Rwe Ag · XETR:RWE
Rwe — H1 2010 Earnings Presentation
37 slides from Rwe's earnings presentation, Aug 12, 2010
Slide 1: Investor and Analyst H1 2010 Conference Call
Investor and Analyst H1 2010 Conference Call Essen, August 12, 2010 Jürgen Großmann Chief Executive Officer Rolf Pohlig Chief Financial Officer Stephan Lowis Vice President Investor Relations
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: Today's Agenda
Today’s Agenda A Jürgen Großmann H1 2010 Highlights & Update on Group issues B Rolf Pohlig H1 2010 Group results and divisional performance & Outlook for 2010 RWE AG | H1 2010 Conference Call | August 12, 2010 3
Slide 4: Good start to 2010 continued
Good start to 2010 continued Strong operating performance: EBITDA +22%, operating result +21%, recurrent net income +23% Solid earnings contribution from German Power Generation, Central Eastern / South Eastern Europe and Essent Joint Venture established for construction and operation of 576 MW Gwyn
Slide 5: Nuclear fuel tax proposal creates major uncertainties
Nuclear fuel tax proposal creates major uncertainties Current draft of the nuclear fuel tax law Our view... > German government’s reasoning: > The government’s CO2 reasoning contradicts the concept of a market-based and technologically – “Substantial extraordinary revenues” unbiased CO2 reduction me
Slide 6: The impact of a nuclear fuel tax on the profitability of nuclear power generation
The impact of a nuclear fuel tax on the profitability of nuclear power generation would be significant The financial burden of the proposed tax Important aspects remain unclear... 50-55 22-32* ≥22 depending on > How many additional years will nuclear power 80 €/MWh €/MWh €/MWh remaining plants be al
Slide 7: Uncertainties from nuclear debate put our mid-term outlook for 2012/13 under review
Uncertainties from nuclear debate put our mid-term outlook for 2012/13 under review 2008 reported forecast 2012 2009 reported forecast 2013 € million versus 2008 € million versus 2009 e w EBITDA No guidance 9,165 above 2009 Operating result 6,826 r CAGR + ca. 5% e revi 7,090 above 2009 Un d Recurren
Slide 8: Power plant new build programme: making good progress
Power plant new build programme: making good progress Renewables Projects (RWE Innogy) Conventional New Builds (Power, npower, Essent) Offshore Wind Germany Germany > Nordsee Ost (295 MW): > Neurath (2 x 1,050 MW): First Bremerhaven chosen as offshore compression test in June successfully base port
Slide 9: ...as are our projects in gas upstream and midstream
...as are our projects in gas upstream and midstream Upstream Gas & Oil (RWE Dea) Gas Midstream (Nabucco) Algeria > Reggane (n/a1): approval of UK 2.6 m Declaration of Commerciality Germany 1.1 m Russia from authorities expected for Czech Rep. 2.3 m third quarter of 2010 Netherlands 1.9 m Hungary* 2
Slide 10: Outlook 2010
Outlook 2010 2009 2010 € million forecast EBITDA 9,165 + 5 – 10% Operating result 7,090 + ca. 5% Recurrent net income 3,532 + ca. 5% Payout ratio of 50 – 60% Dividend € 3.50 of net recurrent income Capex on fixed assets €bn 5.9 ca. 7.0 RWE AG | H1 2010 Conference Call | August 12, 2010 10
Slide 11: Today's Agenda
Today’s Agenda A Jürgen Großmann H1 2010 Highlights & Update on Group issues B Rolf Pohlig H1 2010 Group results and divisional performance & Outlook for 2010 RWE AG | H1 2010 Conference Call | August 12, 2010 11
Slide 12: RWE Group key performance indicators
RWE Group key performance indicators January – June Change € million 2010 2009 in % External revenue 27,354 24,386 +12.2 Cash flows from operating activities 1,736 1,634 +6.2 EBITDA 6,150 5,047 +21.9 Operating result 4,956 4,084 +21.4 Non-operating result -1,009 216 - Financial result -787 -916 +14.
