Slide 1: Investor presentation Q1 2018
Investor presentation Q1 2018 26 April 2018
Slide 2: Disclaimer
DISCLAIMER. Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently available to the management. Forward-looking statements (other than statements of historical fact) regarding our future results of operations, finan
Slide 3: Strong operational and financial performance
Strong operational and financial performance Highlights – Q1 2018 Performance • EBITDA of DKK 5.5bn, up 68% on Q1 2017 • Strong operational performance from our Wind Power sites and high income from partnerships • Improved spreads and higher heat production in Bioenergy & Thermal Power • Positive ou
Slide 4: Wind Power market development – Taiwan & US
Wind Power market development – Taiwan & US • Allocation of 5.5GW grid capacity for the period until 2025: Taiwan − Result of the 3.5GW grid allocation expected end of April − Price auction for the remaining 2.0GW in June 2018 • Selection of preferred bid or bidders in Massachusetts expected in late
Slide 5: Wind Power market development – Europe
Wind Power market development – Europe • 3rd UK CfD auction expected in spring 2019 United Kingdom • Hornsea 3 consent process moving forward as planned. Will expectedly compete in 4th CfD auction • First centralised tender expected in 2021 Germany • Climate protection strategy and action program be
Slide 6: Construction program well in progress
Construction program well in progress Walney Borkum Asnæs Renescience Smart meter Project Hornsea 1 Borssele 1&2 Hornsea 2 Extension Riffgrund 2 CHP plant Northwich roll-out Country Asset type 129MW Heat, 120,000 tonnes 1 million Capacity 659MW 450MW 1,218MW 752MW 1,386MW 25MW Power waste installati
Slide 7: Strong financial performance continued in Q1 2018
Strong financial performance continued in Q1 2018 EBITDA Net profit Free cash flow DKKm DKKm DKKm 232 29 153 5,519 3,032 1,817 3,288 1,214 -1,549 -1,634 Q1 2017 WP BTP DCS Other Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 EBITDA increased by DKK 2.2bn Net profit up DKK 1.8bn FCF in line • Earnings from
Slide 8: Distribution of dividends & solid financial ratios
Distribution of dividends & solid financial ratios Net interest-bearing debt development FFO / Adj. net debt ROCE DKKm % % 46 27 3,783 125 306 4,331 34 17 2,071 398 -835 -1,517 31 Dec CFO CAPEX Divest- Dividends Disc. Other 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 2017 ments operations 2018 2017 2018 2017
Slide 9: 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 Fixed no
Slide 10: Wind Power – Strong operational and partnership results
Wind Power – Strong operational and partnership results Sites, O&Ms & PPA Partnership agreements Power generation EBITDA Other Free cash flow ROCE TWh DKKm DKKm % 3.0 3,956 30 2.1 -213 2,139 3,233 15 2,145 1,082 311 -317 -359 -1,581 31 Mar 31 Mar Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 2017
Slide 11: Bioenergy & Thermal Power – EBITDA doubled
Bioenergy & Thermal Power – EBITDA doubled Heat Ancillary services EBITDA Power Free cash flow DKKm DKKm 439 401 207 330 230 243 78 103 6 -114 Q1 2017 Q1 2018 Q1 2017 Q1 2018 EBITDA of DKK 0.4bn FCF of DKK 0.4bn • Improved spreads in Q1 2018 • Primarily due to the higher • Higher heat production due
Slide 12: Distribution & Customer Solutions – Positive outcome of arbitration
Distribution & Customer Solutions – Positive outcome of arbitration EBITDA Free cash flow DKKm DKKm 1,185 1,214 1,489 -232 Q1 2017 Q1 2018 Q1 2017 Q1 2018 EBITDA in line with Q1 2017 FCF of DKK -0.2bn • One-off compensation from • More funds tied up in completed arbitration of a gas receivables from
Slide 13: 2018 EBITDA guidance increased by DKK 0.5bn
