Slide 1: Ørsted Investor presentation Q3 2019
Ørsted Investor presentation Q3 2019 29 October 2019
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: Strong results and continued strategic progress in Q3 2019
Strong results and continued strategic progress in Q3 2019 Highlights – Q3 2019 • EBITDA guidance increased by DKK 0.5bn to DKK 16-17bn, due to reversal of Elsam provision and strong wind conditions in August • EBITDA totalled DKK 4.1 billion, an increase of 85% compared to Q3 2018, and in line with
Slide 4: Downward adjustment of our offshore wind production forecast
Downward adjustment of our offshore wind production forecast Blockage effect Wake effect • Blockage effect is the slowing down of wind as it approaches a wind • Wake effects occur behind turbines where the wind slows down before farm and turbines it spreads and the wind speed recovers • Individual b
Slide 5: Developments since 2018 CMD and status on long-term key financial targets and estimates
Developments since 2018 CMD and status on long-term key financial targets and estimates Negative developments since CMD 2018 CMD – Key financial targets Update • Downward adjustment of offshore wind production Average yearly growth in EBITDA from offshore and onshore wind forecast across our asset a
Slide 6: 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 Commercially Expected Q4 2020 / operational in Q4 2020 H1 2022 2022 completion Q1 2021 Q4 2019 Status On track On track On track On
Slide 7: Construction programme – Onshore, Bioenergy and Power Distribution
Construction programme – Onshore, Bioenergy and Power Distribution Asnæs Renescience Smart meter Project Sage Draw Willow Creek Plum Creek CHP plant Northwich roll-out Country Asset type 125MW Heat, 120,000 tonnes 1 million Capacity 338MW 103MW 230MW 25MW Power waste installations Expected Q1 2020 Q
Slide 8: Offshore market development – US
Offshore market development – US • Bids submitted in the 800MW offshore wind solicitation with Bay State Wind project in joint venture with Eversource Massachusetts • Outcome expected 8 November 2019 • Passed bill which could increase offshore wind capacity to 3.2GW by 2030 • Bids submitted in the u
Slide 9: Offshore market development – Europe
Offshore market development – Europe • Target annual build-out of 1-2GW to reach 30GW capacity by 2030 • Six offshore wind farms have been awarded a total of 5.5GW in the 2019 UK CfD auction • Decision deadline for Hornsea 3 development consent postponed to 31 March 2020 United Kingdom • Crown Estat
Slide 10: Offshore market development – APAC
Offshore market development – APAC • Taiwan has met its target of awarding 5.5GW to be commissioned by 2025 • Auctions of additional 4.5GW for post 2025 commissioning being planned. Third round Taiwan development auction design expected to be announced in Q4 2019 • 600MW Greater Changhua 3 project r
Slide 11: Expected upcoming offshore wind auctions and tenders in 2020 & 2021
Expected upcoming offshore wind auctions and tenders in 2020 & 2021 H1 2020 H2 2020 H2 2020 H1 2021 H1 2021 H2 2021 2021 Maryland 2nd New York 2nd Holland Coast French tender 4th CfD round Holland Coast German tender +400MW 800-1,200MW West 1 Round 4 2,000-4,000MW West 2 ~900MW 760MW 1,000MW 760MW H
Slide 12: Further strengthening of our US onshore portfolio with final investment decision taken for Plum Creek
Further strengthening of our US onshore portfolio with final investment decision taken for Plum Creek Near-term capacity Development pipeline with offtake contracted MW Permian Solar - 400MWAC - ERCOT West, TX Operating 400 2,068 Under construction • Executed 12 year PPA with ExxonMobil Expected 201
Slide 13: Results in line with expectations
Results in line with expectations CFO EBITDA Net profit Free cash flow CAPEX DKKm DKKm DKKm Divestments 391 170 4,116 1,443 312 871 628 -314 -117 380 260 704 2,225 -4,385 -7,222 418 -4,122 Q3 2018 Offshore Offshore Onshore Bioenergy Customer Other Q3 2019 Q3 2018 Q3 2019 -6,091 sites partnerships So
