E.ON SE · XETR:EOAN
E.ON — FY2011 Earnings Presentation
52 slides from E.ON's earnings presentation, Mar 14, 2012
Slide 1: 2011 Full Year Results E.ON – Cleaner & better energy
2011 Full Year Results E.ON – Cleaner & better energy Johannes Teyssen, CEO March 14, 2012
Slide 2: 2011 results summary & outlook
2011 results summary & outlook y EBITDA: -30% to €9.3bn y Underlying net income: -49% to €2.5 bn 2011 key figures y Operating cash flow: -38% to €6.6 bn y Debt factor: 3.9x (3.4x excl. €1.5bn of negative nuclear exit one-offs) y Proposed dividend: €1.00 per share y EBITDA: €9.6bn – €10.2bn y Underly
Slide 3: Today's topics: Key drivers of E.ON's transformation
Today’s topics Key drivers of E.ON’s transformation y1 Divest non-core assets Investment Less capital, more value 2y Safeguard financial strength Performance Efficiency & 3y Expand in targeted growth areas Europe effective Outside organization Focused & synergistic Europe Targeted 4y Increase effici
Slide 4: Divest non-core assets
1 Divest non-core assets Disposal target and delivery Transactions ~€15bn Key transactions y Central Networks for €4.8bn EV y 3.5% stake in Gazprom for €3.4bn ~€9.5bn Pending1 y Italian gas distribution network for €0.3bn EV ~€0.4bn y 40% stake in HSE for €0.3bn Closed y 10 other transactions for ~€
Slide 5: Safeguard financial strength
2 Safeguard financial strength Debt significantly reduced Comfortable liquidity position €bn y Strong liquidity position 45 Financial y €11.9bn of liquid funds & non-current securities -10 36 net debt 28 y Undrawn €6.0bn revolving credit facility Economic 18 net debt y €10bn + $10bn commercial paper
Slide 6: Expansion: Example outside Europe (I)
3 Expansion: Example outside Europe (I) Brazil first new region Growth potential and risk/return profile y Well diversified economy with strong growth 2010-2020 projected demand growth up to 5% p.a. across many sectors, sustainable demographics, and stable political system 80 y Brazilian power deman
Slide 7: Expansion: Example outside Europe (II)
3 Expansion: Example outside Europe (II) Assets brought into JV Agreement with MPX Parnaiba TPP 2.2 GW gas y E.ON will acquire 10% of MPX through ~€350m MPX assets outside JV Power plants in 70% MPX capital increase operation (24 MW) y E.ON will form 50% JV with MPX Power plants in execution (3 GW)
Slide 8: Expansion: Example outside Europe (III)
3 Expansion: Example outside Europe (III) Entry strategy Agreement with MPX y Economic interest in 3.7 GW of conventional power Focus on conventional and on renewable generation plant projects y Clear ambition to expand in renewables 9 Highly disciplined investment approach focused on organic develo
Slide 9: Increase efficiency, improve organization
4 Increase efficiency, improve organization Controllable cost target Progress Breakdown of cost reductions €bn Procurement >2 ~10.9 ~30% ~9.5 Operations ~40% Support functions 2011 Cost Cost 2015 & Overhead ~30% controllable inflation reductions controllable costs costs y Target of reducing controll
Slide 10: Improve capital management
5 Improve capital management A Increase return requirements C Ensure attractive dividend payouts … Spread between hurdle rates and cost of capital 3.0% Infrastructure 2.5% 2.0% Most other 1.5% 1.5% 1.0% activities € per share E&P and wind 2010 2011 offshore 1.001 1.10 ≥1.10 B Change business approac
Slide 11: Summary: Deliver results
