Rwe Ag · XETR:RWE
Rwe — Investor Presentation (May 2012)
45 slides from Rwe's investor presentation, May 2012
Slide 1: Value in uncertain times
Value in uncertain times (as of May 2012)
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 Q1 2012 operating performance: EBITDA: -9%, operating result -14%, recurrent net income -20% Further successful structural changes of long-term gas supply contracts with international oil and gas majors; focus now on remaining three major gas suppliers Successful hybrid bonds issuance
Slide 4: More international, while maintaining a regionally focused strategy
More international, while maintaining a regionally focused strategy Core markets in Northwest and Central Europe Regional growth markets mainly CEE/SEE, especially Turkey Renewables business in and around our traditional core markets Upstream gas & oil position/projects mainly in Europe, Caspian reg
Slide 5: More sustainable: Three levers to execute our strategy
More sustainable: Three levers to execute our strategy Lower CO2 emissions More renewables Efficient use of energy > Reduce specific CO2 > Increase renewable > Increase efficiency of emissions by more than generation capacity to fossil fuelled power 20% by 2020 compared at least 20% by 2020 plants t
Slide 6: More robust, with a well balanced portfolio approach
More robust, with a well balanced portfolio approach Active along the whole value chain Operating result 2011 Broad geographic diversification in known territory to minimise regulatory and political risks International Germany Balanced generation portfolio across all ~1/3 €5.8bn ~2/3 technologies Co
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 7
Slide 8: Further progress on divestment plans
Further progress on divestment plans Total residual divestment requirement reduced to up to € 7 billion > Sale of selected assets ongoing Upstream assets > RWE Dea remains with RWE Group and represents an important part of our growth story > Disposal of full or parts of various German regional distr
Slide 9: Streamlined and disciplined investment programme
Streamlined and disciplined investment programme > Peak of investment programme € billion ~6.5 Day-to-day in 2010/2011 ~1.9 Replacement, of which ~20% efficiency enhancement > Finalising conventional power generation programme mainly ~7.6 Growth in 2012 and 2013 Renewables, > More than 60% of our ca
Slide 10: €6 bn earmarked for growth areas until 2014
€ 6 bn earmarked for growth areas until 2014 CEE/SEE2 Renewables (RWE Innogy)2 > Growth opportunities mainly in generation > Target capacity of 4.5 GW > Regional focus on Turkey and Poland (in operation or under construction) by 2014 > Operating result of €500 million by 2014 ~ 10% > Balanced genera
Slide 11: By 2014 we will have renewed more than 25% of our electricity generation fleet
By 2014 we will have renewed more than 25% of our electricity generation fleet Gas BoA Neurath 2.1 GW lignite 12.5 GW Lignite out of (2011) 49.2 GW Hard coal Staythorpe Moerdijk 2 Denizli 1.7 GW CCGT 0.4 GW CCGT 0.8 GW CCGT Lingen Claus C Pembroke Hamm Eemshaven 0.9 GW CCGT 1.3 GW CCGT 2.2 GW CCGT H
Slide 12: Strict investment discipline provides platform for sustainable dividends
Strict investment discipline provides platform for sustainable dividends Mid-term target to cover investments and dividends by cash flows from operating activities € billion 9.4 8.8 > Capex level will normalise beyond 2013 > Pay-out ratio of 5.5 5.5 50% - 60% of recurrent net income > Flexibility to
Slide 13: Efficiency programme well on track and stepped up
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 9 700 9 Upgrade February 2011 450 9 of € 200 million 100 9 200 9 Original programme 2006 – 2012 of € 1,200 millio
Slide 14: Further efficiency enhancements initiated
Further efficiency enhancements initiated > Sustainable improvement of operating results and EBITDA compared to 2012 In € million > Efficiency measures focusing on... 1,000 – Group IT, service and overhead functions – All operational companies 250 > Several concrete measures, e.g. 750 – Optimisation
Slide 15: Capital measures strengthen our balance sheet
