Engie S.a. · EURONEXT:ENGI
Engie — Investor Day (February 2019)
117 slides from Engie's investor day presentation, Feb 28, 2019
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY February 28, 2019
Slide 2: Agenda
Tab 2018 performance Judith HARTMANN p. 3 1 11:00 – 12:15 Strategic orientation Isabelle KOCHER p. 27 2 Capital allocation & medium-term guidance Judith HARTMANN p. 59 3 12:15 – 1:00 Buffet lunch Shankar KRISHNAMOORTHY p. 86 4 Paulo ALMIRANTE p. 107 5 1:00 – 2:30 Operational plans by business line G
Slide 3: 2018 Performance
Judith HARTMANN EVP, Chief Financial Officer 2018 PERFORMANCE
Slide 4: NRIgs guidance achieved, solid organic growth
NRIGS GUIDANCE ACHIEVED SOLID ORGANIC GROWTH DESPITE NUCLEAR HEADWIND SOUND OPERATING CASH GENERATION AND STRONG FINANCIAL STRUCTURE 28/02/2019 ENGIE 2019 4
Slide 5: More profitable through focused investments and cost efforts
More profitable through focused investments and cost efforts Strong growth in client solutions driven by targeted acquisitions in services, despite retail headwinds Acceleration in renewables 1.1 GW of wind & solar capacity added in 2018 and targeted capacity addition of 9 GW over 2019-21 Increased
Slide 6: 2018 FY Results
∆ ∆ 2018 FY RESULTS – In €bn Actual Gross(1) Organic (1) EBITDA 9.2 0% +5% COI(2) 5.1 -1% +5% NRIgs(3) 2.46 +10% +17% NIgs 1.0 -22% CFFO(4) 7.3 -1.2 28/02/2019 ENGIE 2019 (1) FY 2017 restated for IFRS 5, 9 and 15 treatments (3) excl. E&P and LNG 6 (2) Including share in net income of associates (4)
Slide 7: EBITDA bridge 2017 to 2018
In €bn By reportable segment(3) +5% NORTH AMERICA 9.2 (0.4) 8.8 (0.7) +0.3 +0.3 9.2 +0.3 +0.2 LATIN AMERICA Other(2) FX & Scope Volume(2) Lean(2) Nuclear Price(2) AFRICA/ASIA FX: (0.3) Volume: (0.7) BENELUX EBITDA EBITDA Scope: (0.1) (0.1) Gas midstream Price:EBITDA Renewables 2017(1) Other:
Slide 8: EBITDA by business line
EBITDA(1) - In €bn, unaudited figures +9% 2.4 CLIENT SOLUTIONS 2.2 NETWORKS 3.8 +4% 3.9 GENERATION - RES & +9% 2.5 2.8 THERMAL CONTRACTED o/w Nuke +0.1 o/w Nuke -0.5 GENERATION - MERCHANT 0.8 -29% 0.5 FY 2017(2) FY 2018 (1) Gross figures excluding unallocated corporate costs and non-core sold 28/02/
Slide 9: Client Solutions
Key performance Key dynamics and financial indicators CLIENT B2B/B2T services SOLUTIONS Strengthening of our positions by targeted acquisitions Revenues €18.6 bn +8.5% + %9 YoY gross EBITDA gross EBITDA organic growth +5% EBIT margin +30 bps Strong increase in demand and backlog Installations backlo
Slide 10: Networks
Key performance Key dynamics and financial indicators France France Gas storage regulation +€3.6 bn of storage RAB NETWORKS (total French RAB +16%) Inauguration of Val de Saône 2.5m gas smart meters 4 + % YoY gross EBITDA transport pipe Installed by end 2018 EBITDA organic growth +5% International I
Slide 11: Generation – RES & Thermal Contracted
Key performance Key dynamics and financial indicators Renewables Renewables GENERATION – RES & +33% volumes hydro France Financial closing of Moray THERMAL CONTRACTED East Offshore Windfarm (UK) +1.1 GW capacity added in Acquisitions of renewables 2018 9 YoY gross + % EBITDA developers (USA and Fran
Slide 12: Generation – Merchant
Key performance Key dynamics and financial indicators GENERATION – MERCHANT Significant unplanned nuclear outages 52% availability rate at Belgian nuclear plants 29% YoY gross Positive portfolio effect - EBITDA on thermal power production -€2/MWh lower achieved price Dynamic management of on nuclear
Slide 13: From EBITDA to NRIgs, NRIgs to NIgs
From EBITDA to NRIgs From NRIgs to NIgs 2018 2017(1) ∆ yoy EBITDA €9.2bn €9.2bn +0.0 NRIgs 2018 €2.4bn D&A and others (4.1) (4.0) (0.1) MtM below COI (0.2) COI(2) €5.1bn €5.2bn (0.0) Impairments (1.8) Net interest expense (3) (1.2) (1.2) (0.0) Restructuring costs (0.2) Income tax (0.9) (1.1) +0.2 Ca