2018 EBITDA guidance increased by DKK 0.5bn EBITDA excl. new WP partnerships Financial targets Target Year • 2018 EBITDA guidance excluding new partnership agreements Return on capital employed (ROCE) increased by DKK 0.5bn to DKK 12.5-13.5bn Group 12-14% Avg. 2018-2023 • Directional guidance for DC
Slide 14: 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 15: Appendix
Appendix
Slide 16: Structural transformation of European power generation
Structural transformation of European power generation Offshore wind CAGR 2017-2030 European power mix 3.7 PWh 3.4 PWh 3.3 PWh Biomass Offshore wind 1% 1% 2% 2% Wind¹ Solar PV 3% Offshore wind 7% New Renewables 17% Biomass 9% 23% Solar PV 8% Hydro Onshore wind 9% Biomass 9% 38% Fossil Nuclear 16% On
Slide 17: Wind Power build-out plan
Wind Power build-out plan Installed capacity 590 MW 1,386 8,914 752 1,218 6,776 659 450 4,449 Q1 2018 Walney Borkum Hornsea 1 2020 Borssele Hornsea 2 Decided (FID) German Extension Riffgrund 2 1&2 capacity Development Portfolio Country UK Germany UK Netherlands UK Germany 2024 Expected Q3 2018 H1 20
Slide 18: SPA/CA split and timing of CA gains on farm-downs
SPA/CA split and timing of CA gains on farm-downs Wind farm MW capacity Commissioning SPA/CA split 2015 2016 2017 2018e 2019e SPA All Gode Wind 1 330 Q4 2016 CA: 75-100% 0-10% 65-75% 20-30% SPA Gode Wind 2 252 Q4 2016 CA: 75-100% 55-65% 30-40% 0-10% SPA DKK 0.6bn Burbo Bank Ext. 258 Q1 2017 CA: 75-1
Slide 19: Group – Financial highlights Q1
Group – Financial highlights Q1 FINANCIAL HIGHLIGHTS Q1 2018 Q1 2017 D EBITDA DKKm 5,519 3,288 68% • Wind Power 3,956 2,139 51% • Bioenergy & Thermal Power 439 207 112% • Distribution & Customer Solutions 1,214 1,185 2% Net profit – continuing operations 3,032 1,214 150% Net profit – discontinued op
Slide 20: WP – Financial highlights Q1
WP – Financial highlights Q1 FINANCIAL HIGHLIGHTS Q1 2018 Q1 2017 D EBITDA DKKm 3,956 2,139 85% • Sites incl. O&Ms and PPAs 3,233 2,145 51% • Partnership agreements and farm-down gains 1,082 311 248% • Other incl. A2SEA and project development (359) (317) 13% ROCE1 % 29.8 14.9 14.9%p KEY BUSINESS DR
Slide 21: Wind measurement
Wind measurement Change from wind energy content to wind speed Wind speed (m/s) 2017 2018 • Wind speed is more intuitively understandable and transparent Normal wind year (meters per second vs. an index) 10.4 • Wind speed is based directly on external data sources and can 10.2 be compared with a his
Slide 22: BTP – Financial highlights Q1
BTP – Financial highlights Q1 FINANCIAL HIGHLIGHTS Q1 2018 Q1 2017 D EBITDA DKKm 439 207 112% • Heat 330 243 36% • Ancillary services 103 78 38% • Power 6 (114) n.a. Free cash flow 401 230 74% KEY BUSINESS DRIVERS Heat generation TWh 4.8 4.2 14% Power generation TWh 3.3 3.2 3% Degree days # 1,417 1,
Slide 23: DCS – Financial highlights Q1
DCS – Financial highlights Q1 FINANCIAL HIGHLIGHTS Q1 2018 Q1 2017 D EBITDA DKKm 1,214 1,185 2% • Distribution 432 468 (8%) • Sales 5 22 (77%) • Markets 794 631 26% • LNG (17) 64 n.a. ROCE1 % 12.7 44.2 (31.5%p) KEY BUSINESS DRIVERS RAB Power DKKm 10,623 10,648 (0%) Gas sales TWh 42.5 41.5 2% Power s
Slide 24: Differences in Business Performance EBITDA and IFRS EBITDA
Differences in Business Performance EBITDA and IFRS EBITDA DKKm Q1 2018 Q1 2017 EBITDA – BUSINESS PERFORMANCE (BP) 5,519 3,288 BP adjustment in respect of revenue for the year (110) 929 BP adjustment in respect of COGS for the year (124) (374) EBITDA – IFRS 5,285 3,843 Total BP adjustments for the y
Slide 25: Investments
Investments GROSS AND NET INVESTMENTS (DKKm) Q1 2018 Q1 2017 Gross investments per Capital employed per business unit business unit Cash flow from investing activities 333 (1,026) Q1 2018 31 March 2018 Dividends received and capital reduction, reversed (1) - Purchase and sale of securities, reversed
