Rwe Ag · XETR:RWE
Rwe — FY2014 Earnings Presentation
42 slides from Rwe's earnings presentation, Mar 10, 2015
Slide 1: Paving the way for growth with continued focus on financial discipline
Paving the way for growth with continued focus on financial discipline Essen, 10 March 2015 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: Agenda
Agenda A Peter Terium Paving the way for growth B Bernhard Günther Continued focus on financial discipline RWE AG | FY 2014 Conference Call | 10 March 2015 3
Slide 4: On our way to financial robustness as base for long-term growth
On our way to financial robustness as base for long- term growth What we have achieved so far What we are focusing on > Establishment of European generation business to drive cost Identification and fostering 1 efficiencies and portfolio measures of growth areas > First two waves of efficiency progr
Slide 5: Changing energy market offers growth potential
1 Areas of growth Changing energy market offers growth potential Renewables Grids Retail > Focus on on- and off- > Best in class grid > Strong Pan European shore wind management Retail organisation with > ~ €1 bn in growth capex > Investments of > €3 bn 23m customers (2015-2017) between 2015 and 201
Slide 6: Increased earnings pressure on conventional power generation
2 Generation review Increased earnings pressure on conventional power generation As of March 20141 As of January 20152 OR > c. > 50% – 60% c. > 25% – 35% WACC3 Optimi- sation Market OR > 0 c. > 60% – 70% decline c. > 40% – 50% FCF3 > 0 c. > 70% – 80% c.>> 55% – 65% 1 Rough profitability analysis for
Slide 7: Conventional Power Generation: mark-to-market free cash flow neutral
2 Generation review Conventional Power Generation: mark-to-market free cash flow neutral € billion 3.3 3.0 2.0 Mark-to-market (m-t-m)1 1.0 1.0 OR m-t-m Efficiencies before 2012-2017 efficiencies 0.0 -1.0 2012 2014 Depreciation EBITDA Other Day-to-day Free Operating result (OR) cash flow capex cash f
Slide 8: Fundamental change is required to respond to market changes
3 Efficiency programme Fundamental change is required to respond to market changes increase top team alignment foster motivation WHAT TO better capital allocation ACHIEVE more partnerships prototype new business ideas WHAT WE DO Rapid prototyping New leadership styles; less hierarchical DIFFERENTLY
Slide 9: Efficiency programme ahead of schedule, additional measures contribute another €500 million
3 Efficiency programme Efficiency programme ahead of schedule, additional measures contribute another €500 million Net benefit to operating result Net benefit by division € million ~ 10% Holding and cross ~ 50% 400 divisional effects Generation 100 100 ~ 10% Trading/ 400 Gas Midstream ~ €2 bn by
Slide 10: Next wave of efficiencies entails a wide range of performance measures
3 Efficiency programme Next wave of efficiencies entails a wide range of performance measures Additional measures focus on cost reduction and cash flow optimisation Costs > Implementation of lean programme and improved end-to-end processes > Consolidation of IT landscape > Reduction of costs of exte
Slide 11: Development of total controllable costs (TCC)
3 Efficiency programme Development of total controllable costs (TCC) Continuous reduction of TCC (nominal values) €10.8 bn €10.1 bn €8.7 bn ~ €8.5 bn 0.5 0.2 0.4 1.0 0.1 0.1 5.5 4.9 3.9 3.9 5.3 5.2 4.8 4.6 2012 2013 2014 2017e Personnel costs Other TCC Operational cost improvement Portfolio and othe
Slide 12: Capex programme reduced to maintenance level
4 Financial discipline Capex programme reduced to maintenance level Further growth projects have to be financed debt-neutral, e.g. by the disposal of other assets or partnering solutions € billion > Approx. €6.5 – 7.0 bn capex ~ 1.5 – 2.0 Conventional power generation programme for 2015 – 2017: ~ €1
Slide 13: Dividend policy reflects whole economic situation
4 Financial discipline Dividend policy reflects whole economic situation Dividend of the preceding year serves as a reference point for the dividend proposal Earnings situation Dividend Leverage Growth and cash flow opportunities situation RWE AG | FY 2014 Conference Call | 10 March 2015 13
Slide 14: Agenda
Agenda A Peter Terium Paving the way for growth B Bernhard Günther Continued focus on financial discipline RWE AG | FY 2014 Conference Call | 10 March 2015 14
Slide 15: Agenda
