E.on Se · XETR:EOAN
E.on — Investor Presentation (November 2016)
65 slides from E.on's investor presentation, Nov 9, 2016
Slide 1: Focused Disciplined Striving
Focused Disciplined Striving
Slide 2: Disclaimer (I/II)
Disclaimer (I/II) This document and the presentation to which it relates contains information relating to E.ON SE ("E.ON") that must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other person or used in whole or in part for any other purp
Slide 3: Disclaimer (II/II)
Disclaimer (II/II) This presentation is not intended to provide the basis for any evaluation or any securities and should not be considered as a recommendation that any person should purchase any shares or other securities. This presentation contains certain financial measures (including forward-loo
Slide 4: Agenda
Agenda 1. 9M 2016 Update 2. Group overview & Group financials (pro-forma 2015) 3. Energy Networks 4. Customer Solutions 5. Renewables 6. IR contacts & reporting calendar 3
Slide 5: E.ON transformation progressing
E.ON transformation progressing Q3 2016 Highlights Solid Q3 YTD performance & FY16 guidance confirmed €200m additional proceeds from M&A earn-out agreement1 Successful listing of Uniper- market valuation leads to impairment charge Cabinet approval of draft KFK law Efficiency program initiated- secur
Slide 6: KFK implementation shaping up
KFK implementation shaping up Payment amounts1 for E.ON Next steps € bn Legislative process started 9.8 9.8 Risk Additional Cabinet decision on 19 Oct 2.6 2.0 premium premium Decision by Bundestag (Nov/Dec) Consent by Bundesrat (Dec) Base 7.8 amount 7.2 Current provisions Government target
Slide 7: Solid EBIT despite lower Networks contribution
Solid EBIT despite lower Networks contribution EBIT1 9M 2016 vs. 9M 2015 €m 2,418 +120 103 140 2,282 256 85 2,162 63 61 9M 2015 Divested 9M 2015 Energy Customer Renewables Corp. Preussen 9M 2016 Operations w/o div. Networks Solutions Functions & Elektra w/o div. operations Other, operations Consolid
Slide 8: Underlying Net Income strongly up
Underlying Net Income strongly up 9M 2016 € bn Group EBIT1 2.3 Interest on 9% YoY improvement due to bond repayment in fin. assets/ 0.5 January liabilities2 11% YoY weakening driven by valuation effects on Other interest other long-term provisions and lower construction 0.7 expenses interest capital
Slide 9: The Spin-off significantly impacted our IFRS equity
The Spin-off significantly impacted our IFRS equity IFRS equity € bn 19.1 1.1 1.0 10.3 Excluding 16.4 KFK effects 3.2 5.4 0.4 5.0 2.6 FY15 Dividends Income from Loss from Pensions 9M 2016 cont. ops discont. ops Shareholders’ equity Minorities 8
Slide 10: Strong cash flow improves net financial position
Strong cash flow improves net financial position Net Financial Position 9M 2016 vs. FY 2015 € bn -2.0 3.0 0.0 -1.1 0.6 0.4 -0.1 NFP FY 2015 OCF Investments Dividend Build & Sell/ Others NFP 9M 2016 Divestment -3.3 Provisions for pensions -5.9 -17.9 Asset retirement obligations -18.1 1 = -21.3 Econom
Slide 11: 2016 Outlook confirmed
2016 Outlook confirmed1 €4.6-5.0bn EBITDA2 €2.7-3.1bn EBIT2 Underlying €0.6-1.0bn Net Income2 1. In transition year 2016 including at-equity contribution of Uniper on an underlying basis after spin-off & deconsolidation; as of 2017 without Uniper contribution 10 2. Adjusted for non operating effects
Slide 12: E.ON Focus – our basis for steering the company
E.ON Focus – our basis for steering the company E.ON FOCUS – medium-term framework Capital structure BBB+ / Baa1 Profit Cash Return Growth Group EBIT1 Cash conversion ROCE3 EPS4 rate2 ≥ 80 % 8 – 10 % ≥ 5 - 10 % p.a. Dividend payout 40 – 60 % of Underlying Net Income closely linked to EPS and relativ
Slide 13: Agenda
Agenda 1. 9M 2016 Update 2. Group overview & Group financials (pro-forma 2015) 3. Energy Networks 4. Customer Solutions 5. Renewables 6. IR contacts & reporting calendar 12
Slide 14: E.ON at a glance
E.ON at a glance KEY FINANCIALS E.ON Pro-forma 2015 REVENUE | Focused | Disciplined | Striving € 43 bn EBIT GROUP • E.ON Focus - a newly defined financial framework to guide € 3.6 bn performance UNDERLYING NET INCOME • Stability – around 65% share of earnings from regulated / long- term contracted b
Slide 15: E.ON has the right combination of businesses to succeed in the New Energy World
