E.on Se · XETR:EOAN
E.on — Non-Deal Roadshow (December 2017)
53 slides from E.on's roadshow presentation, Dec 12, 2017
Slide 1: E.ON Delivering step by step
E.ON Delivering step by step
Slide 2: Key investment highlights
Key investment highlights Highly stable business profile with ~2/3 of EBITDA from regulated, long-term contracted businesses1 Well positioned to profit from megatrends digitization, decentralization, e-mobility, renewables Deleveraging: from 5.3x Net Debt/EBITDA (FY 2016) to ~4.0x Net Debt/EBITDA (m
Slide 3: Highly stable business profile
Highly stable business profile Business profile FY EBITDA 20161 High share of regulated and long-term contracted earnings (~2/3 of EBITDA ) Operations in Energy Networks under stable, well 15% Energy Networks established frameworks in low risk markets with strong regulatory track record 12% €3.7
Slide 4: E.ON at a glance
E.ON at a glance Key financials FY ‘16 Energy Customer Renewables Networks Solutions 15%1 Adjusted EBIT €bn 57%1 28%1 3.1 >22m Customers across >6GW Renewable capacities Adjusted net income €bn Europe with strong cash delivered across Europe and ~€19bn Regulated asset base flow generation the US 0.9
Slide 5: Delivering step by step...
Delivering step by step... 2-ori
Slide 6: Potential over-achievement of deleveraging could create balance sheet head room
Potential over-achievement of deleveraging could create balance sheet head room Economic net debt € bn 26.3 Debt Reduction 19.7 Debt reduction measures 1 + Monetization of Uniper shares ~3.8 NFT3 ~5.3x ~€2.85bn + Transfer of NS12 into CTA ~1.0 EBITDA ABB4 ~€1.35bn > 4.0x ~4.0x + Nuc. decommissioning
Slide 7: Raising payout and striving for dividend growth
Raising payout and striving for dividend growth Payout ratios by E.ON and peers Dividend policy: 80% • Raising payout ratio to a minimum of 65%2 Peer group1 • Striving for payout ratio in line with peers • Specification of exact range with FY2017 65% results E.ON target 60% • Targeting absolute divi
Slide 8: Capex budget under review
Capex budget under review Medium-term – Gross capex € bn ∑ ~10.0 -20% ∑ ~8.0 Strict focus on capital discipline across all business units CAPEX budget for the mid-term under review Update with FY17 results 2016 2017 2018 2017 2018 2019 2017 – Gross capex € bn Energy Networks investments of 1
Slide 9: Energy Networks: Multi-decade growth
Energy Networks: Multi-decade growth Mega trends support multi decade growth RAB growth: potential for higher replacement capex on top of continuing network extensions Mega trends driving multi decade growth Emergence of bi-directional flows as opposed to the purely one- directional flows in the p
Slide 10: CS: Very good progress and growth also from asset-backed solutions
CS: Very good progress and growth also from asset-backed solutions District Heating / B2M Heat contributes ~20% of Customer Solutions EBIT Strong district heating business in Sweden, Germany, UK with yearly EBIT of ~€130m Stable and resilient earnings profile often based on network assets €130m
Slide 11: Renewables: Risk & return focus
Renewables: Risk & return focus Focus on PPA and FiT secured pipeline US onshore Safe-harbored pipeline of > 3,000MW with 100% PTC support New project Stella (201MW) with FID expected in Q3-17 ~500 MW on track for completion in 2017 3.2 GW Europe onshore Opportunistic approach Recent examp
Slide 12: Embedding operational excellence: the Phoenix project
Embedding operational excellence and establishing a strong performance culture: the Phoenix project Scope Targets Phoenix well on track €400m Controllable cost1 baseline € bn • Phoenix target: €400 m EBIT contribution p.a. from 2018 onwards 5.3 ~€300m • About €300 m predominantly from central overhe
Slide 13: Outlook 2017 confirmed
Outlook 2017 confirmed Outlook 2017 Effects for the remainder of 2017 Energy + Regulatory effects (e.g. pensions), Networks lower maintenance costs €2.8-3.1 bn + Tariff increase in Sweden + Positive development in CEE Customer EBIT1 Solutions + Price increases in Germany & UK, focus on efficiency –
