Bkw Ag · SIX:BKW
Bkw — FY2012 Earnings Presentation
51 slides from Bkw's earnings presentation, Mar 21, 2013
Slide 1: BKW Group: Leading provider of comprehensive energy services
BKW Group Leading provider of comprehensive energy services Company Presentation 21 March 2013 Suzanne Thoma, CEO Beat Grossenbacher, CFO
Slide 2: Overview, Financials FY 2012, Strategy, Outlook and Summary
• Overview • Financials FY 2012 • Strategy • Outlook and Summary Company Presentation page 2
Slide 3: BKW Group: Strong competitive position and successful business model
BKW Group: Strong competitive position and successful business model Leading provider of comprehensive energy services, covering all stages of energy supply One of the most important distributors in Switzerland, delivering electricity to more than 1 million residents Extensive distribution network i
Slide 4: Shareholder structure: Free float around 21%
Shareholder structure: Free float around 21% BKW Inc. shares are listed on the main segment of SIX Swiss Exchange (SIX) and are included in the Swiss Performance Index (SPI) Significant shareholders 31.12.2012 Free Canton of Berne 52.5% float ~21% Groupe E Ltd. 10.0% E.ON Energie AG 7.0% Treasury st
Slide 5: Continued challenging business environment
Continued challenging business environment Wholesale price for electricity Regulatory and political environment 80 • Political and regulatory uncertainties 75 70 • KKM: Ongoing political discussions 65 • Changing market structures / EUR/MWh 60 55 feed-in tariffs 50 • Concession for Grimsel 3 pumped
Slide 6: Strategy “BKW 2030”
Strategy “BKW 2030” Strategy “BKW 2030” Focus area Energy Solutions: Examples • Focus on comprehensive energy • Acquisition of EES, a leading company services: operator of integrated system in photovoltaics and solar thermal of decentralised production, energy- • Further expansion of electrical effi
Slide 7: Achievements FY 2012
Achievements FY 2012 Solid operating result despite challenging economic and regulatory environment Reinforced position: one of the Swiss leaders for new renewable energy Acquisition of wind farm Castellaneta in Italy (56 MW) Productivity enhancement and cost reduction programme on track KKM: high a
Slide 8: Key figures: Solid operating result
Key figures: Solid operating result Total operating revenue CHF m EBITDA CHF m 2,788 2,633 2,860 474 418* 523 * FY 2010 FY 2011 FY 2012 FY 2010 FY 2011 FY 2012 Net profit CHF m Cash flow from operating activities CHF m 228 123* 205 * 275 292 339 FY 2010 FY 2011 FY 2012 FY 2010 FY 2011 FY 2012 * adju
Slide 9: Agenda: Financials FY 2012
• Overview • Financials FY 2012 • Strategy • Outlook and Summary Company Presentation page 9
Slide 10: Financial Highlights FY 2012
Financial Highlights FY 2012 Improvement in operating profit: adjusted EBITDA up 25% to CHF 523m, adjusted EBIT up 44% to CHF 334m Exceptional impairment charges of CHF 112m for power plants Positive impact on financial result from return on financial assets in the decommissioning and disposal funds
Slide 11: Adjustments for exceptional impairment charges
Adjustments for exceptional impairment charges FY 2011 adjust- FY 2011 FY 2012 adjust- FY 2012 change CHF m reported ments adjusted reported ments adjusted adjusted Operating revenue 2,633 2,633 2,860 2,860 Energy procurement -1,705 -280 -1,425 -1,654 -112 1,542 EBITDA 138 -280 418 411 523 +25% Depr
Slide 12: Cumulative impairment charges per power plant
Cumulative impairment charges per power plant Cumulative impairment charges end-2012 amount to CHF 438m (FY 2011: CHF 318m) CHF m FY 2011 FY 2012 250 200 150 100 50 0 Wilhelmshaven Livorno Ferraris Tamarete Hagneck Fessenheim Company Presentation page 12
Slide 13: Higher operating profit (EBIT) despite challenging market environment
Higher operating profit (EBIT) despite unchanged challenging market environment FY 2011 FY 2012 • Operating revenue up by 9%, driven by CHF m higher revenue in energy trading adjusted adjusted Operating revenue 2,633 2,860 • Adjusted energy procurement up 8% due to higher volumes Energy procurement
Slide 14: Cost reduction and efficiency programme
