E.ON SE · XETR:EOAN
E.ON — German Corporate Conference 2002
26 slides from E.ON's conference presentation, Feb 28, 2002
Slide 1: German Corporate Conference: Business Focus as Value Driver
German Corporate Conference „Business Focus as Value Driver“ Dr. Erhard Schipporeit, E.ON AG February 28, 2002 Page 1
Slide 2: E.ON's value drivers to become a top global integrated energy service provider
E.ON‘s value drivers to become a top global integrated energy service provider: • Focus on core business Energy – Electricity, Gas and Water • Divest all non-utility assets: Continue optimizing value • Invest proceeds into core business: Growth markets, especially in the United States, but not at an
Slide 3: E.ON Group – Focus company
E.ON Group – Focus company E.ON AG Energy Non-core activities E.ON Energie 100% Oil VEBA Oel* 49% – Electricity Chemicals • Generation Degussa 64.6% • Trading Real Estate • Transmission/ Viterra 100% distribution Other Activities • Supply Stinnes 65.5% – Gas Connect Austria 50.1% Bouygues Telecom 17
Slide 4: E.ON Group – Divest all non-utility assets ahead of plan
E.ON Group – Divest all non-utility assets ahead of plan € in millions Stake Sales Proceeds Comments % 2000 (equity value) Listed companies Degussa 64.6 20,139 - Stinnes 65.5 11,981 - MEMC 71.8 944 - Divested Schmalbach-Lubeca 49 1,891 - Divestment initiated Gerresheimer Glas 71 8361 215 Divested Ot
Slide 5: E.ON Group - Implementing E.ON's global growth strategy
E.ON Group - Implementing E.ON‘s global growth strategy Growth outside Europe • Acquire integrated utilities in North America (eg. LG&E) • Selectively engage in South America Broad expansion in • Expand around Germany (eg. majority in Sydkraft) Europe • Establish European-wide wholesale presence • E
Slide 6: E.ON Energie - Second-largest utility in Germany
E.ON Energie - Second-largest utility in Germany SCHLESWAG EWE e.dis Avacon EMR PESAG EAM TEAG E.ON Bayern E.ON Bayern Majority participations Minority participations Includes only participations => 25% Page 6
Slide 7: E.ON Energie - Acquisitions of Municipalities (Examples)
E.ON Energie - Acquisitions of Municipalities (Examples) Participation Sales Number of customers % mill € Municipal utilities Stadtwerke Germersheim 25 50 10,000 Stadtwerke Stade 20 64 23,000 Stadtwerke Chemnitz 15 400 176,000 Gemeindewerke Ansbach 40 82 25,000 Gemeindewerke Haßloch 25 40 10,000 Sta
Slide 8: E.ON Energie - Strong market share in gas distribution in Germany
E.ON Energie - Strong market share in gas distribution in Germany 2000 (pro forma) SCHLESWAG Turnover Sales volume (mill €) (bn kWh) Heingas EWE EWE 1,594 72.5 AVACON • The leading local distribution Gelsenwasser company in Germany* Thüga • Further participations in Italy, Austria, Czech, Hungary, L
Slide 9: In Germany's gas market, E.ON needs to make up ground
In Germany‘s gas market, E.ON needs to make up ground in the import and long-distance delivery segments GAS IMPORT LONG-DISTANCE LOCAL SUPPLY ELECTRICITY GENERATION TRANSMISSION DISTRIBUTION SUPPLY Market position* Excellent Good * Includes shareholdings greater than 20 % Weak Source: E.ON Page 9
Slide 10: Ruhrgas activities outside Germany fit E.ON's strategy very well
Geographically, Ruhrgas activities outside Germany fit E.ON‘s strategy very well E.ON‘s gas interests Ruhrgas shareholdings Page 10
Slide 11: E.ON Energie - Largest privately-owned water operator in Germany
E.ON Energie - Largest privately-owned water operator in Germany 2000 (pro forma) Turnover Sales volume (mill €) (mill m3) 217 259 swb T T • 15% market share in Germany* T • Broad experience in drinking N-ERGIE T and sewage water T REWAG • German water market: € 25 bn T European water market: € 80 b
Slide 12: E.ON Group - Implementing E.ON's global growth strategy
E.ON Group - Implementing E.ON‘s global growth strategy Growth outside Europe • Acquire integrated utilities in North America (eg. LG&E) • Selectively engage in South America Broad expansion in • Expand around Germany (eg. majority in Sydkraft) Europe • Establish European-wide wholesale presence • E
Slide 13: E.ON Energie - Strong international expansion
