Rwe Ag · XETR:RWE

Rwe — WestLB - Deutsche Stromwirtschaft: Neue Energie? 2004

28 slides from Rwe's conference presentation, Apr 28, 2004

  1. Slide 1: Generating Power and Value

    Generating Power and Value Antonius Voss, CFO RWE Power WestLB - Deutsche Stromwirtschaft: Neue Energie? Zürich, 28. April 2004

  2. 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

  3. Slide 3: RWE Power: Core Competencies Cost Reduction and Asset Optimization

    RWE Power: Core Competencies Cost Reduction and Asset Optimization RWE AG (Group Center) RWE Power RWE Energy RWE Innogy RWE Trading RWE RWE Umwelt RWE Systems Thames Water GENERATION Upstream „ RWE Group‘s upstream platform Gas & Oil RWE Dea „ all continental European power plants in one hand Renew

  4. Slide 4: RWE Power: Generation Output and Power Plant Capacity (2003)

    RWE Power: Generation Output and Power Plant Capacity (2003) Output: 196 TWh*) Capacity: 35.7 GW*) Gas Gas Water and Lignite 9% 15% others 39% 5% Water and Lignite others 31% 10% Nuclear 19% Nuclear 16% Hard coal Hard coal 28% 28% *) Including contractually secured capacity. 4

  5. Slide 5: The German Power Market: RWE's Value Driver No. 1

    The German Power Market: RWE’s Value Driver No. 1 Capacity reduced „ substantial generation capacity taken out „ some capacity only available part time (e.g.wind) Price level increased Overcapacity no longer exists „ price collapse immediately after liberalisation Highest loads „ since then steady i

  6. Slide 6: Remaining Power Generation Reserve Capacity for Germany

    Remaining Power Generation Reserve Capacity for Germany in 2003 - 2005 6000 5500 5000 Reserve Capacity in MW 4500 4000 January 3500 July 3000 2500 2000 1500 2003 2004 2005 Year Source: Union for the Co-ordination of Transmission of Electricity (UCTE) report published December 2002, Title: UCTE Syste

  7. Slide 7: German Power Generation: Considerable Replacement Needed

    German Power Generation: Considerable Replacement Needed Age-related reduction in existing power plant capacities (in GW) Others 100 40,000 MW to be replaced Nat. gas between 2010 and 2020 Hard coal 50 Lignite Nuclear energy 0 Water 2000 2005 2010 2015 2020 2025 2030 Premise: Decommissioning in each

  8. Slide 8: Development of German Forward Prices since 2000 – Base Load

    Development of German Forward Prices since 2000 – Base Load 35,00 33,00 31,00 2005 in 2004 29,00 Euro / MWh 27,00 25,00 2004 in 2003 23,00 2003 in 2002 21,00 2002 in 2001 19,00 2001 in 2000 17,00 0 5 10 15 20 25 30 35 40 45 50 calendar weeks 8

  9. Slide 9: Cost Cutting at RWE Power: Ambitious Targets for Economies of Scale and Scope

    Cost Cutting at RWE Power: Ambitious Targets for Economies of Scale and Scope „ In order to bring power stations into the money, RWE established an ambitious cost cutting programme:  Overall group target: € 3,055 bn p.a. until 2006  thereof generation: € 1.4 bn p.a. „ Implementation of cost cuttin

  10. Slide 10: Monetisation of Flexibility: Skill Advantages and Close Co-operation with RWE Trading

    Monetisation of Flexibility: Skill Advantages and Close Co-operation with RWE Trading Increasing importance of flexibility z disappearance of reserve margin leads to more frequent Peak load power situations of market tightness stations move z subsidised must run wind beyond cost cutting: energy has

  11. Slide 11: RWE Power: Impact of Power Price Surge on 2004 Profitability

    RWE Power: Impact of Power Price Surge on 2004 Profitability „ Market relevant 2004 German electricity output approx. 170 TWh, thereof >75% sold by H1 2003 „ ¾ of output sold to wholesale market, redistributors and industrial clients → forward products, profit relevant with a lag of 12 months „ ¼ of

  12. Slide 12: CO2 Emissions Trading in Germany: Our Current View

    CO2 Emissions Trading in Germany: Our Current View „ The Draft National Allocation Plan (NAP) was approved and sent to the European Commission by the German Government on March 31st. Our view is that: „ The total allotment of CO2 allowances will ensure compliance with the German Kyoto (and EU Burden

  13. Slide 13: "Powering Up": From Consolidation to Delivery

    “Powering Up”: From Consolidation to Delivery Ingo Alphéus, Head of Investor Relations RWE AG WestLB - Deutsche Stromwirtschaft: Neue Energie? Zürich, 28. April 2004

  14. Slide 14: Highlights of 2003 – Year of Consolidation

    Highlights of 2003 – Year of Consolidation „ Group operating result +23%, core business +27% PERFORMANCE „ EVA target achieved (€ 1 bn in core business) „ Dividend up by 14% „ Cost reduction target increased by 20% „ 2005 target already achieved (< € 20 bn) DEBT REDUCTION „ Net debt at € 17.8 bn „ N

  15. Slide 15: RWE Group Key Figures 2003

    PERFORMANCE RWE Group Key Figures 2003 2003 2002 change € million € million in % External revenue 43 875 46 633 -5.9 EBITDA 8 476 7 241 +17.1 Operating Result 5 551 4 504 +23.2 Cash flow from operating activities 5 289 5 933 -10.9 Capex incl. acquisitions 9 762 16 985 -42.5 Net profit after goodwill