Slide 14: Growth Capex
CAPEX Growth CAPEX by nature - In €bn by métiers - In €bn Generation – Merchant 9.1 8.2 Client 1% Generation – RES & thermal Solutions contracted Development 3.3 32% 3.6 €5.4bn(1) Growth €4.8bn 50% CAPEX (39% on Financial 3.4 Renewables) 2.0 17% Networks Maintenance 2.5 2.6 2017 2018 €4.8bn net of D
Slide 15: ROCEp
R ROCEp OCEp (1) ( 1 ) 2015 2018 Scope impact Nuclear impact -€0.8bn -€0.8bn ENGIE 6.5% 7.4% 2018 COI impact vs 2015 2018 COI impact vs 2015 CLIENT SOLUTIONS(2) 10.4% 12.2% CAPEX 2016-18(3) Lean 2018 €1.0bn €1.3bn GENERATION - RES & THERMAL CONTRACTED 10.3% 12.8% COI contribution as net cost savings
Slide 16: Financial net debt and cost of gross debt
4,4 Financial net debt & cost of gross debt - In €bn 3,9 27.7 24.8 3,4 22.5 2.99% 21.1 2.78% 2.63% 2.68% 2,9 2,4 Dec 15 Dec 16 Dec 17 Dec 18 3.7 4.0 3.8(2) 3.7(3) 2.5 2.4(1) 2.3(1) 2.3 Financial Net Debt / EBITDA Economic Net Debt / EBITDA Dec 15 Dec 16 Dec 17 Dec 18 In 2018, S&P confirmed its A-/A-
Slide 17: 2019 indications: EBITDA, NRIgs, dividend, leverage
Net recurring income EBITDA indication - In €bn Group share - In €bn Dividend for 2019 9.9-10.3(2) 9.7(1) 65-75% 2.5-2.7(2) pay-out ratio on NRIgs 2.46(1) Leverage & rating(3) Financial net debt / EBITDA ≤2.5x “A” category rating 2018 2019e 2018 2019e (1) Without E&P and LNG contributions, restated
Slide 18: Additional Material
ADDITIONAL MATERIAL 28/02/2019 ENGIE 2019 18
Slide 19: Cash equation
In €bn 9.2 (0.8) CASH EQUATION 8.5 (0.8) (0.6) 7.3 Restructuring 0.2 & others Tax cash Net WCR 5.8 expenses financial expenses CFFO €1.7bn Dividends 2018 €0.8bn Dividends to minorities €0.1bn Hybrids coupon €3.1bn Net Capex(1) EBITDA Cash generated from operations 2018 before income tax and WCR (1)
Slide 20: Client Solutions EBITDA bridge
CLIENT SOLUTIONS In €bn, % yoy organic +0.1 +0.0 2.4 2.3 +0.1 B2C B2B supply 0.7 B2C B2B & B2T +0% services Energy services Market opening Power margins 0.2 +38% B2B supply Restated in France in Mexico Gas margins for FX (volumes & Margins) GEM & UK (Keepmoat) Scope B2B & B2T services 1.
Slide 21: Networks EBITDA bridge
NETWORKS In €bn, % yoy organic +0.1 +0.1 (0.0) +0.0 +0.0 3.9 3.7 0.4 +24% International Storage Distribution Transport Power Other & Regas transmission networks Storage regulation Commissioning GRT gaz HB conversion Chile Restated contract in France Latam tariffs for FX Latam tariffs Inf
Slide 22: Generation RES & Thermal Contracted EBITDA bridge
GENERATION - RES & THERMAL CONTRACTED In €bn, % yoy organic +0.1 (0.0) 2.8 +0.6 2.3 (0.2) Lean Other 1.6 Renewables Prices Volumes +25% Restated Brazil Better hydrology for FX spot prices in France & France hydro Assets Scope achieved prices commissioning & DBpSO margins End of high margin B
Slide 23: Generation Merchant EBITDA bridge
GENERATION - MERCHANT In €bn, % yoy organic 0.8 (0.7) +0.4 (0.05) Restated 0.5 for FX, Scope Generation & Nuclear & Other Nuclear GEM tax Prices Gas supply portfolio LTC EBITDA 2017 renegotiation EBITDA 2018 Volumes (unplanned outages) Accounting effect 28/02/2019 ENGIE 2019 23
Slide 24: COI by business line
COI(1) - In €bn, unaudited figures +8% 1.7 CLIENT SOLUTIONS 1.6 NETWORKS 2.2 2.4 +5% GENERATION - RES & 1.8 +12% 2.1 THERMAL CONTRACTED o/w Nuke -0.3 o/w Nuke -1.1 GENERATION - MERCHANT N/A -0.1 -0.3 FY 2017 FY 2018 28/02/2019 ENGIE 2019 (1) Gross figures excluding unallocated corporate costs and no
Slide 25: EBITDA 2018 to 2019 bridge
By business line - In €bn By reportable segment(3) FRANCE +0.7 (0.1) 9.9-10.3 9.2 +0.2 +0.2 (0.1) +0.1 (0.0) (0.5) +0.5 9.1 LATIN AMERICA FX Scope IFRS 16 Scope RES Networks Client Thermal & GEM, out(2) in Solutions Nuclear Corporate Merchant & other MIDDLE EAST AFRICA ASIA PACIFIC EBITDA EBIT