Slide 14: Increase in net debt - Solid financial ratios
Increase in net debt - Solid financial ratios Net interest-bearing debt development FFO / Adj. net debt (LTM) ROCE (LTM) DKKm % % 47 29 42 23 -4,980 -6,091 -118 -893 -12,082 30 Jun 2019 Free cash flow Hybrid coupon Other 30 Sep 2019 30 Sep 2018 30 Sep 2019 30 Sep 2018 30 Sep 2019 Net interest-bearin
Slide 15: Offshore – Q3 financial performance
Offshore – Q3 financial performance Sites, O&Ms & PPA Denmark Germany Power generation EBITDA Partnerships Free cash flow UK US TWh DKKm Other, incl. DEVEX DKKm 2.8 3,304 0.5 1,972 1.9 2,693 0.4 1.8 1,989 -3,156 1.2 1,188 651 0.3 0.5 -668 -577 -6,161 0.0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 20
Slide 16: Onshore – Q3 financial performance
Onshore – Q3 financial performance Sites Power generation EBITDA PTCs and tax attributes Free cash flow TWh DKKm Other, incl. DEVEX DKKm 0.9 312 249 145 -82 -256 Q3 2019 Q3 2019 Q3 2019 Power generation of 0.9TWh EBITDA of DKK 0.3bn FCF totalled DKK -0.3bn • Wind speed of 6.6m/s in Q3 2019 vs. • EBI
Slide 17: Bioenergy – Q3 financial performance
Bioenergy – Q3 financial performance Heat EBITDA Ancillary Free cash flow Free cash flow DKKm Power DKKm DKKm 187 96 71 78 93 -2 -158 -353 -592 -204 Q3 2018 Q3 2019 Q3 2018 Q3 2019 EBITDA up DKK 0.4bn FCF totalled DKK -0.6bn • Earnings from Power positively affected • Higher inventories and lower pa
Slide 18: Customer Solutions – Q3 financial performance
Customer Solutions – Q3 financial performance Distribution EBITDA Sales Free cash flow DKKm Markets DKKm LNG 478 1,061 164 216 82 365 212 -32 -29 18 -190 -830 Q3 2018 Q3 2019 Q3 2018 Q3 2019 EBITDA decreased DKK 0.3bn FCF totalled DKK 1.1bn • Lower earnings from LNG due to • Lower receivables and lo
Slide 19: 2019 guidance and long-term financial estimates and policies
2019 guidance and long-term financial estimates and policies 2019 guidance DKKbn Financial estimates EBITDA without new partnerships 16-17 Total capex spend, 2019-2025 DKK 200bn Gross investments 21-23 Capex allocation split, 2019-2025: - Offshore 75-85% Business unit EBITDA FY 2019 vs. FY 2018 Dire
Slide 20: Q&A
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 21: Appendix
Appendix Orsted
Slide 22: Renewable capacity as of 30 September 2019
Renewable capacity as of 30 September 2019 Indicator Unit 9M 2019 FY 2018 9M 2018 Installed renewable capacity Installed renewable capacity MW 8,487 8,303 6,995 Installed renewable capacity is calculated as the - Offshore wind power MW 5,602 5,602 5,107 cumulative renewable gross capacity installed
Slide 23: 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 1,218 6,820 5,602 Operational Hornsea 1 Total by Borssele Hornsea 2 Greater Decided (FID) US North- US Mid- German Greater Decided & Q3 2019 2020 1&2 Changhua capacity East
Slide 24: Onshore wind build-out plan
Onshore wind build-out plan Installed capacity MW Operational 400 2,068 Under construction Expected 2019 FID 230 103 338 997 Operational Sage Draw Willow Creek Plum Creek Permian Solar Total Q2 2019 Region ERCOT, TX SPP, SD SPP, NE ERCOT, TX Expected 2021 Q1 2020 Q4 2020 Q4 2020 completion (Pending
Slide 25: 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 Ørsted has been a signatory to the UN 2018 • In 9M 2019, 83% of our energy generation was green. By Global Compac
Slide 26: Group – Financial highlights
Group – Financial highlights FINANCIAL HIGHLIGHTS Q3 2019 Q3 2018 D FY 2018 FY 2017 D EBITDA DKKm 4,116 2,225 85% 30,029 22,519 33% • Offshore 3,304 1,972 68% 27,809 20,595 35% • Onshore 312 - n.a. 44 - n.a. • Bioenergy 187 (204) n.a. 367 152 141% • Customer Solutions 164 478 (66%) 1,970 2,082 (5%)
Slide 27: Offshore – Financial highlights
