Slide 1: Investor presentation Q2 2019
Ørsted Investor presentation Q2 2019
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements, including but not limited to, the statements and expectations contained in the “Financial Outlook” section of this presentation. Statements herein, other than statements of historical fact, regarding our future results of oper
Slide 3: Two major US offshore wind projects awarded and results in line with expectations
Two major US offshore wind projects awarded and results in line with expectations Highlights – Q2 2019 • EBITDA totalled DKK 3.6 billion, an increase of 18% compared to Q2 2018, and in line with expectations • EBITDA from offshore wind farms in operation increased by 29%, to DKK 2.3 billion in Q2 20
Slide 4: Ørsted selected as preferred bidder in New Jersey and New York offshore wind solicitations
Ørsted selected as preferred bidder in New Jersey and New York offshore wind solicitations 1,100MW Ocean Wind project in New Jersey • Selected to negotiate a 20-year offshore wind renewable energy certificate (OREC) • The 20-year OREC price is USD 98.10 per MWh from 2024, with a 2% annual escalator
Slide 5: Construction programme – Offshore
Construction programme – Offshore Changhua Project Hornsea 1 Borssele 1&2 Virginia Hornsea 2 1&2a Country Asset type Capacity 1,218MW 752MW 12MW (EPC) 1,386MW 900MW Expected Q4 2020 / Q4 2019 Q4 2020 H1 2022 2022 completion Q1 2021 Status On track On track On track On track On track Comments All fou
Slide 6: Construction programme – Onshore, Bioenergy and Power Distribution
Construction programme – Onshore, Bioenergy and Power Distribution Asnæs Renescience Smart meter Project Lockett Sage Draw Willow Creek CHP plant Northwich roll-out Country Asset type 125MW Heat, 120,000 tonnes 1 million Capacity 184MW 338MW 103MW 25MW Power waste installations Expected Q3 2019 Q1 2
Slide 7: Offshore market development – US
Offshore market development – US • 800MW offshore wind solicitation with bids due on 23 August 2019 Massachusetts • Outcome expected in November 2019 • Passed bill which could increase offshore wind capacity to 3.2GW by 2030 • Ørsted/Eversource awarded 880MW in offshore wind solicitation with Sunris
Slide 8: Offshore market development – Europe
Offshore market development – Europe • 2019 UK CfD bid window closed, subsequent auctions every two years • Target annual build-out of 1-2GW to reach 30GW capacity by 2030 United Kingdom • Hornsea 3 consent process moving forward as planned • Crown Estate’s extensions leasing round in progress. Expe
Slide 9: Offshore market development – APAC
Offshore market development – APAC • Taiwan has met its target of awarding 5.5GW to be commissioned by 2025 • Auctions of additional 4.5GW post 2025 is being planned. Third round development Taiwan auction design expected to be announced in Q4 2019 • 600MW Greater Changhua 3 project ready for future
Slide 10: Continued expansion of US onshore portfolio
Continued expansion of US onshore portfolio Near-term capacity Development pipeline with offtake contracted MW Operating 400 2,068 Plum Creek Wind - 230MW - SPP, NE Under construction • 12 year PPA with Smucker Co, Avery Dennison and Expected 2019 FID Vail Resort for >70% capacity 230 • Turbine Supp
Slide 11: Continued reduction of carbon emissions
Continued reduction of carbon emissions 98% carbon intensity reduction from our energy New target: 50% reduction in scope 3 emissions by generation and operations (scope 1&2) by 2025 20321 gCO2e/kWh Thousand tonnes CO2e -98% -50% 462 36,234 Scope 1 Scope 3 Direct greenhouse gas emissions from Indire
Slide 12: Results in line with expectations
Results in line with expectations CFO EBITDA Net profit Free cash flow CAPEX DKKm DKKm DKKm Divestments 514 188 68 3,625 1,093 4,131 167 3,079 -303 -88 876 170 7,510 3,293 -3,109 -3,368 -14 -11 Q2 2018 Offshore Offshore Onshore Bioenergy Customer Other Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 sites p
Slide 13: Decrease in net debt and solid financial ratios
Decrease in net debt and solid financial ratios Net interest-bearing debt development FFO / Adj. net debt ROCE (LTM) DKKm % % 58 29 44 23 4,131 381 -378 -3 -4,980 -9,111 31 Mar 2019 Free cash Hybrid Disc. Other 30 Jun 2019 30 Jun 2018 30 Jun 2019 30 Jun 2018 30 Jun 2019 flow coupon operations Net in
Slide 14: Offshore – Q2 financial performance
Offshore – Q2 financial performance Denmark Sites, O&Ms & PPA Power generation United Kingdom EBITDA Partnerships Free cash flow TWh Germany DKKm Other, incl. DEVEX DKKm 2.2 3,301 5,930 3,090 1.8 0.6 2,281 0.5 1,767 1.2 0.9 1,619 1,638 0.4 0.4 -296 -618 -1,475 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018
