Rwe Ag · XETR:RWE
Rwe — FY2015 Earnings Presentation
38 slides from Rwe's earnings presentation, Mar 8, 2016
Slide 1: Transforming RWE: Securing a sound financial base
Transforming RWE Securing a sound financial base Essen, 8 March 2016 Peter Terium Bernhard Günther 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: Agenda
Agenda A Peter Terium Strategy update B Bernhard Günther Financial performance and outlook for 2016 RWE AG | FY 2015 Conference Call | 8 March 2016 3
Slide 4: 3 steps to securing a sound financial base
3 steps to securing a sound financial base NewCo Efficiencies Dividend > Listing of a unique and > Step up of efficiency > Dividend policy reflects the leading European utility programme by another general business situation comprising grid, retail and €500 million and market conditions renewables b
Slide 5: Creation of a unique and leading European utility taking shape and well on track
Creation of a unique and leading European utility taking shape and well on track Key milestones > December 2015 RWE AG NewCo SE Supervisory Board approval shareholders shareholders > March 2016 100% Nomination of management team RWE AG > 1 April 2016 Conventional ~10% Operational start of NewCo plan
Slide 6: Designated management team for NewCo with long-standing experience
Designated management team for NewCo with long- standing experience and extensive industry knowledge Peter Terium Bernhard Günther Uwe Tigges > Chief Executive Officer > Chief Financial Officer > Chief HR Officer > 13 years sector experience > 18 years sector experience > 32 years sector experience
Slide 7: Operational progress in downstream and renewables businesses
Operational progress in downstream and renewables businesses provide solid basis for future growth Grid Retail Renewables > Commissioning of power- > Expansion of retail > Commissioning of Nordsee to-gas storage facility to activities in Slovenia, Ost and Gwynt y Môr stabilise grid Poland and Hungar
Slide 8: Restructuring plan defined to put RWE npower back on track
Restructuring plan defined to put RWE npower back on track Root causes > Over-customised billing system resulting in issues delivering accurate and timely bills > Absence of adequate operational controls to detect system issues Implications > Write down of anticipated revenues due to erroneous and l
Slide 9: Persistent pressure on conventional power generation met by efficiency efforts
Persistent pressure on conventional power generation met by continued efficiency efforts €/MWh € million €60 60 1.200 1,200 €51 50 €48 €41 40 800 30 20 400 10 0 0 2012 2013 2014 2015 German 1 year base load forward (lhs) RWE average realised power price (lhs) Net benefit to operating result from eff
Slide 10: Additional measures identified to improve cash flow for conventional power generation
Additional measures identified to improve cash flow situation for conventional power generation Indicative free cash flow situation1 Measures to improve cash flow situation > Further optimisation of maintenance strategy including reduction of day-to-day Coal NL Coal UK capex and opex in order to tak
Slide 11: Efficiency programme reaches €2.5 billion
Efficiency programme reaches €2.5 billion through GenCo’s efforts to identify improvement measures Net benefit to operating result Net benefit by division € million ~60% ~10% Conventional Power Additional programme: 500 Holding and other Generation Outstanding from old programme: 400 ~10% Grids/Part
Slide 12: RWE maintains disciplined capex approach
RWE maintains disciplined capex approach and secures investment opportunities Day-to-day/maintenance capex of €1.8 billion complemented with up to €700 million in potential growth investments Day-to-day investments in € billion for 2016 > Total capex for 2016 expected to be between €2 – 2.5bn, depen
Slide 13: Forward-looking dividend policy reflecting the general business situation
Forward-looking dividend policy reflecting the general business situation Dividend proposal for fiscal 2015: suspension of payment for common shares and €0.13 per preferred share Earnings situation Dividend Leverage Growth and cash flow opportunities situation RWE AG | FY 2015 Conference Call | 8 Ma
