Slide 1: Investor Presentation Q3 2018
Investor PpResentation QS 2018 Orsted 1 November 2018
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: Solid growth in operating earnings and strengthened strategic platform
Solid growth in operating earnings and strengthened strategic platform Highlights – Q3 2018 • EBITDA of DKK 2.2bn, an increase of DKK 0.5bn • EBITDA from offshore wind farms in operation increased by 31% • Better than expected performance in Markets • Increased EBITDA guidance by DKK 0.5bn to DKK 13
Slide 4: Ørsted and Deepwater Wind merger creates the leading US offshore platform
Ørsted and Deepwater Wind merger creates the leading US offshore platform New Ørsted US Offshore Wind organisation New US offshore footprint • Ørsted’s and Deepwater Wind’s offshore wind assets and organisations will be merged into the leading US offshore wind platform • Merger will combine Deepwate
Slide 5: Construction programme – Offshore Wind
Construction programme – Offshore Wind Borkum Virginia Project Hornsea 1 Borssele 1&2 Hornsea 2 Riffgrund 2 (EPC) Country Asset type Capacity 450MW 1,218MW 752MW 12MW 1,386MW Expected Q4 2018 2020 2020/2021 2020/2021 2022 completion Status On track On track On track On track On track Comments All 56
Slide 6: Construction programme – Onshore Wind, Bioenergy & Customer Solutions
Construction programme – Onshore Wind, Bioenergy & Customer Solutions Smart Asnæs Renescience Project Tahoka meter roll- CHP plant Northwich out Country Asset type 129MW Heat, 120,000 tonnes 1 million Capacity 300MW 25MW Power waste installations Expected Q4 2018 2019 H1 2019 2020 completion Status
Slide 7: Offshore Wind market development – Taiwan & US
Offshore Wind market development – Taiwan & US • Taiwan has now met its target of awarding 5.5GW to be developed by 2025 Taiwan • Auctions are being planned for projects post 2025 • Greater Changhua 3 – 600MW ready for future auctions • Expected to solicit 800MW in 2019 Massachusetts • Passed bill w
Slide 8: Offshore Wind market development – Europe
Offshore Wind market development – Europe • Next UK CfD auction to be initiated May 2019, subsequent auctions every two years • Target annual build-out of 1-2GW to reach 30GW capacity by 2030 • Hornsea 3 consent process moving forward as planned United Kingdom • Hornsea 4 consent preparation moving
Slide 9: Strong results across the Group in Q3 2018
Strong results across the Group in Q3 2018 EBITDA Net profit Free cash flow DKKm DKKm DKKm 276 2,225 418 298 1,757 -44 -62 209 -4,363 -4,122 Q3 2017 Offshore Bioenergy Customer Other Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Wind Solutions EBITDA increased by DKK 0.5bn Net profit doubled FCF up DKK 0.
Slide 10: Solid financial ratios
Solid financial ratios Net interest-bearing debt development FFO / Adj. net debt ROCE (LTM) DKKm % % 42 23 4,385 1 231 8,957 -380 15 27 4,603 117 30 Jun CFO CAPEX Divest- Disc. Hybrid 30 Sep 2018 ments operations coupon 2018 30 Sep 30 Sep 30 Sep 30 Sep & other 2017 2018 2017 2018 Net interest-bearin
Slide 11: Offshore Wind – Solid earnings in Q3 2018
Offshore Wind – Solid earnings in Q3 2018 Denmark Sites, O&Ms & PPA United Kingdom Partnership agreements Power generation Germany EBITDA Other Free cash flow ROCE (LTM) TWh DKKm DKKm % 1.9 1,972 26 1.7 0.4 1,674 0.5 16 1,989 1,521 1.2 0.9 504 651 -351 -668 -3,156 0.3 0.3 -3,322 30 Sep 30 Sep Q3 201
Slide 12: Hornsea 1 transaction - Estimation of farm-down profit
