Orsted · OMXCOP:ORSTED

Orsted — DONG Energy — Q1 2013 Earnings Presentation

30 slides from Orsted's earnings presentation, Apr 23, 2013

  1. Slide 1: Interim Financial Report Q1 2013

    INTERIM FINANCIAL REPORT Q1 2013 Moving Energy Forward 23 April 2013

  2. Slide 2: Disclaimer

    Disclaimer Certain statements in this presentation are based on the beliefs of our We urge you to read our annual report available on our website at management as well as assumptions made by and information currently www.dongenergy.com for a discussion of some of the factors that could available to

  3. Slide 3: Q1 13 highlights Financials

    Q1 13 highlights Financials Q1 2013 RESULTS 3

  4. Slide 4: Sound progress

    Sound progress Highlights Q1 13 Group EBITDA  EBITDA of DKK 4.6bn (up 30% y/y) DKKbn  FFO of DKK 3.4bn (up 28% y/y) 14.1 13.8  Net debt of DKK 34.5bn (up 8% vs. EoY 2012)  Adj. Net debt/EBITDA1 of 3.8x (2.9x excl. non-cash 9.3 8.6 provisions) vs. 4.0x (3.0x) in 2012 +30% 4.6 3.6 Unchanged Outloo

  5. Slide 5: 2013-14 Financial Action Plan

    2013-14 Financial Action Plan Update Q1 13  Agreement to sell Polish onshore wind business (DKK 1.8bn) 1 Divest DKK 10bn of non-core assets  Execution of other divestments progressing as planned 2 Selective farm-down of core assets  Execution of farm-downs progressing as planned  FTE reductions

  6. Slide 6: Cost reductions on track

    Cost reductions on track Assumptions for like-to-like comparison Group OPEX  Target of DKK 1.2bn cost savings to be measured DKKm 2.596 on a like-to-like basis -397  Adjustments for OPEX growth driven by new offshore wind farms 253 2.199 2.111 75 90  Annual savings target of DKK 1.2bn equates to

  7. Slide 7: Restructuring of Energy Markets – Road to profitability in 2014

    Restructuring of Energy Markets – Road to profitability in 2014 Key drivers for regaining profitability Energy Markets' EBITDA development  Secure continued positive contribution from optimisation and hedging in challenging market conditions 1  Recurring cost savings 0 - Headcount reduction of 30%

  8. Slide 8: Restructuring of Energy Markets – Renegotiation of gas contracts

    Restructuring of Energy Markets – Renegotiation of gas contracts Gas sourcing contracts Price review status (number of supply contracts)  Price review focus on aligning contract price to market price levels while managing oil/gas price exposure 1  Settled price reviews finalised in line with expec

  9. Slide 9: Sizeable new assets coming on stream in 2013

    Sizeable new assets coming on stream in 2013 London Array  All 175 turbines installed (April 2013) UK, 630MW1 Ownership: 50%  Final commissioning expected Q2 13 Lincs  All 75 turbines installed (April 2013) UK, 270MW1  Final commissioning expected summer 2013 Ownership: 25% Anholt  81 out of 11

  10. Slide 10: Key assets on stream 2014 and 2015

    Key assets on stream 2014 and 2015 West of Duddon Sands Borkum Riffg. 1 (277 MW1) (389 MW1) Westermost R. (210 MW1) 2014 2015 Laggan-Tormore Hejre (UK gas field – 44MMboe2) (DK oil field – 102MMboe2) 1) Gross capacity 2) DONG Energy E&P share of reserves Q1 2013 RESULTS 10

  11. Slide 11: Q1 13 highlights Financials

    Q1 13 highlights Financials Q1 2013 RESULTS 11

  12. Slide 12: Market conditions and prices

    Market conditions and prices HYDRO BALANCE (TWh) POWER, GAS, COAL & CO2 – INDEXED PRICES Jan 2011=100 Coal price Gas (TTF) Oil Price (Brent) 20 CO2 price Power price, DK 10 Forward prices 2012 150 0 -10 -20 100 -30 2013 -40 50 -50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 Range 2005-2012 Med

  13. Slide 13: Financial highlights Q1 13

    Financial highlights Q1 13 Selected financial figures1 Q1 13 Q1 12 2012 Revenue 21,449 19,896 67,179 EBITDA 4,627 3,564 8,639 EBITDA – DKK 4.6bn (up 30% y/y) Financial items, net -639 -414 1,356  E&P – up DKK 0.4bn y/y Profit after tax 474 2,257 -4,021 Higher oil production and lower costs for Siri

  14. Slide 14: Exploration & Production

    Exploration & Production Oil & Gas production (mboe) Oil Gas 28.5 26.4 24.0 24.4 Operational highlights  Higher oil production (up 14% y/y) 0%  Lower gas production (down 6% y/y) 6.8 6.8 2.3 2.6  Siri without production disruptions during the repair 4.5 4.2 in Q1 13 2009 2010 2011 2012 Q1 12 Q1 1

  15. Slide 15: Wind Power

    Wind Power Renewable production (TWh) 5 30% 4 Operational highlights 20% 3  Increased production in Q1 13 (up 17% y/y) from 2 10% new wind farms 1  London Array: All turbines installed (April 2013) 0 0%  Lincs: All turbines installed (April 2013) 2008 2009 2010 2011 2012 Q1 12 Q1 13  Anholt: 81