E.ON Energie - Strong international expansion Graninge Lenenergo Viking Cable E.ON Latvijas Eesti Energia RAO "EES Rossii" Scandinavia Gaze Latvenergo Latvenergo EV3 I/S Sydkraft RAO "Gazprom" Baltic Lietuvos Energija E.ON Benelux Cable Jantarenergo Jantarenergo E.ON Polska Poland (9 Distribution Co
Slide 14: The UK - A key European market
The UK - A key European market • Third largest European electricity market (~ 300 TWh sales) • Leading country in energy liberalization • Value creating opportunities exist for – flexible portfolio generators – experienced asset backed traders – efficient operators of distribution assets – innovativ
Slide 15: Powergen: UK excellence
Powergen: UK excellence • World-class, flexible and diversified generation portfolio Assets • Efficient distribution assets Trading • Integrated trading strategy • Leading market player Retail • Targeted marketing strategy with strong brand • More than 3 million customer accounts - and growing Page
Slide 16: E.ON Group - Implementing E.ON's global growth strategy
E.ON Group - Implementing E.ON‘s global growth strategy Growth outside Europe • Acquire integrated utilities in North America (eg. LG&E) • Selectively engage in South America Broad expansion in • Expand around Germany (eg. majority in Sydkraft) Europe • Establish European-wide wholesale presence • E
Slide 17: The US - World's largest power market
The US - World‘s largest power market • Larger than total European electricity market • Offers higher growth and return potential than Europe • Integrated utility as the accepted business model • Value creation opportunities from introducing European best practices • Further opportunities arising fr
Slide 18: Midwest an attractive region within the US power market
Midwest an attractive region within the US power market North American Electricity Pools(1) • Midwest(2) with around 30% of US electricity demand • Crossroads of major energy flows, MAIN well interconnected and with Detroit good fuel supply options New York Chicago MAAC Philadelphia • Heavily indust
Slide 19: LG&E: US excellence
LG&E: US excellence • Reliable, low cost generation assets Generation • Opportunities for off-system sales at attractive rates • Top quartile regional efficiency ranking in distribution - and improving Distribution • High service levels and customer satisfaction • (#1 JD Power survey1)) • Favourable
Slide 20: E.ON Group – Investment and Return criteria
E.ON Group – Investment and Return criteria • Invest in growth markets, but not at any price • 1–2% above the cost of capital • Earnings enhancing pre-goodwill in the first full year of consolidation Page 20
Slide 21: E.ON Group financial goals – Optimize cost of capital
E.ON Group financial goals – Optimize cost of capital • Leveraging the balance sheet to finance growth • Share buy-back program Page 21
Slide 22: E.ON Group – Improve returns in the core business Energy
E.ON Group – Improve returns in the core business Energy • Best practice through benchmarking • Reduction of installed capacities • “Margins before volume” approach • Market prices vs. cost of generation Page 22
Slide 23: E.ON Group - Cost Management
E.ON Group - Cost Management € in millions realized realized realized planned 1993 - 1999 2000 1993 - 2000 2001 - 2003 Electricity 1,060 430 1,490 1,020 Oil 308 32 340 60 Chemicals 796* 80 876 380 Holding - - - 50 Total 2,164 542 2,706 1,510 *Only Degussa-Hüls,without SKW Trostberg and Goldschmidt P
Slide 24: E.ON Energie - Reduction of installed generation capacity
E.ON Energie - Reduction of installed generation capacity (2001-2003) Planned Realized Shutdowns 2,279 MW Cold reserve 1,333 MW Staudinger 1 (winter only) 249 MW Total reduction of installed capacity 3,861 MW 1,493 MW Shutdown of assets currently in cold reserve 293 MW 293 MW Continuation of cold re
Slide 25: E.ON: A leading global powerhouse
E.ON: A leading global powerhouse • Focused utility business • Global leadership position in power • Poised for future growth in US and Europe, but not at any price • Best-in-class skills across value chain • High quality international management team • Continue to improve returns in our core busine
Slide 26: German Corporate Conference: Business Focus as Value Driver
German Corporate Conference „Business Focus as Value Driver“ Dr. Erhard Schipporeit, E.ON AG February 28, 2002 Page 26