Rwe Ag · XETR:RWE
Rwe — FY2011 Earnings Presentation
54 slides from Rwe's earnings presentation, Mar 6, 2012
Slide 1: Value in uncertain times
Value in uncertain times Fiscal year 2011 analyst and investor conference call Essen, 6 March 2012 Jürgen Großmann Peter Terium Rolf Pohlig Stephan Lowis Chief Executive Deputy Chief Chief Financial Vice President Officer Executive 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: Today's Agenda
Today’s Agenda A Jürgen Großmann FY 2011 highlights & business review B Rolf Pohlig FY 2011 group results and divisional performance & outlook C Peter Terium Strategy update & outlook 2012/2013 RWE AG | FY 2011 Conference Call | 6 March, 2012 33
Slide 4: Milestones of 2011
Milestones of 2011 Financial performance for 2011 slightly ahead of our guidance: EBITDA -18%, operating result -24%, recurrent net income -34% Equity capital measure of €2.1bn concluded Further refinement of divestment plan 2012 Efficiency enhancement programme well on track; new programme of €1 bi
Slide 5: 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 Gas BoA Neurath 2.1 GW lignite 12.5 GW Lignite out of (2011) 49.2 GW Hard coal Staythorpe Moerdijk 2 Denizli 1.7 GW CCGT 0.4 GW CCGT 0.8 GW CCGT Lingen Claus C Pembroke Hamm Eemshaven 0.9 GW CCGT 1.3 GW CCGT 2.2 GW CCGT H
Slide 6: Further progress on divestment plans
Further progress on divestment plans Total residual divestment requirement reduced to up to € 7 billion > Sale of selected assets ongoing Upstream assets > RWE Dea remains with RWE Group and represents an important part of our growth story German > Disposal of full or parts of various German regiona
Slide 7: Efficiency programme well on track and stepped up
Efficiency programme well on track and stepped up Cumulative operating result contribution of the programme compared to 2006 In € million Upgrade August 2011 1,500 of € 100 million > 900 9 700 9 Upgrade February 2011 450 9 of € 200 million 100 9 200 9 Original programme 2006 – 2012 of € 1,200 millio
Slide 8: Today's Agenda
Today’s Agenda A Jürgen Großmann FY 2011 highlights & business review B Rolf Pohlig FY 2011 group results and divisional performance & outlook C Peter Terium Strategy update & Outlook 2012/2013 RWE AG | FY 2011 Conference Call | 6 March, 2012 88 1
Slide 9: RWE Group key performance indicators
RWE Group key performance indicators January – December Change € million 2011 2010 in % External revenue 51,686 53,320 -3.1 Cash flows from operating activities 5,510 5,500 0.2 EBITDA 8,460 10,256 -17.5 Operating result 5,814 7,681 -24.3 Non-operating result -1,157 -767 -50.8 Financial result -1,633
Slide 10: Operating Result by Divisions (in € million)
Operating Result by Divisions (in € million) -33% FY 2010 FY 2011 4,000 2,700 -4% 1,575 1,505 -5% 1,173 1,109 +83% -37% +31% +151% 558 391 245 272 357 181 305 72 - -21 -800 Power Sales / NL/B UK CEE/SEE Renewables Upstream Trading/Gas Generation Distribution Gas&Oil Midstream Networks Germany RWE AG
Slide 11: Divisional outlook
Divisional outlook € million 2011 actual 2012 forecast vs. 2011 Germany 4,205 Above last year Power Generation 2,700 Above last year Sales/Distribution networks 1,505 In the order of last year’s level Netherlands/Belgium 245 Significantly below last year United Kingdom 357 Significantly above last y
Slide 12: RWE's gas procurement portfolio
RWE’s gas procurement portfolio (as of February 2012) Long-term oil-indexed purchase contracts (take-or-pay) Own production 36% Russia NBP 31% Norway ~45 bcm ~20 bcm p.a. p.a. TTF 12% Germany 21% Netherlands > Our gas procurement portfolio is solely managed by RWE Supply & Trading > ~44% or 20 bcm p
Slide 13: How we are going to support our "A" rating
How we are going to support our “A” rating Expected development of leverage factor Measures to support our “A” rating Rating Already implemented: Leverage factor = 4,0 Net debt1 € 2.1 billion equity capital measure EBITDA BBB+ CHF 250 million hybrid capital Baa1 € 1.5 billion asset disposals 3.5 3.5
Slide 14: Today's Agenda
Today’s Agenda A Jürgen Großmann FY 2011 highlights & business review B Rolf Pohlig FY 2011 group results and divisional performance & outlook C Peter Terium Strategy update & Outlook 2012/2013 RWE AG | FY 2011 Conference Call | 6 March, 2012 14 14