Slide 13: Performance of the Germany Division (I) Power Generation
Performance of the Germany Division (I) Power Generation Business Area (RWE Power) H1 operating result: +24.6 % € million + Lower fuel costs (ca. +€ 420 million) and costs for CO2 certificates (ca. +€ 100 million) 2,229 + Lower realised electricity prices and higher volumes (ca. +€ 50 million) 1,789
Slide 14: Forward selling by RWE Power in the German market
Forward selling by RWE Power in the German market (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% 20% sold sold >> 50% 50% sold sold
Slide 15: Performance of the Germany Division (II) Sales and Distribution Networks
Performance of the Germany Division (II) Sales and Distribution Networks Business Area H1 operating result: +0.7% € million Sales + Stable gas margins Reduced electricity margins 978 985 Distribution networks + Positive volume effect due to economic recovery + Allowed costs for growth capex in netwo
Slide 16: Performance of the Netherlands/Belgium Division (Essent)
Performance of the Netherlands/Belgium Division (Essent) H1 operating result: - € million + First-time consolidation of Essent 345 + RWE Energy Nederland (REN) included in “other/consolidation” in H1 2009 - + Operating performance: Higher gas sales mainly due to weather effects H1 2009 H1 2010 Guida
Slide 17: Performance of the United Kingdom Division (RWE npower)
Performance of the United Kingdom Division (RWE npower) H1 operating result: +14.1% € million + Sustained cost and efficiency improvements Power generation 154 Reduced generation margins and lower income from short-term 135 position management + Lower maintenance costs Retail + Higher residential ga
Slide 18: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division H1 operating result: +38.6% € million + Higher margins in the Czech gas sales business but Lower gas sales volumes and transit revenues 722 521 + Improved electricity sales margins in Hungary and Poland + Positive f/x effects H1 20
Slide 19: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) H1 operating result: +13.0% € million + First-time consolidation of Essent wind activities (+€9 million) + First-time consolidation effect from Danta de Energías + Commissioning of Rhyl Flats wind farm (90 MW) in December 2009 23 26 Upfront costs o
Slide 20: Performance of the Upstream Gas & Oil Division (RWE Dea)
Performance of the Upstream Gas & Oil Division (RWE Dea) H1 operating result: +47.7% € million + Higher oil prices 192 Lower gas prices 130 Lower production volumes + German business: lower royalties + North Africa: reduced exploration costs H1 2009 H1 2010 Guidance for 2010: significantly above pre
Slide 21: Performance of the Trading/Gas Midstream Division (RWE Supply & Trading)
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) H1 operating result: -62.3% € million Trading + First-time consolidation of Essent’s trading activities (+€68 million) 738 Performance below high level of H1 2009 278 Supply Absence of one-offs (successful conclusion of price r
Slide 22: Non-operating result
Non-operating result January – June Change € million 2010 2009 (absolute) Capital gains 1 7 -6 Impact of commodity derivatives on earnings -1,064 514 -1,578 Restructuring, other 54 -305 359 Total -1,009 216 -1,225 ¾ Capital gains: No major capital gains in 2009 and 2010. ¾ Impact of commodity deriva
Slide 23: Financial result
Financial result January – June Change € million 2010 2009 (absolute) Net interest -337 -253 -84 Interest accretion to non-current -442 -446 4 provisions Other financial result -8 -217 209 Total -787 -916 129 ¾ Net interest - Higher interest expenses due to increased debt used to finance our growth
Slide 24: Cash flow statement
Cash flow statement January – June Change € million 2010 2009 (absolute) Funds from operations (FFO) 4,020 2,643 +1,377 Change in working capital -2,284 -1,009 -1,275 of which variation margins -904 +421 -1,325 Cash flows from operating activities 1,736 1,634 +102 Capex on fixed assets -2,497 -2,133
Slide 25: Major goal remains to secure sound credit standing as expressed by A-flat/A2 rating