Summary: Deliver results Expected earnings development 2011-2013 EPS growth €bn 2011A-2015E underlying EPS CAGR of more than 10% 11.6-12.3 9.6-10.2 9.3 2.0-2.3 1.31 3.2-3.7 2.5 2.3-2.7 2011A 2012E 2013E 2011A 2015E EBITDA Underlying net income Underlying EPS (€ per share) Earnings growth post 2011 1
Slide 12: 2011 Full Year Results E.ON – Cleaner & better energy
2011 Full Year Results E.ON – Cleaner & better energy Marcus Schenck, CFO March 14, 2012
Slide 13: Key drivers of group EBITDA 2011 vs. 2010
Key drivers of group EBITDA1 2011 vs. 2010 Full year 2011 in € billion 01.01.2010- 13.3 EBITDA 2010 31.12.2010 - 2.5 Nuclear: Nuclear phase-out and fuel tax - 1.0 Power portfolio: Price and volume effects - 0.7 Gas: Gross margin +9.9 - 0.5 Portfolio effects: Central Networks, E.ON Rete - 0.3 Germany
Slide 14: E.ON Group – EBITDA and EBIT by segments
E.ON Group –EBITDA1 and EBIT1 by segments In € million EBITDA1 EBIT1 2011 2010 +/-% 2011 2010 +/- % Generation 2,114 3,757 -44 1,128 2,767 -59 Renewables 1,459 1,207 +21 1,088 880 +24 Gas 1,533 1,975 -22 997 1,415 -30 Trading -631 1,205 - -642 1,196 - Germany 2,421 2,463 -2 1,470 1,541 -5 Other EU c
Slide 15: EBITDA by unit – Generation
EBITDA1 by unit – Generation In € million 2011 2010 +/- % Nuclear 272 1,996 -86 Steam 1,369 1,312 +4 CCGT 423 413 +2 Other/Consolidation 50 36 +39 EBITDA1 2,114 3,757 -44 Main effects (in € bn): Nuclear (-1.7) y Higher transfer prices from Trading (+0.5) y Higher volumes Nordic as a result of last y
Slide 16: EBITDA by unit – Renewables
EBITDA1 by unit – Renewables In € million 2011 2010 +/- % Hydro 909 755 +20 Wind, solar and others 550 452 +22 EBITDA1 1,459 1,207 +21 Main effects (in € bn): Hydro (+0.2) y Higher transfer prices in Germany and Nordic (+0.2) y Lower volumes in Germany, Spain and Italy (-0.1) Wind, solar and others
Slide 17: EBITDA by unit – Gas
EBITDA1 by unit – Gas In € million 2011 2010 +/- % Upstream 753 710 +6 Midstream -79 487 - Transmission / Shareholdings 615 696 -12 Other/Consolidation 244 82 +198 EBITDA1 1,533 1,975 -22 Main effects (in € bn): Upstream (-) y Positive price/volume effect from Yushno Russkoje (+0.2) y Negative price
Slide 18: EBITDA by unit – Trading
EBITDA1 by unit – Trading In € million 2011 2010 +/- % Optimization -675 1,310 - Proprietary Trading 44 -105 - EBITDA1 -631 1,205 - Main effects (in € bn): Optimization (-2.0) y Mainly power portfolio: Higher transfer prices paid to generation companies in combination with lower average achieved pri
Slide 19: EBITDA by unit – Germany
EBITDA1 by unit – Germany In € million 2011 2010 +/- % Distribution 1,535 1,876 -18 Sales/Other 886 587 51 EBITDA1 2,421 2,463 -2 Main effects (in € bn): Distribution (-0.3) y Mainly driven by lower revenues in power and gas distribution; 2010 contained positive one-off effects that did not repeat i
Slide 20: EBITDA by unit – Other EU countries
EBITDA1 by unit – Other EU countries In € million 2011 2010 +/- % Distribution 1,437 1,679 -14 Sales 419 574 -27 Other/Consolidation 403 330 22 EBITDA1 2,259 2,583 -13 Main effects (in € bn): Distribution (-0.2) y Czech Republic: Reflection of higher cost for renewable energy volumes in distribution
Slide 21: EBITDA by unit – Russia
EBITDA1 by unit – Russia In € million 2011 2010 +/- % Russia 553 377 +47 Main effects (in € bn): Russia (+0.2) y Electricity market: Higher gross margin of existing units driven by market opening and demand growth (+0.1) y Electricity market: Gross margin of new units (+0.1) y Capacity market: Highe
