Flow 2,0 Fiscal Year 2007 €6.1 bn 1,5 Q1-Q3 2008 €4.3 bn 1,0 Fully committed syndicated loan 0,5 (€1.6 bn 364 days1 for liquidity €2.0 bn 3 year
Slide 20: Mid-term capex programme significantly stepped up: Growth takes centre stage
Mid-term capex programme significantly stepped up: Growth takes centre stage €6.5 bn German versus international p.a. capex +/-10% RWE npower €1,000 m p.a. (+/-40%) International German €5 bn p.a. RWE Energy €1,600 m p.a. (+/-20%) ~80% grid (incl. storages) ~20% others More than half of capex will b
Slide 21: How growth and efficiency enhancement capex will impact our underlying earnings performance
How growth and efficiency enhancement capex will impact our underlying earnings performance (€ bn) 33 Maintenance 9 Mandatory (grid) 2 Efficiency enhancement Replacement 7 approx. 20% 17 2 Operating result*: 100% + €1,600 m p.a. Growth 15 15 EBITDA: + €2,000 m p.a. Total capex Growth/efficiency Aver
Slide 22: Recommended offer for the leading Dutch utility Essent – Strategic rationale
Recommended offer for the leading Dutch utility Essent – Strategic rationale 1 A leading vertically integrated utility in the attractive Dutch market 2 A focused geographic position > 4.7 GW of generation1 including from leadership in contiguous 6 108 MW of renewables markets A pan-European > 3.9 mi
Slide 23: Recommended offer for Essent – Fair transaction multiple achieved
Recommended offer for the leading Dutch utility Essent – Fair transaction multiple achieved Transaction valuation (€ million) Comments Enterprise value 9,300 > EV includes 51% of swb and proportional stakes in JVs > Net debt and other (1,170) > Final net debt and other adjustments1 purchase price ad
Slide 24: Recommended offer for Essent – Financial investment criteria met
Recommended offer for the leading Dutch utility Essent – Financial investment criteria met Financial criteria Description Essent IRR Exceeds post tax project WACC of 7.0%1 9 Return on capital employed Exceeds pre tax project WACC of 9.5% after 3 years1 9 Net income Earnings accretive from 1st year o
Slide 25: The intended transaction accelerates the delivery of RWE's strategic roadmap
The intended transaction accelerates the delivery of RWE’s strategic roadmap What we aim to do Target for 2012 Essent impact Defend and expand existing margins in GER: defend/grow margins on current volumes RWE key markets Germany and UK UK: defend/grow volumes and profitability Increase level of re
Slide 26: Efficiency enhancement: Stepped up from €600 million by 2010 to €1.2 billion by 2012
Efficiency enhancement: Stepped up from €600 million by 2010 to €1.2 billion by 2012 Annual earnings contribution of current Cumulative volume of efficiency programme (€ million) programme (€ million) 1,200 new programme €1,200 million old programme annual 200 600 earnings contribution 200 in total
Slide 27: Mid-term financial targets
Mid-term financial targets Operating Result 5% CAGR from organic growth to 2012 Recurrent net 5 - 10% CAGR to 2012 income Dividend Payout ratio of 70 - 80% for fiscal 2008 Regular payout ratio of 50 - 60% Capital structure Optimal capital structure (leverage factor of 2.8 - 3.4 x EBITDA) b
Slide 28: Back-ups
Back-ups The energy to lead 28
Slide 29: Recommended offer for Essent – Transaction overview
Recommended offer for the leading Dutch utility Essent – Transaction overview Transaction value (100%) > Transaction value of € 9,300 million including net indebtedness (enterprise value1) Transaction structure > Offer for 100% of the shares of Essent2 Timetable > Closing anticipated for Q3 2009 Key
Slide 30: Essent is a highly attractive asset
Essent is a highly attractive asset Essent Waste Networks Stadtwerke Bremen (swb) 51% Outside of scope of the transaction Stadtwerke Bielefeld (49%) Deutsche Essent Services and Value Added & Essent Wind Business Trading Production Sales (S&S) Services (VAS) Nederland Development Projects > Portfoli
Slide 31: Essent offers significant standalone growth potential
Essent offers significant standalone growth potential Generation Retail & B2B > New build projects of 1.7 GW by 2012 > Improvements in sales margins / > Moerdijk (Gas, 426 MW until 2011) reduction of cost-to-serve Claus C (Gas, 1,275 MW in 2012) Essent’s standalone EBITDA and EBIT Trading to grow by
Slide 32: Germany: Clean Spark Spread versus natural gas and CO2 prices
Germany: Clean Spark Spread (CSS) versus natural gas and CO2 prices 40 40 Forward 2008 30 30 20 20 10 10 0 0 40 80 Forward 2009 30 60 20 40 10 20 0 0 40 80 Forward 2010 30 60 20 40 10 20 0 0 01.01.2006 01.07.2006 01.01.2007 01.07.2007 01.01.2008 01.07.2008 01.01.2009 CSS Peakload Cal 2008-10 (€/MWh;
Slide 33: UK: Clean Dark Spread versus hard coal and CO2 prices
UK: Clean Dark Spread (CDS) versus hard coal and CO2 prices 50 150 Forward 2008 40 120 30 90 20 60 10 30 0 0 50 200 Forward 2009 40 160 30 120 20 80 10 40 0 0 40 240 Forward 2010 30 180 20 120 10 60 0 0 01.01.2006 01.07.2006 01.01.2007 01.07.2007 01.01.2008 01.07.2008 01.01.2009 CDS Cal 2008-10 Base
Slide 34: UK: Clean Spark Spread versus natural gas and CO2 prices
UK: Clean Spark Spread (CSS) versus natural gas and CO2 prices 40 40 Forward 2008 30 30 20 20 10 10 0 0 50 100 Forward 2009 40 80 30 60 20 40 10 20 0 0 40 80 Forward 2010 30 60 20 40 10 20 0 0 01.01.2006 01.07.2006 01.01.2007 01.07.2007 01.01.2008 01.07.2008 01.01.2009 CSS Peakload Cal 2008-10 (€/MW
Slide 35: Leveraging up the balance sheet: Leverage target for 2010 implemented
Leveraging up the balance sheet: Leverage target for 2010 implemented Leverage will be measured by ratio of Net Debt/EBITDA (= leverage factor): New definition of net debt* Leverage Factor Net financial debt RWE’s targeted range for the leverage factor: + provisions for pension 2.8x – 3.4x by 20
Slide 36: Development of net debt
Development of net debt € billion Capex Share Dividends Cash flows Acquisitions/ Others Change in buy back from disposals/ including pension, operating (de)consoli- f/x effects nuclear, activities dations mining provisions 25 +2.0 -4.3 +2.5 20 -0.2 +2.5 -0.3 -0.2 18.4 16.5 Including Including DCO*:
Slide 37: Development of pension liabilities, plan assets and provisions
Development of pension liabilities, plan assets and provisions change € million 30.09.2008 31.12.2007 absolute Present value of funded benefit obligations 10,794 12,298 -1,504 Fair value of plan assets 11,095 12,675 -1,580 Net amount for funded plans -301 -377 +76 Capitalized surplus of plan assets
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