Rwe Ag · XETR:RWE
Rwe — H1 2009 Earnings Presentation
41 slides from Rwe's earnings presentation, Aug 13, 2009
Slide 1: Investor and Analyst Conference Call H1 2009
Investor and Analyst Conference Call H1 2009 Essen, August 13, 2009 Jürgen Großmann Chief Executive Officer Rolf Pohlig Chief Financial Officer Ingo Alphéus Vice President 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 Highlights of H1 2009, Update on Group topics B Rolf Pohlig Group results H1 2009 and divisional performance, Outlook 2009 RWE AG | Conference Call H1 2009 | August 13, 2009 3
Slide 4: Key messages
Key messages Performance > Operating result increased by 4% H1 2009 > Recurrent net income up by 5% Strategy > Closing of Essent acquisition expected in Q3 2009 > Deconsolidation of American Water > Upstream: Breagh gas field acquisition to add approx. 10% to RWE Dea’s 2008 gas reserves/resources >
Slide 5: Impact of economic crisis in our core markets
Impact of economic crisis in our core markets Electricity January – June Forecast ¾ BDEW statistic shows low-point for German demand 2009 2009 electricity demand decline in April 2009 at -12% Market data1 year-on-year. More promising data in May (-6%) > Germany -6% -5% to -7% and June (-6%). > UK -6
Slide 6: Reduced industrial demand is most prominent in offpeak
Reduced industrial demand is most prominent in offpeak – therefore impact on wholesale prices is limited Industrial customer load profile before (dark blue) and during (light blue) the economic crisis in Germany 3500 3500 kW Working day (8-20 peak, 20-8 offpeak) Weekend (offpeak) Overall decline: 30
Slide 7: Price volatility keeps increasing in Germany
Price volatility keeps increasing in Germany – opportunities for flexible generators like RWE Growing proportion of renewables leads to higher price volatility. October 2008 to July 2009: 50 hours with negative prices; highest price almost reached €500/MWh. 3 50 494.26 Daily maximum price 3 00 Daily
Slide 8: Higher volatility also leads to higher risk premia
Higher volatility also leads to higher risk premia 100 €/MWh Maximum forward price1 80 Average forward price1 Minimum forward price1 Average spot price (baseload)2 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 1 German Baseload Electricity Forward for the respective year as traded in the p
Slide 9: New-build power plants will come into the market in times of tight capacity
Our new-build power plants will come into the market in times of tight capacity and unprecedented volatility Two-thirds of current power plant projects ¾ RWE: 10 GW of new capacity under in Germany will probably not be realized construction, thereof approx. 8 GW with special designs for serving the
Slide 10: Early hedging protects us from recession
Early hedging protects us from recession and allows flexible short-term optimisation Forward selling of RWE Power in the German market (base load forwards in €/MWh) 100 90 Forward 2009 80 70 60 50 40 >> 10% 10% sold sold >> 20% 20% sold sold >> 25% 25% sold sold >> 35% 35% sold sold >> 65% 65% sold
Slide 11: RWE's daily make or buy decision
RWE’s daily make or buy decision: Extracting additional value on top of forward selling ¾Forward hedging ensures the required return of our generation fleet. ¾On this basis, we can decide every day if we produce the contracted power at the locked in clean dark spread or buy the power in the market i
Slide 12: RWE Innogy: Further steps in renewables growth strategy
RWE Innogy: Further steps in execution of renewables growth strategy Installed asset base to grow Project pipeline increased by 30% to 1.6 GW in 2009 by 30% in H1 2009 Installed capacity Assets under construction (in GW, consolidated) (consolidated, 06/2009) (consolidated, 06/2009) 18 8.8 16.9 15 1.
