Orsted · OMXCOP:ORSTED
Orsted — DONG Energy — 9M 2012 Earnings Presentation
28 slides from Orsted's earnings presentation, Nov 1, 2012
Slide 1: Financials 2012 First 9 Months Results
FINANCIALS 2012 FIRST 9 MONTHS RESULTS 1 November 2012
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation are based on the We urge you to read our annual report available on our website beliefs of our management as well as assumptions made by at www.dongenergy.com for a discussion of some of the and information currently available to the management. fac
Slide 3: Agenda
Agenda Highlights Financials Outlook Appendix 3
Slide 4: First nine months 2012
First nine months 2012 Highlights1 Key figures EBITDA of DKK 6.7bn (down 43% y/y) DKKbn 15 13.4 13.8 FFO of DKK 7.1bn (down 20% y/y) 14.1 12.5 11.3 11.7 11.7 Net debt of DKK 33.2bn (up 41% vs. year-end 2011) 9.3 10 8.9 Adj. net debt/EBITDA at 4.0x (1.9x at FY11) 7.5 6.7 7.1 Solid liquidity
Slide 5: 4 out of 5 Business Units developing as expected
4 out 5 Business Units developing as expected Business Unit EBITDA (DKKbn) Comments 8 Continued increase in production and earnings 4 Solid reserves (17 times to production) 0 E&P serving as cheap internal gas sourcing E&P 2007 2008 2009 2010 2011 2012E 3 Ramp-up in production and earnings
Slide 6: Revised 2012 expectations to Energy Markets
Revised 2012 expectations to Energy Markets Challenging conditions for Energy Markets in 2012 - Low contribution margin (GSS) for gas-fired power stations (CCGT) - Higher German infrastructure costs - Oversupplied gas markets reduce margins and summer/winter spread - Oil/gas delink continues to dr
Slide 7: Impacts that will strengthen earnings & capital structure in 2013
Impacts that will strengthen earnings & capital structure in 2013 1 NEW ASSETS ON STREAM Full year impact of the Walney wind farm Full year impact of E&P fields Oselvar and Marulk Positive impact from start up of wind farms Lincs, Anholt and London Array Positive impact from start up of E&P
Slide 8: Significant new assets on stream in 2012 and 2013
Significant new assets on stream in 2012 and 2013 London Array – UK wind • 630MW offshore wind • DONG Energy's share: 50% • First power in Oct. 2012 Wind Power Anholt – DK wind • 400MW offshore wind • DONG Energy's share: 50% • First power in Sep. 2012 Walney 2 – UK wind Lincs – UK wind • 184MW offs
Slide 9: Renegotiation of gas contracts
Renegotiation of gas contracts Long-term contracted gas sourcing up for renegotiation Renegotiation of gas contracts ongoing – both for sourcing and sales contracts In general, DONG Energy expects to obtain similar terms as other large gas purchasers For certain contracts there might be delays
Slide 10: Agenda
Agenda Highlights Financials Outlook Appendix 10
Slide 11: Market prices
Market prices Hydro balance Green Dark Spread (monthly average) TWh EUR/MWh 20 40 2012 Forward prices 10 20 0 -10 0 -20 -30 2011 -20 -40 -50 -40 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 2011 2012 2013 Range 2004-2011 Median 2004-2011 DK avg. Nord Pool (system) EEX Source: Syspower Source
Slide 12: Selected Financial Figures
Selected Financial Figures Business Performance DKK million 9M 12 9M 11 2011 EBITDA decreased to DKK 6.7bn (down 43% y/y) Revenue 51,310 40,985 56,842 Non-cash provisions on gas storage and LNG contracts EBITDA 6,696 11,685 13,770 (DKK 2.9bn) Financial items, net -1,270 -95 -282 One off gain o
Slide 13: Explanation of special items – provisions
Explanation of special items – provisions In Q3 12, provisions of DKK 2.9bn have been incurred within Energy Markets Provisions relate to reduced value of long-term gas storage and LNG terminal capacity contracts Provisions impact EBITDA, but has no cash flow effect Provision Gas Storage contr
Slide 14: Exploration & Production
Exploration & Production Higher prices and production Operational figures Operational highlights mboe Marulk started production in April 2012 30 25 Oselvar started production in April 2012 20 65% 63% 65% Siri repair expected to be extended into 2014 – cost 15 46% 64% 64% estimate remains uncha