Major goal remains to secure sound credit standing as expressed by A-flat/A2 rating Securing A-flat rating remains a major goal Leverage factor as an operational tool > RWE is well positioned with an A-flat / A2 > Target is to keep leverage factor below or equal rating compared to peers to 3.0 > Tar
Slide 26: Back-up
Back-up RWE AG | H1 2010 Conference Call | August 12, 2010 26
Slide 27: RWE Group electricity production (by geographic regions)
RWE Group electricity production (by geographic regions) January – June Other Total Total in TWh Germany UK NL Internat. 2010 2009 Lignite 32.9 2.7 35.6 36.0 Nuclear 22.6 22.6 17.8 Hard coal 19.7 4.9 3.1 0.3 28.0 21.0 thereof contracts 11.8 11.8 7.0 Gas 6.2 10.6 3.5 0.2 20.5 11.6 Renewable energies
Slide 28: RWE Group electricity sales volume (by geographic regions)
RWE Group electricity sales volume (by geographic regions) January – June Total Total in TWh Germany UK NL Poland Hungary Other 2010 2009 Private and commercial 14.2 9.9 5.9 1.2 2.8 34.0 29.1 customers Industrial and corporate 29.4 15.6 5.0 2.2 2.9 55.1 47.7 customers Distributors 47.3 3.0 0.7 51.0
Slide 29: RWE Group gas sales volume (by geographic regions)
RWE Group gas sales volume (by geographic regions) January – June Czech Total Total in TWh Germany Rep. NL UK Other 2010 2009 Private and commercial 17.0 20.9 41.8 27.7 2.1 109.5 67.2 customers Industrial and corporate 22.7 11.9 29.2 2.8 5.3 71.9 49.9 customers Distributors 44.9 4.5 0.0 0.0 0.0 49.4
Slide 30: Germany: Clean Dark Spread versus hard coal and CO2 prices
Germany: Clean Dark Spread (CDS) versus hard coal and CO2 prices 160 40 2009 forward 120 30 80 20 40 10 0 0 160 40 2010 forward 120 30 80 20 40 10 0 0 160 40 2011 forward 120 30 80 20 40 10 0 0 160 40 2012 forward 120 30 80 20 40 10 0 0 01.01.2008 01.07.2008 01.01.2009 01.07.2009 01.01.2010 01.07.20
Slide 31: Germany: Clean Spark Spread versus natural gas and CO2 prices
Germany: Clean Spark Spread (CSS) versus natural gas and CO2 prices 50 50 2009 forward 40 40 30 30 20 20 10 10 0 0 50 50 2010 forward 40 40 30 30 20 20 10 10 0 0 50 50 2011 forward 40 40 30 30 20 20 10 10 0 0 50 50 2012 forward 40 40 30 30 20 20 10 10 0 0 01.01.2008 01.07.2008 01.01.2009 01.07.2009
Slide 32: UK: Clean Dark Spread versus hard coal and CO2 prices
UK: Clean Dark Spread (CDS) versus hard coal and CO2 prices 150 50 2009 forward 120 40 90 30 60 20 30 10 0 0 150 50 2010 forward 120 40 90 30 60 20 30 10 0 0 150 50 2011 forward 120 40 90 30 60 20 30 10 0 0 150 50 2012 forward 120 40 90 30 60 20 30 10 0 0 01.01.2008 01.07.2008 01.01.2009 01.07.2009
Slide 33: UK: Clean Spark Spread versus natural gas and CO2 prices
UK: Clean Spark Spread (CSS) versus natural gas and CO2 prices 40 40 2009 forward 30 30 20 20 10 10 0 0 40 40 2010 forward 30 30 20 20 10 10 0 0 40 40 2011 forward 30 30 20 20 10 10 0 0 40 40 2012 forward 30 30 20 20 10 10 0 0 01.01.2008 01.07.2008 01.01.2009 01.07.2009 01.01.2010 01.07.2010 01.01.2
Slide 34: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change in disposals/ from including pension, (de)consoli- operating f/x effects nuclear, dations activities mining provisions +2.1 +0.9 29.8 30 -0.2 +0.6 +2.5 -1.7 25.8 25 0 Net Net debt debt 31.12.2009 30.06.2010 RWE
Slide 35: Financial liabilities and assets
Financial liabilities and assets (as of 30.06.2010) Financial liabilities in billion Euros Financial assets in billion Euros Split of securities 25 10 20,7 20 17,8 2,0 7,2 0,7 8 6,7 0,7 0,7 0,4 1,3 15 1,0 19% 5 2,3 2,3 10 16,6 17,3 1,0 1,0 81% 3 5 3,0 0,3 2,4 0,5 2,6 1,3 0,3 0,7 0,7 0,2 0 0 Interest
Slide 36: Gross financial debt currency and interest exposure
Gross financial debt currency and interest exposure1 (as of 30.06.2010) Others 2% USD 1% Floating 19% £ 36% Fixed 81% € 61% 1 Including cross-currency swaps. RWE AG | H1 2010 Conference Call | August 12, 2010 36
Slide 37: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Strong sources of financing 2,5 20 in € bn Fully committed for liquidity syndicated loan back-up 2,0 16 (€4.0bn up to Oct. 2011) €0.0 bn 1,5 12 1,0 8 Commercial paper $0.3 bn ($5.0 bn) (up to 1 year) 0,5 4 €0.3 b