Slide 26: Capital Markets Day
CAPITAL MARKETS DAY February 28, 2019
Slide 27: Strategic Orientation
Isabelle KOCHER Chief Executive Officer, ENGIE STRATEGIC ORIENTATION
Slide 28: Our Story So Far
OUR STORY SO FAR 28/02/2019 ENGIE 2019 28
Slide 29: IEA outlook and ENGIE COI 2015-2018
IEA World Energy Outlook 2018 ENGIE COI €bn Energy Renewables Gas Efficiency Other 2015 2018(1) 1.7 Client solutions (including Supply) 1.2 66% +9% 2.4 +43% X2.2 Networks 2.3 X1.7 Thermal 0.9 +10% contracted 1.0 Renewables 0.7 1.2 -32% 41% Other thermal 0.4 0.4 merchant 0.1 Gaz midstream 0.3 25% Nuc
Slide 30: Development platform for renewables, leadership in client solutions
CENTRAL EMERGING Off-grid Public Lighting market leader in Africa 1.5M lighting points ~300k customers managed We have built a development #2 in charging points #1 cooling networks platform for Renewables worldwide (EV box) in the world #1 in microgrids Green Corporate PPA in the world (EPS) Spain,
Slide 31: Decentralized and purpose-driven organization
Training & skills management €100M Invested over 3 years DECENTRALIZED & PURPOSE-DRIVEN Accountability 65% - 35% collective – individual bonuses ORGANIZATION INCREASED participation and engagement 28/02/2019 ENGIE 2019 31
Slide 32: COI organic growth
COI +5% +5% +2% 2013 2014 2015 2016 2017 2018 -3% -8% X% Organic growth YoY (%) -14% 28/02/2019 ENGIE 2019 32
Slide 33: Investors, clients and employees
-56% INVESTORS +13 points A list DJSI index most 500 valuable brands 2019 CO2 emissions CLIENTS 1.5 Million from 2012 to 2018 Power Green offer in France 82% EMPLOYEES believe strongly in the products and services ENGIE provides 28/02/2019 ENGIE 2019 33
Slide 34: Faster growing, less risky, cleaner
2015 EBITDA yoy organic growth(1) -9% +5% ✓ Faster growing Contracted / regulated 71% 93% ✓ Less risky Low CO2 75% 93% ✓ Cleaner 2.4 EBITDA Client Solutions (€bn)(2) 1.8 +36% ✓ Client Solutions oriented Strong growth even if below target (+50%) ROCEp(3) 6.5% 7.4% ✓ More profitable ROCEp increase in
Slide 35: What the Market Tells Us
WHAT THE MARKET TELLS US 28/02/2019 ENGIE 2019 35
Slide 36: Market consultation figures
Over 15,000 70 people countries 13,476 16,600 posts reactions 28/02/2019 ENGIE 2019 36
Slide 37: A Second Wave Has Started
…A SECOND WAVE HAS STARTED… 28/02/2019 ENGIE 2019 37
Slide 38: Decarbonization, digitalization, decentralization
Local Industries Authorities DECARBONIZATION DIGITALIZATION DECENTRALIZATION 28/02/2019 ENGIE 2019 38
Slide 39: Pressure to act is increasing
PRESSURE TO ACT IS INCREASING Philippines, US (NYC), In France, ~30,000 students from 38% of Australians changed NGOs denouncing the financing Netherlands: oil companies leading universities signed “green brand preference due to CSR of fossil fuel called to court hearings manifesto” to decline jobs
Slide 40: Renewable combined heat and power plant, Switzerland
Renewable combined Investment Supply 17,500 households heat & power plant by ENGIE with cleaner electricity switzerland 28/02/2019 ENGIE 2019 40
Slide 41: Cooling, rooftop solar, energy efficiency
Rooftop Energy Cooling solar Efficiency Philippines 28/02/2019 ENGIE 2019 41
Slide 42: Walmart virtual PPA, USA
Walmart’s ambition: operating 150 MW Virtual Windfarm in South with 100% renewable energy PPA Dakota usa 28/02/2019 ENGIE 2019 42
Slide 43: Local authorities taking the lead
PRESSURE TO ACT IS INCREASING 2018: Ugandan government 2019: 2019: students protesting for sued by young citizens for 2018: Gilets Jaunes 2M+ signatures climate action in the EU and US inaction on climate change LOCAL AUTHORITIES ARE TAKING THE LEAD Since 2012: 10% CO2 emission reduction in 27 citie
