Rwe Ag · XETR:RWE
Rwe — H1 2011 Earnings Presentation
46 slides from Rwe's earnings presentation, Aug 9, 2011
Slide 1: Securing financial strength for long-term growth
Securing financial strength for long-term growth Strategy update and Fiscal H1 2011 Essen, 9 August 2011 Jürgen Großmann Rolf Pohlig Stephan Lowis Chief Executive Chief Financial Vice President Officer Officer 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 Strategy update & H1 2011 highlights B Rolf Pohlig H1 2011 group results and divisional performance C Jürgen Großmann Outlook This written materials and the information contained herein are not being issued and may not be distributed in the United States of America,
Slide 4: Main messages
Main messages New energy policy in Germany in place – nuclear phase-out decided, nuclear fuel tax stays in place H1 2011 operating performance negatively impacted by one-off costs from nuclear exit decision: EBITDA -25%, operating result -33%, recurrent net income -39% Amprion: successful step in ou
Slide 5: Financial pressure intensified following recent political decisions in Germany
Financial pressure intensified following recent political decisions in Germany The seven oldest nuclear power plants and Krümmel stay closed – one plant probably to be kept as "cold reserve" until 31 March 2013 Transfer of capacities from older to younger plants as well as transfer of Mülheim-Kärlic
Slide 6: Maintain strategic and regional focus
Maintain strategic and regional focus RWE’s core business remains electricity and gas We build on our leading positions in our core markets to look for further growth Regional growth markets mainly CEE/SEE, especially Turkey Grow our renewables business in and around our traditional core markets RWE
Slide 7: Execution of strategy will be based on four pillars
Execution of strategy will be based on four pillars Bundle of measures 1 Divestments Secure Focused long-term financial strength 2 capex programme for long-term growth 3 Efficiency programme 4 Capital measures This written materials and the information contained herein are not being issued and may n
Slide 8: Divestment programme well on track
Divestments Divestment programme well on track – Further potential assets for disposal identified Approx. € 1.5 bn already realised > Sale of Thyssengas > Sale of our stake in Rostock power plant > Disposal of 75% of Amprion We will evaluate our strategic options on further assets > RWE Dea / assets
Slide 9: Memorandum of Understanding with Gazprom
Memorandum of Understanding with Gazprom RWE and Gazprom intend to: a) bring ongoing commercial negotiations on gas contracts to a mutually satisfactory conclusion and b) form a strategic partnership in power generation Power generation partnership is focusing on new or existing gas and hard coal fi
Slide 10: Capex programme: limited flexibility short-term, focused growth mid- to long-term
Focused capex Capex programme: limited flexibility short-term – focused growth mid- to long-term € billion > Peak of investment programme in 2011 > Reduced capex to less than < 7.5 € 5 bn by 2013 6.4 5.9 Finalising huge conventional <5 <5 power generation programme ~4 p.a.1 mainly in 2012 and 2013 >
Slide 11: Efficiency programme well on track and stepped up
Efficiency programme Efficiency programme well on track and stepped up Cumulative operating result contribution of the programme compared to 2006 In € million Upgrade August 2011 1,500 of € 100 million 900 700 9 Upgrade February 2011 450 9 of € 200 million 100 9 200 9 Original programme 2006 – 2012
Slide 12: Intended capital measures will further strengthen our balance sheet
Capital measures Intended capital measures will further strengthen our balance sheet Intention of equity capital measure of approx. € 2.5 bn > Use of treasury shares (28.8 million) > Use of authorised capital > Timing depending on market conditions Intention to issue further hybrid capital > Combini
