Rwe Ag · XETR:RWE
Rwe — Investor Presentation (November 2017)
46 slides from Rwe's investor presentation, November 2017
Slide 1: RWE Company presentation
RWE Company presentation As of November 2017
Slide 2: Disclaimer
Disclaimer This document contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management, and are based on infor- mation currently available to the management. Forward-looking statements shall not be construed as a pro
Slide 3: Investment highlights
Investment highlights ✔ Leading integrated European generation and trading business ✔ Strong track record of operational excellence and commercial optimisation ✔ Well placed to benefit from fundamental changes in energy markets ✔ Solid financial position and focus on cash flow generation ✔ Committed
Slide 4: Strategic outlook
Strategic outlook RWE AG | Company presentation | November 2017 4
Slide 5: Strategic focus on evolution of existing business portfolio
Strategic focus on evolution of existing business portfolio Optimise Enhance Tap into evolving existing operations portfolio opportunities Lignite & Nuclear/ European Power > Explore technologies European Power suitable to provide > Develop portfolio security of supply > Manage cost base for future
Slide 6: Expected tightening due to decline of firm capacity
Expected tightening due to decline of firm capacity Demand-supply balance at peak load in Germany1 (GW) 120 > Conventional capacity expected to shrink Expected 100 tightening > Reduction driven by nuclear phase-out and recently 80 announced hard coal closures > No corresponding amount 60 of capacity
Slide 7: Capacity tightness already seen in certain situations
Capacity tightness already seen in certain situations German generation capacity on 24 January 2017 (GW) Resulting High (€/MWh) > Low contribution from capacity gap1 contribution renewables 80 from nuclear 250 – Wind: common high 70 225 pressure situation in 200 winter 60 175 – PV: shorter daytime 5
Slide 8: Generation: Ongoing cost reduction and active portfolio measures
Generation: Ongoing cost reduction and active portfolio measures Operational cash cost development1 Active portfolio measures (€ bn) Conventional power generation Since 2012 (GW) 1.4 10.6 4,3 3.0 4,0 3,8 3,7 3,4 3,1 3.0 3.2 2012 2013 2014 2015 2016 Target Shut- Moth- Contract Lignite Total 2019 down
Slide 9: Generation: Further positive cash contribution from operations
Generation: Further positive cash contribution from operations Generation output in Germany (TWh)1 Cash contribution3 Transfer of 5 blocks to stand-by reserve > Rule-of-thumb: Breakeven at power prices minus CO2 costs of 69 ~74 69-71 ~€22/MWh including additional planned 64-66 62-65 Lignite efficien
Slide 10: Hedging – Improved average hedge prices from implicit fuel hedge strategy
Hedging – Improved average hedge prices as a result of our implicit fuel hedge strategy Expected positions and hedge status as of 30 September 2017 Outright ~31 ~27 ~27 ~30 (Lignite & ~100 TWh 85 – 90 TWh 80 – 85 TWh 80 – 85 TWh Nuclear) >90% >90% >90% >70% 2017E 2018E 2019E 2020E Change to repo
Slide 11: Significant improvement of fuel spreads since March 2017
Significant improvement of fuel spreads since March 2017 Development of German fuel spreads1 6 5 4 3 €/MWh 2 1 0 -1 -2 -3 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Months to Delivery Cal16 Cal17 Cal18 Cal19 Cal20 1 Fuel spread defined as: Power p
Slide 12: RWE: Significant CO2 reduction in line with European and national roadmap
RWE: Significant CO2 reduction in line with broader European and national roadmap CO2 emissions by RWE in Germany, Benelux and the UK In million metric tons How we reduce Target1: our emissions minus 55 – 65 171 million t > Shut-down of coal-fired vs. 2015 power plants, e.g. security 154 144 141 140
