Rwe Ag · XETR:RWE
Rwe — FY2013 Earnings Presentation
43 slides from Rwe's earnings presentation, Mar 4, 2014
Slide 1: Focus on financial strength – FY 2013 Conference Call
Focus on financial strength FY 2013 Conference Call Essen, 4 March 2014 Peter Terium Bernhard Günther Stephan Lowis Chief Executive Chief Financial Vice President Officer Officer Investor Relations
Slide 2: Agenda
Agenda A Peter Terium FY 2013 highlights, strategy update B Bernhard Günther FY 2013 group results and divisional performance & outlook RWE AG | FY 2013 Conference Call | 4 March 2014 22
Slide 3: Milestones in 2013
Milestones in 2013 Performance in line with expectations: EBITDA in the order of € 9 bn; operating result in the order of € 5.9 bn; recurrent net income in the order of € 2.4 bn Impairment charge of € 4.8 bn taken mainly in the conventional power generation business due to deteriorating market envir
Slide 4: From commodity driven earnings development to attractive regulated profile
From commodity driven earnings development to attractive regulated profile RWE develops towards an attractive stable downstream business profile with additional focus on renewables and upside potential from conventional power generation Operating result in € bn 6.4 Upstream Gas & Oil 5.9 Renewables
Slide 5: RWE's mid-term business profile drivers
RWE’s mid-term business profile drivers GENERATION TRADING DISTRIBUTION SUPPLY > Selective growth in > Ongoing focus on value > GER: Stable regulatory > Focus on efficiency renewable energy extraction in commercial environment for the next enhancements asset optimisation regulatory period > Increasi
Slide 6: Conventional Power Generation: mark-to-market earnings perspective
Conventional Power Generation: mark-to-market earnings perspective € bn 3.5 3.3 3.0 2.5 Mark-to-market (m-t-m)1 2.0 1.5 1.4 1.0 OR m-t-m 0.5 before efficiencies 0.0 2012 2013 -0.5 Efficiencies Operating result (OR) Depreciation EBITDA 2012-2016 1 Mark-to-market as of November 2013 at market prices o
Slide 7: RWE Generation assets under review
RWE Generation assets under review Profitability of RWE’s conven- Capacity measures tional generation portfolio1 > Additional measures for ~2.3 GW decided OR2 > c. > 50% – 60% > Mothballing of Claus C (gas, 1,300 MW) WACC > Contract termination (hard coal, 1,025 MW) > Measures for total capacity of
Slide 8: RWE Innogy will provide mid-term earnings growth despite reduced capex
RWE Innogy will provide mid-term earnings growth despite reduced capex volume Steady increase of operating result by 2016 expected Commissioning: Commissioning: First generation: NSO (295 MW), Onshore and hydro Gwynt y Môr (576 MW), Onshore and hydro projects ~70 MW Commissioning: projects ~160 MW D
Slide 9: Efficiency improvements 1 year ahead of plan
Efficiency improvements 1 year ahead of plan – at least €1.5 bn net benefit to be achieved by 2016 Net benefit to operating result In € million > Total programme consists of measures amounting to €2 bn ( = gross effect) > Efficiency improvements to be fully earnings enhancing by 2016, one year earli
Slide 10: Efficiency measures of €2 bn implemented by the end of 2016
Efficiency measures of €2 bn implemented by the end of 2016 Enhancements by division Conventional Power Generation ~ 10% Holding, other divisions ~ 50% > ~40% reduction of overhead costs and cross divisional Conventional > Reduction of O&M costs effects Power Generation > Improvement of availability
Slide 11: Focus on total controllable costs (TCC)