  16. Slide 16: Dividend 2003: Strong Increase

    PERFORMANCE Dividend 2003: Strong Increase 1.25 % + 14 € 1.10 € 0.10 bonus dividend € 1.00 dividend 74% of EPS post-goodwill 2002 2003 payout ratio Our profit profile provides a sound base for delivering attractive dividends. 16

  17. Slide 17: New Group Structure in Place

    REORGANIZATION New Group Structure in Place RWE Energy RWE Innogy „ Gas business fully integrated (Jan. 2004) „ UK Trading transferred to RWE Trading (Jan. 2004) „ Continental European water business fully integrated (Jan. 2004) „ Regenesys closed „ Telecom customers sold „ Asset-light development o

  18. Slide 18: Cost Reduction: New Target Adds 20% to Existing Program

    PERFORMANCE Cost Reduction: New Target Adds 20% to Existing Program (€ m) 180 3.2 bn 500 synergies new € 100 m 2 555 program RWE Thames Water / RWE Innogy € 80 m Czech Gas € 300 m reorganisation existing program € 20 m efficiency enhancement to compensate RWE Gas deal € 180 m IT, water restructuring

  19. Slide 19: RWE Thames Water: Regulatory Progress and New Cost Initiative

    PERFORMANCE RWE Thames Water: Regulatory Progress and New Cost Initiative UK water operations „ Positive signals from the regulator for next UK regulatory period 2005 - 2010 - Post-tax return (real) on regulated asset base to increase from 4.75% to 5% - Customer price increases expected - Infrastruc

  20. Slide 20: Faster Reduction of Net Debt

    DEBT REDUCTION Faster Reduction of Net Debt (€ bn) 25 23.2 bn TARGET 2003* (< € 24 bn) 20 TARGET 2005** (< € 20 bn) 17.8 bn NEW TARGET 2005*** (< € 17 bn) 15 10 5 1/2003 12/2003 Based on exchange rates of (€ 1 =): * USD 1.10; GBP 0.70; ** USD 1.15; GBP 0.70; *** USD 1.20; GBP 0.70. 20

  21. Slide 21: By 2006 All Past Acquisitions on Track to Deliver Positive EVA

    INTEGRATION By 2006 All Past Acquisitions on Track to Deliver Positive EVA Czech Gas EVA target reached 3 years ahead of schedule RWE Innogy on track to reach EVA break even in 2005 RWE Thames Water on track to reach EVA break (incl. American Water) even in 2005 American Water on track to reach EVA

  22. Slide 22: Streamlining the Core Business

    PORTFOLIO Streamlining the Core Business Stake/company disposed of closing proceeds 3.5% of Ruhrgas Q1/2003 € 224 m 34.9% of STE (Czech Republic) Q2/2003 € 73 m Various activities of RWE Umwelt 2003 none Non operational real estate 2003 € 270 m (overall program: € 1 bn; achieved: € 810 m) 40% of Sta

  23. Slide 23: Successful Placement of HOCHTIEF Shares

    PORTFOLIO Successful Placement of HOCHTIEF Shares „ RWE‘s 56% shareholding in Hochtief comprised of – 36% held directly (25.2 million shares) and – 20% held indirectly (14.1 million shares) „ Two-pronged disposal process – Accelerated Bookbuilt Offer: 32.6 million shares placed at € 23/share – € 200

  24. Slide 24: RWE Umwelt Sale Intended

    PORTFOLIO RWE Umwelt Sale Intended „ Despite comprehensive cost reductions and realignment, RWE Umwelt will not meet its cost of capital by 2005. „ The environmental business does not fit into the integrated business model with electricity, gas and water - very limited synergies - different strategi

  25. Slide 25: German Network Regulation: Our Current View

    German Network Regulation: Our Current View „ The German Federal Ministry of Economics proposes lean regulation as a general guideline. This implies: – reliable determination of the methodology to calculate grid tariffs defined by law which will be binding for the REGTP – ex post control by REGTP to

  26. Slide 26: Outlook for 2004 – Year of Delivery

    DELIVERY Outlook for 2004 – Year of Delivery 2003 2004 € million expectation* External revenue 43 875 Operating result 5 551 Net income after goodwill 953 Net income before goodwill 1 938 ROCE 10.4% Capex on fixed assets 4 362 * Based on exchange rates of (€ 1 =) USD 1.20; GBP 0.70. 26

  27. Slide 27: Outlook for 2004

    DELIVERY Outlook for 2004 Operating Result 2003 2004 forecast* € million unadjusted adjusted** RWE Power 1 682 RWE Energy 2 046 RWE Innogy 714 RWE Trading 59 RWE Thames Water 1 374 RWE Umwelt 76 Total core business 5 951 Heidelberg -118 Total operating result 5 551 EBITDA 8 476 * Based on exchange r

  28. Slide 28: RWE is Set to Deliver More: Ambitious Medium Term Targets

    DELIVERY RWE is Set to Deliver More: Ambitious Medium Term Targets Debt Operating Cost Dividend ROCE reduction result cutting CAGR +15% max. € 17 bn at least 11% € 2 555 m 2004 – 2006 by year end 5% CAGR by 2005 by year end 2005* from organic 2004 growth € 500 m by year end 2006 * Based on exchange

RWE — WestLB - Deutsche Stromwirtschaft: Neue Energie? 2004 on 6ix