Rwe Ag · XETR:RWE
Rwe — Investor Presentation (November 2011)
35 slides from Rwe's investor presentation, November 2011
Slide 1: Securing financial strength for long-term growth
Securing financial strength for long-term growth (as of November 2011) These written materials and the information contained herein are not being issued and may not be distributed in the United States of America, Canada, Japan or Australia.
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: Main messages
Main messages New energy policy in Germany in place – nuclear phase-out decided, nuclear fuel tax stays in place Q1-Q3 2011 operating performance negatively impacted by one-off costs from nuclear exit decision: EBITDA -21%, operating result -30%, recurrent net income -44% First successful structural
Slide 4: RWE Group key performance indicators
RWE Group key performance indicators January – September Change € million 2011 2010 in % External revenue 38,167 38,510 -0.9 Cash flows from operating activities 4,540 4,404 +3.1 EBITDA 6,244 7,914 -21.1 Operating result 4,270 6,129 -30.3 Net income 1,416 2,637 -46.3 Recurrent net income 1,782 3,175
Slide 5: Financial pressure intensified following political decisions in Germany
Financial pressure intensified following political decisions in Germany The seven oldest nuclear power plants and Krümmel stay closed Transfer of capacities from older to younger plants as well as transfer of Mülheim-Kärlich and Krümmel volumes possible Closure of the remaining nuclear power plants
Slide 6: Maintain strategic and regional focus
Maintain strategic and regional focus RWE’s core business remains electricity and gas We build on our leading positions in our core markets to look for further growth Regional growth markets mainly CEE/SEE, especially Turkey Grow our renewables business in and around our traditional core markets RWE
Slide 7: Execution of strategy will be based on four pillars
Execution of strategy will be based on four pillars Bundle of measures 1 Divestments Secure Focused long-term financial strength 2 capex programme for long-term growth 3 Efficiency programme 4 Capital measures These written materials and the information contained herein are not being issued and may
Slide 8: Divestment programme well on track – Potential assets for disposal identified
Divestments Divestment programme well on track – Potential assets for disposal identified Approx. € 1.5 bn already realised > Sale of Thyssengas > Sale of our stake in Rostock power plant > Disposal of 75% of Amprion We will evaluate our strategic options on further assets > RWE Dea / assets > NET4G
Slide 9: Memorandum of Understanding with Gazprom
Memorandum of Understanding with Gazprom RWE and Gazprom intend to: a) bring ongoing commercial negotiations on gas contracts to a mutually satisfactory conclusion and b) form a strategic partnership in power generation Power generation partnership is focusing on new or existing gas and hard coal fi
Slide 10: Capex programme: limited flexibility short-term – focused growth mid- to long-term
Focused capex Capex programme: limited flexibility short-term – focused growth mid- to long-term € billion > Peak of investment programme in 2011 > Reduced capex to less than 6.5-7.0 € 5 bn by 2013 6.4 5.9 Finalising huge conventional <5 <5 power generation programme ~4 p.a.1 mainly in 2012 and 2013
Slide 11: Financial flexibility to invest in growth areas
Focused capex Financial flexibility to invest in growth areas Renewable Energy Eastern Europe including Turkey > Average growth investments of more than > Average growth investments of more than € 1 bn p.a. € 0.5 bn > Target capacity of 4.5 GW (in operation or > Investment focus along the whole valu
