Rwe Ag · XETR:RWE
Rwe — Investor Presentation (September 2007)
35 slides from Rwe's investor presentation, Sep 21, 2007
Slide 1: Ready to invest in organic growth
Ready to invest in organic growth Autumn 2007 21.09.2007
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: Key messages of H1 2007
Key messages of H1 2007 Performance Operating result +18% H1 2007 Net income +58% Recurrent net income +16% Regulation Clarity on German National Allocation Plan II More clarity on cornerstones of incentive based regulation for German networks Strategy “Go ahead” for major organic growth
Slide 4: RWE Group results H1 2007
Performance H1 2007 RWE Group results H1 2007 January – June change € million 2007 2006* in % EBITDA 5,187 4,520 +14.8 Operating result 4,449 3,758 +18.4 Non-operating result -94 -395 +76.2 Financial result -551 -873 +36.9 Net income 2,629 1,659 +58.5 Recurrent net income 2,226 1,920 +15.9 Cash flow
Slide 5: New cap for net debt
Balance sheet New cap for net debt Old cap of “net financial debt” New cap of “net debt” at at € 10 – 12 bn € 22 – 24 bn after CTA € bn € bn 23.4 25 25 20 20 12.0 15 15 11.4 10 10 6.9 5 5 11.4 -4.7 0 0 11.6 -4.7 -5 -5 2005 2006 2005 2006 Net financial debt (+), assets (-) Pension provisions 5
Slide 6: Utilisation of financial flexibility
Strategy Utilisation of financial flexibility The disposal of the Water Division will further enhance the financial flexibility of the Group. We aim to utilise it by way of Organic growth Cash returns to shareholders Selective external growth 6
Slide 7: Paving the way for further organic profit growth
Strategy Paving the way for further organic profit growth RWE Dea Doubling of production RWE Power by 2013 P50 reserves: 9% CAGR Average realised whole- for 2006 – 2010 sale price to catch up with forwards Potential for growth Attractive long-term fundamentals RWE Gas Midstream RWE Energy
Slide 8: RWE Power: Still more than €15/MWh to catch up with current market price
Organic growth RWE Power: Still more than € 15/MWh1) to catch up with current market price Forward selling of RWE Power in the German market (base load forwards in €/MWh) 64 60 56 52 Forward 48 44 2007 40 36 32 28 >1% sold >10% sold >35% sold >55% sold >90% sold >95% sold >95% sold 24 64 60 56 52 Fo
Slide 9: RWE Energy successfully implemented a value-oriented retail strategy
Organic growth RWE Energy successfully implemented a value-oriented retail strategy Development of volume and gross margin* Value-oriented retail strategy – RWE Energy Electricity Germany – Across all customer segments: value-orientation results in increasing total gross margin Stabilization of
Slide 10: RWE npower: value oriented retail strategy with growing customer numbers
Organic growth RWE npower: value oriented retail strategy with growing customer numbers Development of customer numbers Value-oriented retail strategy (in million accounts) Price volatility in wholesale gas 6.9 and power prices has continued [of which 6.3 dual fuel] 6.2 6.1 [2.1] Competition rem
Slide 11: Mid-term capex programme significantly stepped up
Organic growth Mid-term capex programme significantly stepped up: Growth takes centre stage € 5.0 bn p.a. +/- 10% RWE npower € 600 m p.a. (+/-50%) € 4.0 bn p.a. € 3.5 bn p.a. +/- 15% RWE Energy € 1,500 m p.a. (+/-20%) Water Division € 2.3 bn p.a. RWE Dea € 600 m p.a. (+/-15%) Energy RWE Power € 2,30
Slide 12: How growth and efficiency capex will impact underlying earnings
Organic growth How growth and efficiency enhancement capex will impact our underlying earnings performance (€ bn) 25.0 Maintenance 7.0 Mandatory (grid) 1.4 Efficiency Replacement 8.4 enhancement 9.9 Operating result*: approx. 20% 1.7 + € 1,000 m p.a. 100% EBITDA: Growth 8.2 8.2 + € 1,200 m p.a. Tota
Slide 13: RWE Power: Upgrading our hard coal based power plant portfolio
Organic growth RWE Power: Upgrading our hard coal based power plant portfolio in Continental Europe Hamm Ensdorf Eemshaven (Germany) (Germany) (Netherlands) Capex 2.0 € bn 2.0 € bn 2.2 € bn Capacity (net) 1,530 MW 1,530 MW 1,560 MW Commissioning 2012 2012 2012 Thermal Efficiency 46% 46% 46% CO2 redu