Cost reduction and efficiency programme Measures on track and closely monitored: cost reduction of around CHF 50m achieved Cost reduction impact is expected to gradually grow until FY15 100% achieved FY 2012 50% FY 2012 FY 2013 FY 2014 FY 2015 • Cost basis: controllable costs Income statement positi
Slide 15: Business Segments: Contribution to operating profit
Business Segments: Contribution to operating profit Swiss supply business as stable contributor to Group operating profit (EBIT) CHF m 350 334 334 FY 2010 FY 2011* FY 2012 * 250 233 232 198 160 150 139 120 62 45 50 -10 -50 -40 Energy Switzerland Energy Intl. Networks BKW Group & Trading * adjusted f
Slide 16: Energy Switzerland
Energy Switzerland High production as driver for operating profit FY 2012 • Operating revenue lower due to negative CHF m FY 2011 price effect and lower sales volume adjusted Operating revenue 2,263 2,168 • Net sales to other segments driven by higher year-on-year production and lower internal Net s
Slide 17: Energy International and Trading
Energy International and Trading Unchanged challenging environment with low international wholesale prices FY 2011 FY 2012 • Electricity trading up 12% despite lower CHF m adjusted adjusted international price levels Operating revenue 2,072 2,203 • Prop. trading slightly lower year-on-year • Energy
Slide 18: Networks
Networks Stable revenue and increased operating profit • External revenue for grid usage largely CHF m FY 2011 FY 2012 invoiced by Energy Switzerland and disclosed as internal revenue by the Operating revenue 686 701 Networks segment Net sales to external • Majority of net sales to external customer
Slide 19: Income Statement: Net profit
Income Statement: Net profit Positive year-on-year impact from financial market development FY 2011 FY 2012 Financial result CHF 39m higher: CHF m adjusted adjusted • Due to better performance of financial EBIT 232 334 markets, result from state funds CHF 60m higher Financial result -88 -49 • Higher
Slide 20: Cash Flow Statement
Cash Flow Statement Increase of cash inflow from operating activities, up 16% CHF m FY 2011 FY 2012 • Cash inflow from operating activities increased by 16% due to higher Cash flow before change operating profit and lower taxes paid in net current assets and 425 433 income taxes paid • Cash outflow
Slide 21: Investments of CHF 257m (FY 2011: CHF 515m)
Investments of CHF 257m (FY 2011: CHF 515m) Investments: CAPEX, equity-valued companies and group companies CHF m 180 160 140 120 100 FY11 80 FY12 60 40 20 0 Hydro Wind New renewable Coal Nuclear Networks Other energies 40% Growth FY 2012: Growth vs. Maint./Repl. 60% Maint./Repl. Company Presentatio
Slide 22: Balance Sheet
Balance Sheet Solid balance sheet, equity ratio of 36.5% • Balance sheet total 5% higher year-on-year • Assets and liabilities held for sale refer to sale of transmission grid to swissgrid on January 3, 2013 CHF m FY11 FY12 FY11 FY12 Non-current assets 5,170 5,315 Equity 2,655 2,723 thereof - Fixed
Slide 23: Networks: Legally prescribed sale of transmission grid to Swissgrid
Networks: Legally prescribed sale of transmission grid to Swissgrid on 3 January 2013 • Preliminary compensation on 3 January 2013 based on FY 2011 figures Net asset base Preliminary compensation transmission grid end-2011 in MCHF 70 MCHF repaid in January 2013 140 Loans 70 MCHF as mandatory convert
Slide 24: Balance Sheet: Provision for nuclear waste disposal and decommissioning
Balance Sheet: Provision for nuclear waste disposal and decommissioning Provisions for nuclear waste disposal and Financial assets decommissioning Two state funds cover future cost of nuclear waste disposal and plant Decommis Disposal of Plant Total decommissioning CHF m -sioning spent fuel specific
Slide 25: Balance Sheet: Net debt
Balance Sheet: Net debt BKW‘s financing situation remains solid Net debt / EBITDA* CHF m FY 2012: 1.0 FY 2011 FY 2012 1000 FY 2011: 1.3 826 721 500 Cash & equivalents & current financial assets 0 Financial debt -500 -536 -510 -1000 Net financial debt -1257 -1500 -1336 * adjusted for exceptional impa
Slide 26: Long-term financing framework in place