Hornsea 1 transaction - Estimation of farm-down profit based on company announcement and guidance 609 MW DKKbn (GBPbn) ~ 37.3 (4.46) -5.8 (-0.7) -0.1 ~ -13.4-14.4 17-18 Transaction proceeds Offshore transmission3 FX hedges CAPEX, DEVEX, Other costs Expected profit Approximation based on CAPEX guidan
Slide 13: Bioenergy – Warm weather adversely impacting results
Bioenergy – Warm weather adversely impacting results Heat Ancillary services EBITDA Power Free cash flow DKKm DKKm 84 71 65 78 -158 -291 -353 -142 -204 -598 Q3 2017 Q3 2018 Q3 2017 Q3 2018 EBITDA down DKK 0.1bn FCF up DKK 0.4bn • Lower EBITDA was due to • Divestment of 50% ownership warm weather and
Slide 14: Customer Solutions – Better than expected performance in Markets and LNG
Customer Solutions – Better than expected performance in Markets and LNG EBITDA Free cash flow DKKm DKKm 478 202 -753 -830 Q3 2017 Q3 2018 Q3 2017 Q3 2018 EBITDA up DKK 0.3bn FCF decreased DKK 0.1bn • Higher margins in LNG • More funds tied up in gas • Increased earnings in Markets storages from hig
Slide 15: 2018 EBITDA guidance increased by DKK 0.5 billion
2018 EBITDA guidance increased by DKK 0.5 billion EBITDA in 2018 Financial targets Target Year • Full-year EBITDA excluding new partnerships guidance increased Return on capital employed (ROCE) by DKK 0.5bn to DKK 13-14 billion Group 12-14% Avg. 2018-2023 • EBITDA including new partnerships is expec
Slide 16: Ørsted Capital Markets Day 2018
Ørsted Capital Markets Day 2018 - 28 November Programme 08.00-09.00 Check-in 09.00-10.00 Update on Strategy & Capital Allocation 10.00-11.00 US Acquisitions Deepwater Wind Lincoln Clean Energy 11.00-15.00 Break-out sessions Global Offshore Wind Markets Offshore Wind EPC Excellence Offshore Wind O&M
Slide 17: Q&A Conference call
Q&A Conference call DK: +45 35 44 55 83 UK: +44 203 194 0544 US: +1 855 269 2604 For questions, please press 01
Slide 18: Appendix
Appendix Orsted
Slide 19: Offshore Wind build-out plan
Offshore Wind build-out plan Installed capacity 920 11,876 MW 1,142 900 1,386 8,914 752 1,218 6,776 5,108 450 Q3 2018 Borkum Hornsea 1 2020 Borssele Hornsea 2 Decided (FID) Greater German Greater Decided & Riffgrund 2 1&2 capacity Changhua Development Changhua Awarded (2022) 1&2a Portfolio 2b&4 capa
Slide 20: SPA/CA split and timing of CA gains on farm-downs
SPA/CA split and timing of CA gains on farm-downs Wind farm MW capacity Commissioning SPA/CA split 2015 2016 2017 2018e 2019e 2020e SPA All Gode Wind 1 330 Q4 2016 CA: 75-100% 0-10% 65-75% 20-30% SPA Gode Wind 2 252 Q4 2016 CA: 75-100% 55-65% 30-40% 0-10% SPA DKK 0.6bn Burbo Bank Ext. 258 Q1 2017 CA
Slide 21: Group – Financial highlights Q3
Group – Financial highlights Q3 FINANCIAL HIGHLIGHTS Q3 2018 Q3 2017 D EBITDA DKKm 2,225 1,757 27% • Offshore Wind 1,972 1,674 18% • Bioenergy (204) (142) 44% • Customer Solutions 478 202 137% Net profit – continuing operations 418 209 100% Net profit – discontinued operations (13) 2,931 n.a. Total
Slide 22: Offshore Wind – Financial highlights Q3
Offshore Wind – Financial highlights Q3 FINANCIAL HIGHLIGHTS Q3 2018 Q3 2017 D EBITDA DKKm 1,972 1,674 18% • Sites incl. O&Ms and PPAs 1,989 1,521 31% • Partnership agreements and farm-down gains 651 504 29% • Other incl. A2SEA and project development (668) (351) 90% ROCE1 % 25.8 15.8 10.0%p KEY BUS
Slide 23: Wind speeds
Wind speeds Wind speed (m/s) 2017 2018 Normal wind year 10.2 10.4 9.2 8.2 7.9 11.0 9.9 10.3 9.3 8.5 7.9 7.9 7.7 Q1 Q2 Q3 Q4 FY 23