Slide 14: RWE Power: Coal is an attractive option in Germany (I)
Organic growth RWE Power: Coal is an attractive option in the German market even with tight CO2 allocation (I) Site and components Consented brown-field sites available Secured favourable contracts for plants which may not be available in the foreseeable future (tight market for critical power p
Slide 15: RWE Power: Coal is an attractive option in Germany (II)
Organic growth RWE Power: Coal is an attractive option in the German market even with tight CO2 allocation (II) New hard coal plants benefit from price setting by less efficient, older, hard coal and gas plants Merit order Germany (illustrative) Min Max Hourly Demand New New New Power price Lignit
Slide 16: RWE npower: Doubling of our gas-fired new-build in the UK
Organic growth RWE npower: Doubling of our gas-fired new-build in the UK Staythorpe Pembroke (CCGT) (CCGT) Capex 0.9 € bn 1.1 € bn Capacity (net) 1,650 MW 2,000 MW Commissioning 2010 2011 Thermal Efficiency 58% 59% CO2 reduction (compared 60% 60% to average old coal plant) Special items – Pending Se
Slide 17: RWE npower: Gas is the most attractive option for UK new-build (I)
Organic growth RWE npower: Gas is the most attractive option for new-build in the UK market (I) Site and components Brown-field sites available; Staythorpe already consented Secured favourable contracts for plants which may not be available in the foreseeable future (tight market for critical po
Slide 18: RWE npower: Gas is the most attractive option for UK new-build (II)
Organic growth RWE npower: Gas is the most attractive option for new-build in the UK market (II) Gas benefits from price setting of less efficient, older, hard coal and gas plants and from high load factors (gas runs base load) Merit order UK (illustrative) Min Max Hourly Demand New New Hard Coal
Slide 19: RWE Dea: Ambitious new targets
Organic growth RWE Dea: Ambitious new targets Target: Doubling of annual production by 2013 (million boe) Gas Oil 55 CAGR ~ 11% 18 18 20 2006* 2013e Organic growth through defined development projects Growth of P50 reserves (9% CAGR 2006-2010) through conversion of existing resources Growth of
Slide 20: RWE Gas Midstream: Various projects in preparation
Organic growth RWE Gas Midstream: Various projects in preparation Teesside German Coast GasPort* (regas.) GasPort* (regas.) Ready for Feasibility study operation Flexible deliveries to the First delivery was German market made in Feb. 2007 Krk LNG terminal GATE LNG terminal (regas.) (regas.)
Slide 21: New efficiency enhancement targets
Organic growth New efficiency enhancement targets Annual earnings contribution (€ million) 200 200 € 600 million annual earnings 100 contribution in total 100 as of 2010 2007 2008 2009 2010 Efforts will mainly focus on cost reductions from internal benchmarking processes and higher availability an
Slide 22: Update on the planned disposal of American Water
Strategy Update on the planned disposal of American Water States in which American Water Status quo has regulated operations All state regulatory approvals (13) received Necessary post IPO corporate functions established Successful private placement of $ 1.1 billion senior unsecured notes Re
Slide 23: External growth: Strategy and perspectives
External growth External growth: Strategy and perspectives We will stick to our strategy: – Targets have to make strategic sense (markets, synergies) – Targets have to fulfil our strict financial criteria M&A market is currently a sellers’ market with stretched valuations, therefore patience is
Slide 24: Clarity on Emissions Trading (I): German NAP II finalised
Political topics Clarity on Emissions Trading (I): German National Allocation Plan (NAP II) finalised On July 6, 2007, the Upper House of Parliament agreed on NAP II: – Emissions cap: 453 million t p.a. + 3 million t for gas by-products – Benchmark system; two best available technology (BAT) bench