Focus on total controllable costs (TCC) 60% of the efficiency programme will be achieved through a reduction of total controllable costs € 10.8 bn € 10.1 bn ~€ 9.0 bn 0.5 0.2 0.4 0.7 5.5 4.9 4.3 5.3 5.2 4.7 2012 2013 2016e Personnel costs Other TCC Operational cost improvement Portfolio and other ef
Slide 12: Practical example for efficiency improvements in the lignite business
Practical example for efficiency improvements in the lignite business Availability of our lignite based power generation fleet Measures to improve availability (examples) 100% > Optimisation of coal management > Improvement of commercial availability by shifting planned outages into low-price times
Slide 13: Agenda
Agenda A Peter Terium FY 2013 highlights, strategy update B Bernhard Günther FY 2013 group results and divisional performance & outlook RWE AG | FY 2013 Conference Call | 4 March 2014 1313
Slide 14: Development of operating result
Development of operating result … … by division (-€535 million; -8.3%) … by major value drivers1 € million € bn Fiscal year 2012 6,416 Fiscal year 2012 6.4 Conventional -1,892 Efficiency programme +0.8 Power Generation Supply/Distribution +48 Networks Germany New CO2-regime -1.2 Supply NL/B +88 Gene
Slide 15: Reconciliation of (recurrent) net income
Reconciliation of (recurrent) net income € million Fiscal year 2013 +/- Non-operating result shows the impairments, mainly in our Conventional Power Generation EBITDA 8,762 -552 division and significant restructuring charges Depreciation -2,881 +17 Financial result improved due to Operating result 5
Slide 16: Cash flow statement and reconciliation of cash balance
Cash flow statement and reconciliation of cash balance January – December Change € million 2013 2012 (absolute) Funds from operations (FFO) 7,068 5,446 1,622 Change in working capital -1,313 -1,051 -262 Cash flows from operating activities 5,755 4,395 1,360 Capex on fixed assets1 -4,488 -5,081 593 F
Slide 17: Excellent access to debt capital market is key
Excellent access to debt capital market is key Leverage target mid-term: < 3.0x; more flexibility short-term € bn 29.9 33.0 30.7 In the order of 2013 Net debt 3.5x 3.5x 3.5x Significantly >3.5x Leverage factor1 19.9 19.4 16.9 13.0 13.1 11.2 2011 2012 2013 2014e Net financial debt incl. 50% of hybrid
Slide 18: RWE well on track to reach target of a positive cash balance
RWE well on track to reach target of a positive cash balance Cash flows from operating activities to cover investments and dividends by 2015 € bn -3.3 -3.8 -2.7 -0.4 >0 Cash balance 9.3 8.8 7.1 6.2 5.8 5.5 5.5 4.4 ≤ 2010 2011 2012 2013 2014e 2015e Capex in property, plant & equipment and financial a
Slide 19: Outlook for 2014
Outlook for 2014 In € million 8,762 7,600 – 8,100 EBITDA 5,881 4,500 – 4,900 Operating result Recurrent 2,314 1,300 – 1,500 net income Dividend €1.00/share1 Pay out ratio of 40% – 50% 2013 2014e2 1 Executive and Supervisory Board propose to the AGM on 16.04.2014 a dividend of €1 per common and prefe
Slide 20: 2014 Divisional outlook for the operating result
2014 Divisional outlook for the operating result € million 2013 2014 forecast versus 2013 Conventional Power Generation 1,383 Significantly below 2013 Supply/Distribution Networks Germany 1,626 Moderately above 2013 Supply Netherlands/Belgium 278 Significantly below 2013 Supply United Kingdom 290 Mo
Slide 21: Operating result outlook for fiscal year 2014
Operating result outlook for fiscal year 2014 Trend for major value drivers in fiscal year 2014 Operating result 2013 €5.9 bn Efficiency programmes c. €150 million envisaged for 2014 Depreciation Trend for higher depreciation as a result of investment programme Electricity generation margins (D;
Slide 22: Major earning drivers post 2013