Slide 13: Financial flexibility to invest in growth areas
Financial flexibility to invest in growth areas Renewable Energy Eastern Europe including Turkey > Average growth investments of more than > Average growth investments of more than € 1 bn p.a. € 0.5 bn > Target capacity of 4.5 GW (in operation or > Investment focus along the whole value under constr
Slide 14: Today's Agenda
Today’s Agenda A Jürgen Großmann Strategy update & H1 2011 highlights B Rolf Pohlig H1 2011 group results and divisional performance C Jürgen Großmann Outlook This written materials and the information contained herein are not being issued and may not be distributed in the United States of America,
Slide 15: A solid "A" rating is important for all stakeholders
A solid “A” rating is important for all stakeholders Company Rating Outlook > “A” Rating is benchmark for integrated European utilities AA- Stable > Keeping a certain financial flexibility A Stable is necessary for capital intensive infrastructure projects (e.g. power A Stable plant new builds) A Ne
Slide 16: How we are going to secure a solid "A" rating
How we are going to secure a solid “A” rating Expected development of leverage factor Measures to secure our solid “A” rating Rating Reduce net debt by: Leverage factor = 4,0 Net debt1 Up to € 11 billion disposals between 2011 and EBITDA BBB+ 2013 Baa1 Capex cut to approx. € 4 billion p.a. from 3,5
Slide 17: RWE Group key performance indicators
RWE Group key performance indicators January – June Change € million 2011 2010 in % External revenue 27,457 27,354 +0.4 Cash flows from operating activities 3,139 1,736 +80.8 EBITDA 4,622 6,150 -24.8 Operating result 3,341 4,956 -32.6 Non-operating result -210 -1,009 +79.2 Financial result -706 -787
Slide 18: Performance of the Germany Division (I) Power Generation
Performance of the Germany Division (I) Power Generation Business Area (RWE Power) January – June: operating result: -43.1% € million - Lower realised electricity prices and lower volumes (c. -€690 million), inter 2,229 alia, due to new energy policy and shut down of nuclear power plants 1,268 - Hig
Slide 19: Performance of the Germany Division (II) Sales/Distribution Networks
Performance of the Germany Division (II) Sales/Distribution Networks Business Area January – June: operating result: -4.3% € million + First-time full consolidation of regional sales and distribution company NVV 985 943 Sales - Lower gas sales volumes resulting from milder weather conditions Distrib
Slide 20: Performance of the Netherlands/Belgium Division (Essent)
Performance of the Netherlands/Belgium Division (Essent) January – June: operating result: -45.8% € million - Parts of gas midstream business now reported in Trading/Gas Midstream 345 - Lower electricity generation spreads 187 - Lower gas margins due to normalised weather conditions + Efficiency imp
Slide 21: Performance of the United Kingdom Division (RWE npower)
Performance of the United Kingdom Division (RWE npower) January – June: operating result: +129% € million + Cost reductions / efficiency improvements Power generation: 352 + First time contribution from Staythorpe CCGT 154 + Settlement of claims relating to major investment projects Retail: + Improv
Slide 22: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division January – June: operating result: -4.3% € million + Positive f/x effects 722 691 Czech Republic: - Weather-induced lower gas volumes + Higher income in gas transport business - Hungary: Lower electricity retail margins and burden f
