Rwe Ag · XETR:RWE
Rwe — Investor Presentation (August 2018)
47 slides from Rwe's investor presentation, Aug 16, 2018
Slide 1: RWE Company Presentation
RWE Company Presentation As of August 2018
Slide 2: Disclaimer
Disclaimer This document contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management, and are based on information currently available to the management. Forward-looking statements shall not be construed as a promi
Slide 3: Investment Highlights: Transforming RWE into a leading European renewables and conventional power generator
Investment Highlights: Transforming RWE into a leading European renewables and conventional power generator Provider of secure energy supply underlined with highly complementary renewable and conventional power generation portfolio Creation of Europe’s #3 renewables player with significant offshore
Slide 4: Strategic highlight: RWE continues to reshape its future
Strategic highlight: RWE continues to reshape its future RWE AG | Company Presentation | August 2018 Page 4
Slide 5: RWE is reshaping its operating business and financial portfolio
RWE is reshaping its operating business and financial portfolio Financial Operating business portfolio New Lignite & Nuclear European Power Renewables Supply & Trading Financial portfolio E.ON 16.7% E.ON 25% Gundremmingen innogy RES Gas storage 37.9% Kelag E.ON 25.1% Amprion 12.5% Emsland E.ON RES ~
Slide 6: Key transaction parameters
Key transaction parameters > E.ON to acquire RWE’s 76.8% stake in innogy for a total consideration of €17.1bn, including fiscal 2017 and 2018 dividend E.ON acquisition > E.ON to launch a voluntary public takeover offer for innogy minorities at €40 per of innogy share (adjusted for dividend payments
Slide 7: Highly complementary renewables and conventional generation portfolio
Highly complementary renewables and conventional generation portfolio Pro forma combined electricity generation capacity1 (as at 31 December 2017) > Leading European generator with diversified and balanced generation Low CO2 Firm and technologies generation 2.8 flexible capacity 10.3 capacity 8.3 >
Slide 8: Leading renewables player with attractive growth platform
Leading renewables player with attractive growth platform Installed renewable capacity in Europe1 Pro forma combined renewables capacity2 RoW Germany 7% 19% US 36% 8.6 GW 24% UK Pro 4% 6% forma 4% combined Italy Iberia Benelux > No. 3 renewables player in Europe with well-balanced portfolio and stro
Slide 9: Strong platform with attractive growth prospects
Strong platform with attractive growth prospects Capacity in operation, under construction and close to FID1 GW, pro rata 1.4 10.7 > Total combined development pipeline of ~17 GW 0.7 8.6 > Projects under construction include projects expected to be commissioned in 2018 and 2019 Triton Knoll2 507 MW
Slide 10: Earnings growth foreseen until early 2020s before investing into further pipeline projects
Earnings growth foreseen until early 2020s before investing into further pipeline projects Estimated development of EBITDA for pro forma combined operational renewables portfolio illustrative Expiration of higher starting > Illustrative earnings tariffs under EEG compression End of ROC scheme profil
Slide 11: Step-change in operating business with doubling of EBITDA post transaction
Step-change in operating business with doubling of EBITDA post transaction RWE stand-alone EBITDA1 Pro forma EBITDA2 (€ bn) > Significant earnings ~10% accretion with more than 90% of EBITDA from ~30% operating businesses ~25% > Diversification of ~40% earnings mix 1.4 – 1.7 > ~60% contribution from
Slide 12: Strong financial position post transaction provides ability to support future growth
Strong financial position post transaction provides ability to support future growth Transactional debt effects Financing > Limited cash requirements from transaction Nuclear provisions ~€0.8bn financed through own liquidity and funds > No assumption of capital market debt or Provisions for wind pla