Long-term financing framework in place No bond refinancing required until 2018 Bonds Registered notes Other financial liabilities CHF m 350 300 250 200 10 yrs, 3.375% 150 8 yrs, 1.875% 20 yrs, 2.5% 15 yrs, 3% 100 15 yrs 20 yrs 50 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 202
Slide 27: Agenda: Strategy
• Overview • Financials FY 2012 • Strategy • Outlook and Summary Company Presentation page 27
Slide 28: Important future issues and trends
Important future issues and trends Growing demand for electricity Feed-in tariffs for renewables distort electricity market Political will to promote renewable energy production Swiss energy strategy with focus on: • Local energy production • Reliable grid, conversion to „smart grid“ • Energy effici
Slide 29: Strategy “BKW 2030”: Leading provider of comprehensive energy services
Strategy “BKW 2030”: Leading provider of comprehensive energy services Continuity & Stability Financial strategy • Direct access to end customers • Strong balance sheet (sales & grid) • Financial flexibility • Vertically integrated • Cash and value generation • Local roots and partnerships • Cost-sa
Slide 30: Strategy: New group structure
Strategy: New group structure CEO Corporate Finance Steering and Services Renewables Generation Market Networks and Efficiency Focus on Corporate Steering Opportunities of the future electricity market Finance and Services Profitability and financial flexibility Generation Balanced mix in an uncerta
Slide 31: Strategy: Strategic initiatives
Strategy: Strategic initiatives Renewables Generation Market Networks and Efficiency Large hydro Energy solutions Smart solutions Smart grid plants/pumped storage Wind power Third-party Third-party services services Small New renewables hydro plants Customer Improvement Energy efficiency retention a
Slide 32: Hydro production: Selected expansion projects
Hydro production: Selected expansion projects Bielersee Kraftwerke AG Kraftwerke Oberhasli (KWO) (BKW stake 50%) (BKW stake 50%) Upgrade of existing power plant Hagneck 1) Upgrade of two existing power plants 2) New underground pump storage plant 3) Raising Grimsel dam (add storage volume) Key figur
Slide 33: Regulatory update: Mühleberg nuclear power plant (I/II)
Nuclear: Mühleberg nuclear power plant (KKM) (I/II) 3.2012 4.2012 8.2012 Ruling Federal Administrative BKW: Appeal to Federal Court BKW: Submission of application for Court (FAC): (FC) opposing FAC ruling, extension and comprehensive Legal update - Existing operating limit lifted requesting suspensi
Slide 34: Nuclear: Mühleberg nuclear power plant (KKM) (II/II)
Nuclear: Mühleberg nuclear power plant (KKM) (II/II) Q1 2013 Q2 2013 Q4 2013 Politics Legal: FC BKW Counter proposal of the Ruling Federal Court on Decision on refitting plan governement Canton Berne BKW-Appeal following KKM for long-term operation in regarding policital initiative: no FAC-ruling la
Slide 35: Fossil-fuelled thermal power plants: Rounding off a well-balanced production portfolio
Fossil-fuelled thermal power plants: Rounding off a well-balanced production portfolio Germany: Base load production capacity Italy: Base and flexible production capacity Project: Coal-fired power plant in On-stream: Gas-fired combined cycle power Wilhelmshaven plant Livorno Ferraris Project: Gas-fi
Slide 36: Leading position as Swiss operator of wind farms
Leading position as Swiss operator of wind farms in Switzerland and abroad FY 2012 9 MW, Borkum 28 MW, Bippen • Contract signed to acquire wind farm West II in constr. 26 MW, Holleben Castellaneta, Apulia (I), 56 MW 11 MW, 40 MW, • Acquisition of 50% in wind farm HelveticWind Dubener Platte Landkern
Slide 37: BKW aims to invest up to CHF 1.2 billion until 2016
BKW aims to invest up to CHF 1.2 billion until 2016 CHF m Cumulative investments 500 Hydro: Partner plant investments not included (e.g. KWO, BIK) 400 300 200 Refitting cost KKM to be defined 100 0 Hydro Wind New renewable Coal Nuclear Networks Other energies Growth vs. Maint./Repl. investments Grow
Slide 38: Direct access to end customers: Sales