Slide 25: Update on Emissions Trading (II): Expected impact from German NAP II
Political topics Update on Emissions Trading (II): Expected impact on RWE from German NAP II CO2 emissions and free allocation of RWE in Germany (in million tons; annualized) 147 140 +/- 5% 142 29 from contractually secured capacity 26 from own power plants free 118 116 allocation ca. 97% free alloc
Slide 26: Update on Emissions Trading (III): Status of UK NAP II
Political topics Update on Emissions Trading (III): Current status of UK Governmental draft (NAP II) The UK published a drafted NAP II in March 2006; following public consultation, the Government announced further details of the NAP at the end of June and submitted it to the EU Commission on Augus
Slide 27: Update on Emissions Trading (IV): Expected impact from UK NAP II
Political topics Update on Emissions Trading (IV): Expected impact on RWE from UK NAP II CO2 emissions and free allocation of RWE in UK (in million tons; annualized*) 25 20 mt +/- 10% * Excludes CHP plant and new build plant 17 Free-of-charge allocation Free-of-charge allocation ca. 70% (post auctio
Slide 28: We aim to significantly reduce our exposure to carbon
Political topics We aim to significantly reduce our physical and financial exposure to carbon CO2-mitigation in RWE Group: Physical and financial measures and potential (m t/a)1) -7 2) to -7 3) up -7 -18 4) 178 RWE 5) Extension up to -3 -3 -8 2) planned 3) of lifetime up-8 to -8 new-builds CDM/JI ?
Slide 29: RWE's current Kyoto credit portfolio for 08-12
Political topics RWE‘s current Kyoto credit portfolio for 2008-12 Projects by July, 2007 Contract volume by technology 100 Hydro N2O N 2O 90 90 HFC23 80 Energy Efficiency 70 Wind CH4 mill. certificates 60 CH 4 50 40 LoI Contract volume by region LoI 30 LoI Validated China 20 Validated South Korea In
Slide 30: RWE Energy: More clarity on incentive network regulation
Outlook RWE Energy: More clarity on incentive network regulation leads to higher earnings visibility Last cost-based tariff review (2008) before 2013 for German electricity and gas grids We have filed all our electricity network tariffs with the Federal Regulator; filing for gas tariffs by Septe
Slide 31: RWE Energy: Medium-term earnings stability on a high level
Outlook RWE Energy: Medium-term earnings stability on a high level RWE Energy’s operating result in € million Target Target 2,506 ~ 2,500 ~ 2,500 -5% − -10% >10% cut <10% cut Annual in network in network cuts fees fees ex- (incentive Efficiency pected regulation) enhance- Efficiency Effi
Slide 32: Outlook for 2007 (I)
Outlook Outlook for 2007 (I) Reported 20061 Pro forma 20062 2007 € million € million forecast2,3 EBITDA 7,861 7,172 +5 – 10% Operating result 6,106 5,681 +10 – 15% RWE Power 2,744 2,744 Ò RWE Energy 2,506 2,506 -5 – -10% RWE npower 512 512 Ò Water Division 425 DCO2 DCO2 1 Exchange rates of (€ 1 =) U
Slide 33: Outlook for 2007 (II)
Outlook Outlook for 2007 (II) Reported 20061 Pro forma 20062 2007 € million € million forecast2, 3 External revenue 44,256 42,554 Ò Operating result 6,106 5,681 +10 – 15% Net income 3,847 3,847 Ô Recurrent net income 2,466 2,466 ≥ +15% Capex on fixed assets 4,494 2,9104 ca. € 4 bn4 1 Exchange rates
Slide 34: RWE's mid-term targets
Outlook RWE‘s mid-term targets Dividend Share buy back Operating Recurrent net Efficiency result income enhancements For 2007: Planned upon 5% CAGR from 10% CAGR € 600 m annual proposal of the deconsoli- organic growth until 2008 earnings extraordinary dation of contribution by payout ratio American
Slide 35: Reminder…
Reminder… To be always updated, please have a look at our webpage. Navigation around www.rwe.com Calendar Investor Relations > Calendar Annual Report Investor Relations > Financial Reports > Annual Report Interim Report Investor Relations > Financial Reports > Interim Reports Fact book (300