Slide 23: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) January – June: operating result: +242% € million 89 + Increased generation volumes (partly driven by improved wind conditions and our growth investments) and improved electricity prices + Liquidated damages associated with the Greater Gabbard proj
Slide 24: Performance of the Upstream Gas & Oil Division (RWE Dea)
Performance of the Upstream Gas & Oil Division (RWE Dea) January – June: operating result: +74% € million 334 + Significantly higher realised oil and gas prices 192 + Higher oil production - FX- effects and lower natural gas production - Increased cost of production and royalties + Lower exploration
Slide 25: Performance of the Trading/Gas Midstream Division
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) January – June: operating result: -315% € million Trading - Negative development partly driven by market disturbance as a result of the events in North Africa and the changed German energy policy 278 Supply - Burdens from long-
Slide 26: Non-operating result
Non-operating result January – June Change € million 2011 2010 (absolute) Capital gains 315 1 +314 Impact of commodity derivatives on earnings -3 -1,064 +1,061 Restructuring, other -522 54 -576 Total -210 -1,009 +799 Capital gains: Mainly from the sale of Thyssengas and our 24.6% stake in the Rostoc
Slide 27: Financial result
Financial result January – June Change € million 2011 2010 (absolute) Net interest -257 -337 +80 Interest accretion to non-current provisions -416 -442 +26 Other financial result -33 -8 -25 Total -706 -787 +81 Net interest > Release of provisions, among other things Interest accretion to non-current
Slide 28: Cash flow statement
Cash flow statement January – June Change € million 2011 2010 (absolute) Funds from operations (FFO) 2,984 4,020 -1,036 Change in working capital 155 -2,284 +2,439 of which variation margins -570 -904 +334 Cash flow from operating activities 3,139 1,736 +1,403 Minus capex on fixed assets -2,709 -2,4
Slide 29: Today's Agenda
Today’s Agenda A Jürgen Großmann Strategy update & H1 2011 highlights B Rolf Pohlig H1 2011 group results and divisional performance C Jürgen Großmann Outlook This written materials and the information contained herein are not being issued and may not be distributed in the United States of America,
Slide 30: Updated Outlook for 2011 – 2013
Updated Outlook for 2011 – 2013 € million EBITDA 10,256 c. -20% c. 9,400 7,681 Operating c. -25% result c. 5,900 3,752 Recurrent c. -35% c. 2,500 net income 2010 2011e 2013e before further disposals Dividend € 3.50/share Pay out ratio of 50% – 60% of recurrent net income The outlook for 2013 include
Slide 31: Back-up
Back-up This written materials and the information contained herein are not being issued and may not be distributed in the United States of America, Canada, Japan or Australia. RWE AG | H1 2011 Conference Call | 9 August 2011 31
Slide 32: RWE Group electricity production (by geographic regions)
RWE Group electricity production (by geographic regions) January – June Other Total Total in TWh Germany UK NL/BE Internat. 2011 2010 Lignite 33.3 2.8 36.1 35.6 Nuclear 19.1 19.1 22.6 Hard coal 17.1 3.9 2.6 0.2 23.8 28.0 thereof contracts 10.5 10.5 11.8 Gas 6.5 10.9 2.4 0.1 19.9 20.5 Renewable energ
Slide 33: 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/BE Poland Hungary Other 2011 2010 Private and commercial 13.6 9.0 5.5 1.3 2.8 0.1 32.3 33.7 customers Industrial and corporate 28.3 16.1 8.6 2.0 2.6 0.3 57.9 56.2 customers Distributors 48.5 2.
Slide 34: 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 2011 2010 Private and commercial 16.1 16.0 22.3 21.9 0.6 76.9 94.0 customers Industrial and corporate 21.1 9.5 29.6 1.3 7.1 68.6 81.7 customers Distributors 34.0 2.1 0.0 0.1 3.6 39.8 4
Slide 35: Forward selling by RWE Power in the German market