Slide 14: E.ON Focus – Our basis for steering the company
E.ON Focus – Our basis for steering the company • Update of E.ON Focus with FY 2017 results • Increased payout ratio to minimum of 65%4 • Striving for payout ratio in line with peers (specification of exact range with FY 2017 results) • Target of absolute dividend growth (base year 2017) • Strong al
Slide 15: Segments
Segments
Slide 16: Energy Networks at a glance
Energy Networks at a glance Highlights EBIT1 in m€ +18% Germany EBIT 9M 20171,2 1.417 1.196 + Regulatory benefits Germany 788 + Lower maintenance cost 638 70% Sweden Sweden 288 345 CEE & Turkey + Tariff increases 270 284 CEE & Turkey 9M 2016 9M 2017 + Positive effects in Czech Republic, Hungary Furt
Slide 17: Energy Networks: E.ON has a strong European regulated asset base
Energy Networks: E.ON has a strong European regulated asset base Well diversified footprint Presence in countries with AAA rating/ catch-up potential Regulated asset base (€ bn) EBIT 2016 (€ bn) ~ 23% ~ 24% ~ 54% 0.4 1.7 Sweden Germany 0.9 0.4 IG4 AAA €3.9 bn2 €10.7 bn AAA GER SWE CEE 5 Total % of T
Slide 18: Predictable earnings generated from RAB-based returns
Predictable earnings generated from RAB- based returns Pro-forma allowed WACC as solid base1 Regulatory stability in the near term Start of next regulatory period (Power) 2017 Germany 5.9%2 % of Total EBIT 2016 2018 Sweden 4.56%3 2019 CEE 4.7% - 8.0%4 ~90% 2020 1. Power WACC for latest regulatory pe
Slide 19: Customer Solutions at a glance
Customer Solutions at a glance Highlights EBIT1 in m€ -36% Germany EBIT 9M 20171, 2 548 + Price increase in Q2 2017 Germany 144 353 – Lower power margins due to 17% UK 227 93 increased TSO fees 144 – Lower gas margin due to Other 177 116 price decrease in Nov 2016 9M 2016 9M 2017 UK + Stabilizing cu
Slide 20: Customer Solutions: Introducing new solutions
Customer Solutions: Introducing new solutions E.ON Aura: PV & storage B2B Large: continuously gaining traction E-mobility: gearing up All-in-one solution including PV, battery, Significant sales growth with tailor- Established dedicated unit to take energy management app, service & made energy
Slide 21: Customer Solutions addresses customer needs across different segments
Customer Solutions addresses customer needs across different segments B2C & B2B SME Energy Sales Power & Gas Heat District Heating, B2B Large Local Heating & B2M Foundation New Solutions 21
Slide 22: Customer Solutions: Financial highlights
Customer Solutions: Financial highlights Adjusted EBIT1 by business pillars €bn Energy sales 2016 0.3 0.3 ~0.71 Energy sales financials €bn Gross Margin Heat 2016 0.1 2016 1.2 1.3 OPEX2 Total Adj. EBIT 2016 0.8 2016 0.8 1.0 UK Continental Europe 1. Adjusted for non-operating earnings; Slight differe
Slide 23: Renewables at a glance
Renewables at a glance Highlights EBIT 9M 20171, 2 EBIT1 in m€ -20% Offshore 12% 309 – Arkona book gain in Onshore/Solar 66 248 Q2 2016 62 – Low wind conditions in Offshore/Other 243 the UK 186 Onshore + COD of Colbeck’s Corner in May 2016 9M 2016 9M 2017 + Higher production of US wind farms & bette
Slide 24: E.ON's capabilities in most attractive technologies and markets
E.ONs capabilities in most attractive technologies and markets Geography Technology Business model 2.1 GW Wind Onshore Wind Offshore PV 3.2 GW • Focus on Europe & North America • Focus on Onshore wind, off-shore wind & • Integrated renewables player utility-scale PV • Stable countries / low-risk • P
Slide 25: Segments: PreussenElektra
Segments: PreussenElektra E.ON 9M 2017 results Highlights +3% – Lower volumes due to Brokdorf outage EBIT1 in m€ 345 357 – Lower achieved power prices – Additional depreciation of asset retirement costs (ARC) Germany + End of nuclear fuel tax payments in 2016 + One-off effects in relation to court c
Slide 26: PreussenElektra: Asset overview
PreussenElektra: Asset overview Geographic presence in Germany Overview nuclear plants Brunsbüttel Brokdorf Stade Krümmel Unterweser Hannover Emsland Grohnde Würgassen Grafenrheinfeld Isar 1/2 Gundremmingen A/B/C Active and operated by Active and minority share PreussenElektra PreussenElektra Shut d