E.ON has the right combination of businesses to succeed in the New Energy World Sustainability Customer Customized Solutions energy solutions Technological innovation Digitalization & Energy Connecting connectedness Networks platform Empowered customers Decentralization of energy State of the art Re
Slide 16: E.ON conducts its transformation with an eye for the future
E.ON conducts its transformation with an eye for the future and beyond Strive for leadership in the New Energy World Pursue attractive opportunities mid-term within established Laying the foundation core businesses for growth Focus on stable earnings, a sound balance sheet and fostering the right ca
Slide 17: Attractive portfolio and sound earnings foundation
Attractive portfolio and sound earnings foundation Key Financials (2015)2 New EBIT 20151 EBITDA € bn Energy Customer 7.6 Renewables 5.8 Networks Solutions -1.8 E.ON Deconsolidation New Group Uniper E.ON 1 EBIT € bn 4.4 3.6 -0.9 € 1.8 bn € 0.8 bn € 0.4 bn E.ON Deconsolidation New Group Uniper E.ON 1
Slide 18: Enhanced transparency and straightforward disclosure
Enhanced transparency and straightforward disclosure Non-core Core businesses business Energy Customer Corporate Preussen Renewables Networks Solutions Functions/Other Elektra Core EBIT Group EBIT1 Group EBIT1 Group EBIT1 - Interest/ taxes/ other +/- Non-cash effective items = Underlying Net Income
Slide 19: Outlook for new E.ON adapted to new scope
Outlook for new E.ON adapted to new scope w/o divested 2015 operations 20164 € bn € bn EBITDA 5.8 5.0 3 4.6-5.0 -0.8 Group 1 Divested Group w/o Group operations 2 divested operations EBIT 3.6 3.2 3 2.7-3.1 -0.4 Group 1 Divested Group w/o Group operations 2 divested operations Underlying Net Income 1
Slide 20: Renewables and Customer Solutions growing in 2016
Renewables and Customer Solutions growing in 2016 EBIT 20151 2015 2016 Drivers for 2016 Energy Networks € bn + Start of new regulatory period in Sweden 1.8 – Positive one-off effects in 2015 Stable earnings especially from provision release in 60%2 backbone Germany EBIT 2015 Renewables € bn + Full-y
Slide 21: ~70% of investments in regulated / long-term contracted businesses
~ 70% of investments1 in regulated / long-term contracted businesses Capex 20152 2015 2016 Drivers for 2016 Energy Networks Gross investments, € bn • Investments for maintenance and replacements in regulated asset base 1.5 1.5 • Integration of renewables, new 47% connections & intelligent grids • Fo
Slide 22: Underlying Net Income impacted by accretion of nuclear provisions and legacy bond coupons
Underlying Net Income impacted by accretion of nuclear provisions and legacy bond coupons 2015 Pro-forma € bn EPS (€ per share)1 0.6 3.6 0.4 Accretion of -0.8 2.6 nuclear provisions -0.7 2.1 0.56 -0.7 1.1 -0.3 Core EBIT w/o Divested PreussenElektra Group Economic Profit before Tax expense Minorities
Slide 23: Financial interest will reduce as bonds mature
Financial interest will reduce as bonds mature Liquidity and financial flexibility1 Maturity Profile1 3 € bn € bn 5 Revolving credit facility (undrawn) 5 4 3 2 Liquid funds & non-current 12.4 securities2 2.7 2.3 1 1.2 0 Liquidity 2016 2017 2018 2016 2017 2018 2019 2020 2021 2022 2023 ≥2024 Bond & pr
Slide 24: Spin-off has a significant impact on balance sheet
Spin-off has a significant impact on balance sheet E.ON pro-forma balance sheet (2015)1 Deconsolidation effect on equity (2015)1 € bn € bn Total: 79.9 Equity E.ON Group 2.6 16.4 19.1 8.7 Equity 2015 before spin-off Fixed 2.1 Minorities assets 24.7 Uniper Pro-forma -15.5 stake 7.2 deconsolidation Uni
Slide 25: Current book value does not adequately reflect the intrinsic value of the businesses
Current book value does not adequately reflect the intrinsic value of the businesses Energy Networks Germany Energy Networks Sweden € bn - unaudited, indicative values € bn - unaudited, indicative values ~4.7x ~6.0x ~8.0 ~3.0 1.7 0.5 IFRS net assets 2015 EBITDA 2015 IFRS net assets 2015 EBITDA 2015
Slide 26: Leverage position post split driven by provisions
Leverage position post split driven by provisions Economic net debt (2015)1 Debt factor development € bn Economic net debt / EBITDA Financial Liabilities2 15.6 Liquid Funds -7.8 3.7x Non-current -4.5 Securities Net Uniper Loan -3.1 3 2015 2016 Net Financial 0.1 Position • High economic net debt driv