Capital measures strengthen our balance sheet Equity capital measure of € 2.1 bn successfully concluded in Dec. 2011 > Placement of 80.4 million shares via an accelerated book building procedure > Transaction included 28.1 million treasury shares > Subscription price of € 26 per share Intention to i
Slide 16: Outlook for 2012 – 2013
Outlook for 2012 – 2013 € million EBITDA 8,460 in the order of 2011 ~9,000 Operating 5,814 in the order of 2011 in the order of 2011 result Recurrent 2,479 in the order of 2011 in the order of 2011 net income 2011 2012e 2013e after further disposals1 after further disposals1 Dividend € 2.00/share Pa
Slide 17: RWE’s platform for future value enhancement
RWE’s platform for future value enhancement Stream- lined and Maintain disciplined Further strategic and investment efficiency Three main regional focus approach enhance- Positive long-term ments and outlook for growth areas: operational 2012/2013 Renewables, excellence Upstream and CEE/SEE 17
Slide 18: Back-up Charts
Back-up Charts | i a |
Slide 19: RWE Group key performance indicators
RWE Group key performance indicators January – March Change € million 2012 2011 in % External revenue 15,593 15,754 -1.0 Cash flows from operating activities 298 2,284 -87.0 EBITDA 3,125 3,426 -8.8 Operating result 2,436 2,827 -13.8 Non-operating result 13 209 -93.8 Financial result -470 -372 -26.3
Slide 20: Operating Result by Division
Operating Result by Division (in € million) -12% 1,201 Q1 2011 Q1 2012 1,057 +2% 595 607 -29% -28% 444 409 321 +37% 291 +4% 241 +24% 176 145 151 +20% 68 84 -220 -276 Power Sales / NL/B UK CEE/SEE Renewables Upstream Trading/Gas Generation Distribution Gas&Oil Midstream Networks Germany 20
Slide 21: Divisional outlook for the operating result
Divisional outlook for the operating result € million 2011 actual 2012 forecast vs. 2011 Germany 4,205 Above last year Power Generation 2,700 Above last year Sales/Distribution networks 1,505 In the order of last year’s level Netherlands/Belgium 245 Significantly below last year United Kingdom 357 A
Slide 22: RWE's capex programme 2012 to 2014
RWE's capex programme 2012 to 2014 How capex leads to earnings growth Day to day investments 6.5 Mainte- Thereof grid 3.0 nance 6.5 Growth and replacement projects 9.5 Efficiency enhancements Electricity generation Replace- approx. > Hard coal and lignite plants 2.5 ment 20% > Gas plants 0.5 1.9 0.4
Slide 23: Development of TTF gas price and brent oil price
Development of TTF gas price and brent oil price Forward for delivery Forward for delivery Forward for delivery Forward for delivery in 2010 in 2011 in 2012 in 2013 €/MWh €/MWh 45 70 40 60 35 50 30 40 25 30 20 20 15 10 10 0 5 -10 0 -20 Trading year 2009 Trading year 2010 Trading year 2011 Trading ye
Slide 24: RWE’s gas procurement portfolio
RWE’s gas procurement portfolio (as of April 2012) Long-term oil-indexed purchase contracts (take-or-pay) Own production 39% Russia NBP 32% Norway ~45 bcm ~19 bcm p.a. p.a. TTF or similar 8% Germany 21% Netherlands > Our gas procurement portfolio is managed by RWE Supply & Trading > ~42% or 19 bcm p
Slide 25: 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 Already achieved reduction of the oil-indexed share of RWE’s gas purchase portfolio 25 20 15 contract reviews initiated 2011 10 5 contract reviews initiat
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 2012 forward 90 70 50 30 > 30% > 35% > 50% > 80% > 90% 2013 forward > 10% > 30% > 50% > 60% 2014 forward > 20% > 30% 01/01/2010 01/07/2010 01/01/2011 01/07/2011 01/01/2012 01/07/2012 01/01/2013 Peak-load
Slide 27: Germany: Clean Dark and Spark Spreads
Germany: Clean Dark and Spark Spreads (CDS/CSS) 2011 forward 2012 forward 2013 forward 25 20 15 Ø 14.88 10 Ø 7.74 Ø 9.48 5 Ø 6.16 Ø 4.93 Ø 0.61 0 -5 Trading year 2010 Trading year 2011 Trading year 2012 0 1 2 0 1 2 0 1 2 10 11 12 -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 Ap A
Slide 28: UK: Clean Dark and Spark Spreads
UK: Clean Dark and Spark Spreads (CDS/CSS) 2011 forward 2012 forward 2013 forward 28 24 Ø 19.68 20 16 Ø 13.78 12 Ø 8.19 8 Ø 3.55 Ø 3.39 4 Ø 6.70 0 Trading year 2010 Trading year 2011 Trading year 2012 0 1 2 0 1 2 0 1 2 10 11 12 -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 Ap Ap
Slide 29: How we are going to support our “A” rating