Slide 13: Our lignite operations bear lion share in CO2 reduction
Our lignite operations bear lion share in CO2 reduction 2020 2030 Planned Stand-by reserve End of Inden mine capacity de- 2 x 300 MW Weisweiler1 ~2030 crease 2017 2 x 300 MW Frimmersdorf 2021 2 x 600 MW Weisweiler1 2018 2 x 300 MW Niederaußem 2022 2019 1 x 300 MW Neurath 2023 By 2020 By 2030 CO2 red
Slide 14: European Power: Significant cash improvements while maintaining full optionality
European Power: Significant cash improvements while maintaining full optionality Management of cost base Efficient convoy management Operational cash cost development1 800 MW class (€ bn) 1,6 1,4 1,3 1,3 1,1 1,0 Eemshaven Westfalen 3 identical units (commissioned 2014/15) High efficiency (>46%)
Slide 15: Commercial Asset Optimisation: High value contribution from all activities
Commercial Asset Optimisation: High value contribution from all activities Commercial Asset Optimisation (CAO) value contribution Deviation from Reference Hedge Path ~5% Option management > Within defined limits > Re-optimisation of power ~15% > Based on fundamental market views station option ~5% >
Slide 16: Supply & Trading: Important earnings contributor to RWE results
Supply & Trading: Important earnings contributor to RWE results EBITDA development and gross margin split Business segments Average Return on risk capital2 Gross margin Trading return and margin Trading Trading Supply split1 ~50% 75% 25% > Physical and financial products on screen in liquid markets
Slide 17: Supply & Trading: Trading track record of attractive risk adjusted returns
Supply & Trading: Trading track record of attractive risk adjusted returns Gross margin versus VaR (€ m) > Strong track record of achieving 1.200 attractive returns while staying 12,3 12,1 15,4 11,2 13,9 15,8 17,1 below risk limits 8,0 10,9 1.000 6,3 > Historically, average portfolio VaR has been si
Slide 18: Financial highlights
Financial highlights RWE AG | Company presentation | November 2017 18
Slide 19: RWE stand-alone figures relevant for cash and value management
RWE stand-alone figures relevant for cash and value management RWE Group RWE stand-alone Lignite & Nuclear Lignite & Nuclear European Power Operating European Power business Supply & Trading Supply & Trading innogy innogy stake and dividends Financial Consolidated net debt portfolio Provisions Key f
Slide 20: Improved transparency from new business segments
Improved transparency from new business segments Operating business Financial portfolio Lignite & Nuclear European Power Supply & Trading innogy/Provisions > Lignite operations > Hard coal, gas and > Trading/origination > Asset dedicated to in Germany hydro power plants cover provisions > Principal
Slide 21: Income statement 2016 still impacted by higher depreciation and financial result
Income statement 2016 still impacted by higher depreciation and financial result Group RWE stand-alone1 (2016) (€ bn) > RWE stand-alone EBITDA includes innogy dividend (2016: €730 m)2 and 5.4 Adj. EBITDA 1.9 Other/Consolidation of -€119 m > Financial result impacted by (2.3) Depreciation (0.9) – Los
Slide 22: 2016 distributable cash flow affected by working capital and cash interests/taxes
2016 distributable cash flow affected by phasing out of working capital measures and higher cash interests/taxes Group RWE stand-alone1 (2016) (€ bn) > RWE stand-alone EBITDA includes innogy dividend (2016: €730 m)2 and 5.4 Adj. EBITDA 1.9 Other/Consolidation of -€119 m Change in provisions & > Chan
Slide 23: Reduction of changes in provisions expected by 2019
