Orsted · OMXCOP:ORSTED
Orsted — Ørsted — FY2019 Earnings Presentation
46 slides from Orsted's earnings presentation, Jan 30, 2020
Slide 1: Investor presentation Q4 and full-year 2019
Investor presentation Q4 and full-year 2019 30 January 2020
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements, including but not limited to, the statements and expectations contained in the “Financial Outlook” section of this presentation. Statements herein, other than statements of historical fact, regarding our future results of oper
Slide 3: Very satisfactory results in 2019
Very satisfactory results in 2019 EBITDA Strong financial results in 2019 Key accomplishments in 2019 DKKbn • EBITDA excluding new partnerships Offshore Non-recurring items increased 17% to DKK 17.5bn • Hornsea 1 (1,218MW) commissioned Offshore new partnerships • EBITDA from offshore and onshore win
Slide 4: Financial results for 2019 exceeded our expectations
Financial results for 2019 exceeded our expectations EBITDA Outperformance vs. latest guidance DKKbn of DKK 16.0-17.0bn • Net negative impact of DKK 0.8bn related to 17.5 divestment of LNG activities 16.0-17.0 15.5-16.5 • Strong offshore generation in December • Better than expected performance from
Slide 5: Investments in construction projects increased significantly in 2019
Investments in construction projects increased significantly in 2019 Gross investments Gross investments slightly above 2019 DKKbn guidance range of DKK 21-23bn Deepwater Wind acquisition Lincoln Clean Energy acquisition Spend on construction projects increased DKK 8.4bn 24.5 compared to 2018: Marke
Slide 6: Strong results and continued strategic progress in Q4 2019
Strong results and continued strategic progress in Q4 2019 Highlights – Q4 2019 • EBITDA totalled DKK 4.6bn, an increase of DKK 0.5bn compared to Q4 2018 when adjusting for Hornsea 1 farm-down • EBITDA from offshore and onshore wind farms in operation increased by 16% to DKK 4.9bn in Q4 2019 • Green
Slide 7: New target: Carbon neutral energy generation and operations by 2025
New target: Carbon neutral energy generation and operations by 2025 We are committed to help limit global warming to 1.5°C Carbon neutral by 2025 Energy generation and operations (scope 1-2) • We have reduced our carbon emissions 86% from 2006 to 2019 g CO2e/kWh IEA 2 degree scenario • Our target ha
Slide 8: Construction programme – Offshore
Construction programme – Offshore Changhua Project Hornsea 1 Borssele 1 & 2 Virginia Hornsea 2 1 & 2a Country Asset type Capacity 1,218MW 752MW 12MW (EPC) 1,386MW 900MW Expected Q4 2019 End of Q4 2020 Q4 2020 H1 2022 2022 completion Status Commissioned On track On track On track On track Comments On
Slide 9: Construction programme – Onshore, Bioenergy and Power Distribution
Construction programme – Onshore, Bioenergy and Power Distribution Permian Asnæs Renescience Smart meter Project Sage Draw Willow Creek Plum Creek Energy Center CHP plant Northwich roll-out Country Asset type 420MWac 125MW Heat, 120,000 tonnes 1 million Capacity 338MW 103MW 230MW 40MWac 25MW Power w
Slide 10: Offshore market development – US
Offshore market development – US • 804MW awarded to Shell/EDPR in the 2nd offshore wind solicitation Massachusetts • Passed bill which has increased the offshore wind target to 3.2GW by 2030 • Next auction of 800MW expected in H2 2021 • 804MW awarded to Avangrid/CIP in the 3rd offshore wind solicita
Slide 11: Offshore market development – UK and Continental Europe
Offshore market development – UK and Continental Europe • Six offshore wind farms awarded a total of 5.5GW in the 2019 UK CfD auction • Target annual build-out of 3GW to reach 40GW capacity by 2030 • The development consent order for Hornsea 3 is expected in Q2 2020 United Kingdom • Auction framewor