Major earning drivers post 2013 Further decline in realised electricity Efficiency enhancement programme margins (realised outright power (2014 to 2016: at least € 500 million) price 2013: € 51/MWh) Earnings growth in renewables (target Disposal of RWE Dea to reach ROCE/WACC break even in 2016) Disp
Slide 23: Back-up Charts
Back-up Charts i a. ey The energy to lead
Slide 24: Performance of the Conventional Power Generation Division
Performance of the Conventional Power Generation Division January – December: operating result: -57.8% (-€1,892 million) € million - Full auctioning of CO2-certificates (c. -€1.2 bn) - Lower realised electricity generation spreads, incl. coal tax in NL 3,275 - Adjustment of provision for pending los
Slide 25: Overview of capacity measures
Overview of capacity measures Measure Plant MW1 Fuel Location Date Decom- Amer 8 610 Hard coal NL Q1-2016 missioning Long-term Claus C 1,300 Gas NL Q3-2014 mothballing Moerdijk 2 430 Gas NL Q4-2013 Gersteinwerk F 355 Gas – steam turbine DE Q3-2013 Gersteinwerk G 355 Gas – steam turbine DE Q2-2014 We
Slide 26: RWE's forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 31 December 2013 >30% >10% >40% >10% >50% >20% >50% >30% >60% >40% >70% >50% >80% >60% >80% >80% >90% >90% 2014 forward >30% >10% >40% >10% >40% >20% >50% >30% >60% >40% 2015 forward >30% >20% 2016 fo
Slide 27: Germany: Clean Dark and Spark Spreads
Germany: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward 2015 forward 16 12 Ø 9.96 Ø 7.86 8 Ø 6.35 4 0 -4 Ø -2.37 -8 Ø -11.63 -12 Ø -12.98 -16 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 12 13 14 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju
Slide 28: NL: Clean Dark and Spark Spreads
NL: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward1 2015 forward1 20 15 Ø 11.43 10 Ø 8.33 5 Ø 7.63 0 -5 Ø -4.55 -10 Ø -7.46 Ø -10.24 -15 -20 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 12 13 14 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju J
Slide 29: UK: Clean Dark and Spark Spreads
UK: Clean Dark (CDS) and Spark Spreads (CSS) 2013 forward 2014 forward1 2015 forward1 28 Ø 22.49 24 20 Ø 19.51 Ø 18.10 16 12 8 4 Ø 3.12 Ø 2.07 0 Ø 2.03 Trading year 2012 Trading year 2013 Trading year 2014 2 3 4 2 3 4 2 3 4 12 13 14 -1 -1 -1 r-1 r-1 r-1 l- 1 l- 1 l- 1 n- n- n- kt kt kt Ju Ju Ju Ap A
Slide 30: Performance of the Supply/Distribution Networks Germany Division
Performance of the Supply/Distribution Networks Germany Division January – December: operating result: +3.0% (+€48 million) € million + Efficiency improvements 1,578 1,626 + Weather induced higher gas sales - Loss of earnings from the disposal of Berlin waterworks and KEVAG and transfer of Zagreb wa
Slide 31: Performance of the Supply Netherlands/Belgium Division (Essent)
Performance of the Supply Netherlands/Belgium Division (Essent) January – December: operating result: +46.3% (+€88 million) € million + Positive impact from change in provisions + Weather induced higher gas sales 278 + Efficiency improvements 190 - Competition induced pressure on gas margins - Upfro
Slide 32: Performance of the Supply United Kingdom Division (RWE npower)
Performance of the Supply United Kingdom Division (RWE npower) January – December: operating result: +1.4% (+€4 million) € million + Efficiency improvements + Stronger results in B2B segment 286 290 - Negative f/x effects - Higher grid fees - Higher burdens from government programmes to promote ener
Slide 33: Performance of the Central Eastern and South Eastern Europe Division
Performance of the Central Eastern and South Eastern Europe Division January – December: operating result: -1.9% (-€20 million) € million - Disposal of NET4GAS (as of 2 August 2013) 1,052 + Positive effect from derivatives to hedge f/x risks 1,032 Czech Republic: + Improved gas grid and sales margin