Agenda A Peter Terium Paving the way for growth B Bernhard Günther Continued focus on financial discipline RWE AG | FY 2014 Conference Call | 10 March 2015 14 15
Slide 16: Development of the major earning figures in 2014
Development of the major earning figures in 2014 € billion Fiscal year 2014 +/- vs. 2013 Depreciation increases due to recognition of asset impairments in the operating result in 2014 EBITDA 7.1 -0.8 Non-operating result improves as Depreciation -3.1 -0.6 previous year’s figure included Operating re
Slide 17: Development of operating result
Development of operating result … … by division (-€1.4 billion; -25%) … by major value drivers1 € billion € billion Fiscal year 2013 5.4 Fiscal year 2013 5.4 Conventional -0.4 Efficiency programme +0.4 Power Generation Supply/Distribution +0.2 Impairments -0.8 Networks Germany Generation Supply NL/B
Slide 18: Development of cash flows from operating activities
Development of cash flows from operating activities Strong increase in cash flows1 due to relief from new CO2 purchase policy € billion +0.4 -0.6 +1.5 -0.2 5.6 4.8 -0.8 +2.1 -0.8 -0.8 CFOA Gazprom Higher Others, Higher Change in Tax Reduction Others CFOA 20131 arbitration use of mainly reduction acc
Slide 19: Positive cash balance reached 1 year ahead of plan
Positive cash balance reached 1 year ahead of plan Cash flows from operating activities to cover investments and dividends € billion -2.7 -0.7 +1.1 <0 >0 Cash balance 7.1 5.5 5.6 4.4 4.8 4.5 ≥ ≤ 2012 20131 20141 2015e 2016e Capex in property, plant & equipment and financial assets (according to cash
Slide 20: Development of net debt
Development of net debt € billion Cash flows Capex on Dividends1 Divestments1 Change Others from operat- property, plant in pension, including f/x ing activities1 and equipment nuclear, effects, and intangible mining deconsolidations assets and provisions1 and change of net financial debt from asset
Slide 21: Excellent access to the capital market is key to us
Excellent access to the capital market is key to us Significant reduction of net financial debt Achievements € billion > Strong decrease of net 29.9 33.0 30.7 31.03 < 2014 Net debt financial debt Leverage 3.5x 3.5x 3.5x2 3.8x2 > 2014 > Net financial debt/ factor1 EBITDA <1x (2015e) 19.9 19.6 20.6 >
Slide 22: Outlook for 2015
Outlook for 2015 € million EBITDA 7,131 6,100 – 6,400 Operating 4,017 3,600 – 3,900 result Recurrent 1,282 1,100 – 1,300 net income Dividend €1.00/share1 Oriented towards growth opportunities, indebtedness and earnings situation. The dividend for 2014 serves as a reference point. 2014 2015e2 reporte
Slide 23: 2015 divisional outlook for the operating result
2015 divisional outlook for the operating result € million 2014 2015 forecast versus 2014 Conventional Power Generation1 979 Significantly below 2014 Supply/Distribution Networks Germany 1,871 Moderately below 2014 Supply NL/B 146 Significantly above 2014 Supply UK 227 Moderately above 2014 Central
Slide 24: Operating result outlook for fiscal year 2015
Operating result outlook for fiscal year 2015 Trend for major value drivers in fiscal year 2015 Operating result (OR) 2014 €4.0 bn Efficiency programme c. €100 million envisaged for 2015 Depreciation Lower depreciation as 2014 includes impairments Electricity generation margins (D;NL;UK); volume
Slide 25: Back-up Charts
Back-up Charts i a. ey The energy to lead
Slide 26: Performance of the Conventional Power Generation Division
Performance of the Conventional Power Generation Division January – December: operating result: -29% (-€405 million) € million - Lower realised electricity generation spreads 1,384 - Closure of Tilbury and Didcot A power plants 979 - Higher depreciation due to impairments + Efficiency improvements +
Slide 27: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 31 December 2014 >30% >10% >40% >10% >40% >20% >50% >30% >60% >40% >60% >50% >80% >60% >90% >70% >90% >70% 2015 forward >30% >20% >40% >10% >40% >10% >60% >10% >60% >20% 2016 forward >30% <10% 2017 fo
Slide 28: RWE successfully qualified approx. 8 GW for the UK capacity market
RWE successfully qualified approx. 8 GW for the UK capacity market Plant MW1 Plant type > First UK capacity auction for winter 2018/19 settled at Aberthaw 1,486 Coal/OCGT £19.40/kW (2012 money). Didcot B 1,364 CCGT > The result was broadly in line with Great Yarmouth 361 CCGT our expectations. Littl
Slide 29: Germany: Clean Dark and Spark Spreads