Slide 12: Efficiency programme well on track and stepped up
Efficiency programme 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 900 700 Upgrade February 2011 450 of € 200 million 100 200 Original programme 2006 – 2012
Slide 13: Intended capital measures will further strengthen our balance sheet
Capital measures Intended capital measures will further strengthen our balance sheet Intention of equity capital measure of approx. € 2.5 bn > Use of treasury shares (28.8 million) > Use of authorised capital > Timing depending on market conditions Intention to issue further hybrid capital > Combini
Slide 14: A solid “A” rating is important for all stakeholders
A solid “A” rating is important for all stakeholders Company Rating Outlook > “A” Rating is benchmark for integrated European utilities AA- Stable > Keeping a certain financial flexibility A Stable is necessary for capital intensive infrastructure projects (e.g. power A Stable plant new builds) A Ne
Slide 15: How we are going to secure a solid “A” rating
How we are going to secure a solid “A” rating Expected development of leverage factor Measures to secure our solid “A” rating Rating Reduce net debt by: Leverage factor = 4,0 Net debt1 Up to € 11 billion disposals between 2011 and EBITDA BBB+ 2013 Baa1 Capex cut to approx. € 4 billion p.a. from 3,5
Slide 16: Outlook for 2011 – 2013
Outlook for 2011 – 2013 € million EBITDA 10,256 c. -20% c. 9,400 7,681 Operating c. -25% result c. 5,900 3,752 Recurrent c. -35% c. 2,500 net income 2010 2011e 2013e before further disposals Dividend € 3.50/share Pay out ratio of 50% – 60% of recurrent net income The outlook for 2013 includes the di
Slide 17: Back-up
Back-up These written materials and the information contained herein are not being issued and may not be distributed in the United States of America, Canada, Japan or Australia. 17
Slide 18: Overview of German nuclear power plants
Overview of German nuclear power plants Power plant Net capacity Commercial Closure MW commissioning Biblis A 1,167 1975 German nuclear power plants Neckarwestheim I 785 1976 Brunsbüttel Biblis B 1,227 1977 Brunsbüttel 771 1977 Immediately Brokdorf Isar 1 878 1979 8,409 MW Unterweser Krümmel Unterwe
Slide 19: Nuclear phase-out to cut secured available capacity down to peak-demand level
Nuclear phase-out to cut secured available capacity down to peak-demand level ~ 153 GW PV: 17 GW 17 GW Wind: 28 GW 26 GW 1 GW Biomass: 4 GW 2 GW Hydro: 4 GW 10 GW1 ~ 97 GW 7 GW Pumped storage: 5 GW 8.4 GW < 82 GW ~ 80 GW Conventional and nuclear capacity: 95 GW Installed Un- Secured Balancing Nuclea
Slide 20: Shift of German merit order after decommissioning of nuclear plants
Illustrative, part 1 Shift of German merit order as an effect of the immediate decommissioning of 8 nuclear power plants1) Peak demand Key 2 Process Variable production cost in €/MWh hydro, pump storage, biomass 1 ~8.400 MW nuclear nuclear capacity with low production cost has lignite been taken off
Slide 21: Shift of German merit order (cont.)
Illustrative, part 2 Shift of German merit order as an effect of the immediate decommissioning of 8 nuclear power plants1) Peak demand Key Process (cont.) Variable production cost in €/MWh hydro, pump storage, biomass 3 In order to meet peak 3 nuclear demand, power lignite plants with higher margina
Slide 22: Germany’s generation portfolio is overaged
Germany’s generation portfolio is overaged: >15 GW already online longer than originally scheduled Age structure of Germany’s fossil-fuelled power plants GW 12 Originally planned service life 10 8 Gas & oil 6 Hard coal 4 Lignite 2 0 >50 >45 >40 >35 >30 >25 >20 >15 >10 >5 0-5 Age (in years) These wri