Slide 13: Major transaction and legal milestones until closing
Major transaction and legal milestones until closing Announcement of transaction (12 March 2018) E.ON public tender offer 2018 (PTO) for innogy minorities Merger control and regulatory reviews and approvals Closing I 2019 > RWE sale of 76.8% innogy stake > E.ON issuance of 440m shares to RWE > RWE p
Slide 14: Strategic developments in current operations
Strategic developments in current operations RWE AG | Company Presentation | August 2018 Page 14
Slide 15: Strategic focus on evolution of existing business portfolio
Strategic focus on evolution of existing business portfolio Optimise Enhance Tap into evolving existing operations portfolio opportunities Lignite & Nuclear/ European Power > Explore technologies European Power suitable to provide > Develop portfolio for future security of supply > Manage cost base
Slide 16: TSOs expect significant tightening of secure generation capacity
TSOs expect significant tightening of secure generation capacity TSO supply/demand balance1 (GW) > TSOs forecast potential for negative supply/demand balance by 2020 5 > Reduction of reliable capacity driven by nuclear 4 phase-out and hard coal plant closures > Growing need for TSOs to secure capaci
Slide 17: RWE's significant CO2 reductions in line with European and national climate goals
RWE‘s significant CO2 reductions in line with European and national climate goals RWE’s CO2 emissions in core markets1 (million tonnes) > Significant CO2 reduction since 2012 > More than 10% emissions reduction in 2017 Reduction 171 -27% target1: > Target to reduce CO2 emissions by 55 to 65 55 – 65
Slide 18: Future growth options are developed and next steps considered
Future growth options are developed and next steps considered Gundremmingen Tilbury Energy Centre Global LNG portfolio (m tons) 8 6.1 6 3.7 4 2.0 2 0.7 1.2 0.1 0 2012 2013 2014 2015 2016 2017 > Development of open > Development of various > Growth of supply gas turbine project for new build options
Slide 19: Financial highlights FY 2017
Financial highlights FY 2017 RWE AG | Company Presentation | August 2018 Page 19
Slide 20: Successful delivery of 2017 management targets
Successful delivery of 2017 management targets RWE stand-alone ✔ Earnings development above expectations (€ million) 2017 adj. EBITDA Return to clear dividend policy with minimum 1,600 – 1,900 2,066 ✔ ✔ dividend of €0.50/share and future upside Reimbursement of nuclear fuel tax and ✔ participation o
Slide 21: Development of adjusted EBITDA dominated by recovery of earnings at Supply & Trading
Development of adjusted EBITDA dominated by recovery of earnings at Supply & Trading Group RWE stand-alone (€ million) > Lignite & Nuclear: 5,403 FY 2016 1,928 Declining generation margins Lower non-recurring items compared to 2016 -408 Lignite & Nuclear -408 > European Power: Strong contribution fr
Slide 22: Adjusted net income FY 2017 reaches €973 million
Adjusted net income FY 2017 reaches €973 million Group RWE stand-alone (€ million) > RWE stand-alone adj. EBITDA includes Adj. EBITDA 2,066 operating income from Lignite & Nuclear, 5,756 European Power, Supply & Trading and dividend from innogy -2,110 Adj. depreciation -592 > All effects related to
Slide 23: High FY 2017 distributable cash flow despite negative effects in working capital
High FY 2017 distributable cash flow despite negative effects in working capital RWE stand-alone 2016 2017 (€ million) > innogy dividend of €683 million fully reflected in adj. EBITDA 1,928 Adj. EBITDA 2,066 > Changes in provisions refer mainly to legacy Change in provisions & provisions, nuclear pr
Slide 24: Solid capital structure with high financial flexibility