Reduction of changes in provisions expected by 2019 Outlook for changes in provisions Outlook for changes in provisions1 (€ m) Nuclear 656 > Stable use of provisions over next 3 to 4 years > Peak expected after shut-down of last nuclear power plant in 2022 Legacy contracts > Loss-making power purcha
Slide 24: Solid capital structure with increased financial flexibility
Solid capital structure with increased financial flexibility RWE stand-alone net economic debt (as of 31 December 2016) RWE RWEstand-alone stand-alonenet debt (as liquidity of 30 Sept position 2017) (as of 31 2016) (€ bn) Limited relevance of traditional leverage ratios > Net financial asset positi
Slide 25: RWE stand-alone – Outlook for 2017 confirmed
RWE stand-alone – Outlook for 2017 confirmed 2016 2017 €1.6 bn – €1.9 bn Adjusted EBITDA €1.9 bn -€0.9 bn Adj. depreciation > Reduction by ~€0.3 bn from impairments > Reduction in interest accretion to provisions (€0.4 – 0.5 bn) -€1.0 bn Adj. net financial result > Lower losses from sale of securiti
Slide 26: Strict focus on disciplined capital allocation
Strict focus on disciplined capital allocation Elements of capital allocation Operating business Portfolio management Lignite & Nuclear Minimum financial portfolio requirement > Cash-optimised maintenance capex > Minimum coverage of provision utilisation by innogy/fungible asset > Target coverage: 1
Slide 27: Sustainable dividend with upside potential
Sustainable dividend with upside potential Elements of dividend policy > Target dividend driven by > Potential upsides distributable cash flows of Commodity price RWE stand-alone developments/outright power > Objective of sustainable €0.50 per share for price recovery dividend payout fiscal year 2
Slide 28: Appendix
Appendix
Slide 29: RWE overview
RWE overview RWE AG | Company presentation | November 2017 29
Slide 30: Generation: Leading and diversified provider of reliable energy
Generation: Leading and diversified provider of reliable energy Core generation markets1 (%) Production volumes2 (%) 1 3 4 18 21 8.5 UK 49 205 205 TWh 51 TWh GW 11 63 10 78 Germany 17 39 26.3 GW Spread3 Outright3 Germany Netherlands/ 3 Belgium 15 UK Other4 19 Netherlands/ Belgium 38 Highly relevan
Slide 31: Overview of capacity measures
Overview of capacity measures Measure Plant MW1 Fuel Location Date Change4 Decom- Goldenbergwerk 110 Lignite DE Q3-2015 missioning Amer 8 610 Hard coal NL Q1-2016 Westfalen C 285 Hard coal DE Q1-2016 Mid-size units 190 Gas NL Q4-2016 Voerde A/B 1,390 Hard coal DE Q1-2017 Gersteinwerk K2 610 Hard coa
Slide 32: Integrated platform extracts maximum value from assets
Integrated platform extracts maximum value from assets Business interaction Commercial Asset Optimisation Commercial asset management Customers Hedging Short-term Supply Generation CAO optimisation Physical & Trading Commodity assets markets Capacity markets, reserve & ancillary services Fuel procur
Slide 33: Supply & Trading: Attractive value contribution
Supply & Trading: Attractive value contribution Global footprint Strong track record 8 ~50% ~1,100 Trading Return on Employees offices risk capital employed1 Prague Essen Average of last 5 years London & Swindon ~€400 m Risk capital New York Den Bosch Beijing employed2 Mexico City Istanbul Singapore
Slide 34: Additional financial information
Additional financial information RWE AG | Company presentation | November 2017 34
Slide 35: Lignite & Nuclear – Driven by power price developments
Lignite & Nuclear – Driven by power price developments Key financials Historical financials > Lower realised power prices (2014: €48/MWh, €m 2014PF 2015PF 2016PF 2015: €41/MWh, 2016: €35/MWh) > €0.5 bn improvement in operational cash costs Adj. EBITDA1 2,105 1,261 1,087 since 2012 > Non-recurring it