Slide 23: RWE Power's Nuclear Power Plant Decommissioning Concept
RWE Power's Nuclear Power Plant Decommissioning Concept 35 – 40% About 50% 10 – 15% share of costs share of costs share of costs Decommissioning Post operational phase Nuclear dismantling Conventional (immediate, deferred) dismantling/ Final disposal demolition 5 – 7 years 10 – 15 years 2 – 3 years
Slide 24: Nuclear Provisions
Nuclear Provisions 1 Provisions for uncertain liabilities as per IAS 37 2 Public-law liabilities under Sec. 9a of the Germany Nuclear Energy Act Provisions are made for RWE fiscal year 2010: €10,010 million > Disposal of spent nuclear fuel assemblies €4,831 million Flasks, transport, conditioning, i
Slide 25: How the Size of the Provision is Determined
How the Size of the Provision is Determined Schematic description € million Escalation rate 2 (specific cost increase) 1 3 4 Annual interest accretion Discount rate Total Amount (discount to net cost at payable present value) the cutt-off Provisions date IFRS t 2010 2010 2011 2012 20.. These written
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 2011 forward 90 70 50 30 > 20% > 50% > 70% > 80% > 90% 110 2012 forward 90 70 50 30 > 10% > 25% > 30% > 35% > 50% > 80% > 90% 110 2013 forward 90 70 50 30 > 10% > 30% > 40% 01/01/2009 01/07/2009 01/01/20
Slide 27: Germany: Clean Dark and Spark Spreads
Germany: Clean Dark and Spark Spreads (CDS/CSS) 2010 forward 2011 forward 2012 forward 30 25 Ø 23.55 20 Ø 14.88 15 Ø 12.49 10 Ø 7.11 5 Ø 6.16 Ø 4.66 0 09 10 9 0 1 09 9 10 0 11 1 09 10 11 9 0 1 l- 0 l- 1 l- 1 -0 -1 -1 -0 -1 -1 v- v- n- n- n- p- p- p- ar ar ar ay ay ay Ju Ju Ju No No Ja Ja Ja Se Se Se
Slide 28: UK: Clean Dark and Spark Spreads
UK: Clean Dark and Spark Spreads (CDS/CSS) 2010 forward 2011 forward 2012 forward 20 16 Ø 13.63 Ø 12.80 12 Ø 8.19 8 Ø 7.35 Ø 6.70 Ø 3.63 4 0 09 10 9 0 1 09 9 10 0 11 1 09 10 11 9 0 1 l- 0 l- 1 l- 1 -0 -1 -1 -0 -1 -1 v- v- n- n- n- p- p- p- ar ar ar ay ay ay Ju Ju Ju No No Ja Ja Ja Se Se Se M M M M M
Slide 29: Development of TTF gas price and brent oil price since January 2009
Development of TTF gas price and brent oil price since January 2009 (EUR/MWh) 40 5 2011 30 0 20 -5 10 -10 0 -15 40 5 2012 30 0 20 -5 10 -10 0 -15 Jan 2009 Apr 2009 Jul 2009 Oct 2009 Jan 2010 Apr 2010 Jul 2010 Oct 2010 Jan 2011 Apr 2011 Jul 2011 Oct 2011 Spread Crude Brent (in EUR, normalised to TTF)
Slide 30: RWE’s gas procurement portfolio
RWE’s gas procurement portfolio (as of 2011) Long-term oil-indexed purchase contracts (take-or-pay) Own production 33% Russia NBP 38% Norway approx. 47 bcm p.a. TTF 9% Germany 20% Netherlands > Our gas procurement portfolio is solely managed by RWE Supply & Trading > ~50% or 24 bcm p.a. of overall g
Slide 31: 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 2010 10 5 contract revisions initiated 2009 0 2009 2012 2015 2018 2021 2024 2027 2030 2033 2036 > Some 50% of the vo
Slide 32: Conventional power plant new build programme
Conventional power plant new build programme (as of 10 November 2011) € 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, 1,650 MW
Slide 33: RWE Innogy major project portfolio
RWE Innogy major project portfolio (as of 10 November 2011) € 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,
Slide 34: RWE Dea's largest field developments
RWE Dea's largest field developments (as of 10 November 2011) RWE Capex1 Production start share (€ bn) 2011 2012 2013 2014 2015 2016 West Nile Delta (Egypt) 40% 2.6 Breagh (UK) 70% 0.4 Reggane (Algeria) 19.5% 0.4 Luno (Norway) 20% 0.5 Knarr (Norway)2 10% 0.2 NC193 (Libya)3 100% 0.3 NC195 (Libya)3 10
Slide 35: 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