Slide 14: Agenda
Agenda A Peter Terium Strategy Update B Bernhard Günther Financial performance and outlook for 2016 RWE AG | FY 2015 Conference Call | 8 March 2016 14 14
Slide 15: Development of operating result in FY 2015
Development of operating result in FY 2015 Earnings in Conventional Power Generation under … by division (-€180 million; -4.5%) pressure mainly due to declining generation € million margins. FY 2014 4,017 Lower earnings from the disposal of grid assets in Germany but better performance in Supply NL/
Slide 16: Development of the earning figures in FY 2015
Development of the earning figures in FY 2015 +/- vs. EBITDA distorted by positive one-offs € billion FY 2015 FY 2014 from Hamm D hard coal plant termi- nation. Offsetting depreciation only in EBITDA 7.0 -0.1 operating result line. Non-operating result (NOR) dominated Depreciation -3.2 -0.1 by impai
Slide 17: Development of cash flows from operating activities
Development of cash flows from operating activities Strong decline in cash flows1 driven by movements in working capital € billion 5.6 -0.6 +0.3 -0.3 -1.1 -0.7 +0.1 3.3 CFOA1 CFOA1 Procure- Higher FY 2014 Higher Lower Other Other FY 2015 ment of variation variation use of CO2 margins margins provisi
Slide 18: Strong improvement of net debt after disposal of RWE Dea
Strong improvement of net debt after successful disposal of RWE Dea € billion Cash flows Capex on Dividends1 Divestments1 Change Others from opera- property, plant in pension, including ting activities1 and equipment nuclear, f/x effects and intangible mining assets and provisions1 financial assets1
Slide 19: Reliable access to the capital market is key to us
Reliable access to the capital market is key to us Significant reduction of net financial debt Achievements € billion Strong decrease of net financial debt 29.9 33.0 30.7 31.01 25.1 Net debt Net financial debt (incl. 50% hybrids)/ EBITDA < 1x (2015) 19.9 19.6 20.6 Ample liquidity after Dea sale 18.8
Slide 20: Outlook for 2016
Outlook for 2016 2015 reported 2016e2 € million EBITDA 7,017 5,200 – 5,500 Operating 3,837 2,800 – 3,100 result Adjusted 1,125 500 – 700 net income1 Dividend3 Common shares: - Oriented towards growth opportunities, indebtedness and Preferred shares: €0.13 earnings situation. 1 New term: formerly ‘re
Slide 21: 2016 divisional outlook for the operating result
2016 divisional outlook for the operating result € million 2015 reported1 2016 forecast2 Conventional Power Generation3 543 Significantly below 2015 Renewables 493 Significantly below 2015 Trading/Gas Midstream 156 Significantly above 2015 Grids/Participations/Other 2,008 Significantly below 2015 Su
Slide 22: Back-up charts
Back-up charts The energy to lead
Slide 23: Performance of the Conventional Power Generation Division
Performance of the Conventional Power Generation Division January – December: operating result: -45% (-€436 million) € million - Lower realised electricity generation spreads 979 - Termination of power plant project Hamm D 543 - Impact from the change in nuclear and mining provisions - Restructuring
Slide 24: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 31 December 2015 >30% >20% >40% >10% >40% >10% >60% >10% >60% >20% >80% >40% >90% >60% >90% >80% >90% >90% 2016 forward 31 Dec. 2013 31 March 2014 30 June 2014 30 Sep. 2014 31 Dec. 2014 31 March 2015
Slide 25: Clean Dark and Spark Spreads 2015-2017
Clean Dark (CDS) and Spark Spreads (CSS) – 2015 - 2017 (forwards for Germany, UK and Netherlands1) Germany UK2 Netherlands Cal15 Cal16 Cal17 Cal15 Cal16 Cal17 Cal15 Cal16 Cal17 €/MWh €/MWh 20 20 15 Ø16.97 15 Ø10.52 Ø11.21 10 10 Ø9.18 Ø7.62 Ø6.63 Ø5.80 Ø5.32 5 5 Ø4.83 Ø 3.98 Ø3.65 Ø4.71 0 0 Ø -1.44 Ø
Slide 26: Performance of the Supply/Distribution Networks Germany Division
Performance of the Supply/Distribution Networks Germany Division January – December: operating result: -0.8% (-€15 million) € million - Lower earnings from the disposal of grid assets 1,871 1,856 + Weather-induced higher gas demand + Improved customer base 2014 2015 Outlook for 2016 see new division