Slide 36: European Power – Benefitting from improving UK spreads
European Power – Benefitting from improving UK spreads Key financials Historical financials > UK: improving spreads and income from €m 2014PF 2015PF 2016PF short-term optimisation UK 90 190 270 > Continental Europe: declining spreads and lower income from balancing services Continental Europe 327 83
Slide 37: Supply & Trading – Impacted by commodity market developments
Supply & Trading – Impacted by commodity market developments Key financials Historical financials > Negative EBITDA in 2016 primarily driven by €m 2014PF 2015PF 2016PF trading losses in Q2 > Non-recurring items predominantly consisting of Adj. EBITDA1 286 164 -139 legacy contracts in gas midstream b
Slide 38: Income statement 2016
Income statement 2016 (€ million) RWE stand-alone RWE Group Revenue (including natural gas tax/electricity tax) 19,574 45,833 Natural gas tax/electricity tax -180 -2,243 Revenue 19,394 43,590 Other operating income 1,161 1,435 Cost of materials -16,829 -33,397 Staff costs -1,921 -4,777 Depreciation,
Slide 39: Balance sheet 2016
Balance sheet 2016 (€ million) RWE stand-alone RWE Group Assets Intangible assets 1,040 12,749 Property, plant and equipment 6,571 24,455 Investment property 45 63 Investments accounted for using the equity method 665 2,908 Other financial assets1 14,561 1,055 Inventories 1,577 1,968 Financial recei
Slide 40: Net debt 2016
Net debt 2016 (€ million) RWE stand-alone RWE Group Cash and cash equivalents 3,197 4,576 Marketable securities 7,343 10,065 Other financial assets 1,278 1,621 Financial receivables against innogy 4,302 - Financial assets 16,120 16,261 Bonds, other notes payable, bank debt, commercial paper 5,191 15
Slide 41: Reconciliation to 2016 adjusted net income
Reconciliation to 2016 adjusted net income (€ million) RWE stand-alone RWE Group Reported Adjustments Adjusted Reported Adjustments Adjusted Adjusted EBIT 1,077 0 1,077 3,082 0 3,082 Non-operating result -5,496 5,496 0 -6,661 6,661 0 Financial result -1,375 410 -965 -2,228 410 -1,818 Taxes on income
Slide 42: RWE Group: Outlook for 2017 above 2016 results
RWE Group: Outlook for 2017 above 2016 results Actuals 2016 2017 forecast1 Change to H1 2017 outlook (€ million) Adjusted 5,403 5,400 – 5,700 EBITDA 1,079 Lignite & Nuclear Significantly below 2016 377 European Power Significantly above 2016 -139 Supply & Trading Significantly above 2016 4,203 innog
Slide 43: Power prices and commodities
Power prices and commodities Base load power prices – Germany, NL (1 year forward) Base load power prices – UK (1 year forward) €/MWh €/MWh 100 45 NL 90 40 80 35 Germany 70 30 UK 25 60 20 50 15 40 Jan'15 Sep'15 Mai'16 Jan'17 Sep'17 Jan'15 Sep'15 Mai'16 Jan'17 Sep'17 Coal prices – API2 Cal-ahead Gas
Slide 44: Clean Dark and Spark Spreads – 2015-2018 forwards
Clean Dark (CDS) and Spark Spreads (CSS) – 2015 - 2018 forwards for Germany, UK and NL1 Germany UK2 Netherlands Cal15 Cal16 Cal17 Cal18 Cal15 Cal16 Cal17 Cal18 Cal15 Cal16 Cal17 Cal18 €/MWh €/MWh 20 20 Ø16.97 15 15 Ø10.52 Ø11.21 10 10 Ø6.63 Ø5.80 Ø7.13 Ø5.13 Ø9.18 Ø7.02 Ø5.28 Ø4.83 Ø3.77 5 Ø5.59 5 Ø
Slide 45: RWE Investor Relations – contacts
RWE Investor Relations – contacts Important Links Contacts for Institutional Investors & Financial Analysts Annual and Interim Reports http://www.rwe.com/ir/reports/ Gunhild Grieve Lenka Zikmundova Head of Investor Relations Tel.: +49 201 5179-3116 Investor and Analyst Conferences Tel. +49 201 5179-
Slide 46: POWERING. RELIABLE. FUTURE.
POWERING. RELIABLE. FUTURE. ED” AK =