Slide 13: RWE Dea: Run-up period to substantial volume growth
RWE Dea: Run-up period to substantial volume growth ¾ Securing revenues by own exploration plus selective small acquisitions ¾ Target to double production of hydrocarbons delayed by 1 to 2 years, mainly due to additional appraisal work requirements and delayed access to infrastructure. But earnings
Slide 14: Nabucco gas pipeline project: Further milestone reached
Nabucco gas pipeline project: Further milestone reached > Inter-governmental agreement signed July 13, 2009 > Gas supply developments are advancing: - RWE activities in Turkmenistan are developing UK 2.7 m - OMV and MOL have acquired interests Germany 3m in gas fields in North Iraq Czech Rep. - Azer
Slide 15: Outlook
Outlook 2008 2009 2012 € million forecast mid-term outlook External revenue 48,950 In the order of last year’s level EBITDA 8,773 In the order of last year’s level Operating result 6,826 In the order of last year’s level 5 – 10% CAGR2 Recurrent net income 3,367 In the order of last year’s level In t
Slide 16: Today's Agenda
Today’s Agenda A Jürgen Großmann Highlights of H1 2009, Update on Group topics B Rolf Pohlig Group results H1 2009 and divisional performance, Outlook 2009 RWE AG | Conference Call H1 2009 | August 13, 2009
Slide 17: RWE Group key performance indicators
RWE Group key performance indicators January – June change € million 2009 2008 in % External revenue 24,386 24,721 -1.4 Cash flows from operating activities 1,634 1,383 +18.1 EBITDA 5,047 4,863 +3.8 Operating result 4,084 3,933 +3.8 Non-operating result 216 -471 - Financial result -916 -618 -48.2 In
Slide 18: Performance of RWE Power
Performance of RWE Power H1 operating result: +3.9% + Higher realised electricity prices and lower volumes € million (+€290 million) including margin impact from Biblis outage 1,769 1,838 (-€440 million) Increased costs due to higher fuel prices (-€320 million) + Lower costs for CO2 certificates (+€
Slide 19: Performance of RWE Innogy
Performance of RWE Innogy H1 operating result: -47.7% € million Upfront costs of large investment programme 44 Higher staff costs + First time consolidation of Urvasco Energia in June 2008 23 2008 2009 Full year 2009 guidance: Operating result below previous year € million Upfront costs of large inv
Slide 20: Performance of RWE Dea
Performance of RWE Dea H1 operating result: -60.0% € million 325 Slump in oil prices leads to significant reduction of average realised oil price (incl. hedging) Negative f/x effects 130 Higher realised gas prices offset by negative volume effects in UK gas production 2008 2009 Full year 2009 guidan
Slide 21: Performance of RWE Supply & Trading
Performance of RWE Supply & Trading H1 operating result: +1,616% Trading € million 738 + Good marked-to-market performance of trading although lower than the extraordinarily positive H1 2008; reported IFRS numbers significantly benefited from realisation of transactions concluded in earlier years Su
Slide 22: Performance of RWE Energy
Performance of RWE Energy H1 operating result: -0.2% + German regions: € million Benefits from efficiency enhancements and improved gas sales business. Lower electricity margins 1,408 1,405 International regions: Negative earnings impact in Dutch business, lower electricity sales in Hungary and gas
Slide 23: Performance of RWE npower
Performance of RWE npower H1 operating result: -60% € million Negative f/x effects of -€19 million Power generation: + Lower cost impact from unplanned plant outages in 2009 334 Reduced generation margins 135 Retail: Impact of electricity price reduction and lower volumes Increased bad debt and high
Slide 24: Non-operating result
Non-operating result January – June Change € million 2009 2008 (absolute) Capital gains 7 45 -38 Impairment losses - - - Restructuring / other 209 -516 725 Total 216 -471 687 ¾ Capital gains: No major capital gains in 2009. In 2008 mainly income from sale of 8% stake in rhenag to RheinEnergie AG ¾ R
Slide 25: Financial result
Financial result January – June Change € million 2009 2008 (absolute) Net interest -253 -32 -221 Interest accretion to non-current provisions -446 -375 -71 Other financial result -217 -211 -6 Total -916 -618 -298 ¾ Net interest: declined because of higher debt partly used to refinance the Essent acq
Slide 26: Cash flow statement
Cash flow statement January – June Change € million 2009 2008 (absolute) Funds from operations (FFO) 2,643 3,301 -658 Changes in working capital -1,009 -1,918 +909 Cash flows from operating activities 1,634 1,383 +251 Capex on fixed assets -2,133 -1,563 -570 Free Cash flow -499 -180 -319 ¾ FFO - Cas
Slide 27: Back-up Charts
Back-up Charts RWE AG | Conference Call H1 2009 | August 13, 2009 27
Slide 28: RWE Group electricity production
RWE Group electricity production January – June Other Total Total in TWh Germany UK Internat. 2009 2008 Lignite 33.3 2.7 36.0 36.8 Nuclear 17.8 17.8 24.7 Hard coal 14.8 6.0 0.2 21.0 33.3 thereof contracts 7.0 7.0 15.7 Gas 4.8 6.7 0.1 11.6 16.3 Renewable energies 1.9 0.5 0.5 2.9 2.7 thereof contracts
Slide 29: RWE Group electricity sales volume
RWE Group electricity sales volume January – June Total Total in TWh Germany UK Poland Hungary Other 2009 2008 Private and commercial 14.0 10.4 1.2 3.1 0.4 29.1 30.5 customers Industrial and corporate 27.5 14.8 2.1 2.8 0.5 47.7 49.7 customers Distributors 45.4 0.5 2.5 0.5 48.9 45.3 Subtotal 86.9 25.
Slide 30: RWE Group gas sales volume
RWE Group gas sales volume January – June Ger- Czech Total Total in TWh many Rep. UK Other 2009 2008 Private and commercial 14.2 20.6 26.4 6.0 67.2 65.5 customers Industrial and corporate 21.0 12.8 4.0 12.1 49.9 57.8 customers Distributors 41.0 10.1 - - 51.1 60.1 Total 76.2 43.5 30.4 18.1 168.2 183.