Slide 15: Onshore – Q2 financial performance
Onshore – Q2 financial performance Sites Power generation EBITDA PTCs and tax attributes Free cash flow TWh DKKm Other, incl. DEVEX DKKm 0.8 167 80 140 -53 -1,174 Q2 2019 Q2 2019 Q2 2019 Power generation of 0.8TWh EBITDA of DKK 167m FCF of DKK -1.2bn • Wind speed of 7.7m/s in Q2 2019 vs. • EBITDA fr
Slide 16: Bioenergy – Q2 financial performance
Bioenergy – Q2 financial performance Heat EBITDA Ancillary Free cash flow Free cash flow DKKm Power DKKm DKKm 8 119 143 90 91 -280 -393 -71 -304 -159 Q2 2018 Q2 2019 Q2 2018 Q2 2019 EBITDA down DKK 0.1bn FCF increased DKK 0.3bn • Lower EBITDA from Power due to timing • Lower gross investment in bioc
Slide 17: Customer Solutions – Q2 financial performance
Customer Solutions – Q2 financial performance Distribution EBITDA Sales Free cash flow DKKm Markets DKKm LNG 310 1,966 122 283 251 105 -8 -14 -41 -107 -37 -617 Q2 2018 Q2 2019 Q2 2018 Q2 2019 EBITDA increased DKK 0.2bn FCF decreased DKK 2.6bn • Higher earnings from trading related to • Higher receiv
Slide 18: 2019 guidance and long-term financial estimates and policies
2019 guidance and long-term financial estimates and policies 2019 guidance DKKbn Financial estimates EBITDA without new partnerships 15.5-16.5 Total capex spend, 2019-2025 DKK 200bn Gross investments 21-23 Capex allocation split, 2019-2025: - Offshore 75-85% Business unit EBITDA FY 2019 vs. FY 2018
Slide 19: Q&A
Q&A Conference call DK: +45 35 44 55 83 UK: +44 203 194 0544 US: +1 855 269 2604 For questions, please press 01
Slide 20: Appendix
Appendix Orsted
Slide 21: Renewable capacity as of 30 June 2019
Renewable capacity as of 30 June 2019 Indicator Unit H1 2019 FY 2018 H1 2018 Installed renewable capacity Installed renewable capacity MW 8,303 8,303 6,995 Installed renewable capacity is calculated as the - Offshore wind power MW 5,602 5,602 5,107 cumulative renewable gross capacity installed - Den
Slide 22: Offshore wind build-out plan
Offshore wind build-out plan Installed capacity MW 920 14,854 1,142 Under construction 1,220 1,714 Awarded 900 9,858 1,386 752 1,218 6,820 5,602 Operational Hornsea 1 Total by Borssele Hornsea 2 Greater Decided (FID) US North- US Mid- German Greater Decided & Q2 2019 2020 1&2 Changhua capacity East
Slide 23: Onshore wind build-out plan
Onshore wind build-out plan Installed capacity MW 400 2,068 Under construction 230 Expected 2019 FID 103 338 997 Operational Sage Draw Willow Creek Plum Creek Permian Solar Total Q2 2019 Region ERCOT, TX SPP, SD SPP, NE ERCOT, TX Expected 2020 2021 Q1 2020 Q4 2020 completion (Pending FID) (Pending F
Slide 24: Sustainability and ESG at Ørsted
Sustainability and ESG at Ørsted Green leadership Contributing to the global goals ESG ratings of Ørsted • We want to help limit global warming to a maximum of Rating agency Rating Benchmark 1.5C. Ørsted has been a signatory to the UN 2018 Global Compact for 13 years and adheres • In H1 2019, 82% of
Slide 25: Group – Financial highlights
Group – Financial highlights FINANCIAL HIGHLIGHTS Q2 2019 Q2 2018 D FY 2018 FY 2017 D EBITDA DKKm 3,625 3,079 18% 30,029 22,519 33% • Offshore 3,301 3,090 7% 27,809 20,595 35% • Onshore 167 - n.a. 44 - n.a. • Bioenergy (159) (71) 124% 367 152 141% • Customer Solutions 310 122 154% 1,970 2,082 (5%) N
Slide 26: Offshore – Financial highlights
Offshore – Financial highlights FINANCIAL HIGHLIGHTS Q2 2019 Q2 2018 D WIND SPEED (m/s), offshore wind farms EBITDA DKKm 3,301 3,090 7% • Sites incl. O&Ms and PPAs 2,281 1,767 29% • Partnership agreements and farm-down gains 1,638 1,619 1% • Other incl. project development (618) (296) 109% ROCE1 % 3
Slide 27: Onshore – Financial highlights
Onshore – Financial highlights FINANCIAL HIGHLIGHTS Q2 2019 EBITDA DKKm 167 • Sites 80 • Production tax credits and tax attributes 140 • Other incl. project development (53) ROCE1 % 3.9 KEY BUSINESS DRIVERS Power generation GWh 0.8 Wind speed m/s 7.7 Availability % 97 Load factor % 47 Installed capa
Slide 28: Bioenergy – Financial highlights
Bioenergy – Financial highlights FINANCIAL HIGHLIGHTS Q2 2019 Q2 2018 D EBITDA DKKm (159) (71) 124% • Heat 143 119 20% • Ancillary services 91 90 1% • Power (393) (280) 40% Free cash flow 8 (304) n.a. KEY BUSINESS DRIVERS Heat generation TWh 1.1 0.9 22% Power generation TWh 0.7 0.9 (22%) Degree days
Slide 29: Customer Solutions – Financial highlights
Customer Solutions – Financial highlights FINANCIAL HIGHLIGHTS Q2 2019 Q2 2018 D EBITDA DKKm 310 122 154% • Distribution 283 251 13% • Sales (41) (14) 193% • Markets 105 (8) n.a. • LNG (37) (107) (65%) ROCE1 % 13.7 8.8 4.9%p KEY BUSINESS DRIVERS RAB Power DKKm 11,431 10,957 4% Gas sales TWh 32.1 34.