Slide 15: Wind Power
Wind Power Contribution from new assets Operational figures Operational highlights TWh Around 30% of power production from renewables 5 35% 4 30% Walney 2 went into full operation in April 2012 25% 3 20% First power in H2 12 obtained from: 2 15% - Lincs (full commercial operation expected H1 1
Slide 16: Thermal Power
Thermal Power Lower production and lower GDS Operational figures Operational highlights TWh TJ Lower thermal production from milder weather and higher 20 60 hydro levels 15 45 Efficiency improvements and capacity adjustments 10 30 progressing on plan 5 15 0 0 2008 2009 2010 2011 9M 11 9M 12 Ther
Slide 17: Energy Markets
Energy Markets Lower earnings from gas sales Operational figures Status on gas business TWh TWh Renegotiations ongoing with gas suppliers – DONG 140 14 Energy expects to obtain similar terms as other large gas 120 12 purchasers. In some cases arbitration has been initiated 100 10 80 8 As expecte
Slide 18: Sales & Distribution
Sales & Distribution Stable earnings Operational figures Operational highlights 9M 12 9M 11 Rising gas sales (up 64% y/y) primarily due to the Gas sales TWh 23.4 14.3 acquisition of Shell Gas Direct in the UK, which was completed in May 2012 Distribution of gas TWh 6.4 7.2 Power sales TWh 5.5 5.6
Slide 19: Debt overview
Debt overview Gross interest-bearing debt and hybrid capital Key ratios loan portfolio (incl. hybrid capital) DKKbn 9M 12 Q4 11 70 Share of fixed rate1 95% 92% 60 9.5 Duration (years) 2 9.6 7.7 4.2 Average time to maturity (years) 3 11.0 9.4 50 Hybrid 0.9 9.5 Average interest rate3 3.8% 4.1% 17.1 1.
Slide 20: Agenda
Agenda Highlights Financials Outlook Appendix 20
Slide 21: Outlook and Targets
Outlook and Targets 2012: EBITDA expected at DKK 8.5-9.0bn Provisions (non-cash) on long-term gas storage and LNG capacity contracts Delayed start-up of London Array Delayed renegotiations of gas purchase and gas sales contracts 2013: EBITDA expected to be significantly above 2012 EBITDA Ful
Slide 22: Q&A
Q&A For further information please visit our website dongenergy.com/EN/Investor/ 22
Slide 23: Outlook Market Prices
Outlook Market Prices Current estimate, Estimate, annual 9 March 2012 (rest of year) report 2011, 9M 2012 Actual, 2012 (average) Oil, Brent USD/bbl 104 105 112 Gas, TTF EUR/MWh 25 23 24 Gas, NBP EUR/MWh 25 23 24 Electricity, Nord Pool system EUR/MWh 30 37 29 Electricity, Nord Pool, DK1 EUR/MWh 42 46
Slide 24: Business Performance – 9M 12
Business Performance – 9M 12 In 9M 12, the difference between Business Performance and IFRS amounted to DKK -1.3bn Business Performance EBITDA DKK 6.7bn Adjustments DKK -1.3bn MtM of financial and physical hedging contracts relating to other periods DKK -0.4bn Deferred losses/gains relating to fin
Slide 25: 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 Adjusted net interest-bearing debt (1) up to 2.5 through parent company – to avoid structural times EBITDA
Slide 26: Net debt calculation 9M 12
Net debt calculation 9M 12 55.5 4.2 10.6 2.2 35.4 3.2 2.0 33.2 2.3 Gross debt Repo Marketable Cash & cash Receivables Receivables Net debt 50% Adjusted Securities equivalents from associates from minority outstanding net debt shareholders hybrid due 3005 26
Slide 27: Investments
Investments Investments in 9M 12 Main gross investments in 9M 12 Cash flow from investing activities -17.0bn Wind activities: DKK 10.5bn Purchase of securities (add back) 4.9bn London Array: DKK 4.4bn Transactions with non-controlling interest -0.0bn Walney DKK 1.8bn Loans to jointly controlled
Slide 28: Larger decided construction projects
Larger decided construction projects Larger projects with production start in 2012-2015 Country MW (1) Commercial Own share Announced Spent Project Type of project operation date(2) of project capex (3) capex (4) Sea Installer 1 Installation vessel n.a. n.a. 2012 51% USD 70m USD 51m London Array(5)