Rwe Ag · XETR:RWE
Rwe — Investor Presentation (June 2011)
37 slides from Rwe's investor presentation, Jun 27, 2011
Slide 1: Managing through the cycle
Managing through the cycle (as of June 2011)
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: Q1 2011: Outlook confirmed – future of German nuclear unclear
Q1 2011: Outlook confirmed – future of German nuclear unclear Operating performance: EBITDA -4%, operating result -5%, recurrent net income -7% Net debt reduced to € 27.5 bn German nuclear moratorium for safety review Outlook for 2011 confirmed despite negative impact from 3-month nuclear moratorium
Slide 4: Utilities are facing four major challenges
Utilities are facing four major challenges Low electricity prices and pressure on generation spreads, inter alia due to unexpected strong growth of renewable energies German nuclear fuel tax 2011 – 2016 Negative gas-to-oil-spread due to decoupling of oil and gas prices Tighter CO2-regime from 2013 o
Slide 5: Our response to steady the course and safeguard future growth
Our response to steady the course and safeguard future growth Continued > Maintain strategic and regional focus strategic > Continue to reduce RWE’s CO2 intensity to market average focus ... by 2020 > Pursue organic growth, especially in renewables and upstream ... combined > Reduce capex level 2011
Slide 6: Europe remains our core market
Europe remains our core market RWE’s core business remains electricity and gas along the entire value chain 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 tradit
Slide 7: Our strategy to reduce the financial impact of CO2
Our strategy to reduce the financial impact of CO2 Certificates to be purchased Mitigating factors C. in million t p.a. Organic growth 150 – 160 +100 > Commissioning of new build projects (bulk before or in 2013) > Increase in profits from renewable energies > Increase in profits from upstream gas &
Slide 8: Compared to the marginal plant RWE's portfolio is already today financially slightly long CO2
Compared to the marginal plant RWE's portfolio is already today financially slightly long CO2 t/MWh Pass-through factor 0.9 > Factor by which CO2 price is reflected in power price 0.8 2009 2010 > Set by marginal plants which on average 0.7 Long have a higher emission factor than the 0.6 Short- marke
Slide 9: Managing CO2: We complement physical measures by comprehensive financial optimisation
Managing CO2: We complement physical measures by comprehensive financial optimisation Specific CO2 emissions exposure (t/MWh) 0.80 0.67 Market average New Renew- CDM/JI Portfolio New builds ables optimi- builds Renew- 0.45 and shut sation ables Shut downs2 downs/ Portfolio lower optimi- load sation
Slide 10: Surpassing the peak of our investment cycle – RWE's capex programme 2011 to 2013
Surpassing the peak of our investment cycle – RWE's capex programme 2011 to 2013 Capex programme 2011 – 2013 cut by approx. € 3 bn compared to previous programme € billion < 7.5 Portfolio divestments1 Portfolio 6.4 0.8 divestments1 5.9 1.3 ~5 ~5 1.1 0.9 1.5 0.5 1.0 1.2 0.9 1.4 0.3 0.7 1.3 0.9 0.2 0.