Slide 44: Green gas, France
Circular Adaptation of gas 30% green gas by 2030 economy infrastructure france 28/02/2019 ENGIE 2019 44
Slide 45: Building retrofit, USA
Investment by ENGIE Building retrofit Green power generation with 50 year contract program & electric vehicles USA 28/02/2019 ENGIE 2019 45
Slide 46: Cleaner energy financing, Tanzania
Cleaner source Financing and Partnership of energy payment solutions for efficient devices TANZANIA 28/02/2019 ENGIE 2019 46
Slide 47: Zero-carbon transition strengthens clients and core mission
Zero-Carbon Transition STRENGTHENS FINANCED COST EFFECTIVE CLIENTS CORE MISSION 28/02/2019 ENGIE 2019 47
Slide 48: Zero-carbon transition as a service
C-SUITE APPROACH Understand holistic customer needs 1 FINANCE OVERHAUL & REINVENT ENERGY 7 2 USES Deliver cost effectively Save energy & decrease CO2 emissions Zero-Carbon Transition OPERATE INSTALLATIONS 6 "as a service" 3 UPGRADE / REPLACE INFRASTRUCTURES EQUIPMENTS Optimize operations and perform
Slide 49: Our ambition: world leader in zero-carbon transition as a service
OUR AMBITION BE THE WORLD LEADER IN ZERO-CARBON TRANSITION "AS A SERVICE" 28/02/2019 ENGIE 2019 49
Slide 50: Infrastructure DNA and client solutions DNA
INFRASTRUCTURE CLIENT SOLUTIONS DNA DNA RENEWABLES NETWORKS CLIENT GENERATION & SUPPLY SOLUTIONS On site presence and close Design – Build – Run – Finance relationships with 30,000 clients 28/02/2019 ENGIE 2019 50
Slide 51: Zero-carbon transition as a service
Zero-Carbon Transition "as a service" Tailor-made High-tech Financed RENEWABLES CLIENT NETWORKS SOLUTIONS GENERATION & SUPPLY 28/02/2019 ENGIE 2019 51
Slide 52: Strategy by business line
RENEWABLES Sophisticated technologies, 50% new RES projects dedicated to specific clients by 2021 Commoditized renewables Zero-Carbon NETWORKS Transition Growth in dynamic development "as a service" markets CLIENT SOLUTIONS Tailor-made Asset-based solutions a rising Attractive returns & cash flows H
Slide 53: Countries, urban areas, global companies
20 30 500 countries urban areas Global companies 28/02/2019 ENGIE 2019 53
Slide 54: Decentralized organization with 4 business lines
BUSINESS LINE - CLIENT SOLUTIONS A decentralized organization: 24 business units BUSINESS LINE - NETWORKS 4 business lines BUSINESS LINE - RENEWABLES Simplified reporting BUSINESS LINE - THERMAL 28/02/2019 ENGIE 2019 54
Slide 55: Design, digital acceleration, financing syndication
STRATEGY DESIGN DIGITAL ACCELERATION FINANCING SYNDICATION C-suite approach to help clients build Scale up software content Deployment their own tailored zero-carbon in our solutions to differentiate us as for all asset- D Development strategy the leading proprietary energy based activities, softwar
Slide 56: Highly skilled resources
Highly skilled resources 10% of ENGIE’s French staff will be apprentices by 2022 50% female managers by 2030 80% of employees 63% 21% 13% < 3% to receive annual training Client Renewables, Networks Other Solutions Generation by 2022 160,000 employees 28/02/2019 ENGIE 2019 56
Slide 57: Faster growth, higher value, better impact
Faster Growth Higher Value Better Impact ROCEp increase CO2 7-9% Energy access NRIgs CAGR, 7.4% in 2018 … 2018-21 Upper single digit in 2021 HARMONIOUS PROGRESS 28/02/2019 ENGIE 2019 57
Slide 58: Capital Markets Day
CAPITAL MARKETS DAY February 28, 2019
Slide 59: Capital Allocation & Medium-Term Guidance
Judith HARTMANN EVP, Chief Financial Officer CAPITAL ALLOCATION & MEDIUM-TERM GUIDANCE
Slide 60: Continued leadership in energy transition, optimized capital allocation
CONTINUED LEADERSHIP IN ENERGY TRANSITION ENERGY RENEWABLES GAS EFFICIENCY ACCELERATE GROWTH OPTIMIZED TARGETED ACTIVE PORTFOLIO CAPITAL INVESTMENTS MANAGEMENT ALLOCATION 28/02/2019 ENGIE 2019 60