Slide 15: More international, while maintaining a regionally focused strategy
More international, while maintaining a regionally focused strategy Core markets in Northwest and Central Europe Regional growth markets mainly CEE/SEE, especially Turkey Renewables business in and around our traditional core markets Upstream gas & oil position/projects mainly in Europe, Caspian reg
Slide 16: More robust, with a well balanced portfolio approach
More robust, with a well balanced portfolio approach Active along the whole value chain Operating result 2011 Broad geographic diversification in known territory to minimise regulatory and political risks International Germany Balanced generation portfolio across all ~1/3 €5.8bn ~2/3 technologies Co
Slide 17: More sustainable: Three levers to execute our strategy
More sustainable: Three levers to execute our strategy Lower CO2 emissions More renewables Efficient use of energy > Reduce specific CO2 > Increase renewable > Increase efficiency of emissions by more than generation capacity to fossil fuelled power 20% by 2020 compared at least 20% by 2020 plants t
Slide 18: Strict investment discipline provides platform for sustainable dividends
Strict investment discipline provides platform for sustainable dividends Mid-term target to cover investments and dividends by cash flows from operating activities € billion 9.4 8.8 > Capex level will normalise beyond 2013 > Pay-out ratio of 5.5 5.5 50% - 60% of recurrent net income > Flexibility to
Slide 19: Streamlined and disciplined investment programme
Streamlined and disciplined investment programme > Peak of investment programme € billion ~6.5 Day-to-day in 2010/2011 ~1.9 Replacement, of which ~20% efficiency enhancement > Finalising conventional power generation programme mainly ~7.6 Growth in 2012 and 2013 Renewables, > More than 60% of our ca
Slide 20: € 6 bn earmarked for growth areas until 2014
€ 6 bn earmarked for growth areas until 2014 CEE/SEE2 Renewables (RWE Innogy)2 > Growth opportunities mainly in generation > Target capacity of 4.5 GW > Regional focus on Turkey and Poland (in operation or under construction) by 2014 > Operating result of €500 million by 2014 ~ 10% > Balanced genera
Slide 21: Further efficiency enhancements initiated
Further efficiency enhancements initiated > Sustainable improvement of operating results and EBITDA compared to 2012 In € million > Efficiency measures focusing on... 1,000 – Group IT, service and overhead functions – All operational companies 250 > Several concrete measures, e.g. 750 – Optimisation
Slide 22: Outlook for 2012 – 2013
Outlook for 2012 – 2013 € million ~9,000 EBITDA 8,460 in the order of 2011 Operating 5,814 in the order of 2011 in the order of 2011 result Recurrent 2,479 in the order of 2011 in the order of 2011 net income 2011 2012e 2013e after further disposals1 after further disposals1 Dividend € 2.00/share2 P
Slide 23: RWE's platform for future value enhancement
RWE’s platform for future value enhancement Stream- lined and Maintain disciplined Further strategic and investment efficiency Three main regional focus approach enhance- Positive long-term ments and outlook for growth areas: operational 2012/2013 Renewables, excellence Upstream and CEE/SEE RWE AG |
Slide 24: Back-up Charts
Back-up Charts RWE AG | FY 2011 Conference Call | 6 March, 2012 24
Slide 25: Performance of the Germany Division (I) Power Generation
Performance of the Germany Division (I) Power Generation Business Area (RWE Power) January – December: operating result: -33% € million - Lower realised electricity prices and lower volumes (c. -1.3 billion), inter alia, due to new energy policy and shut down of nuclear power plants 4,000 2,700 - Hi
Slide 26: 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) 110 2012 forward 90 70 50 30 > 30% > 35% > 50% > 80% > 90% 110 2013 forward 90 70 50 30 > 10% > 30% > 50% 110 2014 forward 90 70 50 30 > 20% 01/01/2010 01/07/2010 01/01/2011 01/07/2011 01/01/2012 01/07/2012
Slide 27: Germany: Clean Dark and Spark Spreads (CDS/CSS)
Germany: Clean Dark and Spark Spreads (CDS/CSS) 2011 forward 2012 forward 2013 forward 30 25 20 Ø 14.88 15 Ø 9.04 10 Ø 7.74 5 Ø 6.16 Ø 1.49 Ø 4.93 0 Trading year 2010 Trading year 2011 Trading year 2012 0 1 2 0 1 2 0 1 2 0 1 2 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 1 1 1 n- n- n- kt kt kt Ju Ju Ju Ap A
