Rwe Ag · XETR:RWE
Rwe — Q3 2013 Earnings Presentation
35 slides from Rwe's earnings presentation, Nov 14, 2013
Slide 1: Investor and Analyst Q1-Q3 2013 Conference Call
Investor and Analyst Q1-Q3 2013 Conference Call Essen, 14 November 2013 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: Conventional Power Generation: mark-to-market earnings perspective
Conventional Power Generation: mark-to-market earnings perspective Operating result in € bn 3.5 3.3 3.0 Impact from decline in Outright 2.5 realised outright power price position from €55/MWh to ~€37/MWh 2.0 CDS/CSS 1.5 Mainly shut down of 150 MW Volumes lignite units and Tilbury 1.0 Free allocation
Slide 4: Full benefit of deleveraging measures mainly after 2014
Full benefit of deleveraging measures mainly after 2014 > Leverage ratio 2014: declining earnings trend overlays efforts to reduce debt > Continued pressure on earnings and cash flows induced from falling commodity prices 3.5 > Prime objective is to maintain excellent access to capital markets 3.0 >
Slide 5: Short-term focus remains on positive cash balance
Short-term focus remains on positive cash balance Cash flows from operating activities to cover investments and dividends by 2015 € bn 9.3 8.8 7.1 5.5 5.5 4.4 ≤ 2010 2011 2012 2013e 2014e 2015e Capex in property, plant & equipment and financial assets (according to cash flow statement) Dividends (in
Slide 6: Current building blocks to improve balance sheet
Current building blocks to improve balance sheet Measures to improve leverage headroom Impact1 1 > Earnings improvement through Efficiency additional efficiency enhancement ~ €1.5 bn enhancements measures (€0.5 bn) 2014 and 2017 Between 2014 and 2017 2 > Reduction of discretional investments Capex >
Slide 7: Additional €1bn of efficiency measures will lead to over €0.5 bn further earnings improvements
1 Efficiency enhancements Additional €1bn of efficiency measures will lead to over €0.5 bn further earnings improvements In € million > Full effect of new measures will be seen by 2017 > New programme consists of gross measures in New €1 bn programme 2014 – 2017 the magnitude of c. €1 bn before offs
Slide 8: Capex programme reduced to maintenance level
2 Capex reduction Capex programme reduced to maintenance level € bn > Approx. €11 bn capex programme for 2014 – 2016; c. €2 bn less than ~1.0 Renewable projects last year’s programme for 2013 – 2015 > Completion of new-build power plant ~2.1 Upstream ~6.5 Day-to-day programme in 2014 gas & oil proje
Slide 9: Disposals focus on RWE Dea and Urenco
3 Disposals Disposals focus on RWE Dea and Urenco > Strategic decision, not for deleveraging purposes RWE Dea > Sale of entire business intended to safeguard value of the business > Disposal progress within expected timeframe > Non core asset Urenco > Reviewing potential exit routes > Disposal condi
Slide 10: Focus on sustainable dividend policy
4 Dividend strategy Focus on sustainable dividend policy As one part of the measures to support RWE’s balance sheet, the Executive Board and the Supervisory Board have decided to adjust the dividend policy: - Planned dividend proposal of €1 per share for fiscal year 2013 - Pay-out ratio of 40% to 50
Slide 11: Development of operating result
Development of operating result … … by division (+€20 million; +0.4%) Improved earnings in Trading/Gas Mid- stream Division after arbitration court € million ruling on our long-term oil-indexed gas Q1-Q3 2012 4,606 contract with Gazprom Conventional -1,504 Power Generation Earnings in Conventional P
Slide 12: Reconciliation of (recurrent) net income
Reconciliation of (recurrent) net income € million Q1-Q3 2013 +/- % Non-operating result shows significant restructuring charges; among others the impairment of EBITDA 6,711 -0.1% our Dutch power generation portfolio of c. €800 million Depreciation 2,085 -1.3% Operating result 4,626 +0.4% Financial
Slide 13: Cash flow statement
Cash flow statement January – September Change € million 2013 2012 (absolute) Funds from operations (FFO) 4,888 3,298 1,590 Change in working capital 118 -58 176 Cash flows from operating activities 5,006 3,240 1,766 Capex on fixed assets -2,937 -3,391 454 Free cash flow 2,069 -151 2,220 FFO – among
Slide 14: Outlook for 2013 and 2014
Outlook for 2013 and 2014 In € million 9,314 In the order of 9,000 7,600 – 8,100 EBITDA 6,416 In the order of 5,900 4,500 – 4,900 Operating result Recurrent 2,457 In the order of 2,400 1,300 – 1,500 net income Dividend €2.00/share €1/share1 Pay out ratio of 40% – 50% 2012 2013e 2014e2 1 Executive an
Slide 15: 2013 Divisional outlook for the operating result
2013 Divisional outlook for the operating result € million 2012 2013 forecast versus 20121 Conventional Power Generation 3,275 Significantly below last year’s level Supply/Distribution Networks Germany 1,578 In the order of last year’s level Supply Netherlands/Belgium 190 Significantly above last ye
Slide 16: Operating result outlook for fiscal year 2014
Operating result outlook for fiscal year 2014 Trend for major value drivers in fiscal year 2014 FY 2013 outlook In the order of €5.9 bn Efficiency programmes c. €300 million from old and new programme envisaged for 2014 Depreciation Trend for higher depreciation as a result of huge investment pr
Slide 17: Back-up Charts
Back-up Charts i a. ey The energy to lead
Slide 18: Performance of the Conventional Power Generation Division
