Rwe Ag · XETR:RWE
Rwe — Delta Lloyd Securities Investment Conference 2004
19 slides from Rwe's conference presentation, Apr 22, 2004
Slide 1: "Powering Up": From Consolidation to Delivery
“Powering Up”: From Consolidation to Delivery Delta Lloyd Securities Investment Conference 2004 Antwerp, April 22nd, 2004 Ingo Alphéus Vice President Investor Relations, RWE AG
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: Highlights of 2003 – Year of Consolidation
Highlights of 2003 – Year of Consolidation Group operating result +23%, core business +27% PERFORMANCE EVA target achieved (€ 1 bn in core business) Proposed dividend up by 14% Cost reduction target increased by 20% 2005 target already achieved (< € 20 bn) DEBT REDUCTION Net debt at € 17
Slide 4: Dividend 2003: Strong Increase
PERFORMANCE Dividend 2003: Strong Increase 1.25 % + 14 € 1.10 € 0.10 bonus dividend € 1.00 dividend 74% of EPS post-goodwill 2002 2003 payout ratio Our profit profile provides a sound base for delivering attractive dividends. 5 4
Slide 5: New Group Structure in Place
REORGANIZATION New Group Structure in Place RWE Energy RWE Innogy Gas business fully integrated (Jan. 2004) UK Trading transferred to RWE Trading (Jan. 2004) Continental European water business fully integrated (Jan. 2004) Regenesys closed Telecom customers sold Asset-light development o
Slide 6: Cost Reduction: New Target Adds 20% to Existing Program
PERFORMANCE Cost Reduction: New Target Adds 20% to Existing Program (€ m) 180 3.2 bn 500 synergies new € 100 m 2 555 program RWE Thames Water / RWE Innogy € 80 m Czech Gas € 300 m reorganisation existing program € 20 m efficiency enhancement to compensate RWE Gas deal € 180 m IT, water restructuring
Slide 7: RWE Power: Impact of Power Price Surge on 2004 Profitability
PERFORMANCE RWE Power: Impact of Power Price Surge on 2004 Profitability Market relevant 2004 German electricity output approx. 170 TWh, thereof >75% sold by H1 2003 ¾ of output sold to wholesale market, redistributors and industrial clients → forward products, profit relevant with a lag of 12 m
Slide 8: RWE Thames Water: Regulatory Progress and New Cost Initiative
PERFORMANCE RWE Thames Water: Regulatory Progress and New Cost Initiative UK water operations Positive signals from the regulator for next UK regulatory period 2005 - 2010 - Post-tax return (real) on regulated asset base to increase from 4.75% to 5% - Customer price increases expected - Infrastruc
Slide 9: Faster Reduction of Net Debt
DEBT REDUCTION Faster Reduction of Net Debt (€ bn) 25 23.2 bn TARGET 2003* (< € 24 bn) 20 TARGET 2005** (< € 20 bn) 17.8 bn NEW TARGET 2005*** (< € 17 bn) 15 10 5 1/2003 12/2003 Based on exchange rates of (€ 1 =): * USD 1.10; GBP 0.70; ** USD 1.15; GBP 0.70; *** USD 1.20; GBP 0.70. 9
Slide 10: By 2006 All Past Acquisitions on Track to Deliver Positive EVA
INTEGRATION By 2006 All Past Acquisitions on Track to Deliver Positive EVA Czech Gas EVA target reached 3 years ahead of schedule RWE Innogy on track to reach EVA break even in 2005 RWE Thames Water on track to reach EVA break (incl. American Water) even in 2005 American Water on track to reach EVA
Slide 11: Streamlining the Core Business
PORTFOLIO Streamlining the Core Business Stake/company disposed of closing proceeds 3.5% of Ruhrgas Q1/2003 € 224 m 34.9% of STE (Czech Republic) Q2/2003 € 73 m Various activities of RWE Umwelt 2003/04 n.a. Non operational real estate 2003 € 270 m (overall program: € 1 bn; achieved: € 810 m) 40% of
Slide 12: RWE Umwelt Sale Intended
PORTFOLIO RWE Umwelt Sale Intended Despite comprehensive cost reductions and realignment, RWE Umwelt will not meet its cost of capital by 2005. The environmental business does not fit into the integrated business model with electricity, gas and water - very limited synergies - different strategi
Slide 13: German Network Regulation: Our Current View
German Network Regulation: Our Current View The German Federal Ministry of Economics proposes lean regulation as a general guideline. This implies: – reliable determination of the methodology to calculate grid tariffs defined by law which will be binding for the REGTP – ex post control by REGTP to
Slide 14: Outlook for 2004 – Year of Delivery
DELIVERY Outlook for 2004 – Year of Delivery 2003 2004 € million expectation* External revenue 43 875 Operating result 5 551 Net income after goodwill 953 Net income before goodwill 1 938 ROCE 10.4% Capex on fixed assets 4 362 * Based on exchange rates of (€ 1 =) USD 1.20; GBP 0.70. 14
Slide 15: RWE is Set to Deliver More: Ambitious Medium Term Targets
DELIVERY RWE is Set to Deliver More: Ambitious Medium Term Targets Debt Operating Cost Dividend ROCE reduction result cutting CAGR +15% max. € 17 bn at least 11% € 2 555 m 2004 – 2006 by year end 5% CAGR by 2005 by year end 2005* from organic 2004 growth € 500 m by year end 2006 * Based on exchange
Slide 16: RWE: Emissions Profile in Germany and UK
RWE: Emissions Profile in Germany and UK Germany: Power Produced in 2003 UK: Power Produced in 2003 (own plants only) - TWh - - TWh - Others 2.8 Others Oil 0.5 Gas 0.2 12.8 Nuclear energy Hard coal 36.9 16.7 Gas** Hard coal Lignite 16.1 21.2 71.5* CO2 emissions 2003 CO2 emissions 2003 113 million to
Slide 17: CO2 Emissions Trading in Germany: Our Current View
CO2 Emissions Trading in Germany: Our Current View The Draft National Allocation Plan (NAP) was approved and sent to the European Commission by the German Government on March 31st. Our view is that: The total allotment of CO2 allowances will ensure compliance with the German Kyoto (and EU Burden
Slide 18: German National Allocation Plan (Draft)
German National Allocation Plan (Draft) Overall Allocation: 503 million t CO2 (2005-2007) → 2.2% reduction 495 million t CO2 (2008-2012) For replacements: 4 years transfer of allowances, after that 14 years without reductions Small reserve for new entrants (3 million t CO2) Small extra alloc
Slide 19: Emissions Trading UK: Our Current View
Emissions Trading UK: Our Current View UK Government aims to achieve 20% CO2 reduction by 2010 thereby exceeding the Kyoto target (current projections indicate a 15.3% reduction). The initial allocation of allowances for 2005-7 is consistent with the achievement of a reduction of 16.3% in UK CO2
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