Rwe Ag · XETR:RWE
Rwe — Investor Presentation (March 2013)
33 slides from Rwe's investor presentation, Mar 6, 2013
Slide 1: 3 Steps to long-term value
3 Steps to long-term value (as of March 2013)
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: RWE – an attractive value proposition
RWE – an attractive value proposition Attractive portfolio Stable financials > Leading market position and > Progress in strengthening balance regionally focused strategy sheet > Pure utility play – exit of upstream > Streamlined and disciplined activities investment approach > Balanced asset portfo
Slide 4: Milestones of 2012
Milestones of 2012 Financial performance in line with upgraded guidance from November 2012: EBITDA +10%, operating result +10%, recurrent net income in line with 2011 Disposal of assets for a combined value of €2.1 bn Successful renegotiation of all but one long-term oil-indexed gas supply contracts
Slide 5: Generation earnings are coming under severe pressure
Generation earnings are coming under severe pressure Operating result in € bn 6.4 Conventional generation 3.3 > Lower outright power prices > Full auctioning of CO2 certificates > Pressure on spreads and load factors Other businesses > Expanding renewables > Growing upstream business 3.1 > Stable to
Slide 6: Strategic cornerstones remain, but targets adjusted to changing market conditions
Strategic cornerstones remain, but targets adjusted to changing market conditions Sustainable > Streamlined investments in renewables > Development of innovative products for energy market transformation (e.g. distributed energy solutions) Robust > Focus on cost efficiency, especially in conventiona
Slide 7: Implementation of strategy based on 3 steps to create long-term value
Implementation of strategy based on 3 steps to create long-term value Sweat the assets Selective capex Strategic repositioning 6
Slide 8: Portfolio considerations
Strategic repositioning Portfolio considerations > Sale of NET4GAS envisaged for 2013 Disposals > Further disposals will be opportunistic with focus on portfolio optimisation and value enhancement > Value enhancing growth over volume expansion, Focused especially in renewables growth > Concentration
Slide 9: Excellent access to debt capital market is key
Strategic repositioning Excellent access to debt capital market is key Leverage factor mid-term target: ≤ 3.0x Net debt in € bn 2.8x 3.5x 3.5x ‘In the order of 2012’ 29.0 29.9 33.0 ‘In the order of 2012’ 16.9 19.9 16.2 12.8 13.0 13.1 2010 2011 2012 2013e Leverage factor (Net debt/EBITDA) Net financi
Slide 10: Positive cash balance provides ability to drive down debt
Strategic repositioning Positive cash balance provides ability to drive down debt Cash flows from operating activities to cover investments and dividends by 2015 € bn Further reductions 9.3 in capex levels 8.8 7.1 Additional efficiency enhancements post 5.5 5.5 2014 initiated 4.4 Pay-out ratio of 50
Slide 11: Financial discipline and flexibility at forefront in new investment plan
Selective capex Financial discipline and flexibility at forefront in new investment plan € bn Approx. €13 bn capex programme for 2013 – 2015 ~ 6.7 Day-to-day of which 3.1 for electricity and gas grids ~ 2.3 Renewable projects Completion of conventional power generation programme ~ 1.9 Upstream gas &
Slide 12: Moderate and disciplined growth in German and CEE/SEE downstream markets
Selective capex Moderate and disciplined growth in German and CEE/SEE downstream markets Germany (examples) CEE/SEE (examples) Build on current downstream market Energy services capex (€ million) positions and expand in new markets, 60 regions, and commodities 40 Continue to build electricity down-
Slide 13: Deteriorating conventional power generation
Sweat the assets Deteriorating conventional power generation Profitability of RWE’s conventional generation portfolio1 > Current market situation leads to severe earnings pressure despite significant OR2 > WACC c. > 50% – 60% efficiency improvements > At current market conditions, approx. 1/3 of our
Slide 14: Measures to mitigate market pressure on conventional power generation
Sweat the assets Measures to mitigate market pressure on conventional power generation Focus on cash to improve the situation of the generation business. > gross margin More from better > International fleet dispatch management “cash asset optimi- > Improve gross margin, in particular through furthe
Slide 15: €1 bn efficiency enhancement programme: All measures identified and implementation on track
Sweat the assets €1 bn efficiency enhancement programme: All measures identified and implementation on track €1 bn programme backed bottom- In € million up by operational measures Several hundred individual 1,000 measures across the whole 250 RWE Group ~250 €200 million achieved earlier 550 Reduced
Slide 16: Efficiency enhancements by divisions
Sweat the assets Efficiency enhancements by divisions € bn Supply/Distribution Networks Germany > Reduction of overhead functions in the ~ 0.2 Holding and cross ~ 0.3 Supply/Distribution grid and sales business divisional effects Networks Germany > Development of new products > Optimising grid opera
Slide 17: Outlook for 2013
Outlook for 2013 In € million 9,314 In the order of 9,000 EBITDA 6,416 In the order of 5,900 Operating result Recurrent 2,457 In the order of 2,400 net income 2012 2013e1 Dividend €2.00/share2 Pay out ratio of 50% – 60% of recurrent net income 1 The outlook is after assumed disposals. In 2013 we exp