Slide 27: Spin-off with significant impact on E.ON reporting in 2016
Spin-off with significant impact on E.ON reporting in 2016 Reporting structure and Uniper "At equity" simulated in consolidation during spin-off process Spin-off Report Q4 '15 • E.ON pro forma consolidated balance sheet in the Spin-off Report Q1 '16 has a simulation of the at-equity Old reporting Fu
Slide 28: E.ON is committed to exit Uniper fully
E.ON is committed to exit Uniper fully Spin-off Shareholding structure Minority participation to be consolidated Other shareholders at equity after execution of deconsolidation agreement2 Dividends received from Uniper will 46.65% 53.35% contribute to E.ON’s free cashflow As of deconsolidation
Slide 29: New mid-term financial framework to guide decision making
New mid-term financial framework to guide decision making E.ON FOCUS Capital structure BBB+ / Baa1 Profit Cash Return Growth Group EBIT1 Cash conversion ROCE3 EPS4 rate2 ≥ 80 % 8 – 10 % ≥ 5 - 10 % p.a. Dividend payout 40 – 60 % of Underlying Net Income closely linked to EPS and relative TSR5 Executi
Slide 30: E.ON has a range of measures available
E.ON has a range of measures available Catalyst Measures Decision criteria Opex cuts Deterioration in Capex efficiency Committed business environment Asset rotation Selective asset EPS impact Additional deterioration disposals Cash generation in financial environment Dividend policy
Slide 31: Stringent incentive plan for the Management Board
Stringent incentive plan for the Management Board KPI Calculation Cap Long-Term Relative TSR1 TSR development relative to 200% Incentive STOXX Europe 600 Utilities over of target value 4 years Short-Term EPS & individual EPS × 200% Incentive performance individual performance multiplier of target va
Slide 32: Agenda
Agenda 1. 9M 2016 Update 2. Group overview & Group financials (pro-forma 2015) 3. Energy Networks 4. Customer Solutions 5. Renewables 6. IR contacts & reporting calendar 31
Slide 33: The DSO is the backbone of the New Energy World
Energy Networks – Market Environment The DSO is the backbone of the New Energy World 32
Slide 34: E.ON has a strong European regulated asset base
Energy Networks E.ON has a strong European regulated asset base Well diversified footprint Presence in countries with AAA rating/ catch-up potential Regulated asset base (€ bn) EBIT 2015 (€ bn) ~ 20% ~ 20% ~ 60% 0.4 1.8 0.3 IG4 Sweden Germany 1.1 AAA €3.9 bn2 €10.0 bn AAA 5 GER SWE CEE Total % of To
Slide 35: Predictable earnings generated from RAB-based returns
Energy Networks Predictable earnings generated from RAB-based returns Pro-forma allowed WACC as solid base1 Regulatory stability in the near term Start of next regulatory period (Power) 2016 Germany 5.9%2 2017 ~10% Sweden 4.5%3 2018 2019 CEE 6.1% - 8.0% ~90% 2020 % of Total Power EBIT 2015 1. Pre-ta
Slide 36: Earnings include additional components
Energy Networks Earnings include additional components Indicative EBITDA pro-forma components 2015 Germany Sweden CEE3 Total EBITDA € 1.7 bn € 0.5 bn € 0.5 bn Return on RAB + Regulatory D&A1 ~63% ~96%5 ~84%4 5 Additional components (% of total EBITDA) Additional Based on grid remuneration expansion
Slide 37: Germany focuses on grid expansion and efficiency
Energy Networks Germany focuses on grid expansion and efficiency RES integration driving grid expansion Leading efficiency recognized by regulator • Since 2000 >80 GW of renewable capacities • E.ON Germany with consistently high installed – 35% connected to E.ON grid efficiency (underpinned also by
Slide 38: Sweden focuses on performance and quality leadership
Energy Networks Sweden focuses on performance and quality leadership Efficiency evidenced by peer benchmarking Continuous quality improvements • Performance leadership as key argument in • Quality improvements are key to increase any regulatory discussion customer satisfaction and reduce financial d
Slide 39: Customers are recognizing E.ON's quality
Energy Networks Customers are recognizing E.ON’s quality Effective customer management... ... reflected in increasing NPS E.ON Energy Networks1 Renewables Low voltage +14.0 NPS Customer requests connections customers2 in <1 year (~373,000) ~13.3 m Mid voltage +14.0 NPS Gas customers customers2 New h