Germany: Clean Dark (CDS) and Spark Spreads (CSS) 2014 forward 2015 forward 2016 forward 16 12 Ø 7.86 8 Ø 5.78 4 Ø 4.14 0 -4 -8 Ø -11.63 Ø -13.11 Ø -8.74 -12 -16 Trading year 2013 Trading year 2014 Trading year 2015 3 4 5 3 4 5 3 4 5 13 14 15 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju
Slide 30: NL: Clean Dark and Spark Spreads
NL: Clean Dark (CDS) and Spark Spreads (CSS) 2014 forward1 2015 forward1 2016 forward1 20 15 Ø 11.43 Ø 9.47 10 Ø 9.10 5 0 Ø -7.46 -5 Ø -7.27 -10 Ø -7.52 -15 -20 Trading year 2013 Trading year 2014 Trading year 2015 3 4 5 3 4 5 3 4 5 13 14 15 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju J
Slide 31: UK: Clean Dark and Spark Spreads
UK: Clean Dark (CDS) and Spark Spreads (CSS) 2014 forward1 2015 forward1 2016 forward1 28 Ø 22.49 24 20 Ø 16.96 16 12 Ø 11.49 8 Ø 2.03 Ø 3.67 4 Ø 4.99 0 Trading year 2013 Trading year 2014 Trading year 2015 3 4 5 3 4 5 3 4 5 13 14 15 -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
Slide 32: Performance of the Supply/Distribution Networks Germany Division
Performance of the Supply/Distribution Networks Germany Division January – December: operating result: +15% (+€245 million) € million + Efficiency improvements 1,871 1,626 + Higher earnings from the disposal of grid assets - Weather-induced decline in gas earnings 2013 2014 Outlook for fiscal 2015:
Slide 33: Performance of the Supply Netherlands/Belgium Division (Essent)
Performance of the Supply Netherlands/Belgium Division (Essent) January – December: operating result: -48% (-€132 million) € million - Absence of positive impact from release of provisions in 2013 278 - Weather-induced reduction in gas earnings 146 - Competition-induced pressure on gas margins + Mar
Slide 34: Performance of the Supply United Kingdom Division (RWE npower)
Performance of the Supply United Kingdom Division (RWE npower) January – December: operating result: -22% (-€63 million) € million - Higher grid fees and commodity costs 290 - Negative weather effects 227 - Additional costs for customer service improvements - Earnings dilution from sale of retail sa
Slide 35: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division January – December: operating result: -33% (-€342 million) € million - Disposal of NET4GAS (as of 2 August 2013; -€171 million) 1,032 - Positive effects in 2013 from derivatives to hedge f/x risks 690 Czech Republic: - Weather-indu
Slide 36: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) January – December: operating result: -8.4% (-€17 million) € million - Impairments, mainly on Markinch biomass project 203 186 - Impact of new renewables support scheme in Spain - Reduced electricity wholesale prices - Group-internal transfer of Ge
Slide 37: Performance of the Trading/Gas Midstream Division
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) January – December: operating result: -67% (-€557 million) € million Trading: 831 + Significantly better performance in the energy trading business Supply: 274 - Absence of one-off from Gazprom arbitration ruling in 2013 + Comm
Slide 38: Financial liabilities and assets
Financial liabilities and assets (Excluding hybrid capital and RWE Dea, as of 31 December 2014) Financial liabilities Financial assets Split of € billion € billion securities 20 18.5 20 13% 2.1 15.2 1.2 15 1.3 0.3 15 0.8 9.4 10.0 10 1.0 10 0.8 3.2 3.2 14.9 13.1 1.0 5 1.0 5 3.3 0.4 0.8 4.4 0.2 0.6 4.
Slide 39: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Strong sources of financing € billion Fully committed syndicated loan For liquidity 2.5 2,5 20 20 (€4.0 bn up back-up to March 2019) €0.0 bn 2.0 2,0 16 16 1,5 1.5 12 12 Commercial paper $0.0 bn ($5.0 bn) (up to 1
Slide 40: Capital market debt currency and interest exposure
Capital market debt currency and interest exposure (as of 31 December 2014) 11% 34% €17.9 bn11 €15.0 bn2 66% 89% € Interest rate fixing expiry > 1 year £ Interest rate fixing expiry < 1 year 1 Capital market debt = bonds of €14.0 bn and hybrids of €3.9 bn; split into currencies includes cross-curren
Slide 41: RWE's major investment projects
RWE’s major investment projects RWE Capex share (€ bn) 2013 2014 2015 2016 2017 2018 Conventional new build power plant programme (capex at 100% share) Hamm (hard coal, 1,528 MW)1 77% 2.5 Unit E (764 MW) Eemshaven (hard coal/biomass, 1,554 MW) 100% 3.1 Units A&B 1 The date for bringing unit D (764 M
Slide 42: Keep up with RWE …
Keep up with RWE … Follow us on twitter.com/RWE_IR and have a look at www.rwe.com/ir Financial 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 Co