Slide 12: Offshore market development – APAC
Offshore market development – APAC • Taiwan has met its target of awarding 5.5GW to be commissioned by 2025 • An additional 10GW offshore wind to be constructed between 2026-2035 Taiwan • Third round auction rules expected to be announced in Q2 2020 • 600MW Greater Changhua 3 project ready for futur
Slide 13: Expected offshore wind auctions and tenders in 2020 and 2021
Expected offshore wind auctions and tenders in 2020 and 2021 Global awarded offshore capacity1 GW, net ownership H2 2020 H1 2021 H2 2021 Japanese tender Holland Coast Connecticut 4th Oil majors Round 1 West offshore wind Infrastructure investors Capacity TBA 1,520MW 800MW Energy companies & utilitie
Slide 14: Onshore target of 5GW installed capacity by 2025
Onshore target of 5GW installed capacity by 2025 Onshore capacity build-out towards 2025 Partners for operating and construction MW portfolio ~5,000 Offtake Operating Project solution Under construction PPA with Amazon and Iron Amazon Mountain Willow Springs Hedge with BAML2 Tahoka Hedge with BAML2
Slide 15: Group – Q4 financial performance
Group – Q4 financial performance CFO EBITDA Net profit Free cash flow CAPEX DKKm DKKm DKKm Divestments 19,206 15,194 11,398 7,565 517 121 739 4,613 4,143 -252 -103 -15,063 -552 18,749 4,816 402 -8,816 -14,916 Offshore Other LNG and DEVEX farm-down partnerships M&B Q4 2018 Q4 2018 excl. new sites Q4
Slide 16: Net debt and financial ratios
Net debt and financial ratios Net interest-bearing debt development FFO / Adj. net debt (LTM) ROCE (LTM) DKKm % % Hornsea 1 partnership gain 69 32.1 31 -12,082 10.6 -3,598 -283 -1,081 -186 -17,230 30 Sep 2019 Free cash Dividends Exchange Other 31 Dec 2019 flow and hybrid rate 31 Dec 2018 31 Dec 2019
Slide 17: Offshore – Q4 financial performance
Offshore – Q4 financial performance Sites, O&Ms & PPA Denmark Germany Power generation EBITDA Partnerships Free cash flow UK Other TWh DKKm Other, incl. DEVEX DKKm 3.9 18,847 16,511 3.3 0.6 4,109 0.7 2.5 2.0 15,411 4,048 4,626 0.6 0.7 -673 -629 51 -1,697 0.0 0.0 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 20
Slide 18: Onshore – Q4 financial performance
Onshore – Q4 financial performance Sites Power generation EBITDA PTCs and tax attributes Free cash flow TWh DKKm Other, incl. DEVEX DKKm 1.0 165 73 0.6 44 40 201 85 -2,822 -81 -109 -4,910 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Power generation increased 0.4TWh EBITDA increased DKK 0.1bn FCF
Slide 19: Markets & Bioenergy – Q4 financial performance
Markets & Bioenergy – Q4 financial performance CHP plants EBITDA Gas Markets & Infrastructure Free cash flow Free cash flow LNG DKKm DKKm DKKm Distribution, B2C and city light Other incl. DEVEX 490 354 303 620 365 250 257 -36 -139 -137 -533 -691 -50 -739 Q4 2018 Q4 2019 Q4 2018 Q4 2019 EBITDA up DKK
Slide 20: Better than expected results from our trading activities
Better than expected results from our trading activities related to the hedging of our UK energy exposures Market Trading During 2019 UK power forward prices decreased in the front and increased in the far end of the forward curve, • Market Trading hedges group energy exposure into traded markets to
Slide 21: Outlook – Guidance for 2020
Outlook – Guidance for 2020 2020 EBITDA excluding new partnerships expected to be Guidance on 2020 EBITDA excl. new partnerships DKK 15.0-16.0 billion DKKbn Effects impacting comparability • Earnings from existing offshore partnerships expected to be very limited 17.5 in 2020 15.0-16.0 • Earnings fr
Slide 22: Outlook – Business unit EBITDA FY 2020 vs. FY 2019
Outlook – Business unit EBITDA FY 2020 vs. FY 2019 Offshore – Lower Onshore – Higher Markets & Bioenergy – Lower • Earnings from offshore wind farms in • Earnings from onshore wind farms in • Decline in earnings from CHP plants due to operation expected to increase from ramp- operation expected to i