Slide 28: Performance of the Germany Division (II) Sales/Distribution Networks
Performance of the Germany Division (II) Sales/Distribution Networks Business Area January – December: operating result: -4.4% € million + First-time full consolidation of regional sales and distribution company NEW 1,575 + Improved income from investments 1,505 Sales Lower gas sales volumes but sli
Slide 29: Performance of the Netherlands/Belgium Division (Essent)
Performance of the Netherlands/Belgium Division (Essent) January – December: operating result: -37.3% € million + Higher gas midstream activities but... 391 - ... parts of gas midstream business now reported in Trading/Gas Midstream 245 - Lower electricity generation spreads + Efficiency improvement
Slide 30: Performance of the United Kingdom Division (RWE npower)
Performance of the United Kingdom Division (RWE npower) January – December: operating result: +31.3% € million + Cost reductions / efficiency improvements Power generation: 357 + First time contribution from Staythorpe CCGT and settlement of claims relating to major investment projects and legacy cl
Slide 31: UK: Clean Dark and Spark Spreads (CDS/CSS)
UK: Clean Dark and Spark Spreads (CDS/CSS) 2011 forward 2012 forward 2013 forward 20 Ø 18.42 16 Ø 13.78 12 Ø 8.19 8 Ø 6.70 Ø 3.55 Ø 3.38 4 0 Trading year 2010 Trading year 2011 Trading year 2012 0 1 2 0 1 2 0 1 2 0 1 2 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 1 1 1 n- n- n- kt kt kt Ju Ju Ju Ap Ap Ap Ja
Slide 32: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division January – December: operating result: -5.5% € million Czech Republic: 1,173 1,109 - Lower gas sales volumes and reduced distribution grid margins - Lower income in gas transport business due to increased regulatory pressure - Hunga
Slide 33: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) January – December: operating result: +151% € million 181 + Increased generation volumes (partly driven by improved wind conditions and our growth investments) and improved electricity wholesale prices 72 + Liquidated damages associated with the Gr
Slide 34: Performance of the Upstream Gas & Oil Division (RWE Dea)
Performance of the Upstream Gas & Oil Division (RWE Dea) January – December: operating result: +83.0% € million 558 + Higher realised oil and gas prices + Higher oil production 305 - Negative f/x effects and lower natural gas production - Increased royalties in Germany as well as cost of production
Slide 35: Performance of the Trading/Gas Midstream Division (RWE Supply & Trading)
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) January – December: operating result: n.m.. € million Trading - Negative development partly driven by market disturbance as a result of the events in North Africa and the changed German energy policy -21 Supply - Burdens from l
Slide 36: Development of TTF gas price and brent oil price
Development of TTF gas price and brent oil price Forward for delivery Forward for delivery Forward for delivery Forward for delivery in 2010 in 2011 in 2012 in 2013 €/MWh €/MWh 40 60 35 50 30 40 25 30 20 20 15 10 10 0 5 -10 0 -20 Trading year 2009 Trading year 2010 Trading year 2011 Trading year 201
Slide 37: 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 2011 10 contract revisions initiated 2010 5 contract revisions initiated 2009 0 2009 2012 2015 2018 2021 2024 2027 2
Slide 38: Reconciliation to recurrent net income
Reconciliation to recurrent net income January – December 2011 2011 2011 2010 Change € million reported non-rec. recurrent recurrent (absolute) Operating result 5,814 - 5,814 7,681 -1,867 Non-operating result -1,157 1,157 0 0 0 Financial result -1,633 - -1,633 -1,936 303 Income from continuing opera
Slide 39: Cash flow statement
Cash flow statement January – December Change € million 2011 2010 (absolute) Funds from operations (FFO) 5,946 7,849 -1,903 Change in working capital -436 -2,349 1,913 of which variation margins -1,173 -1,158 Cash flows from operating activities 5,510 5,500 10 Minus capex on fixed assets -6,353 -6,3
Slide 40: RWE Group electricity production (by geographic regions)
RWE Group electricity production (by geographic regions) January – December Other Total Total in TWh Germany UK NL/BE Internat. 2011 2010 Lignite 68.3 5.8 74.1 71.0 Nuclear 34.3 34.3 45.2 Hard coal 33.6 8.6 5.1 0.5 47.8 55.2 thereof contracts 20.8 20.8 23.4 Gas 12.0 21.3 5.1 0.1 38.5 42.8 Renewables