Slide 22: E.ON Group – From EBITDA to net income (1/2)
E.ON Group – From EBITDA1 to net income (1/2) In € million 2011 2010 +/- % EBITDA1 9,293 13,346 -30 Depreciation/Amortization/Impairments -3,855 -3,892 - EBIT1 5,438 9,454 -42 Economic interest expense (net) -1,776 -2,257 - Net book gains 1,221 2,873 - Restructuring and cost-management expenses -1,3
Slide 23: E.ON Group – From EBITDA to net income (2/2)
E.ON Group – From EBITDA1 to net income (2/2) In € million 2011 2010 +/- % Income/Loss from continuing operations before income taxes -2,911 9,063 - Income taxes 1,036 -1,946 - Income/Loss from continuing operations -1,875 7,117 - Income/Loss from discontinued operations, net 14 -836 - Net income -1
Slide 24: E.ON Group – Underlying net income
E.ON Group – Underlying net income1 In € million 2011 2010 +/- % EBITDA1 9,293 13,346 -30 Depreciation/Amortization recognized in EBIT1 -3,855 -3,892 - Economic interest expense (net) -1,776 -2,257 - EBT (earnings before tax)1 3,662 7,197 -49 Income taxes on EBT1 -761 -1,884 - % of EBT1 21 26 - Mino
Slide 25: Operating cash flow – reconciliation
Operating cash flow – reconciliation Full year 2011 in € billion 01.01.10- 10.6 FY 2010 operating cash flow 31.12.10 - 4.0 EBITDA + 1.1 Non-cash-effective EBITDA - 0.2 UK/Germany: Pension funding +6,738 - 0.3 Global Gas: Increase in working capital - 0.2 Trading: Working capital increase from higher
Slide 26: E.ON Group – Development of economic net debt
E.ON Group – Development of economic net debt December 31, 2011, in € bn 31.12.10 31.12.11 -37.7 -36,4 (of which (of which financial financial +6.6 -1.2 net debt: net debt: -20.3) -1.0 -18.0) -3.1 Debt factor: -6.5 +6.5 Debt factor: 2.8x 3.9x / 3.4x3 Dividends Investments Divestments1 Operating Chan
Slide 27: Safeguarding financial strength
Safeguarding financial strength Key measures and targets Debt significantly reduced 45 Secure solid single A rating: 38 €bn 36 y Adjustment of debt factor target to <3.0 Economic net debt y Significant reduction of financial debt via use of 28 Financial 20 18 net debt disposal proceeds y Reduced div
Slide 28: CAPEX plan 2011-2014
CAPEX plan 2011-2014 E.ON Group capex1 E.ON Group capex split1 € bn € bn 8 ~7.0 ~6.5 ~6.5 ~7.0 ~5.7 ~6.2 ~5.7 ~6.2 6 4 2 0 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E Generation Renewables Maintenance Growth / Replacement Global Gas Regional Units Moving towards a sustainable capex level 1. Inve
Slide 29: 2012/2013 Outlook overview
2012/2013 Outlook overview In € billion 2012 2013 y EBITDA1: 9.6 – 10.2 y EBITDA1: 11.6 – 12.3 y Underlying net income1: 2.3 – 2.7 y Underlying net income1: 3.2 – 3.7 y Underlying EPS1: 1.2 – 1.4 €/share y Underlying EPS1: 1.7 – 2.0 €/share y Dividend: 1.10 €/share y Dividend: ≥1.10 €/share Scope ba
Slide 30: Important drivers for 2012 vs. 2011 EBITDA development
Important drivers for 2012 vs. 2011 EBITDA1 development In € billion EBITDA1 2011 9.3 Positives Negatives y Absence of nuclear one off y Lower power earnings (spread and outright) y Higher E&P earnings y Higher nuclear tax y Higher volumes in Russian power y Several deconsolidation effects (mainly U
Slide 31: EBITDA outlook FY 2012 by reporting segment
EBITDA1 outlook FY 2012 by reporting segment Old reporting structure2 In € million 2011A 2012 vs. 2011 Main drivers Generation 2,114 above Mainly absence of nuclear one-off Renewables 1,459 below Lower market based internal transfer prices Gas 1,533 below Mainly absence of one-offs in other/consolid