Slide 23: 2020 guidance and long-term financial estimates and policies
2020 guidance and long-term financial estimates and policies 2020 guidance DKKbn Financial estimates EBITDA without new partnerships 15-16 Total capex spend, 2019-2025 DKK 200bn Gross investments 30-32 Capex allocation split, 2019-2025: - Offshore 75-85% Business unit EBITDA FY 2020 vs. FY 2019 Dire
Slide 24: Q&A
Q&A Conference call DK: +45 78 15 01 09 UK: +44 333 300 9270 US: +1 833 526 8384 For questions, please press 01
Slide 25: Appendix
Appendix Orsted
Slide 26: Renewable capacity as of 31 December 2019
Renewable capacity as of 31 December 2019 Indicator Unit 2019 2018 Installed renewable capacity Installed renewable capacity MW 9,870 8,303 Installed renewable capacity is calculated as the cumulative renewable gross capacity installed - Offshore wind power MW 6,820 5,602 by Ørsted before divestment
Slide 27: Offshore wind build-out plan
Offshore wind build-out plan Installed capacity MW 920 14,854 1,142 Under construction 1,220 1,714 Awarded 900 9,858 1,386 752 6,820 Operational Borssele Hornsea 2 Greater Decided (FID) US North- US Mid-Atlantic German Greater Decided & Q4 2019 1&2 Changhua capacity East cluster1 cluster2 Portfolio3
Slide 28: Onshore wind build-out plan
Onshore wind build-out plan Installed capacity MW Operational 420 2,088 Under construction 230 103 338 997 Operational Sage Draw Willow Creek Plum Creek Permian Total Q4 2019 Energy Center1 Region ERCOT, TX SPP, SD SPP, NE ERCOT, TX Expected Q1 2020 Q4 2020 Q4 2020 2021 completion Turbine GE GE GE n
Slide 29: Sustainability and ESG at Ørsted
Sustainability and ESG at Ørsted Green leadership Contributing to the global goals ESG ratings of Ørsted • We want to help keep global warming below 1.5°C. Rating agency Rating Benchmark • In 2019, 86% of our energy generation was green. By Ørsted is a signatory to the UN Global Compact and adheres
Slide 30: Group – Financial highlights
Group – Financial highlights FINANCIAL HIGHLIGHTS Q4 2019 Q4 2018 D FY 2019 FY 2018 D EBITDA DKKm 4,613 19,206 (76%) 17,484 30,029 (42%) • Offshore 4,048 18,847 (79%) 15,161 28,046 (46%) • Onshore 165 44 275% 786 44 n.a. • Markets & Bioenergy 490 303 62% 1,495 2,100 (29%) Net profit – continuing ope
Slide 31: Offshore – Financial highlights
Offshore – Financial highlights FINANCIAL HIGHLIGHTS Q4 2019 Q4 2018 D FY 2019 FY 2018 D WIND SPEED (m/s), offshore wind farms EBITDA DKKm 4,048 18,847 (79%) 15,161 28,046 (46%) • Sites incl. O&Ms and PPAs 4,626 4,109 13% 13,750 11,279 22% • Partnership agreements and farm-down gains 51 15,413 (100%
Slide 32: Onshore – Financial highlights
Onshore – Financial highlights FINANCIAL HIGHLIGHTS Q4 2019 Q4 2018 D FY 2019 FY 2018* D EBITDA DKKm 165 44 275% 786 44 n.a. • Sites 73 40 83% 466 40 n.a. • Production tax credits and tax attributes 201 85 136% 628 85 n.a. • Other, incl. project development (109) (81) 35% (308) (81) n.a. KEY BUSINES
Slide 33: Markets & Bioenergy – Financial highlights
Markets & Bioenergy – Financial highlights FINANCIAL HIGHLIGHTS Q4 2019 Q4 2018 D FY 2019 FY 2018 D EBITDA DKKm 490 303 62% 1,495 2,100 (29%) • CHP plants 354 365 (3%) 1,152 715 61% • Gas markets & Infrastructure 620 (36) n.a. 390 705 (45%) • LNG (691) (139) 397% (957) (43) n.a. • Distributions B2C
Slide 34: Currency and energy exposure
Currency and energy exposure Currency exposure 2020-20241 Energy exposure 2020-2024 DKKbn DKKbn Before hedging Before hedging After hedging After hedging 56.9 19.4 16.4 6.2 2.0 0.5 1.1 0.7 0.0 0.0 0.3 -0.1 -0.9 -4.0 GBP2 USD TWD Power Gas Oil Spread Risk after hedging, Effect of price +10% Effect of
Slide 35: Natural hedges significantly reduce Taiwan Dollar risk