Slide 30: Currency and energy exposure
Currency and energy exposure Currency exposure - 1 July 2019 to 30 June 2024 Energy exposure - 1 July 2019 to 30 June 2024 DKKbn Before hedging DKKbn Before hedging After hedging After hedging 54.6 19.6 18.6 7.4 1.8 1.9 3.2 3.2 1.4 0.4 1.2 0.9 GBP* USD TWD -0.1 -4.1 Power Gas Oil Spread Risk after h
Slide 31: Local currency funding and potential partnership agreements reduce risk towards Taiwanese Dollar significantly
Local currency funding and potential partnership agreements reduce risk towards Taiwanese Dollar significantly Illustrative Illustrative Cash flows from Changhua 1 & 2A Risk mitigating actions Potentially mitigated by CAPEX Revenue minus OPEX Credit facility of 5bn DKK to be partnership agreement re
Slide 32: Capital employed
Capital employed CAPITAL EMPLOYED, DKKm H1 2019 FY 2018 H1 2018 Capital employed by segment Intangible assets and property and equipment 92,364 84,832 81,071 %, H1 2019 Equity Investments and non-current receivables 1,410 1,445 1,243 Offshore Bioenergy Net working capital, work in progress 4,551 9,6
Slide 33: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT, DKKm H1 20191 FY 2018 H1 20181 EBITDA – Business Performance 30,186 30,029 23,387 Interest expenses, net (965) (877) (946) Reversal of interest expenses transferred to assets (428) (506) (595) Interest element of decommissi
Slide 34: Debt overview
Debt overview Gross debt and hybrids Effective funding costs – gross debt Long term gross debt maturity schedule Q2 Q2 2019 (excl. hybrid) 2019, DKKbn Cost of Modified Avg. time to DKKbn debt (%) duration (%) maturity (years) % Bond loans 3.5 8.9 11.8 80 6 Bank loans 2.1 0.3 5.5 5.1% 7% 70 Total 3.3
Slide 35: Hybrid capital in short
Hybrid capital in short Hybrid capital can broadly be defined as • Deeply subordinated and only senior to Ørsted has made use of hybrid capital to funding instruments that combine features of common equity maintain our ratings at target level in debt and equity in a cost-efficient manner: connection
Slide 36: Ørsted’s outstanding Green Bonds
Ørsted’s outstanding Green Bonds Issuer Ørsted A/S Ørsted A/S Ørsted A/S Ørsted A/S Ørsted A/S Face Value EUR 750m EUR 500m GBP 350m GBP 300m GBP 250m Format Senior Unsecured Hybrid capital Senior Unsecured Senior Unsecured Senior Unsecured/CPI linked Maturity 26 November 2029 24 November 3017 17 Ma
Slide 37: Financing strategy
Financing strategy We have a centralised financing strategy All cash flow generated by our subsidiaries as customary for vertically and supports the creditworthiness and rating horizontally integrated European energy of and thus the debt taken up by the utilities. parent company, Ørsted A/S. The str
Slide 38: Currency risk management
Currency risk management General hedging principles • The main principle is to hedge highly certain cash flows, such as FX from hedged energy. • Cost-of-hedging minimized by netting of exposures, use of local currency in construction contracts and debt in local currency. Managing outright long risk
Slide 39: Interest rate and inflation risk management
Interest rate and inflation risk management Four risk categories of assets and debt allocation Objectives of interest rate and inflation risk management Illustrative 1. Protect long-term real value of equity by offsetting interest and inflation risk exposure embedded in assets by allocating debt wit
Slide 40: Energy risk management
Energy risk management Risk picture Hedging of open exposure • We manage market risks to protect Ørsted against market price volatility and • Open energy exposure is reduced actively ensure stable and robust financial ratios that support our growth strategy • Minimum hedging requirements are determi
Slide 41: Investor Relations contacts
Daniel Lerup Sabine Lohse Head of Investor Relations Senior Investor Relations Officer DANIL@orsted.com SABLO@orsted.com Rasmus Hærvig Dennis Callesen Senior Investor Relations Officer Lead Investor Relations Officer RAKOL@orsted.com DECAL@orsted.com