Slide 32: Important drivers for 2013 vs. 2012 EBITDA development
Important drivers for 2013 vs. 2012 EBITDA1 development In € billion EBITDA 20121 – Outlook range 9.6 – 10.2 Positives Negatives y Impact of cost cutting (post inflation) y Absence of free CO2 allocation y Higher E&P earnings y Slightly lower power earnings y Higher gas supply and sales earnings y H
Slide 33: Back-up Charts
Back-up Charts
Slide 34: From EBITDA to underlying EPS (2011-2015)
From EBITDA1 to underlying EPS1 (2011-2015) In € billion 2011A 2012E 2013E 2015E3 EBITDA1 9.3 9.6 - 10.2 11.6-12.3 12.5 – 13.0 Depreciation 3.9 ~3.9 ~4.4 Adj. interest expense 1.8 ~1.9 ~1.9 Taxes2 0.8 ~1.2 ~1.7 Minorities 0.4 ~0.4 ~0.5 Underlying net income1 2.5 2.3 – 2.7 3.2 – 3.7 Underlying EPS (€
Slide 35: Key assumptions for commodity business
Key assumptions for commodity business Key price assumptions Volume assumptions (2010/2013)1 Assumed average achieved prices outright generation TWh Nuclear Hydro Coal Gas CE market (€/MWh) Nordic market (€/MWh) CE 2010A 55 5 21 11 2013E Old2 42 5 30 10 58 55 47 43 2013E New 42 5 31 10 2013 2013 201
Slide 36: Planned change in group structure as per Q1 2012
Planned change in group structure as per Q1 2012 2011 Group Management New Build & Other EU Support Generation Renewables Gas Trading Germany Russia Technology1 countries functions1 Support Global units Regional units functions 2012 Group Management Optimization& Exploration& New Build & Other EU Su
Slide 37: EBITDA outlook FY 2012 by reporting segment
EBITDA1 outlook FY 2012 by reporting segment New reporting structure (from Q1 2012 onwards) In € million 2011A 2012E Main drivers Generation 2,114 above Mainly absence of nuclear one-off Renewables 1,459 below Lower market based internal transfer prices Optimization and trading 160 below Margin pres
Slide 38: Alternative EBITDA split
Alternative EBITDA1 split 2011 EBITDA1 split Description Regulated : Quasi-regulated and long- term contracted y Revenues set by law and based on costs plus a 10% reasonable return on capital employed y Therefore extremely stable and predictable Merchant business Quasi-regulated and long-term contra
Slide 39: E.ON Group – Financial highlights
E.ON Group – Financial highlights In € million 2011 2010 +/- % Sales 112,954 92,863 +22 EBITDA1 9,293 13,346 -30 EBIT1 5,438 9,454 -42 Underlying net income1 2,501 4,882 -49 Operating cash flow 6,610 10,614 -38 Investments 6,524 8,286 -21 Economic net debt2 -36,385 -37,701 +1,316 1. Adjusted for ext
Slide 40: EBITDA by unit – Other EU countries
EBITDA1 by unit – Other EU countries In € million 2011 2010 +/- % United Kingdom 523 966 -46 Sweden 672 629 +7 Czech Republic 470 323 +46 Hungary 223 250 -11 Other 371 415 -11 EBITDA1 2,259 2,583 -13 1. Adjusted for extraordinary effects 40
Slide 41: E.ON Group – Underlying net income
E.ON Group – Underlying net income1 In € million 2011 2010 +/- % Net income attrib. to shareholders of E.ON AG -2,219 5,853 - Net book losses/gains -1,221 -2,873 - Restructuring and cost-management expenses 1,387 621 - Mark-to-market valuation of derivatives 1,805 -2,711 - Other non-operating earnin
Slide 42: E.ON Group – Investments by unit
E.ON Group – Investments by unit In € million 2011 2010 +/- % Generation 1,711 2,592 -34 Renewables 1,114 1,260 -12 Gas 1,204 1,244 -3 Trading 24 16 +50 Germany 910 1,083 -16 Other EU countries 1,210 1,565 -23 Russia 322 433 -26 Management Group / Others 29 93 -69 Investments 6,524 8,286 -21 Of whic