Natural hedges significantly reduce Taiwan Dollar risk Illustrative Illustrative Cash flows from Changhua 1 & 2a Risk mitigation CAPEX Revenue less OPEX Potential partnership agreements 2020 2021 2022 2023 2024 2025 2026 2027+ 2020 2021 2022 2023 2024 2025 2026 2027+ TWD USD EUR or DKK TWD TWD fundi
Slide 36: Capital employed
Capital employed CAPITAL EMPLOYED, DKKm FY 2019 FY 2018 Capital employed by segment Intangible assets and property and equipment 106,685 84,832 %, FY 2019 Equity Investments and non-current receivables 1,044 1,445 Offshore Markets & Bioenergy Net working capital, work in progress 8,756 9,654 Onshore
Slide 37: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT, DKKm FY 2019 FY 2018 EBITDA – Business Performance 17,484 30,029 Interest expenses, net (1,312) (877) Interest expenses, leasing (171) - Reversal of interest expenses transferred to assets (344) (506) Interest element of de
Slide 38: Debt overview
Debt overview Gross debt and hybrids Effective funding costs – gross debt Long term gross debt maturity schedule 31 December 2019 (excl. hybrid) DKKbn Cost of Modified Avg. time to DKKbn % debt (%) duration (%) maturity (years) 4.0% 3.9% 80 3.8% 3.8% 4 Bond loans 3.3 8.7 11.2 4.0% 3.3% 3.3% Bank loa
Slide 39: Hybrid capital in short
Hybrid capital in short Hybrid capital can broadly be defined as • Deeply subordinated and only senior to Ørsted has made use of hybrid capital to funding instruments that combine features of common equity maintain our ratings at target level in debt and equity in a cost-efficient manner: connection
Slide 40: Ørsted's outstanding Green Bonds
Ørsted’s outstanding Green Bonds Ørsted A/S Avoided emissions (t Allocated to green Bond Type Face Value Coupon Issue date Maturity CO2/year) projects (in DKK) attributable to the bonds Senior Unsecured EUR 750m 1.5% 24 November 2017 26 November 2029 5,499 733,000 Hybrid capital EUR 500m 2.25% 24 No
Slide 41: Financing strategy
Financing strategy We have a centralised financing strategy All cash flow generated by our subsidiaries as customary for vertically and supports the creditworthiness and rating horizontally integrated European energy of and thus the debt taken up by the utilities. parent company, Ørsted A/S. The str
Slide 42: Currency risk management
Currency risk management General hedging principles • The main principle is to hedge highly certain cash flows, such as FX from hedged energy. • Cost-of-hedging is minimized by netting of exposures, use of local currency in construction contracts and debt in local currency. Managing outright long ri
Slide 43: Interest rate and inflation risk management
Interest rate and inflation risk management Four risk categories of assets and debt allocation Objectives of interest rate and inflation risk management Illustrative 1. Protect long-term real value of equity by offsetting interest and inflation risk exposure embedded in assets by allocating debt wit
Slide 44: Energy risk management
Energy risk management Risk picture Hedging of open exposure • We manage market risks to protect Ørsted against market price volatility and • Open energy exposure is reduced actively ensure stable and robust financial ratios that support our growth strategy • Minimum hedging requirements are determi
Slide 45: Glossary
Glossary Availability Green energy share Commercially adjusted means that, for Danish and German offshore Offshore: The production-based availability (PBA) is calculated as the The green (renewable energy) share of our heat and power generation wind farms, the load factor is adjusted if the offshore
Slide 46: Investor Relations contacts
Allan Bødskov Andersen Sabine Lohse Head of Investor Relations Senior Investor Relations Officer ALBAN@orsted.com SABLO@orsted.com Rasmus Hærvig Dennis Callesen Manager Lead Investor Relations Officer RAKOL@orsted.com DECAL@orsted.com