Slide 11: Set the stage for international growth
Set the stage for international growth > More than 50% of our capex will be spent Share of growth capex1 on growing our business and improving efficiency Growth / > More than 60% of our capex will be spent Replacement / in our international business €18bn efficiency maintenance enhancement > Committ
Slide 12: Building up CO2-free generation – RWE Innogy continues with its ambitious investment programme
Building up CO2-free generation – RWE Innogy continues with its ambitious investment programme > Clear commitment to grow our renewable Capacity1 growth targets (in GW) business > Focused capex programme 2011 – 2013 leads >4.5 to adjustment of targets. We expect to achieve 3.4 our 4.5 GW target in 2
Slide 13: RWE Dea: Significant earnings growth based on own field developments
RWE Dea: Significant earnings growth based on own field developments > Clear commitment to grow upstream Ramp-up of gas/oil production gas and oil position Target of 70 mm boe/a > Production development of RWE Dea until 2016 is mainly driven by seven major field developments > Shift in capex program
Slide 14: 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 Forwards 30 0 2011 20 -5 10 -10 0 -15 40 5 Forwards 30 0 2012 20 -5 10 -10 0 -15 Jan 2009 Apr 2009 Jul 2009 Oct 2009 Jan 2010 Apr 2010 Jul 2010 Oct 2010 Feb 2011 Spread Crude Brent (in EUR, normalised to TTF) TTF forw
Slide 15: RWE’s gas procurement portfolio
RWE’s gas procurement portfolio (As of 2011) Long-term oil-indexed purchase contracts (take-or-pay) Own production 33% Russia NBP 38% Norway approx. 47 bcm p.a. TTF 9% Germany 20% Netherlands > Our gas procurement portfolio is solely managed by RWE Supply & Trading > ~50% or 24 bcm p.a. of overall g
Slide 16: RWE’s long-term oil-indexed gas purchase portfolio
RWE’s long-term oil-indexed gas purchase portfolio bcm p.a. RWE’s long-term oil-indexed gas purchase portfolio at the end of the relevant year 30 25 20 15 contract revisions initiated 2010 10 5 contract revisions initiated 2009 0 2009 2012 2015 2018 2021 2024 2027 2030 2033 2036 > Some 50% of the vo
Slide 17: Efficiency programme well on track
Efficiency programme well on track Cumulative operating result contribution of the programme compared to 2006 In € million 1,400 Upgrade 2011 – 2012 of € 200 million 200 900 Programme 2006 – 2012 700 of € 1,200 million 450 1,200 100 200 2007 2008 2009 2010 2011 2012 > Efficiency programme of
Slide 18: Outlook for 2011 – 2013
Outlook for 2011 – 20131 € million EBITDA 10,256 c. -15% c. 9,000 c. 8,000 7,681 Operating c. -20% result c. 5,700 c. 5,000 3,752 Recurrent c. -30% c. 2,300 c. 2,000 net income 2010 2011e before disposals after disposals 2013e Dividend € 3.50/share Pay out ratio of 50% – 60% of recurrent net income
Slide 19: Financial flexibility is key to us
Financial flexibility is key to us Expected development of leverage factor Unchanged target of solid A rating 3.X Leverage factor will exceed target of max. 3.0x in 2011 but we have initiated measures to bring it back below our threshold mid-term 2.8 2.8 Target of ≤ 3.0 Up to € 8 billion disposals b
Slide 20: RWE’s threefold financial targets
RWE’s threefold financial targets Attractive dividends Pay out ratio of 50% – 60% of recurrent net income Balancing the stakeholders’ interests Leverage Ca. € 9 billion growth capex … Keep leverage factor below … 2011 – 2013 < 3.0x mid-term to support Invest in mid-term growth, solid “A” rating espe
Slide 21: Back-up
Back-up RWE The energy to lead 21
Slide 22: New German energy policy – Major points of the Governmental draft as of 6 June 2011
New German energy policy – Major points of the Governmental draft as of 6 June 2011* The seven oldest nuclear power plants and Krümmel will be closed immediately One plant probably to be kept as “cold reserve” until 31 March 2013 Transfer of capacities from older to younger plants as well as transfe
Slide 23: New German energy policy – Major points of the Governmental draft as of 6 June 2011
New German energy policy – Major points of the Governmental draft as of 6 June 2011* Accelerated renewables growth: share should grow from 17% to 35% by 2020 (previously 30%) Accelerated high voltage grid new build through new law Increase energy efficiency measures: annual state funding of € 1.5 bn