Slide 27: Nuclear decommissioning is no limitation for dividends or capex
Nuclear decommissioning is no limitation for dividends or capex € bn Current approach • Nuclear decommissioning provisions are part of E.ON’s economic net debt (END) Current ~0.4-0.6 • Utilization of nuclear provisions is currently part of operating cash flow and thus implies a burden for the financ
Slide 28: Discount rates for nuclear provisions
Discount rates for nuclear provisions Build up of provisions status quo Build up of provisions post KFK1 Real discount rate: Real discount rate: +0.9% -0.9% Total costs in t0 Total costs in t0 t0 t0 t+1 t+2 t+3 t+100 t0 t+1 t+2 t+n Accretion Storage Decommissioning Accretion Decommissioning Duration
Slide 29: KFK solution with positive impact on adjusted net income
KFK solution with positive impact on adjusted net income 1. Nuclear fund (KFK) 2. Discount rates 3. Additional asset retirement cost (ARC) Storage related provisions, € bn ~10 Decommissioning provisions, € bn ARC € bn 11.2 1.0 7.8 2.0 0.2 9.4 9.7 0.3 1.5 Provisions Premium1 Provision Payment FY 2015
Slide 30: Financials 9M 2017 Results
Financials 9M 2017 Results
Slide 31: 9M 2017 Results
9M 2017 Results 8th November 2017
Slide 32: Solid 9M 2017: well on track to achieve FY 2017 target
Solid 9M 2017: well on track to achieve FY 2017 target E.ON 9M 2017 results Highlights Key Financials1 €m Solid EBIT development: + 13% Q3 2017 vs 3,640 3,540 Q3 2016 Adj. Net Income up ~50% YoY 2,311 2,117 Economic Net Debt reduced to €19.7 bn (vs. €21.5 bn in H1 2017) 965 FY 17 guidance confirmed:
Slide 33: Catch-up continues in Q3 2017
Catch-up continues in Q3 2017 E.ON 9M 2017 results EBIT1 9M 2017 vs. 9M 2016 Key 9M Effects €m 9M 2016 w/o Energy 2.282 Networks + Higher regulated revenues in Germany and div. operations CEE Energy + Tariff increases in Sweden 221 Networks Customer + Price increases in Germany and UK Customer Solut
Slide 34: Adjusted Net Income supported by lower interest accretion and taxes
Adjusted Net Income supported by lower interest E.ON 9M 2017 results accretion and taxes 9M 2017 €m Group EBIT1 2.117 Interest on ~€ 55m decline yoy mainly due to lower interest income fin. assets/ -522 liabilities2 Other interest ~€600m improvement yoy mainly due to significant -53 expenses lower i
Slide 35: END improves significantly due to high cash flow and refund of nuclear fuel tax
END improves significantly due to high cash flow and E.ON 9M 2017 results refund of nuclear fuel tax END1 9M 2017 vs. FY 2016 € bn +6.6 -11.2 Operating Cash Flow: -3.6 -21.4 -3.3 -4.9 0.6 3.4 -19.7 -4.0 3.5 -10.3 10.2 -0.9 -26.3 1.35 0.4 0.2 -2.2 -0.5 END FY OCF2 Cash impact KFK Investments ABB5 Div
Slide 36: Appendix
Appendix Financial Details
Slide 37: Appendix: Table of Contents
Appendix: Table of Contents E.ON 9M 2017 results 38 39 Financial Cash Highlights Conversion 40 41 Energy Customer Networks Solution 42 43 Preussen Renewables Elektra 44 Financial Appendix 37
Slide 38: Financial Highlights
Financial Highlights E.ON 9M 2017 results EBIT Adj. Net Income • Energy Networks: +18% YoY. • €324 m above last years Higher regulated revenues in 9M result €m 9M 2016 9M 2017 % YoY Germany and CEE and tariff • Improvement YoY mainly increases in Sweden driven by significant lower Sales 28,198 27,93
Slide 39: High cash conversion rate of 120% supported by strong operating cash flow
High cash conversion rate2 of 120% supported by E.ON 9M 2017 results strong operating cash flow 9M 2017 € bn +120% 4.2 3.5 0.9 -0.3 3.5 -0.3 -0.2 -2.2 1.3 EBITDA1 Cash Changes in WC OCF bIT4 Interest Tax Payments OCF Capex FCF Adjustments3 Payments 1. Adjusted for non operating effects, 2. Cash Conv
Slide 40: Segments: Energy Networks
Segments: Energy Networks E.ON 9M 2017 results Energy Networks Highlights EBIT1 € m +18% • Germany: + Regulatory effects 1,417 + Lower maintenance costs 1,196 • Sweden: 788 Germany 638 + Tariff increases • CEE & Turkey: Sweden 288 345 + Tariff increases in Hungary CEE & Turkey 270 284 + Higher allow