Slide 43: E.ON Group – Economic net debt
E.ON Group – Economic net debt In € million 2011 2010 Liquid funds 7,020 8,273 Non-current securities 4,904 3,903 Total liquid funds and non-current securities 11,924 12,176 Financial liabilities to banks and third parties -28,490 -31,799 Financial liabilities resulting from interests in associated
Slide 44: Change of financial liabilities 2010 and 2011
Change of financial liabilities 2010 and 2011 € bn 2011 2010 Reduction of total financial liabilities per period 2.6 5.3 Regular repayments 2.1 3.5 Repayments prior to maturity1 2.4 1.1 Commercial paper -0.9 - Changes of financial liabilities to related companies -0.7 1.5 Other effects2 -0.3 -0.8 Si
Slide 45: E.ON's interest rate policy
E.ON’s interest rate policy Key elements of E.ON’s interest rate policy y E.ON's business model is capital intensive and has a very long-term investment horizon y As E.ON is not a cyclical company, funding at variable rates does not provide a hedge for business risks y Risk capital is mainly allocat
Slide 46: Financial liabilities of the E.ON Group
Financial liabilities of the E.ON Group in € billion Maturity profile (as of 31 Dec 2011)3 31 Dec 2011 31 Dec 2010 Bonds1 23.4 27.5 in EUR 13.3 16.6 € bn in GBP 5.0 5.5 5,0 in USD 2.6 2.5 4,0 in CHF 1.3 1.6 3,0 in SEK 0.3 0.4 2,0 in JPY 0.8 0.7 1,0 other currencies 0.1 0.2 0,0 2012 2013 2014 2015 20
Slide 47: E.ON Group – Detail on economic interest expense (net)
E.ON Group – Detail on economic interest expense (net) Full year 2011 in € million 2011 2010 Delta ‘11 / ’10 Interest from financial assets/liabilities -1,058 -1,435 +377 Interest cost from provisions for pensions and similar provisions1 -144 -167 +24 Accretion of provisions for retirement obligatio
Slide 48: E.ON Group – Non-operating income
E.ON Group – Non-operating income In € million Net book gains 1,221 Gazprom 602 Disposal Central Networks 387 Others 232 Restructuring expenses / cost management -1.387 Other non-operating income -6.407 Mark-to-market valuation of derivatives -1.805 Early redemption fee -149 Impairments -3.004 Other
Slide 49: Hedging of E.ON's outright generation
Hedging of E.ON‘s outright generation As of Dec 31, 2011 German, Benelux and French market 2011 ~ 59 €/MWh 1 2012 ~ 54 €/MWh 1 2013 ~ 55 €/MWh 1 2014 ~ 55 €/MWh 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nordic market 2011 ~ 43 €/MWh 1 2012 ~ 43 €/MWh 1 2013 ~ 44 €/MWh 1 2014 ~ 45 €/MWh 1 0% 10%
Slide 50: E.ON Investor Relations Contact
E.ON Investor Relations Contact Sascha Bibert Head of IR T+49 2 11-45 79-5 42 sascha.bibert@eon.com Peter Blankenhorn Regions/Sales, SRI, Retail, T +49 2 11-45 79-4 81 Facts & Figures peter.blankenhorn@eon.com François Poullet What can we do to Generation, Gas T +49 2 11-45 79-3 32 francois.poullet@
Slide 51: E.ON IR - Reporting calendar & important links
E.ON IR - Reporting calendar & important links Reporting calendar Date Event Location May 3, 2012 AGM 2012 Essen May 4, 2012 Dividend payment May 9, 2012 Interim Report I: January – March 2012 Düsseldorf August 13, 2012 Interim Report II: January – June 2012 Düsseldorf November 13, 2012 Interim Repo
Slide 52: This presentation may contain forward-looking statements based on current assumptions and forecasts made by
This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management and other information currently available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual