Rwe Ag · XETR:RWE
Rwe — Debt Investor Presentation (September 2015)
38 slides from Rwe's debt investor presentation, Sep 28, 2015
Slide 1: Paving the way for growth with continued focus on financial discipline
Paving the way for growth with continued focus on financial discipline (as of September 2015)
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains certain forward-looking statements within the meaning of the US federal securities laws. Especially all of the following statements > Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other
Slide 3: RWE – an attractive value proposition
RWE – an attractive value proposition Attractive portfolio Stable financials > Pure utility play with leading market > Progress in strengthening balance position and regionally focused sheet strategy > Streamlined and disciplined > Balanced asset portfolio with strong investment approach downstream
Slide 4: Main messages
Main messages Financial performance first half of 2015: EBITDA -7%, operating result -11%, adjusted net income -28% Successful divestment of RWE Dea for an EV of €5.1bn; net debt improved significantly to €25.6 bn Successful refinancing of 2010 €1.75 bn hybrid bond Adoption of new dividend policy: f
Slide 5: On our way to financial robustness as base for long-term growth
On our way to financial robustness as base for long- term growth What we have achieved so far What we are focusing on > Establishment of European generation business to drive cost Identification and fostering 1 efficiencies and portfolio measures of growth areas > First two waves of efficiency progr
Slide 6: Changing energy market offers growth potential
1 Areas of growth Changing energy market offers growth potential Renewables Grids Retail > Focus on on- and off- > Best in class grid > Strong Pan European shore wind management Retail organisation with > ~ €1 bn in growth capex > Investments of > €3 bn 23m customers (2015-2017) between 2015 and 201
Slide 7: Increased earnings pressure on conventional power generation
2 Generation review Increased earnings pressure on conventional power generation As of March 20141 As of January 20152 ROCE > c. > 50% – 60% c. > 25% – 35% WACC Optimi- sation Market OR > 0 c. > 60% – 70% decline c. > 40% – 50% FCF > 0 c. > 70% – 80% c.>> 55% – 65% 1 Rough profitability analysis for
Slide 8: Conventional Power Generation: mark-to-market free cash flow neutral
2 Generation review Conventional Power Generation: mark-to-market free cash flow neutral € billion 3.3 3.0 2.0 Mark-to-market (m-t-m)1 1.0 1.0 OR m-t-m Efficiencies before 2012-2017 efficiencies 0.0 -1.0 2012 2014 Depreciation EBITDA Other Day-to-day Free Operating result (OR) cash flow capex cash f
Slide 9: Overview of capacity measures
2 Generation review Overview of capacity measures Measure Plant MW1 Fuel Location Date Decom- Amer 8 610 Hard coal NL Q1-2016 missioning Goldenbergwerk 110 Lignite DE Q3-2015 Westfalen C2 285 Hard coal DE Q1-2016 Gersteinwerk K2 610 Hard coal DE Q1-2019 Long-term Claus C 1,300 Gas NL Q3-2014 mothbal
Slide 10: Efficiency programme ahead of schedule, additional measures contribute another €500 million
3 Efficiency programme Efficiency programme ahead of schedule, additional measures contribute another €500 million Net benefit to operating result Net benefit by division € million ~ 10% Holding and cross ~ 50% 400 divisional effects Generation 100 100 ~ 10% Trading/ 400 Gas Midstream ~ €2 bn by
Slide 11: Next wave of efficiencies entails a wide range of performance measures
3 Efficiency programme Next wave of efficiencies entails a wide range of performance measures Additional measures focus on cost reduction and cash flow optimisation Costs > Implementation of lean programme and improved end-to-end processes > Consolidation of IT landscape > Reduction of costs of exte
Slide 12: Development of total controllable costs (TCC)
3 Efficiency programme Development of total controllable costs (TCC) Continuous reduction of TCC (nominal values) €10.8 bn €10.1 bn €8.7 bn ~ €8.5 bn 0.5 0.2 0.4 1.0 0.1 0.1 5.5 4.9 3.9 3.9 5.3 5.2 4.8 4.6 2012 2013 2014 2017e Personnel costs Other TCC Operational cost improvement Portfolio and othe
Slide 13: Capex programme reduced to maintenance level
4 Financial discipline Capex programme reduced to maintenance level Further growth projects have to be financed debt-neutral, e.g. by the disposal of other assets or partnering solutions € billion > Approx. €6.5 – 7.0 bn capex ~ 1.5 – 2.0 Conventional power generation programme for 2015 – 2017: ~ €1
Slide 14: Positive cash balance reached 1 year ahead of plan
4 Financial discipline Positive cash balance reached 1 year ahead of plan Cash flows from operating activities to cover investments and dividends € billion Cash balance -2.7 -0.7 +1.1 <0 Target: ≥0 7.1 5.5 5.6 4.4 4.8 4.5 < ≥ 2012 20131 20141 2015e Beyond 2015 Cash flows from operating activities Ca
Slide 15: Excellent access to the capital market is key to us
4 Financial discipline Excellent access to the capital market is key to us Significant reduction of net financial debt Achievements € billion > Strong decrease of net 29.9 33.0 30.7 31.03 < 2014 Net debt financial debt Leverage 3.5x 3.5x 3.5x2 3.8x2 > 2014 > Net financial debt/ factor1 EBITDA ≤1x (2
Slide 16: Net debt mainly driven by provisions with ultra-long duration
4 Financial discipline Net debt mainly driven by provisions with ultra-long duration Net debt as of 30 June 2015 comprises €6.6 bn net financial debt (incl. 50% of hybrids) and €18.9 bn provisions. Provisions not subject to financial covenants, undertakings, cross default clauses, or rating triggers
Slide 17: Outlook for 2015
Outlook for 2015 € million EBITDA 7,131 6,100 – 6,400 Operating 4,017 3,600 – 3,900 result Adjusted 1,282 1,100 – 1,300 net income1 Dividend €1.00/share Oriented towards growth opportunities, indebtedness and earnings situation. The dividend for 2014 serves as a reference point. 2014 2015e2 reported
Slide 18: Dividend policy reflects whole economic situation
Dividend policy reflects whole economic situation Dividend of the preceding year serves as a reference point for the dividend proposal Earnings situation Dividend Leverage Growth and cash flow opportunities situation 18
Slide 19: Back-up charts
Back-up charts The energy to lead
Slide 20: Political environment in Germany I: Climate protection plan via strategic capacity reserve
Political environment in Germany I Climate protection plan via strategic capacity reserve > Transfer of 2.7 GW > CHP generation target lignite capacity into of 25% of total thermal a strategic reserve power generation > Plants will be shut > Increase of CHP after four years in support from currently
Slide 21: Political environment in Germany II: White book for a new market design
Political environment in Germany II White book for a new market design New market design: “Energy Only Market 2.0” with capacity reserve Further development of existing competitive, market-based energy market (“Energy Only Market 2.0”); no introduction of wide ranging capacity mechanism Introduction
Slide 22: Political environment in Germany III: Treatment and management of nuclear liabilities
Political environment in Germany III Treatment and management of nuclear liabilities Stress testing of Review of nuclear Responsibility for nuclear provisions liability management nuclear liabilities > Assessment of > Evaluation of stress tests > Secure operators’ completeness and further steps to s
Slide 23: Political environment in the UK: CMA Energy Market investigation
Political environment in the UK CMA Energy Market investigation CMA1 findings of Adverse Effect on Competition RWE assessment 1 Absence of locational pricing for losses 2 Mechanisms for allocating CFDs Weak customer response and unilateral market power in power/ 3 gas retail market 4 Features
Slide 24: Becoming faster and getting closer to customers
Becoming faster and getting closer to customers Main steps Key achievements > Transformation of RWE AG from a > Faster decision making processes through holding into an operating company alignment of steering model and legal governance > Merger of most 100% German > Reduction of intercompany interfa
Slide 25: 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 value enhancing renewable energy extraction in commercial environment for the next products and services asset optimisation regulatory per
Slide 26: More customers will produce self-generated power and manage their consumption
More customers will produce self-generated power and will be enabled to manage their consumption Changing energy landscape Trends in retail markets Household » Increase in decentral energy customer production from household customers Virtual » Higher incentivisation of power plants “prosumers” to ma
Slide 27: RWE in European downstream markets
RWE in European downstream markets Gas market share 2014 Sales to end-customers and redistributors RWE’s gas customers3 by country [‘000] Σ = 7,155 2,169 Germany 11% 1,969 1,290 1,397 Netherlands/ 11% Belgium UK 5% 211 119 Central and Germany Nether- Belgium UK Czech Slovakia 34% Eastern Europe1 lan
Slide 28: 2015 divisional outlook for the operating result
2015 divisional outlook for the operating result € million 2014 2015 forecast versus 2014 Conventional Power Generation1 979 Significantly below 2014 Supply/Distribution Networks Germany 1,871 Moderately below 2014 Supply NL/B 146 Significantly above 2014 Supply UK 227 Significantly below 2014 Centr
Slide 29: RWE’s forward hedging of conventional electricity production
RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio) As of 30 June 2015 >30% >10% >40% >10% >40% >20% >50% >30% >60% >40% >60% >50% >80% >60% >90% >70% >90% >70% 2015 forward 31 Dec. 2012 31 March 2013 30 June 2013 30 Sep. 2013 31 Dec. 2013 31 March 2014 30 J
Slide 30: RWE successfully qualified approx. 8 GW for the UK capacity market
RWE successfully qualified approx. 8 GW for the UK capacity market Plant MW1 Plant type > First UK capacity auction for winter 2018/19 settled at Aberthaw 1,486 Coal/OCGT £19.40/kW (2012 money). Didcot B 1,364 CCGT > The result was broadly in line with Great Yarmouth 361 CCGT our expectations. Littl
Slide 31: Clean Dark and Spark Spreads – 2016 forward for Germany, UK and Netherlands
Clean Dark (CDS) and Spark Spreads (CSS) – 2016 forward for Germany, UK and Netherlands Trading year 2015 Germany UK1 Netherlands €/MWh €/MWh 18 18 14 14 Ø 11.88 Ø 11.48 10 10 6 6 Ø 5.25 Ø 5.32 2 2 -2 -2 Ø -4.90 -6 -6 Ø -6.64 -10 -10 CDS Cal 16 base load CDS Cal 16 base load CDS Cal 16 base load (as
Slide 32: Strong improvement of net debt after successful disposal of RWE Dea
Strong improvement of net debt after successful disposal of RWE Dea € billion Cash flows Capex on Dividends1 Divestments1 Change Change Others from operat- property, plant in in pension, including ing activities1 and equipment hybrid nuclear, f/x effects and intangible capital mining assets and prov
Slide 33: Key statements on RWE by the rating agencies
Key statements on RWE by the rating agencies Standard & Poor's Moody's (BBB, “negative outlook") (Baa1, “negative outlook") > On 27 August 2015 S&P revised its rating view for RWE > On 23 June 2015 Moody’s revised its rating view for RWE to „BBB/negative outlook“ from „BBB+/negative outlook“. to „Ba
Slide 34: RWE’s flexible funding tools
RWE’s flexible funding tools Sources of funding1 Capital market maturities1 0 out of 2,0 19,5 20,0 Syndicated loan facility 4 bn € (until Nov 2020) (Back up liquidity) 1,8 18,0 1,6 16,0 Commercial papers 0 out of 1,4 14,0 (up to 1 year) 4.6 bn € ($ 5.0 bn) 1,2 12,0 Mrd. EUR 1,0 10,0 1.1 bn € out of
Slide 35: Main characteristics of the three RWE hybrid bonds issued in 2015
Main characteristics of the three RWE hybrid bonds issued in 2015 EUR Hybrid Bond EUR Hybrid Bond USD Hybrid Bond Key features NC 5.5 (April 2015) NC 10 (April 2015) NC 10.7 (July 2015) Volume 700.000.000 EUR 550.000.000 EUR 500.000.000 USD Tenor April 2075 April 2075 July 2075 Right of early termin
Slide 36: Financial liabilities and assets
Financial liabilities and assets (Excluding hybrid capital as of 30 June 2015) Financial liabilities Financial assets Split of € billion € billion securities 20 18.8 20 16.7 2.2 22% 1.4 1.5 15 0.3 15 1.3 12.2 11.7 1.0 0.7 10 4.0 4.0 10 14.0 14.8 0.5 0.5 5 5 6.5 6.7 0.3 0.5 0.2 2,1 0.3 0.8 0 Short te
Slide 37: Keep up with RWE …
Keep up with RWE … Follow us on twitter.com/RWE_IR and have a look at www.rwe.com/ir Important links Financial Calendar Annual and Interim Reports 12 November 2015 http://www.rwe.com/ir/reports/ Interim Report on Q1-Q3 2015 Investor and Analyst Conferences 08 March 2016 http://www.rwe.com/ir/investo
Slide 38: RWE Investor Relations – contacts
RWE Investor Relations – contacts Contacts for Institutional Investors & Financial Analysts Dr. Stephan Lowis Martin Vahlbrock Gunhild Grieve Dr. Holger Perlwitz Vice President Investor Relations Tel.: +49 201 12-15055 Tel.: +44 207 015-5459 Tel.: +49 201 12-15141 Tel. +49 201 12-15031 martin.vahlbr