Slide 41: Segments: Customer Solutions
Segments: Customer Solutions E.ON 9M 2017 results Customer Solutions Highlights EBIT1 € m • Germany: -36% – Lower power margins due to increased TSO2 fees (Q1 2017) 548 – Lower gas margin due to price decrease in Nov 2016 Germany 144 + Price increases as per Q2 2017 353 • UK: UK 227 93 – Higher ECO3
Slide 42: Segments: Renewables
Segments: Renewables E.ON 9M 2017 results Renewables Highlights EBIT1 € m • Offshore: -20% – Arkona book gain in Q2 2016 309 – Lower wind conditions in UK, FX (GBP) weakening 248 • Onshore: Offshore/Other 243 + COD of Colbeck’s Corner in May 2016 186 + Higher production of US wind farms – Lower wind
Slide 43: Segments: PreussenElektra
Segments: PreussenElektra E.ON 9M 2017 results PreussenElektra Highlights EBIT1 € m – Lower volumes due to Brokdorf outage +3% – Lower achieved power prices 345 357 – Additional depreciation of asset retirement costs (ARC) + End of nuclear fuel tax payments in 2016 + One-off effects in relation to c
Slide 44: Adjusted Net Income
Adjusted Net Income E.ON 9M 2017 results €m 9M 2016 9M 2017 % YoY Economic interest 1 3,640 3,540 -3 EBITDA expense (net) Depreciation/amortization -1,329 -1,423 -7 • Improvement mainly driven 1 2,311 2,117 -8 by significant lower EBIT interest accretion of Economic interest expense (net) -1,118 -57
Slide 45: Reconciliation of Adj. EBIT to IFRS Net Income
Reconciliation of Adj. EBIT to E.ON 9M 2017 results IFRS Net Income €m 9M 2016 9M 2017 % YoY 1 EBITDA 3,640 3,540 -3 Depreciation/Amortization/Impairments -1,329 -1,423 -7 1 EBIT 2,311 2,117 -8 Economic interest expense (net) -1,118 -575 +49 Net book gains 1 288 n/a Restructuring -221 -173 +22 Mark-
Slide 46: Cash effective investments by unit
Cash effective investments E.ON 9M 2017 results by unit €m 9M 2016 9M 2017 % YoY Energy Networks 866 864 -0 Customer Solutions 392 350 -11 Renewables 637 961 +51 Corporate Functions & Other 78 42 -46 Consolidation -4 -5 -25 PreussenElektra 12 10 -17 Investments 1,981 2,222 +12 46 1. Adjusted for non
Slide 47: Economic Net Debt
Economic Net Debt1 E.ON 9M 2017 results €m 31 Dec 2016 30 June 2017 30 Sept 2017 Liquid funds 8,573 14,252 5,450 Non-current securities 4,327 3,850 3,801 Financial liabilities -14,227 -14,691 -14,304 Adjustment FX hedging ² 390 311 158 Net financial position -937 3,722 -4,895 Provisions for pensions
Slide 48: Economic interest expense (net)
Economic interest expense (net) E.ON 9M 2017 results Difference €m 9M 2016 9M 2017 (in € m) Interest from financial assets/liabilities -467 -522 -55 Interest cost from provisions for pensions and similar provisions -64 -61 +2 Accretion of provisions for retirement obligation and similar provisions -
Slide 49: Financial Liabilities
Financial Liabilities E.ON 9M 2017 results Split Financial Liabilities Maturity profile (as of end 9M 2017)1 € bn € bn 4.8 30 Sept 2017 Bonds -12.5 in EUR -5.7 in GBP -3.9 in USD -2.5 2.1 in JPY -0.2 1.8 in other denominations -0.2 1.4 Promissory notes -0.4 1.1 0.8 Commercial papers 0.0 0.6 0.4 Othe
Slide 50: Appendix: Contacts, Calendar & Disclaimer
Appendix Contacts, Calendar & Disclaimer
Slide 51: E.ON Investor Relations contacts
E.ON Investor Relations contacts Alexander Karnick T+49 (201) 184 28 38 Head of Investor Relations alexander.karnick@eon.com Martina Burger T +49 (201) 184 28 07 Manager Investor Relations martina.burger@eon.com Dr. Stephan Schönefuß T +49 (201) 184 28 22 Manager Investor Relations stephan.schoenefu
Slide 52: Financial calendar & important links
Financial calendar & important links Financial calendar March 14, 2018 Annual Report 2017 May 8, 2018 Interim Report I: January – March 2018 May 9, 2018 2018 Annual Shareholders Meeting August 8, 2018 Interim Report II: January – June 2018 November 14, 2018 Interim Report III: January – September 20
Slide 53: Disclaimer
Disclaimer This presentation contains information relating to E.ON Group ("E.ON") that must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other person or used in whole or in part for any other purpose. By accessing this document you agree