Orsted · OMXCOP:ORSTED

Orsted — DONG Energy — H1 2013 Earnings Presentation

30 slides from Orsted's earnings presentation, Aug 20, 2013

  1. Slide 1: Interim Financial Report 1st Half-Year 2013

    INTERIM FINANCIAL REPORT 1ST HALF-YEAR 2013 Moving Energy Forward 20 August 2013

  2. Slide 2: Disclaimer

    Disclaimer Certain statements in this presentation are based on the beliefs of our We urge you to read our annual report available on our website at management as well as assumptions made by and information currently www.dongenergy.com for a discussion of some of the factors that could available to

  3. Slide 3: H1 13 highlights

    H1 13 highlights Financials H1 2013 RESULTS 3

  4. Slide 4: Sound progress – outlook maintained

    Sound progress – outlook maintained Highlights H1 13 Group EBITDA  EBITDA of DKK 7.8bn (up 18% y/y) DKKbn  Operating cash flow of DKK 4.6bn (up 61% y/y) 14.1 13.7  Net debt of DKK 31.4bn (down 2% vs. EoY 2012) +18%  Adj. Net debt/EBITDA1 of 3.7x (2.8x excl. non-cash 9.3 8.6 provisions) vs. 4.0x

  5. Slide 5: 2013-14 Financial Action Plan

    2013-14 Financial Action Plan Update H1 13 1 Divest DKK 10bn of non-core assets  Divestments of DKK 9.2bn (EV) in 2013 YTD 2 Selective farm-down of core assets  Execution of farm-downs progressing as planned  FTE reductions fully implemented 3 Reduce costs by DKK 1.2bn, full effect in 2013  All

  6. Slide 6: Significant divestments of non-core assets in 2013

    Significant divestments of non-core assets in 2013 Agreed divestments* – Enterprise Value 0.3 0.2 9.2 DKKbn 7.0 1.7 4.5 0.8 1.8 Polish Danish Share in H1 13 Mongstad - Share in Other*** 2013 YTD onshore wind onshore wind Swedish gas fired Stadtwerke hydro plant** power plant Lübeck in Norway * Finan

  7. Slide 7: Cost reductions on track

    Cost reductions on track Assumptions for like-for-like comparison Group OPEX  Target of DKK 1.2bn cost savings to be measured on DKKbn a like-for-like basis 0.1  Adjustments for OPEX growth driven by new offshore wind farms 5.4 0.2 0.5  Relative to the target, we saw like-for-like cost reductions

  8. Slide 8: Customers & Markets – merger of Energy Markets and S&D

    Customers & Markets – merger of Energy Markets and S&D  Merger between Energy Markets and S&D enables Energy Markets' EBITDA development an integrated market and customer approach and simplifies our Group structure 1  Restructuring of Energy Markets continues: 0 - Cost savings -0.7 * - Renegotiati

  9. Slide 9: Sizeable new assets coming on stream next 3 years

    Sizeable new assets coming on stream next 3 years Assets coming on stream in 2013 Assets coming on stream in 2014/2015 London Array  All turbines producing in April 2013 West of Borkum Riffg. 1 UK, 630MW1  Inaugurated July 2013 Duddon Sands (277 MW 1) Ownership: 50% (389 MW 1) Westermost R. (210 M

  10. Slide 10: Ormen Lange – increased share

    Ormen Lange – increased share Ormen Lange gas field – key facts  High quality field with excellent performance  Ormen Lange field is a unitised field covering three production  Significant contribution to the E&P portfolio licenses with different ownership  Low lifting costs  DONG Energy has ow

  11. Slide 11: Financials

    H1 13 highlights Financials H1 2013 RESULTS 11

  12. Slide 12: Market conditions and prices

    Market conditions and prices HYDRO BALANCE (TWh) POWER, GAS, COAL & CO2 – INDEXED PRICES Jan 2011=100 Coal price Gas (TTF) 20 2012 10 CO2 price Power price, DK 150 Forward prices 0 -10 2013 100 -20 -30 -40 50 -50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 Range 2005-2012 Median 2005-2012 2011

  13. Slide 13: Financial highlights H1 13

    1 Selected financial figures H1 13 H1 12 2012 Financial highlights H1 13 Revenue 36,097 35,257 67,179 EBITDA 7,766 6,594 8,639 EBITDA – DKK 7.8bn (up 18% y/y) Financial items, net -1,828 -575 -1,356  New wind farms brought on stream and gain from Profit after tax 430 755 -4,021 construction agreeme

  14. Slide 14: Impairment charges in H1 13 of DKK 2.7bn

    Impairment charges in H1 13 of DKK 2.7bn Enecogen (DKK 1.0bn) – gas fired power plant in the Netherlands  Impairment reflects expectations of continued low or negative green spark spreads in continental Europe – gas fired production outcompeted by coal fired production due to low coal and CO2 price

  15. Slide 15: Exploration & Production

    Exploration & Production Oil & Gas production (mboe) Oil Gas 28.5 Operational highlights 26.4 24.0 24.4 -14%  Lower production at Trym due to valve problems at the Mærsk operated platform Harald – production 14.6 12.6 5.2 expected to be resumed in Q4 13 4.6 9.4  Lower production at Alve and Marulk