Slide 61: Alignment to ENGIE's strategy
ALIGNMENT TO ENGIE’S STRATEGY Bias towards sophisticated Focus on core Differentiation over solutions, conducive geographies to build distinct time horizons to profitability leadership at scale 28/02/2019 ENGIE 2019 61
Slide 62: Attractive and less attractive characteristics
CLEAR PERSPECTIVE ON ATTRACTIVE CHARACTERISTICS – ORGANIC AND INORGANIC Very Attractive Less Attractive Complex and innovative offers Commoditized offers (outcome accountability as differentiator) (price as primary competitive lever) Integrated offers Simple offers of piecemeal services spanning ful
Slide 63: Prioritize 20 countries and 30 urban areas
ARCHETYPE 1 Acceleration of demand for sophisticated solutions PRIORITIZE 20 COUNTRIES ARCHETYPE 2 EXIT AND 20 COUNTRIES 30 EMERGING •Early stage IN THE NEXT •in energy transition MARKET URBAN 3 YEARS AREAS ARCHETYPE 3 •High growth •in energy infrastructure 28/02/2019 ENGIE 2019 63
Slide 64: Archetype 1 markets
ARCHETYPE 1 MARKET CHARACTERISTICS • Moderate growth • Well-equipped energy infrastructures • Mature energy consumption • Strong environmental awareness CUSTOMER PRIORITIES • Conversion to green energy • Infrastructures renewal • Increased focus on sustainability Western Europe, North America, Austr
Slide 65: Archetype 2 markets
ARCHETYPE 2 MARKET CHARACTERISTICS • Well-equipped centralized energy infrastructures • Dynamic economic growth and energy consumption • Heterogeneous ecological awareness CUSTOMER PRIORITIES • Large infrastructures • Development of renewable energies • Sustainability GCC, Romania, Mexico, Brazil, C
Slide 66: Archetype 3 markets
ARCHETYPE 3 MARKET CHARACTERISTICS • Under-equipped energy infrastructures • Energy access challenges • Rapid urban development CUSTOMER PRIORITIES • Development of renewable energies • Solar microgrids and home systems • Sustainable city Urban areas in Africa, China, India and Southeast Asia 28/02/
Slide 67: Investments by time horizon
COI LONG-TERM Investments MID-TERM Investments SHORT-TERM Investments BUSINESS AS USUAL NOW T+3 T+5 T+7 Time Generation Client solutions, Offshore wind, New technologies: and asset-light solar, onshore wind, asset-based floating offshore, services, nuclear recovery international networks solutions g
Slide 68: Attractive IRR profile
Resilience Optimized positioning Attractive IRR profile: of the business case within each segment’s target WACC +200bps / to various sensitivities, value chain, COE + 400bps notably prices balancing risks/rewards 28/02/2019 ENGIE 2019 68
Slide 69: Clarity in Reporting
CLARITY IN REPORTING 28/02/2019 ENGIE 2019 69
Slide 70: COI 2018 by business line and region
COI 2018 in €M(2) Client solutions Networks Renewables Thermal Nuclear Supply Others(1) Total Asset-light Asset Based Services France 288 260 2,016 258 210 3,033 Rest of Europe 232 33 82 76 402 (1,057) 277 46 Latin America - 194 754 366 47 1,355 USA & Canada 10 19 12 33 18 59 151 Middle East, Asia &
Slide 71: New reporting structure 2019
Low CO2 Power Generation Global Networks 2016-2018 Client solutions Others RES + Thermal Thermal Infrastructures Upstream B2B B2T B2C contracted Merchant B2B B2B/B2T supply + B2C services Client solutions 1 2019 Asset-light Asset Networks Renewables Thermal Nuclear Supply Others services Based 28/02
Slide 72: New reporting structure 2019
Low CO2 Power Generation Global Networks 2016-2018 Client solutions Others RES + Thermal Thermal Infrastructures Upstream B2B B2T B2C contracted Merchant Client solutions 1 2019 Asset-light Asset Networks Renewables Thermal Nuclear Supply Others services Based 28/02/2019 ENGIE 2019 72
Slide 73: New reporting structure 2019