Slide 40: E.ON invests to seize mid-term growth opportunities
Energy Networks E.ON invests to seize mid-term growth opportunities Capex breakdown 2016-20181 Organic RAB growth2 of investments dedicated ~52% to growth Replacement & Connecting others renewables €2.0 bn, 48 % €0.8 bn, 18 % Higher investment than 1.4x regulatory depreciation fuels asset base growt
Slide 41: Energy Networks Key takeaways
Energy Networks Key takeaways €18 bn Regulated Asset Base1 One of the largest European Strong and well diversified footprint Regulated Asset Bases across Europe €1.8 bn2 Energy Networks EBIT 2015 Predictable underlying earnings from RAB based returns and… 51% of E.ON Group EBIT >10% From additional
Slide 42: Agenda
Agenda 1. 9M 2016 Update 2. Group overview & Group financials (pro-forma 2015) 3. Energy Networks 4. Customer Solutions 5. Renewables 6. IR contacts & reporting calendar 41
Slide 43: Customers evolve from consumers to energy partners
Customer Solutions – Market environment Customers evolve from consumers to energy partners 42
Slide 44: Customer Solutions addresses customer needs across different segments
Customer Solutions Customer Solutions addresses customer needs across different segments B2C & B2B SME Energy Sales Power & Gas Heat District Heating, B2B Large Local Heating & B2M Foundation New Solutions 43
Slide 45: Energy Sales is the strongest business pillar
Customer Solutions Energy Sales is the strongest business pillar EBIT by business pillars1 EBIT by geography1 2015, € bn (% of total Customer Solutions EBIT 2015) 2015 Continental UK Europe UK €0.3 bn Energy Sales 0.4 0.3 0.7 (~85%) B2C & B2B SME New Solutions Germany €0.4 bn Heat 0.1 (~15%) B2B Lar
Slide 46: Stabilized customer base and increasing customer loyalty support attractive financials
Customer Solutions – Energy Sales Stabilized customer base and increasing customer loyalty support attractive financials Stabilized energy sales Steadily increasing Attractive financials3 customer base customer loyalty # of customers (m)1 Top down NPS improvement ‘11 – ‘152 € bn, 2015 Gross Margin 2
Slide 47: E.ON's excellent sales capabilities are the core foundation
Customer Solutions – Energy Sales E.ON’s excellent sales capabilities are the core foundation Make it a great experience +10% Increased customer self-service share by 10% facilitating the “customer journey” Make me want to join -6 Reduced contracting process days duration from one week to one day th
Slide 48: Strong position in resilient and attractive heat business
Customer Solutions – Heat Strong position in resilient and attractive heat business Business E.ON Illustrative models presence infrastructure Business characteristics • Established partnerships with customers based on long-term contracts District heating Heat demand • End-to-end solutions driven <10
Slide 49: Product portfolio is expanding with new solutions
Customer Solutions – New solutions Product portfolio is expanding with new solutions Recent proof points SME commercial lighting 60 projects delivered PV (& battery) 400,000 value added service products sold Value added 3,500 PV contracts signed services connected home 65,000 devices deployed Energy
Slide 50: For large customers proven track record in new solutions
Customer Solutions – New solutions For large customers proven track record in new solutions Key differentiators demonstrated Onsite generation Savings guarantee from energy ~2,000 MW th small to large scale in performance contracts operation ~600 MWel industry on site Independent system integrator
Slide 51: Prudent investments support energy solution expansion
Customer Solutions Prudent investments support energy solution expansion Planned cumulative Capex 2016-2018 1 € bn B2C/B2B SME 0.7 • Upgrade and renewal of IT systems to drive digital transformation • Development and expansion of local area B2B Large/B2M - heating systems Heat 0.7 • Sustainable loca
Slide 52: Customer Solutions Key takeaways
Customer Solutions Key takeaways 23 m Customers across Europe Value creating and sizeable With continuously improving customer customer portfolio experience and broadening of offering ~€800 m1 Customer Solutions EBIT 2015 Established customer relations 23% of E.ON Group EBIT and capabilities in sale
Slide 53: Agenda