Slide 41: RWE Group electricity sales volume (by geographic regions)
RWE Group electricity sales volume (by geographic regions) January – December Total Total in TWh Germany UK NL/BE Poland Hungary Other 2011 2010 Residential and commercial 25.8 17.4 10.7 3.0 5.5 0.2 62.6 64.41 customers Industrial and corporate 55.1 32.9 15.9 3.4 5.2 0.6 113.1 113.21 customers Distr
Slide 42: RWE Group gas sales volume (by geographic regions)
RWE Group gas sales volume (by geographic regions) January – December Czech Total Total in TWh Germany Rep. NL UK Other 2011 2010 Residential and commercial 27.5 26.9 35.9 38.0 1.1 129.4 156.6 customers Industrial and corporate 40.8 16.5 56.5 2.3 13.1 129.2 155.7 customers Distributors 56.6 4.7 0.0
Slide 43: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change Equity divestiture/ from including in pension, capital disposals/ operating f/x effects nuclear, measure (de)consoli- activities mining + dation provisions Hybrid +2.3 +6.4 36 -0.8 +0.6 +0.1 32 29.9 29.0 -5.5 28
Slide 44: Financial liabilities and assets
Financial liabilities and assets (excluding hybrid capital, as of 31 December 2011) Financial liabilities Financial assets Split of in billion Euros in billion Euros securities 10 9.7 25 9.1 21.9 1,1 0,9 11% 20 8 5,0 2,0 2,0 15.4 1,4 15 0,8 6 1,2 0,3 1,2 1,2 10 4 6.5 15,2 13,4 5,0 5,4 5 2 4,2 0,2 0,
Slide 45: 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 for liquidity 2,5 18 syndicated loan back-up (€ 4.0 bn; up to Nov. 2016) 15 € 0.0 bn 2,0 12 1,5 Commercial paper 9 $ 4.4 bn ($ 5.0 bn) (up to 1 year) 1,0 6 € 3.
Slide 46: Capital market debt currency and interest exposure
Capital market debt currency and interest exposure (as of 31.12.2011) 13% 1 28% € 16.9 bn € 17.3 bn2 72% 1 87% € £ Interest rate fixing expiry > 1 year Interest rate fixing expiry < 1 year 1 Capital market debt = bonds of € 15.0 bn and hybrids of c. € 2.0 bn; split into currencies includes cross-cur
Slide 47: RWE's capex programme 2012 to 2014
RWE's capex programme 2012 to 2014 How capex leads to earnings growth Day to day investments 6.5 Mainte- Thereof grid 3.0 nance 6.5 Growth and replacement projects 9.5 Efficiency enhancements Electricity generation Replace- approx. > Hard coal and lignite plants 2.5 ment 20% > Gas plants 0.5 1.9 0.4
Slide 48: 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, 100%) BoA 2&3, Neurath 2.6 Units G F (Lignite, 2,100 MW, 100%) Hamm 2.4 Units D E (Hard coal, 1,528 MW, 77%) Staythorpe 0.8 Units 1 -4 (Gas, 1,728 MW, 100%) Pembroke 1.2 Unit
Slide 49: 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% 2.7 Breagh (UK) 70% 0.4 Reggane (Algeria) 19.5% 0.4 Luno (Norway) 20% 0.7 Knarr (Norway)2 10% 0.2 NC193 (Libya)3 100% 0.3 NC195 (Libya)3 100% 0.2 1 RWE‘s share in c
Slide 50: 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 45 MWe, 88 MWth, 100%) Nordsee Ost 0.9 (Wind offshore, 295 MW, 100%) Capacity and earnin
Slide 51: RWE has taken physical and financial measures to reduce its CO2 exposure
RWE has taken physical and financial measures to reduce its CO2 exposure significantly EU ETS Phase 1 & 2 EU ETS Phase 3 2005 − 2012 2013 − 2020 Specific CO2 emissions exposure (t/MWh) Specific CO2 emissions exposure (t/MWh) 0.79 0.73 0.73 0.70 0.62 0.50 2005 2012 2012 2013 2020 2020 Physical measur
Slide 52: RWE's portfolio measures lead to a largely neutral financial CO2 position
RWE’s physical and financial portfolio measures lead to a largely neutral financial CO2 position t/MWh Pass-through factor1 0,9 > Factor by which the CO2 price 0,8 2011 is reflected in the power price 2010 > Set by the specific emission factor 0,7 0,63 of the marginal plant in every hour 0,6 0,50 0,
Slide 53: In 2020 approx. 20% of RWE's generation capacity will be in renewables
In 2020 approx. 20% of RWE’s generation capacity will be in renewables Renewables Nuclear ~ 20% ~ 5% ~ 46 GW ~ 40% ~ 35% Gas/other1 Coal (partly highly efficient) 1 Including approx. 8% of others, mainly pumped storage. RWE AG | FY 2011 Conference Call | March 6, 2012 53 53
Slide 54: 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/ir 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/ Resul