How we are going to support our “A” rating Expected development of leverage factor Measures to support our “A” rating Rating Already implemented: Leverage factor = 4,0 Net debt1 € 2.1 billion equity capital measure EBITDA BBB+ € 1.5 billion hybrid capital Baa1 € 1.5 billion asset disposals 3.5 3.5 3
Slide 30: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Strong sources of financing in € bn Fully committed for liquidity 2,5 20 syndicated loan back-up (€ 4.0 bn up to Nov. 2015) € 0.0 bn 2,0 16 1,5 12 Commercial paper $ 0.6 bn ($ 5.0 bn) (up to 1 year) 1,0 8 € 0.5 b
Slide 31: RWE has taken measures to reduce its CO2 exposure significantly
RWE has taken physical and financial measures to reduce its CO2 exposure significantly EU ETS Phase 1 & 2 EU ETS Phase 3 2005 − 2012 2013 − 2020 Specific CO2 emissions exposure (t/MWh) Specific CO2 emissions exposure (t/MWh) 0.79 0.73 0.73 0.70 0.62 0.50 2005 2012 2012 2013 2020 2020 Physical measur
Slide 32: Physical and financial measures lead to largely neutral CO2 position
RWE’s physical and financial portfolio measures lead to a largely neutral financial CO2 position t/MWh Pass-through factor1 0,9 > Factor by which the CO2 price 0,8 is reflected in the power price 2011 2010 > Set by the specific emission factor 0,7 0,63 of the marginal plant in every hour 0,6 0,50 0,
Slide 33: In 2020 approx. 20% of generation capacity will be renewables
In 2020 approx. 20% of RWE’s generation capacity will be in renewables Renewables Nuclear ~ 20% ~ 5% ~ 46 GW ~ 40% ~ 35% Gas/other1 Coal (partly highly efficient) 1 Including approx. 8% of others, mainly pumped storage. 33
Slide 34: Conventional power plant new build programme
Conventional power plant new build programme € 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, 100%) Pembroke 1.2 Unit
Slide 35: RWE Dea's largest field developments
RWE Dea's largest field developments 1 RWE Capex Production start share (€ bn) 2011 2012 2013 2014 2015 2016 2017 2018 West Nile Delta NA 40% 2.8 (Egypt) WMDW 20% 100% Disouq (Egypt) 0.1 (Operator) 70% Breagh Phase 1 (GB) 0.4 (Operator) Reggane (Algeria) 19,5% 0.4 Edvard Grieg (Norway)2 20% 0.7 3 Kn
Slide 36: RWE Innogy major projects under construction
RWE Innogy major projects under construction € 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 Ost2 0.9 (Wind offshore, 295 MW, 100%) Capacity
Slide 37: 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 38: German electricity system at its limit
German electricity system at its limit Capacity situation on 8 February 2012 Sufficient electricity supply was only guaranteed on the basis of hardly any outages in the thermal generation fleet GW12 150 Solar 100 8 Wind Hydro 50 4 Thermal capacity 00 Installed Capacity Required German domestic Net e
Slide 39: Scenarios for German capacity reserve margins
Scenarios for German capacity reserve margins Reliable available spare capacity for peak demand Scenarios GW Development of capacity reserve margin considering... 15 Scenario 1: 10 ... only announced new build and most likely shut down of power plants 5 Scenario 2: 0 ... additionally to scenario 1:
Slide 40: The fuel mix of European electricity generators 2011 (capacity)
The fuel mix of European electricity generators 2011 RWE has one of the most balanced generation portfolios of European electricity generators (installed capacity) 100% 80% 60% Hydro/ Other 40% Gas Hard Coal 20% Lignite 0% Nuclear Centrica CEZ EDF Enel E.ON Fortum GDF Iberdrola RWE SSE Share in powe
Slide 41: The fuel mix of European electricity generators 2011 (output)
The fuel mix of European electricity generators 2011 RWE has one of the most balanced generation portfolios of European electricity generators (generation output) 100% 80% 60% Hydro/ Other 40% Gas Hard Coal 20% Lignite 0% Nuclear Centrica CEZ EDF Enel E.ON Fortum GDF Iberdrola RWE Share in electrici
Slide 42: 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 43: 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 2011: €10,366 million > Disposal of spent nuclear fuel assemblies €4,658 million Flasks, transport, conditioning, i
Slide 44: 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 cut-off Provisions date IFRS t 2010 2010 2011 2012 20.. 44
Slide 45: 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