Slide 26: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT (DKKm) Q1 20181 FY 2017 Q1 20171 FY 2016 EBITDA – Business Performance 24,750 22,519 15,311 19,109 Interest expenses, net (761) (629) (418) (402) Reversal of interest expenses transferred to assets (703) (754) (640) (574) In
Slide 27: Debt overview
Debt overview Gross debt and hybrids Net debt Long term gross debt maturity Q1 2018 DKKbn schedule Q1 2018, DKKbn 16 14 12 5% 10 8 31% 43.4 6.5 6 DKKbn 4 64% 4.3 2 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+ Bonds Hybrids Bank loans Q1 2017 Q1 2018 Bonds Bank loans 27
Slide 28: Interest rate risk and funding costs
Interest rate risk and funding costs Effective funding costs – gross debt Key risk figures Q1 2018 (excl. hybrid) (excl. hybrid) Bond and bank debt (excl. hybrid), LHS DKKbn Gross annual expected interest expense (excl. hybrid), LHS Cost of Modified Avg. time to % Average effective interest rate (ex
Slide 29: Hybrid capital in short
Hybrid capital in short Hybrid capital can broadly be defined as funding • Deeply subordinated and only senior to Ørsted has made use of hybrid capital to maintain instruments that combine features of debt and common equity our ratings at target level in connection with the equity in a cost efficien
Slide 30: Benefits of hybrid capital
Benefits of hybrid capital Hybrid capital is an attractive form of financing for corporates: Illustrative example – current example • Provides strength to the balance sheet at relatively attractive terms (tax deductible) ASSUMPTIONS • Supportive to credit ratings Pricing for a hybrid with first call
Slide 31: November 2017 - EUR hybrid and Senior transactions
November 2017 - EUR hybrid and Senior transactions Hybrid Senior Liability Management 6.500% due 2019 Tenor/Target Notes 1000NC7 12 years 4.875% due 2021 2.625% due 2022 Size/Amount Tendered EUR 500m EUR 750m EUR 198.7m Coupon 2.250% 1.500% - Investor Demand EUR 2.4bn EUR 1.6bn - • Successfully achi
Slide 32: Ørsted has issued Green Bonds
Ørsted has issued Green Bonds In November 2017 Ørsted issued a Green senior bond with maturity 2029 and a Green hybrid bond with maturity 3017. Ørsted's Green Bonds Framework follows the four pillars of the ICMA Green Bond Principles 2017 Use of Proceeds Project Evaluation and Selection Process • Ac
Slide 33: Financing strategy
Financing strategy We have a centralised financing All cash flow generated by our strategy as customary for vertically and subsidiaries supports the horizontally integrated European energy creditworthiness and rating of and thus utilities. the debt taken up by the Group parent. The strategy supports
Slide 34: Currency hedging principles
Currency hedging principles • The purpose of our currency risk management is to reduce the Group’s currency risks over a 5-year horizon • The main principle is to hedge FX exposure once it is deemed relatively certain that the underlying cash flows in foreign currency will materialise • Thus, FX ris
Slide 35: Hedging of FX and power risk in Wind Power
Hedging of FX and power risk in Wind Power Construction and farm-downs – Hedging of FX Commercial Operations – Hedging of FX and power Decision gates 100 Pre-FID • Early hedging of large DEVEX items on a 100% basis 80 100% share 75 60 Final Investment 50 • Build up of hedges of transmission asset 40
Slide 36: New income cap on power distribution RAB as expected
New income cap on power distribution RAB as expected Revenue expectations are maintained at same level after Still some uncertainties regarding the future income caps the new income cap order is enacted 06/2018 12/2018 Main elements in new regulation DERA: determination DERA: benchmark • 5-year inco
Slide 37: Investor Relations contacts
Daniel Lerup Sabine Lohse Rasmus Hærvig Amir Mahdavian Head of Investor Relations IR Officer IR Officer Senior Financial Analyst DANIL@orsted.com SABLO@orsted.com RAKOL@orsted.com AMIHM@orsted.com