Slide 34: Performance of the Renewables Division (RWE Innogy)
Performance of the Renewables Division (RWE Innogy) January – December: operating result: +7.1% (+€13 million) € million + Increased earnings contribution from growth investments 183 196 + Higher utilisation of German hydro plants + One-off from compensation payments in Spanish wind business - Extra
Slide 35: Performance of the Upstream Gas & Oil Division (RWE Dea)
Performance of the Upstream Gas & Oil Division (RWE Dea) January – December: operating result: -23.9% (-€164 million) € million - Negative f/x effect and lower realised oil prices 685 521 - Higher exploration costs including costs for dry wells 2012 2013 Guidance for fiscal 2014: Significantly above
Slide 36: Performance of the Trading/Gas Midstream Division
Performance of the Trading/Gas Midstream Division (RWE Supply & Trading) January – December: operating result: +€1,429 million € million Trading: 831 - Lower performance in the energy trading business Supply: + Arbitration court ruling on our long-term oil-indexed gas supply contract with Gazprom +
Slide 37: Reconciliation to recurrent net income
Reconciliation to recurrent net income January – December 2013 2013 2013 2012 Change € million reported non-rec. recurrent recurrent (absolute) Operating result 5,881 - 5,881 6,416 -535 Non-operating result -5,475 +5,475 0 0 0 Financial result -1,893 – -1,893 -2,092 +199 Income from continuing opera
Slide 38: Development of net debt
Development of net debt € billion Capex Dividends Acquisitions/ Cash flows Others Change divestitures/dis- from including in pension, posals/(de)con- operating f/x effects nuclear, solidation; capi- activities mining tal measures provisions 40 +1.6 +4.5 35 33.0 -2.5 30 +0.3 30.7 -5.8 -0.4 0 Change i
Slide 39: Financial liabilities and assets
Financial liabilities and assets (Excluding hybrid capital, as of 31 December 2013) Financial liabilities Financial assets Split of in € billion in € billion securities 25 8.3 10 7.6 0.6 19% 18.7 0.3 20 8 2.0 16.5 1.2 1.4 3.9 3.9 15 0.9 0.4 6 10 4 0.6 0.6 14.9 14.4 5 2.2 2 3.2 2.8 0.7 0.8 0.3 0.5 0.
Slide 40: Capital market debt maturities and sources of financing
Capital market debt maturities and sources of financing Capital market debt maturities1 Strong sources of financing in € bn Fully committed syndicated loan For liquidity (€ 4.0 bn up back-up to Nov. 2017) € 0.0 bn Commercial paper $ 0.0 bn ($ 5.0 bn) (up to 1 year) € 0.0 bn (11 Feb 2014) MTN program
Slide 41: Capital market debt currency and interest exposure
Capital market debt currency and interest exposure (As of 31 December 2013) 4% 32% € 17.6 bn11 € 17.2 bn2 68% 96% € Interest rate fixing expiry > 1 year £ Interest rate fixing expiry < 1 year 1 Capital market debt = bonds of € 13.9 bn and hybrids of € 3.7 bn; split into currencies includes cross-cur
Slide 42: RWE's major investment projects
RWE’s major investment projects RWE Capex share (€ bn) 2013 2014 2015 2016 2017 2018 Conventional power plant new build programme (capex at 100% share) Hamm (hard coal, 1,528 MW) 77% 2.5 Units E D Eemshaven (hard coal/biomass, 1,554 MW) 100% 3.0 Units A B Denizli (gas, 787 MW) 70% 0.5 RWE Dea‘s larg
Slide 43: Always be informed about RWE
Always be informed about RWE … Follow us on twitter@RWE_IR and have a look at www.rwe.com/ir Calendar http://www.rwe.com/web/cms/en/110614/rwe/investor-relations/events/calendar/ Annual and Interim Reports http://www.rwe.com/web/cms/en/110822/rwe/investor-relations/reports/ Investor and Analyst Conf