Direct access to end customers: Sales Strong market position with 9,000 GWh delivered to more than 350’000 customers Advantageous market position through proven partnership models: • Youtility platform with the 1to1 energy brand (more than 130 regional energy providers) • Expansion to Eastern Switze
Slide 39: Direct access to end customers: Extensive distribution network in Switzerland
Direct access to end customers: Extensive distribution network in Switzerland • BKW grid covering local, regional and interregional lines at all voltage levels (~22’000 km in total) • BKW and ten other Swiss electrical utilities combined activities under Swiss Smart Grid Association with long-term g
Slide 40: Focussing on new business models
Focussing on new business models • Technological change as enabler for new Technology business models e.g. „smart technologies“ BKW • New customer requirements call for segment- Clients specific offerings e.g. private, municipal, Competent utilities provider of comprehensive energy services • Bundli
Slide 41: Agenda: Outlook and Summary
• Overview • Financials FY 2012 • Strategy • Outlook and Summary Company Presentation page 41
Slide 42: Outlook FY 2013
Outlook FY 2013 BKW is not expecting any change in the challenging market environment in the current financial year, with energy prices set to remain low and ongoing margin pressure on the international markets. Coupled with regulatory requirements and a persistently strong Swiss franc, this will al
Slide 43: Summary: BKW – The investment case
Summary: BKW – The investment case A strong business model: • Focus on comprehensive energy services • Vertical integration • Direct access to end customers: grid and sales • Diversified production portfolio (Swiss vs. international and central vs. local) A Swiss market leader for renewable energy:
Slide 44: Financial Calendar
Financial Calendar • Annual General Meeting 17 May 2013 • Ex-Dividend Date 22 May 2013 • Dividend Payment 27 May 2013 • Publication of 2013 Interim Results 12 September 2013 For further information, please contact: Thomas Herren, Investor Relations Officer Tel (+41) 31 330 53 56 Fax (+41) 31 330 58
Slide 45: Backup
Backup Company Presentation page 45
Slide 46: Generation: Optimised mix of peak and base load capacities
Generation: Optimised mix of peak and base load capacities Higher production from hydroelectric plants and new renewable energies Generation and FY 2012 FY 2011 Capacity FY 2012 purchases in GWh Hydroelectric plants 3,963 3,406 Peak load Nuclear power plants 44% 5,769 5,373 56% Base load incl. purch
Slide 47: Sales: Committed to supplying our customers with electricity reliably and economically
Sales: Committed to supplying our customers with electricity reliably and economically Strong market position – one of the most important distributors in Switzerland Sales in GWh FY 2012 FY 2011 • Electricity sales Switzerland: Reduction mainly due to lower sales to Electricity sales 7,465 8,186 dis
Slide 48: BKW Group – Generation overview
BKW Group – Generation overview Germany Generation FY 2012 0.2 TWh Installed production 123 MW Switzerland 31.12.2012 (Core market) Installed production under 248 MW Generation FY 2012 9.7 TWh construction (incl. French purchase contracts) Installed production 2’323 MW 31.12.2012 Installed productio
Slide 49: Hedging of (outright) Swiss power generation
Hedging of (outright) Swiss power generation Generation volume of around 4 - 6 TWh sold in FY Average hedge price 2013 ~59 €/MWh 2014 ~64 €/MWh 2015 ~55 €/MWh Hedge ratio end-February 2013 2013 90% 10% 2014 91% 9% 2015 100% 0% 0% 20% 40% 60% 80% 100% Hedged volumes Open volumes Company Presentation
Slide 50: Energy and grid usage tariffs: Regulatory update
Energy and grid usage tariffs: Regulatory update 6.2012 Approval of BKW energy tariffs for 2009 and 2010 BKW allowed to factor in up to CHF 23m of cost overrun not yet charged to regulated customers in future price adjustments 8.2012 Swiss Federal Court (FC) ruling on 2009 transmission grid cost Onl
Slide 51: Disclaimer
Disclaimer This presentation contains forward-looking statements which are made on the basis of current expectations and assumptions. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-look