Offshore – Financial highlights FINANCIAL HIGHLIGHTS Q3 2019 Q3 2018 D WIND SPEED (m/s), offshore wind farms EBITDA DKKm 3,304 1,972 68% • Sites incl. O&Ms and PPAs 2,693 1,989 35% • Partnership agreements and farm-down gains 1,188 651 82% • Other incl. project development (577) (668) (14%) ROCE1 %
Slide 28: Onshore – Financial highlights
Onshore – Financial highlights FINANCIAL HIGHLIGHTS Q3 2019 EBITDA DKKm 312 • Sites 249 • Production tax credits and tax attributes 145 • Other incl. project development (82) ROCE1 % 8.9 KEY BUSINESS DRIVERS Power generation TWh 0.9 Wind speed m/s 6.6 Availability % 98 Load factor % 39 Installed cap
Slide 29: Bioenergy – Financial highlights
Bioenergy – Financial highlights FINANCIAL HIGHLIGHTS Q3 2019 Q3 2018 D EBITDA DKKm 187 (204) n.a. • Heat 96 71 35% • Ancillary services 93 78 19% • Power (2) (353) 99% Free cash flow (592) (158) 275% KEY BUSINESS DRIVERS Heat generation TWh 0.5 0.3 67% Power generation TWh 0.4 0.7 (43%) Degree days
Slide 30: Customer Solutions – Financial highlights
Customer Solutions – Financial highlights FINANCIAL HIGHLIGHTS Q3 2019 Q3 2018 D EBITDA DKKm 164 478 (66%) • Distribution 365 216 69% • Sales (29) (32) (9%) • Markets 18 82 (78%) • LNG (190) 212 n.a. ROCE1 % 12.7 11.2 1.5%p KEY BUSINESS DRIVERS RAB Power DKKm 11,431 10,957 4% Gas sales TWh 31.5 31.6
Slide 31: Currency and energy exposure
Currency and energy exposure Currency exposure – 1 October 2019 to 30 September 2024 Energy exposure - 1 October 2019 to 30 September 2024 DKKbn DKKbn Before hedging Before hedging After hedging After hedging 61.0 20.8 18.2 7.6 2.2 0.4 1.3 0.9 0.0 -1.3 -0.1 -5.7 -5.2 -4.4 GBP* USD** TWD Power Gas Oi
Slide 32: Local currency funding and potential partnership agreements reduce risk towards Taiwanese Dollar significantly
Local currency funding and potential partnership agreements reduce risk towards Taiwanese Dollar significantly Illustrative Illustrative Cash flows from Changhua 1 & 2A Risk mitigating actions Potentially mitigated by CAPEX Revenue minus OPEX Credit facility of 5bn DKK to be partnership agreement re
Slide 33: Capital employed
Capital employed CAPITAL EMPLOYED, DKKm 9M 2019 FY 2018 9M 2018 Capital employed by segment Intangible assets and property and equipment 100,748 84,832 82,590 %, 9M 2019 Equity Investments and non-current receivables 1,390 1,445 1,429 Offshore Bioenergy Net working capital, work in progress 8,764 9,
Slide 34: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT, DKKm 9M 20191 FY 2018 9M 20181 EBITDA – Business Performance 32,077 30,029 23,855 Interest expenses, net (627) (877) (1,206) Reversal of interest expenses transferred to assets (420) (506) (439) Interest element of decommis
Slide 35: Debt overview
Debt overview Gross debt and hybrids Effective funding costs – gross debt Long term gross debt maturity schedule 30 September 2019 (excl. hybrid) 30 September, DKKbn Cost of Modified Avg. time to DKKbn debt (%) duration (%) maturity (years) % Bond loans 3.5 8.8 11.7 80 6 Bank loans 2.2 0.3 5.1 5.1%
Slide 36: 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 37: Ørsted’s outstanding Green Bonds
Ørsted’s outstanding Green Bonds Issuer Ørsted A/S Ørsted A/S Ørsted A/S Ørsted A/S Ørsted A/S Face Value EUR 750m EUR 500m GBP 350m GBP 300m GBP 250m Format Senior Unsecured Hybrid capital Senior Unsecured Senior Unsecured Senior Unsecured/CPI linked Maturity 26 November 2029 24 November 3017 17 Ma
Slide 38: 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 39: 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 minimized by netting of exposures, use of local currency in construction contracts and debt in local currency. Managing outright long risk
Slide 40: 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 41: 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 42: 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