Slide 24: Overview of German nuclear power plants
Overview of German nuclear power plants Power plant Net capacity Commercial Closure* MW commissioning Biblis A 1,167 1975 German nuclear power plants Neckarwestheim I 785 1976 Brunsbüttel Biblis B 1,240 1977 Brunsbüttel 771 1977 Immediately Brokdorf Isar 1 878 1979 8,422 MW Unterweser Krümmel Unterw
Slide 25: Nuclear moratorium to cut secured available capacity down to peak-demand level (March 2011)
Nuclear moratorium to cut secured available capacity down to peak-demand level (March 2011) ~ 153 GW PV: 17 GW 17 GW Wind: 28 GW 26 GW 1 GW Biomass: 4 GW 2 GW Hydro: 4 GW 10 GW1 ~ 97 GW 7 GW Pumped storage: 5 GW 8.4 GW < 82 GW ~ 80 GW Conventional and nuclear capacity: 95 GW Installed Un- Secured Ba
Slide 26: Shift of German merit order as an effect of the interim decommissioning of 8 nuclear power plants
Illustrative, part 1 Shift of German merit order as an effect of the interim decommissioning of 8 nuclear power plants under the German moratorium1) Peak demand Key 2 Process Variable production cost in €/MWh hydro, pump storage, biomass 1 ~8.400 MW nuclear nuclear capacity with low production cost
Slide 27: Shift of German merit order as an effect of the interim decommissioning of 8 nuclear power plants
Illustrative, part 2 Shift of German merit order as an effect of the interim decommissioning of 8 nuclear power plants under the German moratorium1) Peak demand Key Process (cont.) Variable production cost in €/MWh hydro, pump storage, biomass 3 In order to meet peak 3 nuclear demand, power lignite
Slide 28: Germany’s generation portfolio is overaged: >15 GW already online longer than originally scheduled
Germany’s generation portfolio is overaged: >15 GW already online longer than originally scheduled Age structure of Germany’s fossil-fuelled power plants GW 12 Originally planned service life 10 8 Gas & oil 6 Hard coal 4 Lignite 2 0 >50 >45 >40 >35 >30 >25 >20 >15 >10 >5 0-5 Age (in years) 28
Slide 29: RWE Power's Nuclear Power Plant Decommissioning Concept
RWE Power's Nuclear Power Plant Decommissioning Concept 35 – 40% About 50% 10 – 15% share of costs share of costs share of costs Decommissioning Post operational phase Nuclear dismantling Conventional (immediate, deferred) dismantling/ Final disposal demolition 5 – 7 years 10 – 15 years 2 – 3 years
Slide 30: Nuclear Provisions
Nuclear Provisions 1 Provisions for uncertain liabilities as per IAS 37 2 Public-law liabilities under Sec. 9a of the Germany Nuclear Energy Act Provisions are made for RWE fiscal year 2010: €10,010 million > Disposal of spent nuclear fuel assemblies €4,831 million Flasks, transport, conditioning, i
Slide 31: How the Size of the Provision is Determined
How the Size of the Provision is Determined Schematic description € million Escalation rate 2 (specific cost increase) 1 3 4 Annual interest accretion Discount rate Amount (discount to net Cost at payable present value) the cutt-off Provisions date IFRS t 2010 2010 2011 2012 20.. 31
Slide 32: 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) 150 130 2011 forward 110 90 70 50 30 > 20% > 50% > 70% > 80% > 90% 150 130 2012 forward 110 90 70 50 30 > 10% > 25% > 30% > 35% > 50% > 70% 150 130 2013 forward 110 90 70 50 30 > 10% > 20% 01/01/2008 07/01/2
Slide 33: RWE's capex programme 2011 to 2013: How capex leads to earnings growth
RWE's capex programme 2011 to 2013 How capex leads to earnings growth Day to day investments 6.7 (Including portfolio divestments1) (-0.3) Mainte- Thereof grid 3.2 nance 6.7 Growth and replacement projects 11.6 (Including portfolio divestments1) (-0.5) Efficiency Electricity generation enhancements
Slide 34: 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 35: 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 42 MWe, 80 MWth, 100%) Nordsee Ost 1.0 (Wind offshore, 295 MW, 100%) Capacity and earning
Slide 36: 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) 100% 0.4 NC195 (Libya) 100% 0.3 1 RWE‘s share in ca
Slide 37: 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 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/ Facts &