Slide 31: New long-term generation product: Customers lock in power for 2013-2020
New long-term generation product: Customers lock in power for 2013-2020 > Share in virtual lignite power plant for 3 - 8 years on a take-or-pay basis > Customer secures delivery, RWE locks in clean brown spread and transfers full CO2 risk > 220 MW sold to 20 municipal utilities and industrial custom
Slide 32: Germany: Clean Dark Spread versus hard coal and CO2 prices
Germany: Clean Dark Spread (CDS) versus hard coal and CO2 prices 160 40 Forward 2009 120 30 80 20 40 10 0 0 160 40 Forward 2010 120 30 80 20 40 10 0 0 160 40 Forward 2011 120 30 80 20 40 10 0 0 160 40 Forward 2012 120 30 80 20 40 10 0 0 01.01.2007 01.07.2007 01.01.2008 01.07.2008 01.01.2009 01.07.20
Slide 33: Germany: Clean Spark Spread versus natural gas and CO2 prices
Germany: Clean Spark Spread (CSS) versus natural gas and CO2 prices 50 50 Forward 2009 40 40 30 30 20 20 10 10 0 0 50 50 Forward 2010 40 40 30 30 20 20 10 10 0 0 50 50 Forward 2011 40 40 30 30 20 20 10 10 0 0 50 50 Forward 2012 40 40 30 30 20 20 10 10 0 0 01.01.2007 01.07.2007 01.01.2008 01.07.2008
Slide 34: UK: Clean Dark Spread versus hard coal and CO2 prices
UK: Clean Dark Spread (CDS) versus hard coal and CO2 prices 150 50 Forward 2009 120 40 90 30 60 20 30 10 0 0 150 50 Forward 2010 120 40 90 30 60 20 30 10 0 0 150 50 Forward 2011 120 40 90 30 60 20 30 10 0 0 150 50 Forward 2012 120 40 90 30 60 20 30 10 0 0 01.01.2007 01.07.2007 01.01.2008 01.07.2008
Slide 35: UK: Clean Spark Spread versus natural gas and CO2 prices
UK: Clean Spark Spread (CSS) versus natural gas and CO2 prices 50 50 Forward 2009 40 40 30 30 20 20 10 10 0 0 50 50 Forward 2010 40 40 30 30 20 20 10 10 0 0 50 50 Forward 2011 40 40 30 30 20 20 10 10 0 0 50 50 Forward 2012 40 40 30 NBP quotes for 30 20 2012 not yet 20 available 10 10 0 0 01.01.2007
Slide 36: Customer statistic of RWE Energy in Germany and RWE npower
Customer statistic1 of RWE Energy in Germany and RWE npower RWE Energy (Germany) Electricity Gas Total Total customers accounts 31.12.2008 6,983,000 1,035,000 8,018,000 Net losses / gains +60,000 +14,000 +74,000 Total customers accounts 30.06.2009 7,043,000 1,049,000 8,092,000 RWE npower (UK) Electr
Slide 37: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change in disposals/ from including pension, (de)consoli- operating f/x effects nuclear, dations activities DCO mining provisions 25 +2.6 -3.0 +0.7 19.7 20 +2.1 +0.2 18.7 -1.6 15 Including DCO1: 4.2 0 Net Net debt debt
Slide 38: Financial liabilities and assets: Solid financing in place
Financial liabilities and assets: Solid financing in place (as of 30.06.2009) Financial liabilities in billion Euros Financial assets in billion Euros Split of securities 20 19,3 20 16,0 3,3 15,4 0,7 0,2 0,9 14,6 15 0,5 15 1,1 0,6 2,8 2,8 8% 1,6 1,6 10 10 14,9 14,9 5 5 9,8 92% 9,6 3,3 0,4 2,7 0,5 0,
Slide 39: Development of pension liabilities, plan assets and provisions
Development of pension liabilities, plan assets and provisions change € million 31.12.2008 30.06.2009 absolute Present value of funded benefit obligations 11,872 12,961 +1,089 Fair value of plan assets 11,030 11,634 +604 Net amount for funded plans 842 1,327 +485 Capitalized surplus of plan assets o
Slide 40: Gross financial debt currency and interest exposure
Gross financial debt currency and interest exposure1 Others 4% Floating 14% £ 26% USD 2% Fixed 86% € 68% As of June 30, 2009 1 Including cross-currency swaps. RWE AG | Conference Call H1 2009 | August 13, 2009 40
Slide 41: High level of liquidity and strong sources of financing
We maintain a high level of liquidity and strong sources of financing - even after the bid for Essent Capital market debt maturities1 General financing Fully committed in € bn syndicated loan for liquidity 3.0 18.0 (€1.6 bn 364 days back-up €2.0 bn 3 years) €0.0 bn 2.5 15.0 Commercial paper €3.6 bn