Low CO2 Power Generation Global Networks 2016-2018 Client solutions Others RES + Thermal Thermal Infrastructures Upstream B2B B2T B2C contracted Merchant Client solutions (1) 2019 Asset-light Asset Networks Renewables Thermal Nuclear Supply Others services Based 28/02/2019 ENGIE 2019 (1) Others incl
Slide 74: Key External & Operational Assumptions
KEY EXTERNAL & OPERATIONAL ASSUMPTIONS 28/02/2019 ENGIE 2019 74
Slide 75: Forex, achieved prices, weather conditions
FOREX Achieved Prices Weather Conditions European outright In €/MWh 46 42 36 Normalized conditions in France: OVER 2019-2021 gas distribution and energy supply normalized hydro production EUR-BRL EUR-USD Hydrology in Brazil to improve 2019 2020 2021 by 2021 @ ~4.42 @ ~1.20 Market 58 54 50 Prices (1)
Slide 76: Networks, nuclear, consumer, tax rate assumptions
NETWORKS NUCLEAR CONSUMER EFFECTIVE TAX RATE Review of regulatory Belgium nuclear Full pass through of 30% in 2019 reducing returns of our French availability supply costs in French by c. 200bps in 2021 infrastructures business in 78%/79%/93%(1) regulated gas & power 2020-21 for 2019/2020/2021 tarif
Slide 77: Medium Term Indicative Expectations & Guidance
MEDIUM TERM INDICATIVE EXPECTATIONS & GUIDANCE 28/02/2019 ENGIE 2019 77
Slide 78: Operating cash flow, capex and disposals 2019-21
OPERATING CASH FLOW RISING WITHIN THE RANGE OF €6.5-8.5BN PER YEAR CUMULATIVE CUMULATIVE €~11-12BN GROWTH CAPEX 2019-21(2) CAPEX 2019-21(1) CLIENT SOLUTIONS €4.0 - 5.0bn €~20bn 60% growth / development NETWORKS €3.0 - 3.3bn RENEWABLES €2.3 - 2.8bn ASSET DISPOSALS 2019-21 ~€6.0bn THERMAL & SUPPLY €1.
Slide 79: €800M net COI improvement by 2021
NET COI IMPROVEMENT COST REDUCTION REVENUE ENHANCEMENT PROCUREMENT Category management, pooling, insourcing, spending centralization & standardization INDUSTRIAL ASSETS PERFORMANCE IMPROVEMENT €800M DIGITALIZATION Asset and networks availability, efficiency CRM, process engineering and automation, a
Slide 80: EBITDA, COI and ROCEp growth to 2021
GREATER CAPITAL EFFICIENCY DRIVING OPERATING LEVERAGE 3.5 - 6.0% 6.5 - 8.5% Upper single digit 7.4% 5.1 5.1 2018 2021 2018 2021 2018 (1) 2021 €Bn EBITDA CAGR COI(2) CAGR ROCEp (1) See FY 2018 appendices for detailed calculation 28/02/2019 ENGIE 2019 (2) Including share in net income of associates 80
Slide 81: COI CAGR 2018-21 by business
BUSINESS 18 COI (€bn) COI CAGR 18-21 KEY DRIVERS CLIENT SOLUTIONS 1.0 11 - 14% • Revenue 2018-21 CAGR of 4-7% • French regulatory return review in 2020-21, NETWORKS 2.3 (4)% - (1)% international growth opportunities • Addition of c. 9GW of capacity by 2021, RENEWABLES 1.1 8 - 11% increasingly client
Slide 82: Financial and economic net debt
FINANCIAL AND ECONOMIC NET DEBT NET INTEREST EXPENSE (4) €bn €bn 35.6 35-37 1.5 1.2 1.3 <4.0x 3.7x(1) 21.1(2) ~20(2) 2.3x <2.5x (3) 2018 2021 2018 2019-21 Financial Economic Financial Economic Net Debt Net Debt Net Debt / EBITDA Net Debt / EBITDA RETAIN CURRENT COMMITMENT TO “A” RATING(3) (1) Leases
Slide 83: Dividend policy
NET RECURRING DIVIDEND POLICY INCOME GROUP SHARE 65-75% €2.5bn €0.75 Payout Ratio(1) per share 2018 2021 2018 New policy 28/02/2019 ENGIE 2019 (1) Dividend as a % of net recurring result group share 83
Slide 84: Disciplined capital allocation principles
DISCIPLINED CAPITAL ALLOCATION PRINCIPLES TO DELIVER ATTRACTIVE RETURNS GEOGRAPHIC REFOCUS TOWARDS 20 COUNTRIES AND 30 EMERGING MARKET URBAN AREAS NRIGS GROWTH OF 7-9% ATTRACTIVE DIVIDEND POLICY: 65-75% PAYOUT RATIO(1) 28/02/2019 ENGIE 2019 (1) Out of Net Recurring Income group share 84
Slide 85: Capital Markets Day
CAPITAL MARKETS DAY February 28, 2019
Slide 86: Industry Growth Drivers and Segmentation Critique
Shankar KRISHNAMOORTHY Executive Vice President INDUSTRY GROWTH DRIVERS AND SEGMENTATION CRITIQUE
Slide 87: Where is the power sector going?