Slide 18: Back-up Charts
Back-up Charts The energy to lead
Slide 19: Divisional outlook for the operating result
Divisional outlook for the operating result € million 20121 2013 forecast versus 20122 Conventional Power Generation 3,268 Significantly below last year Supply/Distribution Networks Germany 1,578 In the order of last year’s level Supply Netherlands/Belgium 190 In the order of last year’s level Suppl
Slide 20: Operating result outlook for fiscal year 2013
Operating result outlook for fiscal year 2013 … … by major value drivers FY 2012 €6.4 bn Efficiency programme c. €550 million envisaged for 2013 Higher depreciation Increase in the order of €0.2 bn in 2013 Additional burdens of c. €1.2 bn; In FY 2012 still c. 121 million certificates Full auctio
Slide 21: Development of net debt influenced by increase in provisions due to low interest environment
Development of net debt influenced by increase in provisions due to low interest environment € billion Capex Dividends Acquisitions/ Cash flows Others Change Hybrid divestiture/ from including in pension, disposals/ operating f/x effects nuclear, (de)consoli- activities mining dation provisions +1.6
Slide 22: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio, excl. RWE Innogy) >20% <10% >30% >10% >40% >10% >60% >20% >70% >30% >70% >40% >70% >70% >90% >80% >90% >90% 2013 forward >30% >10% >40% >10% >50% >20% >50% >30% >60% >40% 2014 forward >30% >10% 2015 forward
Slide 23: Germany: Clean Dark (CDS) and Spark Spreads (CSS)
Germany: Clean Dark (CDS) and Spark Spreads (CSS) 2012 forward 2013 forward 2014 forward Ø 9.96 Ø 7.74 Ø 7.88 Ø 4.93 Ø -2.37 Ø -8.89 Trading year 2011 Trading year 2012 Trading year 2013 CDS Cal 2012–14 Base load (€/MWh) Average CDS CSS Cal 2012 – 14 Peak load (€/MWh) Average CSS (assumed thermal ef
Slide 24: NL: Clean Dark (CDS) and Spark Spreads (CSS)
NL: Clean Dark (CDS) and Spark Spreads (CSS) 2012 forward 2013 forward1 2014 forward1 Ø 8.59 Ø 7.63 Ø 7.96 Ø -4.55 Ø -1.24 Ø -7.89 Trading year 2011 Trading year 2012 Trading year 2013 CDS Cal 2012 – 14 Base load (€/MWh) Average CDS CSS Cal 2012 – 14 Base load (€/MWh) Average CSS (assumed thermal ef
Slide 25: UK: Clean Dark (CDS) and Spark Spreads (CSS)
UK: Clean Dark (CDS) and Spark Spreads (CSS) 2012 forward 2013 forward1 2014 forward1 Ø 19.87 Ø 13.78 Ø 19.51 Ø 3.55 Ø 3.12 Ø 2.79 Trading year 2011 Trading year 2012 Trading year 2013 CDS Cal 2012 – 14 Base load (€/MWh) Average CDS CSS Cal 2012 – 14 Base load (€/MWh) Average CSS (assumed thermal ef
Slide 26: 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 syndicated loan For liquidity (€4.0 bn up back-up to Nov 2017) €0.0 bn Commercial paper $0.4 bn ($5.0 bn) (up to 1 year) €0.3 bn (28 Feb 2013) MTN programme €30
Slide 27: Capital market debt currency and interest exposure
Capital market debt currency and interest exposure (as of 28 Feb 2013) 10% 33% €18.6 bn11 €18.5 bn2 67% 90% € Interest rate fixing expiry > 1 year £ Interest rate fixing expiry < 1 year 1 Capital market debt = bonds of €14.8 bn and hybrids of €3.7 bn; split into currencies includes cross-currency sw
Slide 28: Our lignite based electricity generation is at full load
Our lignite based electricity generation is at full load Average hourly utilisation of RWE’s 300 MW lignite blocks is at 100%* > Fotovoltaic installations have reached a new record high in Germany (c. 30 GW as of July 110% 1,1 2012) > Lignite baseload electricity generation still at full load if te
Slide 29: Market scenario for the utilisation of power plants in Germany
Market scenario for the utilisation of power plants in Germany Average utilisation of typical German power plants > Long-term scenario for the development of renewable energies published by the BMU 100% 100 expects strong growth of 80 renewables new build to c. 117 GW by the end of 2020 60 c. 28 GW
Slide 30: The fuel mix of European electricity generators 2012
The fuel mix of European electricity generators 2012 RWE has one of the most balanced generation portfolios of European electricity generators (installed capacity) 100% 80% 60% Hydro/ Other 40% Gas Hard Coal 20% Lignite 0% Nuclear Centrica CEZ EDF Enel E.ON Fortum GDF Iberdrola RWE SSE Share in powe
Slide 31: The fuel mix of European electricity generators 2012
The fuel mix of European electricity generators 2012 RWE has one of the most balanced generation portfolios of European electricity generators (generation output) 100% 80% 60% Hydro/ Other 40% Gas Hard Coal 20% Lignite 0% Nuclear Centrica CEZ EDF Enel E.ON Fortum GDF Iberdrola RWE Share in electrici
Slide 32: By 2014 we will have renewed more than 25% of our electricity generation fleet
By 2014 we will have renewed more than 25% of our electricity generation fleet BoA Neurath 12.5 GW 2.1 GW lignite out of (2012) 52 GW Staythorpe Moerdijk 2 1.7 GW CCGT 0.4 GW CCGT Lingen Claus C Pembroke Denizli Hamm Eemshaven 0.9 GW CCGT 1.3 GW CCGT 2.2 GW CCGT 0.8 GW CCGT 1.5 GW Hard coal 1.6 GW H
Slide 33: RWE's major investment projects
RWE‘s major investment projects RWE Capex share (€ bn) 2013 2014 2015 2016 2017 2018 Conventional power plant new build programme (Capex at 100% share) Hamm (Hard coal, 1,528 MW) 77% 2.4 Units D E Eemshaven (Hard coal/biomass, 1,560 MW) 100% 2.9 Units A B Denizli (Gas, 775 MW) 70% 0.5 RWE Dea‘s larg