Solid capital structure with high financial flexibility RWE stand-alone net debt (as of 31 Dec 2017)1 (€ bn) Financial assets and receivables 8.7 > Net financial asset position > Financial receivables against innogy 1.7 > Majority of debt characterised by long-term > Financial assets 7.0 provisions
Slide 25: Financial highlights H1 2018
Financial highlights H1 2018 RWE AG | Company Presentation | August 2018 Page 25
Slide 26: Key messages of H1 2018
Key messages of H1 2018 ✔ Good first half of fiscal year 2018 – RWE stand-alone earnings outlook confirmed ✔ RWE Group figures and outlook amended after classification of innogy’s grid and retail businesses as ‘discontinued operations’ ✔ Transaction with E.ON well on track: agreement reached with in
Slide 27: Lower adjusted EBITDA mainly due to declining generation margins in conventional power generation
Lower adjusted EBITDA mainly due to declining generation margins in conventional power generation Group RWE stand-alone (€ million) 1,130 H1 2017 1,438 > Lignite & Nuclear: Declining generation margins -234 Lignite & Nuclear -234 and lower volumes > European Power: Declining generation margins -26 E
Slide 28: Hedging – stable average hedge prices
Hedging – stable average hedge prices Expected positions and hedge status as of 30 June 2018 Outright Average hedge price 2018 – 2021 corresponds with average hedged CO2 price in the range of ~€5 – 6/t1 (Lignite & Nuclear) ~28 ~28 ~29 ~29 85 – 90 TWh 80 – 85 TWh ~80 TWh ~80 TWh >90% >90% >90% >40% 2
Slide 29: Recovery of fuel spreads at the end of Q2 2018 after strong decline since end of 2017
Recovery of fuel spreads at the end of Q2 2018 after strong decline since end of 2017 Development of German fuel spreads1 8 6 4 €/MWh 2 0 -2 -4 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Months to Delivery Cal17 Cal18 Cal19 Cal20 Cal21 1 Fuel spre
Slide 30: Adjusted net income for H1 2018 reaches €683 million
Adjusted net income for H1 2018 reaches €683 million RWE stand-alone H1 2017 H1 2018 (€ million) > RWE stand-alone adj. EBITDA includes 1,438 Adj. EBITDA 1,140 adj. EBITDA from Lignite & Nuclear, European Power, Supply & Trading and dividend from innogy -295 Adj. depreciation -270 > Financial result
Slide 31: High H1 2018 distributable cash flow due to full amount of innogy dividend and cyclical working capital development
High H1 2018 distributable cash flow due to full amount of innogy dividend and cyclical working capital development RWE stand-alone H1 2017 H1 2018 (€ million) > innogy dividend of €683 million (FY 2017: 1,438 Adj. EBITDA 1,140 €683 million) fully reflected in adj. EBITDA Change in provisions & > Ch
Slide 32: Strong decline of net debt due to high inflow of variation margins
Strong decline of net debt due to high inflow of variation margins Development of net debt (RWE stand-alone) (€ million) 4,510 -829 922 9 -1,394 494 -19 3,693 Net debt Distributable Dividend Financial Other Change in Change in Net debt 31 Dec 2017 cash flow RWE AG investments/ changes in provisions
Slide 33: RWE stand-alone – outlook for 2018 confirmed
RWE stand-alone – outlook for 2018 confirmed FY 2017 FY 2018e €1.4 bn – €2.1 bn Adj. EBITDA €1.7 bn -€0.6 bn Adj. depreciation > Stable development expected > Significant improvement after redemption and buy back of hybrids in -€0.4 bn Adj. net financial result 2017 and impact from settlement of nuc
Slide 34: Clear perspective of growing dividend
Clear perspective of growing dividend Elements of dividend policy for next two years €1.50 > Dividends driven by distributable cash flow of €1.00 RWE stand-alone > Target to fully pay out entire distributable cash flow over planning horizon €0.701 Smooth short-term volatility of trading business >
Slide 35: Appendix
Appendix Page 35
Slide 36: RWE Group: Amended outlook for 2018 after classification of innogy's grid and retail businesses as DCO
RWE Group: Amended outlook for 2018 after classification of innogy’s grid and retail businesses as DCO1 (€ million) Actuals 2017 2018 forecast Adjusted EBITDA 2,149 1,500 – 1,800 671 Lignite & Nuclear 350 – 450 463 European Power 300 – 400 271 Supply & Trading 100 – 300 innogy – continuing 700 – 800