WHERE IS THE POWER SECTOR GOING? 28/02/2019 ENGIE 2019 87
Slide 88: Power generation growth
+ 45% 45,000 45 000 40,000 40 000 Power generation CAGR: 1.6% 35,000 35 000 30,000 30 000 25,000 25 000 (TWh) 20,000 20 000 2017 2025 2030 2035 2040 28/02/2019 ENGIE 2019 Source: IEA, World Energy Outlook, Sustainable Development Scenario 88
Slide 89: Global low-CO2 power capacity
Global low-CO2 power generation installed capacity (GW) 2017/2040 4 500 4,240 4 000 x10 3 500 3 000 2,819 2 500 +65% 2,096 2 000 x5.5 1 500 1,270 x3 1 000 398 515 500 379 136 0 Solar Wind Hydro Bioenergy 28/02/2019 ENGIE 2019 Source: IEA, World Energy Outlook, Sustainable Development Scenario 89
Slide 90: Electricity generation and capacity growth
50 000 65,000 + 100% 16 000 13,000 15 000 45 000 Power capacity 14 000 55,000 12,000 CAGR: 3.3% 13 000 40 000 45,000 12 000 11,000 35 000 11 000 35,000 10,000 10 000 30 000 25,000 + 45%generation Electricity CAGR: 2% 9 000 89,000 000 25 000 Power generation CAGR: 1.6% 7 000 (TWh) 15,000 20 000 68,00
Slide 91: Lower barriers to entry, phenomenal growth
Lower barriers to entry Phenomenal growth Complex segments emerging that need to consider more than price to be successful 28/02/2019 ENGIE 2019 91
Slide 92: What's happening on the client side?
WHAT’S HAPPENING ON THE CLIENT SIDE? 28/02/2019 ENGIE 2019 92
Slide 93: Energy efficiency gains in equipment
In-Home LEDs District Heating Condensation Boilers 5x 50% more 30% more as efficient as efficient than efficient than incandescent light bulbs individual heating standard ones systems Air Conditioners District Cooling Cogeneration Units 3x 50% more 25% more as efficient as they efficient than effici
Slide 94: Traditional efficiency vs energy as-a-service
Traditional energy Energy Audit Lighting Building Retail Choice efficiency solutions Retrofitting Retrofitting Procurement Large Off-Site Wind & Solar Intelligent Procurement Energy as-a-service Strategic Energy Building Portfolio Performance Energy solutions Guidance Contract Management & Automatio
Slide 95: Emergence of as a service models
Faster phasing out of energy-consuming equipment Emergence of “as a service” models 28/02/2019 ENGIE 2019 95
Slide 96: What are the winning as a service business models?
WHAT ARE THE WINNING "AS A SERVICE" BUSINESS MODELS? 28/02/2019 ENGIE 2019 96
Slide 97: Batteries can provide up to 13 services
Backup Energy Power Arbitrage Spin Increased Non-Spin PV Self- Reserve Consumption Frequency Regulation Demand Charge Voltage Reduction Support Time-of-Use Bill Black Management Start Batteries can provide up to 13 services Distribution Resource Adequacy to 3 stakeholder groups Deferral Transmission
Slide 98: RE100 members x10 between 2014 and 2018
X10 RE100 members between 2014 and 2018 The world’s most influential companies committed to 100% renewable power 28/02/2019 ENGIE 2019 98
Slide 99: Value in integrated solutions and upstream-downstream link
Value in being able to provide integrated solutions Value in upstream-downstream link 28/02/2019 ENGIE 2019 99
Slide 100: Will we make our planet great again with gas?