  16. Slide 16: Wind Power

    Wind Power Renewable production (TWh) 5 30% 4 Operational highlights 20% 3  Increased production in H1 13 (up 22% y/y) from 2 new wind farms 10% 1  London Array: All turbines producing in April 2013 0 0%  Anholt: All turbines producing in June 2013 2008 2009 2010 2011 2012 H1 12 H1 13  Lincs: Al

  17. Slide 17: Thermal Power

    Thermal Power Thermal heat and power production (TJ, TWh) 60 20 Operational highlights 15 40  Increased heat and power production in H1 13 y/y 10 due to cold weather and lower hydro balance in 20 5 Norway and Sweden 0 0  Long-term heat supply agreement for the Skærbæk 2008 2009 2010 2011 2012 H1 1

  18. Slide 18: Customers & Markets

    Customers & Markets Operational highlights Operational figures H1 13 H1 12  Decreased gas sales in H1 13 y/y due to lower Gas sales TWh 66.3 72.9 sales on gas hubs Power sales TWh 8.5 6.3  Increased power sales from increased power Distribution of gas TWh 5.5 5.1 production in the UK  Increased g

  19. Slide 19: Debt overview

    Debt overview Gross debt incl. hybrid capital (DKKbn) Key ratios loan portfolio1 H1 13 Q4 12 62.3 Duration 6.3 6.8 58.3 9.5 Hybrid 9.6 0.0 Average time to maturity (years) 10.0 10.5 0.3 Other gross debt 16.9 Average interest rate 3.9% 3.9% 15.2 Bank loans Note (1): Excluding hybrid capital Bonds 31.

  20. Slide 20: Outlook maintained

    Outlook maintained EBITDA (updated 6 June 2013) DKK 13-14bn in 2013 Net investments (updated 6 June 2013) DKK 30bn in 2013-2014 Adjusted net debt/EBITDA Around 2.5x in 2014 H1 2013 RESULTS 20

  21. Slide 21: Q&A

    DONG H12013 RESULTS 21 energy

  22. Slide 22: Appendix

    APPENDIX H1 2013 RESULTS 22

  23. Slide 23: Ten targets defining our ambition and direction

    Ten targets defining our ambition and direction 1 ROCE >10% by 2016 and >12% by 2020 2 Adjusted Net Debt/EBITDA < 2.5x 3 CO2 emission reduction to 260g CO2/kWh by 2020 4 From 1.7GW to 6.5GW installed gross offshore wind capacity by 2020 5 Offshore wind cost-of-energy below €100/MWh1 by 2020 6

  24. Slide 24: Clear financial targets

    Clear financial targets ROCE >10 % -7.5 2012 2016 EBITDA ~20 DKKbn 8.6 2012 2016 Adj. NIBD/EBITDA x 4.0 1.0 ~2.5 3.0 2012 2014 H1 2013 RESULTS 24

  25. Slide 25: Outlook Market Prices 2013

    Outlook Market Prices 2013 Current Expectation at Realised estimate AR12 (27 Feb. H1 13 (rest of 2013) 2013) (average) Oil, Brent USD/bbl 101 107 107 Gas, TTF EUR/MWh 27 26 28 Gas, NBP EUR/MWh 27 27 28 Electricity, Nord Pool system EUR/MWh 39 38 40 Electricity, Nord Pool, DK1 EUR/MWh 39 43 40 Electr

  26. Slide 26: Business Performance – H1 13

    Business Performance – H1 13  In H1 13, the difference between Business Performance and IFRS amounted to DKK 0.2bn Business Performance EBITDA DKK 7.8bn Adjustments DKK 0.2bn MtM of financial and physical hedging contracts relating to other periods DKK 0.6bn Deferred losses/gains relating to financ

  27. Slide 27: Dividend, Funding and Rating

    Dividend, Funding and Rating Long term capital structure target Funding strategy and Debt Programmes  Maintain a minimum rating of BBB+ / Baa1  External funding primarily to be carried out through  Adjusted net interest-bearing debt (1) up to 2.5 times parent company – to avoid structural subordi

  28. Slide 28: Net debt calculation H1 13

    Net debt calculation H1 13 48.7 0.0 13.2 4.8 36.2 2.7 31.4 0.1 1.3 Gross debt incl. Repo’ed mark. Marketable Cash & cash Receivables Other Net debt 50% hybrid capital Adjusted REPO’ed mark. securities Securities equivalents from associates net debt securities H1 2013 RESULTS 28

  29. Slide 29: Investments

    Investments Investments in H1 13 Main gross investments in H1 13 Cash flow from investing activities 0.7bn Wind activities: DKK 4.6bn Purchase of securities -5.8bn  Anholt DKK 1.8bn Sale of securities 7.5bn  West of Duddon Sands DKK 1.1bn Loans to jointly controlled entities 0.8bn  Gode Wind 1+2

  30. Slide 30: Larger decided construction projects

    Larger decided construction projects Larger ongoing projects with production start in 2013-2015 Country MW (1) Commercial Own share of Announced Project Type of project operation date(2) project capex (3) Syd Arne phase 3 Oil/gas field DK n.a. 2013 36.8% DKK 2.7bn(5) Laggan-Tormore Oil/gas field UK

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