  16. Slide 16: Thermal Power

    Thermal Power Thermal heat and power production (TJ, TWh) 60 20 Operational highlights 15 40  Increased heat and power production in Q1 13 y/y 10 20 due to cold weather and lower hydro balance in 5 Norway and Sweden 0 0  Biomass conversion continues – most lately the 2008 2009 2010 2011 2012 Q1 12

  17. Slide 17: Energy Markets

    Energy Markets Gas and Power sales (TWh) 150 15 Operational highlights 100 10  Decreased gas sales in Q1 13 y/y due to lower 50 5 sales on gas hubs  Increased power sales from increased power 0 0 production in the UK 2008 2009 2010 2011 2012 Q1 12 Q1 13 Gas sales, TWh Power sales, TWh (rhs) Financ

  18. Slide 18: Sales & Distribution

    Sales & Distribution Operational highlights Operational figures Q1 13 Q1 12  Doubling of gas sales in Q1 13 y/y primarily due to Gas sales TWh 15.0 7.7 the acquisition of Shell Gas Direct in the UK, Distribution of gas TWh 3.9 3.6 recognised from May 2012 Power sales TWh 2.1 2.1 Distribution of pow

  19. Slide 19: Debt overview

    Debt overview Gross debt incl. hybrid capital (DKKbn) Key ratios loan portfolio1 Q1 13 Q4 12 64.1 62.3 Duration 6.5 6.8 9.5 9.5 Hybrid 0.3 0.0 Average to maturity (years) 10.3 10.5 17.4 Other gross debt 16.9 Average interest rate 3.9% 3.9% Bank loans Net interest cost (DKKm)2 13 46 Bonds 31.2 31.6 N

  20. Slide 20: Unchanged Outlook

    Unchanged Outlook EBITDA DKK 11.5-12.5bn in 2013 Net investments DKK 25-30bn in 2013-2014 Adjusted net debt/EBITDA Around 2.5x in 2014 Q1 2013 RESULTS 20

  21. Slide 21: Q&A Q1 2013 Results

    DONG Q12013 RESULTS = 21 energy

  22. Slide 22: Appendix

    APPENDIX Q1 2013 RESULTS 22

  23. Slide 23: Ten targets defining our ambition and direction

    Ten targets defining our ambition and direction 1 ROCE >10% by 2016 and >12% by 2020 2 Adjusted Net Debt/EBITDA < 2.5x 3 CO2 emission reduction to 260g CO2/kWh by 2020 4 From 1.7GW to 6.5GW installed gross offshore wind capacity by 2020 5 Offshore wind cost-of-energy below €100/MWh1 by 2020 6

  24. Slide 24: Clear financial targets

    Clear financial targets ROCE >10 % -7.5 2012 2016 EBITDA ~20 DKKbn 8.6 2012 2016 Adj. NIBD/EBITDA x 4.0 1.0 ~2.5 3.0 2012 2014 Q1 2013 RESULTS 24

  25. Slide 25: Outlook Market Prices 2013

    Outlook Market Prices 2013 Current Expectation at Realised estimate AR12 (27 Feb. Q1 13 (rest of 2013) 2013) (average) Oil, Brent USD/bbl 112 107 113 Gas, TTF EUR/MWh 26 26 28 Gas, NBP EUR/MWh 26 27 29 Electricity, Nord Pool system EUR/MWh 36 38 42 Electricity, Nord Pool, DK1 EUR/MWh 38 43 41 Electr

  26. Slide 26: Business Performance – Q1 13

    Business Performance – Q1 13  In Q1 13, the difference between Business Performance and IFRS amounted to DKK 0.7bn Business Performance EBITDA DKK 4.6bn Adjustments DKK 0.7bn MtM of financial and physical hedging contracts relating to other periods DKK 0.4bn Deferred losses/gains relating to financ

  27. Slide 27: Dividend, Funding and Rating

    Dividend, Funding and Rating Long term capital structure target Funding strategy and Debt Programmes  Maintain a minimum rating of BBB+ / Baa1  External funding primarily to be carried out through  Adjusted net interest-bearing debt (1) up to 2.5 times parent company – to avoid structural subordi

  28. Slide 28: Net debt calculation Q1 13

    Net debt calculation Q1 13 54.6 4.2 10.2 3.0 2.2 36.7 34.5 0.4 2.2 Gross debt incl. Repo’ed mark. Marketable Cash & cash Receivables Other Net debt 50% outstanding Adjusted REPO’ed mark. securities Securities equivalents from associates hybrid due 3005 net debt securities Q1 2013 RESULTS 28

  29. Slide 29: Investments

    Investments Investments in Q1 13 Main gross investments in Q1 13 Cash flow from investing activities DKK 4.8bn Wind activities: DKK 3.6bn Sale of securities (add back) DKK 0.5bn  Anholt DKK 1.0bn Net investments1 DKK 5.2bn  West of Duddon Sands DKK 0.8bn Gross investments DKK 5.2bn  Westermost Ro

  30. Slide 30: Larger decided construction projects

    Larger decided construction projects Larger projects with production start in 2013-2015 Country MW (1) Commercial Own share of Announced Project Type of project operation date(2) project capex (3) London Array(4) Offshore wind farm UK 315MW 2013 50% DKK 8.2bn Anholt Offshore wind farm DK 200MW 2013

DONG Energy — Q1 2013 Earnings Presentation on 6ix