WILL WE MAKE OUR PLANET GREAT AGAIN WITH GAS? 28/02/2019 ENGIE 2019 100
Slide 101: Global gas demand and gas power capacity
4 300 +12% 3 000 +42% 4,184 4 200 2 500 2,406 4 100 2 000 4 000 1,695 3 900 1 500 3 800 3,752 1 000 3 700 500 3 600 3 500 0 GLOBAL GAS DEMAND (BCM) 2017/2040 GLOBAL GAS POWER INSTALLED CAPACITY (GW) 2017/2040 28/02/2019 ENGIE 2019 Source: IEA, World Energy Outlook, Sustainable Development Scenario 1
Slide 102: Global biogas market
Global Biogas 364 TWh/y Market in 2016 Global Biogas Market 7,500 TWh/y Potential in 2050 28/02/2019 ENGIE 2019 Source: International Conference on Applied Energy 102
Slide 103: Global hydrogen market
Global Hydrogen Market Global Hydrogen Market in 2018 in 2050 incl.75% green H2 Feedstock for industry Energy for industry Small-scale industrial uses x10 Heat & Power for 55 Mtpa 550 Mtpa buildings Power generation Large-scale industrial uses Other Transportation 28/02/2019 ENGIE 2019 Source: Hydro
Slide 104: Greener gas more integrated with power
Greener gas to still flow in the pipes, and will be more integrated with power 28/02/2019 ENGIE 2019 104
Slide 105: Cookie-cutter plants vs tailor-made solutions
Risk Sharing, Tailor-Made Integrated Complexity & Green Energy Upstream- Long-Term Solutions Downstream Commitment Models Separated Cookie-Cutter Short-Term Upstream & Renewable Service Downstream Plants Contracts Models 28/02/2019 ENGIE 2019 105
Slide 106: Capital Markets Day
CAPITAL MARKETS DAY February 28, 2019
Slide 107: Solid Earnings Combined with Optionality Value
Paulo ALMIRANTE Executive Vice President Chief Operating Officer SOLID EARNINGS COMBINED WITH OPTIONALITY VALUE
Slide 108: Gas and power networks, thermal contracted, Europe
Gas and Energy Thermal Power Markets Contracted Networks Europe 28/02/2019 ENGIE 2019 108
Slide 109: Strong Regulated Networks and Contracted Generation
STRONG REGULATED NETWORKS AND CONTRACTED GENERATION 28/02/2019 ENGIE 2019 109
Slide 110: Networks: leading position in gas networks in France
NETWORKS Zero-Carbon Attractive returns & cash Transition flows "as a service" Tailor-made A LEADING POSITION IN GAS NETWORKS IN FRANCE, High-tech Financed COMPLETED BY A GROWING INTERNATIONAL PRESENCE RENEWABLES CLIENT NETWORKS SOLUTIONS GENERATION & SUPPLY Global Presence 2018 90% of RAB/CE is loc
Slide 111: Focus on France: RAB and regulatory period
A LEADING POSITION IN GAS NETWORKS IN FRANCE, COMPLETED BY A GROWING INTERNATIONAL PRESENCE Focus on France €bn 27.3 29.5 New regulatory period starting 7.25% 1.1 in H1 2020(4) 5.75% 3.6 5.25% 8.2 5.1 Rebalance our geographic exposure 5.00% 14.4 RAB 2018 (1) Capex 2019-21 (2) RAB 2021 RAB Remunerati
Slide 112: Networks international growth opportunities
NETWORKS Zero Carbon Growth in dynamic Transition development markets "as a service" Tailor-made INTERNATIONAL GROWTH OPPORTUNITIES LEVERAGING OUR RECOGNIZED TRACK High-tech Financed RECORD AS AN INDUSTRY PLAYER RENEWABLES CLIENT NETWORKS SOLUTIONS GENERATION & SUPPLY Opportunistic approach Complex
Slide 113: Networks in the energy transition
NETWORKS Zero Carbon Priority to convert gas Transition infrastructure to green gas "as a service" Tailor-made INTERNATIONAL GROWTH OPPORTUNITIES LEVERAGING OUR RECOGNIZED TRACK High-tech Financed RECORD AS AN INDUSTRY PLAYER RENEWABLES CLIENT NETWORKS SOLUTIONS GENERATION & SUPPLY Networks in the E
Slide 114: Thermal contracted: limited PPA termination impact
LIMITED PPA TERMINATION IMPACT BEFORE 2025 WHILST WE CONTINUE TO REDUCE OUR EXPOSURE TO COAL Global presence 2018(1) Increase performance and digitalization MIDDLE EAST LATAM OTHER Gas 30.1 GW 1.9 GW 4.5 GW COI reduction related to divestments Coal 1.9 GW 2.3 GW COI 2018(2) €0.8bn COI 2021 €0.5-0.6b
Slide 115: Coal phase out and CO2 reduction
GENERATION & SUPPLY Zero Carbon Further reduction in thermal Transition capacity led by continuing "as a service" disposals of coal generation Tailor-made LIMITED PPA TERMINATION IMPACT BEFORE 2025 High-tech Financed WHILST WE CONTINUE TO REDUCE OUR EXPOSURE TO COAL RENEWABLES CLIENT NETWORKS SOLUTI
Slide 116: Projects under development in the Middle East
OPPORTUNITIES AND NEW GROWTH DRIVERS LINKED TO ASSET-BASED SOLUTIONS Projects under development in the Middle East KSA QATAR ABU DHABI Leading positions in the Middle East on power and water production Investment focus on sophisticated CHP1: 900 MWe IWPP(2): 1,500 MW CCGT: 2,000 MW and tailor-made s
Slide 117: Opportunities in asset-based solutions
OPPORTUNITIES AND NEW GROWTH DRIVERS LINKED TO ASSET-BASED SOLUTIONS Opportunities and new growth drivers linked to asset-based solutions Long-term partnerships with energy intensive industrials in Europe PRODUCTS KEY FIGURES Industrial opportunities linked to Energy Efficiency 14 CHP partnerships i