Slide 37: Generation: Leading and diversified provider of reliable energy
Generation: Leading and diversified provider of reliable energy Core generation markets1 (%) Production volumes2 (%) 31 4 18 19 8.5 UK 45 191 191 GW TWh 55 12 TWh 65 11 78 Germany 18 44 23.4 GW Spread3 Outright3 Germany Netherlands/ 3 Belgium 11 UK Other4 16 Netherlands/ Belgium 39 Highly relevant
Slide 38: Commercial Asset Optimisation: High value contribution from all activities
Commercial Asset Optimisation: High value contribution from all activities Commercial Asset Optimisation (CAO) value contribution Deviation from Reference Hedge Path ~5% Option management > Within defined limits > Re-optimisation of power ~15% > Based on fundamental market views station option ~5% >
Slide 39: Supply & Trading: Important earnings contributor to RWE results
Supply & Trading: Important earnings contributor to RWE results EBITDA development and gross margin split Business segments Average Return on risk capital2 Gross margin Trading return and Supply margin 40% Trading split1 ~50% Trading > Physical and financial products 60% on screen in liquid markets
Slide 40: RWE stand-alone figures relevant for cash and value management
RWE stand-alone figures relevant for cash and value management RWE Group RWE stand-alone Lignite & Nuclear Lignite & Nuclear European Power Operating European Power business Supply & Trading Supply & Trading innogy innogy stake and dividends Financial Consolidated net debt portfolio Provisions Key f
Slide 41: Lignite & Nuclear – earnings driven by lower realised generation margins and volumes
Lignite & Nuclear – earnings driven by lower realised generation margins and volumes Key financials H1 2018 versus H1 2017: H1 H1 Lower realised generation margins € million 2018 2017 change Closure of Gundremmingen B nuclear unit Longer outages and higher overhaul costs Adj. EBITDA 167 401 -234 Ope
Slide 42: European Power – operational performance on a par with previous year's level
European Power – operational performance on a par with previous year’s level Key financials H1 2018 versus H1 2017: H1 H1 Lower realised generation margins € million 2018 2017 change Absence of positive one-offs (e.g. land sales) UK 99 135 -36 Earnings contribution from UK capacity market Operating
Slide 43: Supply & Trading – Strong performance in Q2 2018
Supply & Trading – Strong performance in Q2 2018 Key financials H1 2018 versus H1 2017: H1 H1 Very good trading performance in Q2 2018 € million 2018 2017 change Good performance of gas and LNG business; however, earnings contribution below high previous year’s result Adj. EBITDA 101 131 -30 Value a
Slide 44: Power prices and commodities
Power prices and commodities Base load power prices – Germany, NL (1 year forward) Base load power prices – UK (1 year forward) €/MWh €/MWh 80 60 UK NL 70 40 60 Germany 20 50 0 40 Aug'16 Feb'17 Aug'17 Feb'18 Aug'18 Aug'16 Feb'17 Aug'17 Feb'18 Aug'18 Coal prices – API2 Cal-ahead Gas prices – TTF Cal-
Slide 45: Clean Dark and Spark Spreads – 2016-2019 forwards for Germany, UK and NL
Clean Dark (CDS) and Spark Spreads (CSS) – 2016 - 2019 forwards for Germany, UK and NL1 Germany UK2 Netherlands Cal16 Cal17 Cal18 Cal19 Cal16 Cal17 Cal18 Cal19 Cal16 Cal17 Cal18 Cal19 €/MWh €/MWh 15 15 Ø11.21 Ø10.52 10 10 Ø7.13 Ø7.02 Ø5.35 Ø5.80 Ø5.59 Ø5.24 Ø4.57 Ø5.35 Ø3.58 5 5 Ø4.16 Ø4.83 Ø3.10 Ø2
Slide 46: Your contacts @RWE Investor Relations
Your contacts @RWE Investor Relations Important Links Financial Calendar Annual and Interim Reports & Statements 14 August 2018 http://www.rwe.com/ir/reports Interim report on the first half of 2018 Investor and Analyst Conferences 14 November 2018 http://www.rwe.com/ir/investor-and-analyst-conferen
Slide 47: Powering. Reliable. Future.
Powering. Reliable. Future. RWE