Slide 24: Bioenergy – Financial highlights Q3
Bioenergy – Financial highlights Q3 FINANCIAL HIGHLIGHTS Q3 2018 Q3 2017 D EBITDA DKKm (204) (142) 44% • Heat 71 84 (15%) • Ancillary services 78 65 20% • Power (353) (291) 21% Free cash flow (158) (598) (74%) KEY BUSINESS DRIVERS Heat generation TWh 0.3 0.7 (57%) Power generation TWh 0.7 1.2 (42%)
Slide 25: Customer Solutions – Financial highlights Q3
Customer Solutions – Financial highlights Q3 FINANCIAL HIGHLIGHTS Q3 2018 Q3 2017 D EBITDA DKKm 478 202 137% • Distribution 216 294 (27%) • Sales (32) 15 n.a. • Markets 82 (95) n.a. • LNG 212 (12) n.a. ROCE1 % 11.2 23.0 (11.8%p) KEY BUSINESS DRIVERS RAB Power DKKm 10,957 10,623 3% Gas sales TWh 31.5
Slide 26: Differences in Business Performance EBITDA and IFRS EBITDA
Differences in Business Performance EBITDA and IFRS EBITDA DKKm Q3 2018 Q3 2017 EBITDA – BUSINESS PERFORMANCE (BP) 2,225 1,757 BP adjustment in respect of revenue for the year (2,220) (222) BP adjustment in respect of COGS for the year 562 108 EBITDA – IFRS 567 1,643 Total BP adjustments for the yea
Slide 27: Investments
Investments GROSS AND NET INVESTMENTS (DKKm) Q3 2018 Q3 2017 Gross investments per Capital employed per business unit business unit Cash flow from investing activities 452 (276) Q3 2018 30 September 2018 Dividends received and capital reduction, reversed (24) - Purchase and sale of securities, rever
Slide 28: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT (DKKm) Q3 20181 FY 2017 Q3 20171 FY 2016 EBITDA – Business Performance 23,855 22,519 15,796 19,109 Interest expenses, net (1,206) (629) (543) (402) Reversal of interest expenses transferred to assets (439) (754) (659) (574)
Slide 29: Debt overview
Debt overview Gross debt and hybrids Net debt Long term gross debt maturity Q3 2018 DKKbn schedule Q3 2018, DKKbn 18 16 14 5% 12 10 8 34% 39.4 10.3 6 DKKbn 4 61% 2 9.0 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+ Bonds Hybrids Bank loans Q3 2017 Q3 2018 Bonds Bank loans 29
Slide 30: Interest rate risk and funding costs
Interest rate risk and funding costs Effective funding costs – gross debt Key risk figures Q3 2018 (excl. hybrid) (excl. hybrid) Bond and bank debt (excl. hybrid), LHS DKKbn Gross annual expected interest expense (excl. hybrid), LHS Cost of Modified Avg. time to % Average effective interest rate (ex
Slide 31: 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 32: 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. Group parent. The strategy supports
Slide 33: Currency hedging principles
Currency hedging principles • The purpose of our currency risk management is to reduce the Group’s currency risks over a 5-year horizon • The main principle is to hedge FX exposure once it is deemed relatively certain that the underlying cash flows in foreign currency will materialise • Thus, FX ris
Slide 34: Hedging of FX and power risk in Offshore Wind
Hedging of FX and power risk in Offshore Wind Construction and farm-downs – Hedging of FX Commercial Operations – Hedging of FX and power Decision gates 100 Pre-FID • Early hedging of large DEVEX items on a 100% basis 80 100% share 75 60 Final Investment 50 • Build up of hedges of transmission asset
Slide 35: Investor Relations contacts
Daniel Lerup Rasmus Hærvig Dennis Callesen Head of Investor Relations Senior Investor Relations Officer Lead Investor Relations Officer DANIL@orsted.com RAKOL@orsted.com DECAL@orsted.com