Agenda 1. 9M 2016 Update 2. Group overview & Group financials (pro-forma 2015) 3. Energy Networks 4. Customer Solutions 5. Renewables 6. IR contacts & reporting calendar 52
Slide 54: Renewables are becoming key in global generation mix
Renewables - Market Environment Renewables are becoming key in global generation mix Renewables growth1 Technological split1 Geographical split1 Global installed renewable capacity in GW 2 Global installed renewable capacity by Installed renewable capacity by region in technology in GW (2015)2 GW (2
Slide 55: Improving economics support growth trend
Renewables - Market Environment Improving economics support growth trend Levelized cost of electricity (LCOE)1 2 Onshore wind Offshore wind Utility-scale PV €/MWh €/MWh €/MWh 300 300 300 -25% -45% 200 200 200 -40% -25% -5% -15% 100 100 100 CCGT (2020) CCGT (2020) CCGT (2020) 0 0 –0 2010 2015 2020 20
Slide 56: E.ON maximizes value creation by leveraging its capabilities in most attractive technologies and markets
Renewables E.ON maximizes value creation by leveraging its capabilities in most attractive technologies and markets 1 Geography Technology Business model Wind Onshore Wind Offshore PV • Focus on Europe & North • Focus on Onshore wind, off- • Integrated renewables player America shore wind & utility-
Slide 57: E.ON is a leading player in attractive regions & segments
Renewables E.ON is a leading player in attractive regions & segments 1 E.ON track record E.ON Renewables footprint (2015) Capacity built (GW) Operated Capacity (GW) 5.9 PV + CSP 5.2 Offshore wind Onshore wind 4.4 4.2 Cumulative Disposals 2.8 3.0 GW 2.1 GW 1.11 Operated capacity countries Project pip
Slide 58: E.ON has a solid track record of value creation & growth
Renewables E.ON has a solid track record of value creation & growth IRR vs WACC spreads examples EBIT development bps above WACC € bn 1,000 0.5 +29% 0.4 0.4 800 0.3 0.3 0.2 0.1 0.1 600 2008 2009 2010 2011 2012 2013 2014 2015 400 Revenue mix 20151 2 200 More than 200bps above WACC Onshore/PV US Onsho
Slide 59: Continuously improving technologies, processes & costs
Renewables Continuously improving technologies, processes & costs LCOE1 Optimization levers -40 % -22 % Key design & construction improvement 100 % 100 % levers 78% • Optimized design & LCOE-driven layout 60% • Rigorous application of procurement best practices 2009 2011 2015 2015 (Pyron) (Colbeck’s
Slide 60: Portfolio optimization frees capital & reduces cluster risks
Renewables Portfolio optimization frees capital & reduces cluster risks Type Main rationale Examples Partnering Reduce exposure to clusters on a full risk- Rampion sharing basis with partners (Offshore) Increase flexibility and support a diversified portfolio development Additional value from
Slide 61: E.ON's long-term delivery ambitions
Renewables E.ON’s long-term delivery ambitions Wind Onshore PV Wind Offshore ~600 MW p.a.1 ~150 MW p.a.1 ~every two years one project1 • Continue growing as • Scale up utility-scale PV and • Manifest leading position established player in Europe battery business in North- through a solid development
Slide 62: Renewables Key takeaways
Renewables Key takeaways 5.9 GW Renewables capacities Experienced player focusing on delivered attractive regions and segments 10 year track record of renewables development, construction & operations ~€400 m1 Renewables EBIT 2015 Continuous improvement of 11% of overall E.ON EBIT technology, proces
Slide 63: Agenda
Agenda 1. 9M 2016 Update 2. Group overview & Group financials (pro-forma 2015) 3. Energy Networks 4. Customer Solutions 5. Renewables 6. IR contacts & reporting calendar 62
Slide 64: E.ON Investor Relations contacts
E.ON Investor Relations contacts Florian Floßmann T+49 (201) 184 28 33 Head of Investor Relations [email protected] Alexander Karnick T+49 (201) 184 28 38 Vice President Investor Relations [email protected] Martina Burger T +49 (201) 184 28 07 Manager Investor Relations martina.burge
Slide 65: Financial calendar & important links
Financial calendar & important links Financial calendar March 15, 2017 Annual Report 2016 May 10, 2017 Interim Report I: January – March 2017 May 10, 2017 2017 Annual Shareholders Meeting August 9, 2017 Interim Report II: January – June 2017 November 8, 2017 Interim Report III: January – September 2