Performance of the Conventional Power Generation Division January – September: operating result: -64.1% (-€1,504 million) € million - Full auctioning of CO2-certificates (c. -€840 million) - Closure of 12 old lignite blocks of 150 MW class in 2012 - Lower realised electricity generation spreads, inc
Slide 19: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 30 September 2013 >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% >70% >50% >80% >60% >80% >80%
Slide 20: Germany: Clean Dark and Spark Spreads
Germany: Clean Dark (CDS) and Spark Spreads (CSS) 2012 forward 2013 forward 2014 forward 15 Ø 9.96 10 Ø 7.74 Ø 7.86 5 Ø 4.93 0 -5 Ø -2.37 -10 Ø -11.63 -15 Trading year 2011 Trading year 2012 Trading year 2013 1 2 3 1 2 3 1 2 3 11 12 13 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju Ju Ju A
Slide 21: NL: Clean Dark and Spark Spreads
NL: Clean Dark (CDS) and Spark Spreads (CSS) 2012 forward 2013 forward1 2014 forward1 15 Ø 8.59 Ø 10.85 10 Ø 7.63 5 0 -5 Ø -1.24 Ø -4.55 Ø -7.50 -10 Trading year 2011 Trading year 2012 Trading year 2013 1 2 3 1 2 3 1 2 3 11 12 13 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju Ju Ju Ap Ap A
Slide 22: UK: Clean Dark and Spark Spreads
UK: Clean Dark (CDS) and Spark Spreads (CSS) 2012 forward 2013 forward1 2014 forward1 28 24 Ø 22.03 20 Ø 19.51 16 Ø 13.78 12 8 Ø 3.55 4 Ø 3.12 Ø 2.07 0 Trading year 2011 Trading year 2012 Trading year 2013 1 2 3 1 2 3 1 2 3 11 12 13 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju Ju Ju Ap A
Slide 23: Performance of the Supply/Distribution Networks Germany Division
Performance of the Supply/Distribution Networks Germany Division January – September: operating result: +10.5% (+€121 million) € million + Efficiency improvements 1,149 1,270 + Cold weather - Loss of earnings from the disposal of Berlin waterworks and KEVAG and transfer of Zagreb wastewater business
Slide 24: Performance of the Supply Netherlands/Belgium Division (Essent)
Performance of the Supply Netherlands/Belgium Division (Essent) January – September: operating result: +83.5% (+€111 million) € million + Positive impact from change in provisions + Weather induced higher gas sales 244 + Efficiency improvements 133 - Competition induced pressure on gas margins - Ene
Slide 25: Performance of the Supply United Kingdom Division (RWE npower)
Performance of the Supply United Kingdom Division (RWE npower) January – September: operating result: +2.5% (+€5 million) € million + Efficiency improvements + Weather induced higher gas sales 200 205 - Negative f/x effects - Higher grid fees - Energy savings by households 2012 2013 - Higher burdens
Slide 26: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division January – September: operating result: +10.7% (+€80 million) € million + Positive effect from derivatives to hedge f/x risks - Disposal of NET4GAS (as of 2 August 2013) 826 Czech Republic: 746 + Improved gas grid and sales margins
Slide 27: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) January – September: operating result: +29.9% (+€26 million) € million + Increased earnings contribution from growth investments + Higher utilisation of hydro plants 113 + One-off from compensation payments in Spanish wind business 87 - Impact from
Slide 28: Performance of the Upstream Gas & Oil Division (RWE Dea)
Performance of the Upstream Gas & Oil Division (RWE Dea) January – September: operating result: -22.6% (-€127 million) € million - Lower realised oil and gas prices including negative f/x effect 561 - Higher exploration costs including costs for dry wells 434 + Higher oil and gas sales in Europe 201
Slide 29: Performance of the Trading/Gas Midstream Division
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) January – September: operating result: +€1,306 million € million Trading: +903 - Slightly lower performance in the energy trading business Supply: + Arbitration court ruling on our long-term oil-indexed gas supply contract with
Slide 30: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change divestiture/ from including in pension, disposals/ operating f/x effects nuclear, (de)consoli- activities mining dation provisions 40 +1.6 +2.9 35 33.0 -2.2 +0.2 +0.3 30.8 30 -5.0 0 Net debt Net debt 31 Dec 2012
Slide 31: Financial liabilities and assets
Financial liabilities and assets (excluding hybrid capital, as of 30 September 2013) Financial liabilities Financial assets Split of in € billion in € billion securities 9.6 8.9 17% 19.5 2.1 16.1 1.3 1.5 0.9 0.5 3.4 0.7 0.8 0.6 0.5 Short term Long term Total Short term Long term Total 83% (≤ 12 mont
Slide 32: 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 2.5 20 (€ 4.0 bn up back-up to Nov. 2017) € 0.0 bn 2.0 16 1.5 12 Commercial paper $ 0.0 bn ($ 5.0 bn) (up to 1 year) 1.0 8 € 0.0 b
Slide 33: Capital market debt currency and interest exposure
Capital market debt currency and interest exposure (as of 8 Oct 2013) 9% 30% € 18.5 bn11 € 18.1 bn2 70% 91% € 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
Slide 34: 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 E D Eemshaven (hard coal/biomass, 1,560 MW) 100% 3.0 Units A B Denizli (gas, 787 MW) 70% 0.5 RWE Dea‘s larg
Slide 35: Always be informed about RWE
Always be informed about RWE … Follow us on twitter@RWE_IR and have a look at www.rwe.com/ir Calendar http://www.rwe.com/web/cms/en/110614/rwe/investor-relations/events/calendar/ Annual and Interim Reports http://www.rwe.com/web/cms/en/110822/rwe/investor-relations/reports/ Investor and Analyst Conf