Forward selling1 by RWE Power in the German market (Base-load & peak-load forwards in €/MWh) 110 2011 forward 90 70 50 30 > 20% > 50% > 70% > 80% > 90% 110 2012 forward 90 70 50 30 > 10% > 25% > 30% > 35% > 50% > 80% 110 2013 forward 90 70 50 30 > 10% > 30% 01/01/2009 07/01/2009 01/01/2010 07/01/201
Slide 36: Germany: Clean Dark and Spark Spreads (CDS/CSS)
Germany: Clean Dark and Spark Spreads (CDS/CSS) 2010 forward 2011 forward 2012 forward 30 25 Ø 23.55 20 Ø 14.88 15 Ø 12.49 10 Ø 5.89 5 Ø 6.16 Ø 4.54 0 09 10 9 0 1 09 9 10 0 11 1 09 10 9 0 1 l- 0 l- 1 l- 1 -0 -0 -1 -1 -1 -1 v- v- n- n- n- p- p- ai ai ai rz rz rz Ju Ju Ju No No Ja Ja Ja Se Se M M M M
Slide 37: UK: Clean Dark and Spark Spreads (CDS/CSS)
UK: Clean Dark and Spark Spreads (CDS/CSS) 2010 forward 2011 forward 2012 forward 20 16 Ø 12.80 12 Ø 12.56 Ø 8.19 8 Ø 7.35 Ø 6.70 Ø 3.88 4 0 09 10 9 0 1 09 9 10 0 11 1 09 10 9 0 1 l- 0 l- 1 l- 1 -0 -0 -1 -1 -1 -1 v- v- n- n- n- p- p- ai ai ai rz rz rz Ju Ju Ju No No Ja Ja Ja Se Se M M M M M M 1- 1-
Slide 38: Development of TTF gas price and brent oil price since January 2009
Development of TTF gas price and brent oil price since January 2009 (EUR/MWh) 40 5 2011 30 0 20 -5 10 -10 0 -15 40 5 2012 30 0 20 -5 10 -10 0 -15 Jan 2009 Apr 2009 Jul 2009 Oct 2009 Jan 2010 Apr 2010 Jul 2010 Oct 2010 Jan 2011 Apr 2011 Jul 2011 Spread Crude Brent (in EUR, normalised to TTF) TTF forw
Slide 39: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change divesture from including in pension, operating f/x effects nuclear, activities mining provisions 34 +2.2 -0.4 32 -3.1 +0.1 +2.7 30 -0.4 30.1 28 29.0 26 24 0 Net debt Net debt Dec. 31, 2010 June 30, 2011 This wri
Slide 40: Financial liabilities and assets
Financial liabilities and assets (excluding hybrid capital, as of June 30, 2011) Financial liabilities Financial assets Split of in billion Euros in billion Euros securities 25 10 20% 19.5 20 8 2,1 6.6 15.7 0,4 0,7 0,6 6.0 15 6 1,1 0,1 0,8 1,6 1,6 10 4 16,4 0,9 0,9 14,9 5 3.8 2 0,3 1,4 2,7 3,0 0,6 0
Slide 41: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Strong sources of financing in € bn Fully committed for liquidity 2,5 20 syndicated loan back-up (€ 4.0 bn up to Nov. 2015) € 0.0 bn 2,0 16 1,5 12 Commercial paper $ 0.4 bn ($ 5.0 bn) (up to 1 year) 1,0 8 € 0.3 b
Slide 42: Capital market debt currency and interest exposure
Capital market debt currency and interest exposure (as of June 30, 2011) 19% 25% € 17.8 bn1 € 16.9 bn2 75% 81% € £ Interest rate fixing expiry > 1 year Interest rate fixing expiry < 1 year 1 Capital market debt = bonds of € 16.1 bn and hybrid of € 1.75 bn; currency split includes cross-currency swap
Slide 43: Conventional power plant new build programme
Conventional power plant new build programme € bn1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Lingen 0.5 (Gas, 876 MW) BoA 2&3, Neurath 2.6 Units G F (Lignite, 2,100 MW) Hamm 2.4 Units D E (Hard coal, 1,528 MW) Staythorpe 0.8 Units 1 -4 (Gas, 1,650 MW) Pembroke 1.2 Units 1 -5 (Gas, 2,188 MW)
Slide 44: RWE Innogy major project portfolio
RWE Innogy major project portfolio € bn1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Gwynt y Môr 2.4 (Wind offshore, 576 MW, 60%) Greater Gabbard 1.9 (Wind offshore, 504 MW, 50%) Markinch (Biomass CHP 0.3 45 MWe, 88 MWth, 100%) Nordsee Ost 0.9 (Wind offshore, 295 MW, 100%) Capacity and earning
Slide 45: RWE Dea's largest field developments
RWE Dea's largest field developments RWE Capex1 Production start share (€ bn) 2011 2012 2013 2014 2015 2016 West Nile Delta (Egypt) 40% 2.6 Breagh (UK) 70% 0.5 Reggane (Algeria) 19.5% 0.5 Luno (Norway) 20% 0.5 Jordbær (Norway) 10% 0.2 NC193 (Libya)2 100% 0.4 NC195 (Libya)2 100% 0.3 1 RWE‘s share in
Slide 46: Always be informed about RWE…
Always be informed about RWE… To always be up-to-date, please have a look at our website www.rwe.com/ir 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-reports/ Resul