Slide 27: Performance of the Supply Netherlands/Belgium Division (Essent)
Performance of the Supply Netherlands/Belgium Division (Essent) January – December: operating result: +33% (+€48 million) € million + Weather-induced higher gas demand + Marketing of new supply offerings 194 146 2014 2015 Outlook for 2016 see new division ‘Supply’ page 31. RWE AG | FY 2015 Conferenc
Slide 28: Performance of the Supply United Kingdom Division (RWE npower)
Performance of the Supply United Kingdom Division (RWE npower) January – December: operating result: -€364 million € million - Significant process and system-related problems in B2C billing 227 system -137 - Shift to tariffs with lower margins - Customer losses and lower energy consumption in the B2
Slide 29: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division January – December: operating result: +33% (+€229 million) € million + Efficiency improvements Slovakia: 919 690 + VSE: One-off effect from asset revaluation linked to the full consolidation (+€185 million) Czech Republic: 2014 201
Slide 30: Outlook Grids/Participations/Other
Outlook Grids/Participations/Other Outlook for fiscal 2016: significantly below previous year € million + Efficiency improvements 2,008 - Increased costs to operate and maintain the distribution grid -+Lower earnings from the disposal of grid assets in Germany - VSE: One-off effect from asset reva
Slide 31: Outlook Supply
Outlook Supply Outlook for fiscal 2016: moderately below previous year € million East: - VSE: One-off effect from asset revaluation linked to the full 824 +consolidation in 2015 (-€42 million) 2015 2016e UK: Pro forma + Improved earnings from operating activities - Burdens from restructuring progr
Slide 32: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) January – December: operating result: +165% (+€307 million) € million + Increased earnings contribution from growth investments, mainly Nordsee Ost and Gwynt y Môr and sale of grid connection asset of the latter project 493 + Weather-induced higher
Slide 33: Performance of the Trading/Gas Midstream Division
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) January – December: operating result: -43% (-€118 million) € million Trading: - Trading activities did not reach high earnings level of 2014 Supply: 274 Still suffering from out of the money long-term gas storage contracts 156
Slide 34: Financial liabilities and assets
Financial liabilities and assets (Excluding hybrid capital as of 31 December 2015) Financial liabilities Financial assets Split of € billion € billion securities 20 18.9 20 16.5 1.9 24% 1.0 1.6 15 0.4 15 1.3 11.0 11.5 0.8 0.5 10 2.5 10 2.5 0.6 0.6 14.2 15.0 5 7.4 7.6 5 0.3 0.5 2.4 0.3 0.2 0.4 0.9 0
Slide 35: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Sources of funding1 € billion 2,0 2.0 18,0 18.0 Syndicated loan facility €0.0bn out of €4.0bn (until March 2020) (Back up liquidity) 1,5 1.5 13,5 13.5 Commercial papers $0.1bn out of $5.0bn 1,0 1.0 9,0 9.0 (up to
Slide 36: Capital market debt: Currency and interest exposure
Capital market debt: Currency and interest exposure (as of 31st December 2015) Currency exposure1 Interest exposure2 8% 1 39% 61% 92% € Fixed interest payments £ Floating interest payments (fixing expiry ≤ 1 year) 1 Capital market debt (senior bonds and hybrids) including cross-currency swaps. 2 Cap
Slide 37: Keep up with RWE …
Keep up with RWE … Follow us on twitter.com/RWE_IR and have a look at www.rwe.com/ir Important links Financial Calendar Annual and Interim Reports 20 April 2016 http://www.rwe.com/ir/reports/ Annual General Meeting Investor and Analyst Conferences 12 May 2016 http://www.rwe.com/ir/investor-and-analy
Slide 38: RWE Investor Relations – contacts
RWE Investor Relations – contacts Contacts for Institutional Investors & Financial Analysts Dr. Stephan Lowis Martin Vahlbrock Gunhild Grieve Dr. Holger Perlwitz Vice President Investor Relations Tel.: +49 201 12-15055 Tel.: +44 207 015-5459 Tel.: +49 201 12-15141 Tel. +49 201 12-15031 martin.vahlbr