Orsted · OMXCOP:ORSTED
Orsted — Ørsted — Q1 2019 Earnings Presentation
38 slides from Orsted's earnings presentation, 2019
Slide 1: Ørsted Investor presentation Q1 2019
Ørsted Investor presentation Q1 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: Good start to the year
Good start to the year Highlights – Q1 2019 • EBITDA totaled DKK 5.1 billion, a decrease of 7% compared to Q1 2018, but in line with expectations • EBITDA from offshore wind farms in operation increased by 13%, to DKK 3.6 billion in Q1 2019 • Green share of generation reached 80% • FID on 900MW Grea
Slide 4: Construction programme – Offshore
Construction programme – Offshore Project Hornsea 1 Borssele 1&2 Virginia Hornsea 2 Changhua 1&2a Country Asset type Capacity 1,218MW 752MW 12MW (EPC) 1,386MW 900MW Expected Q4 2020 / H2 2019 H1 2021 H1 2022 2022 completion Q1 2021 Status On track On track On track On track On track Comments All fou
Slide 5: Construction programme – Onshore, Bioenergy and Customer Solutions
Construction programme – Onshore, Bioenergy and Customer Solutions Project Lockett Sage Draw Asnæs Renescience Smart meter CHP plant Northwich roll-out Country Asset type 129MW Heat, 120,000 tonnes 1 million Capacity 184MW 338MW 25MW Power waste installations Expected Q3 2019 Q1 2020 Q4 2019 H1 2019
Slide 6: Offshore market development – US
Offshore market development – US • Draft 800MW RFP submitted for regulatory approval. Solicitation expected August 2019 Massachusetts • Passed bill which could increase offshore wind capacity to 3.2GW by 2035 • Bid submitted in +800MW offshore wind solicitation with the Sunrise Wind project • Outcom
Slide 7: Offshore market development – Europe
Offshore market development – Europe • Next UK CfD auction to be initiated in May 2019, subsequent auctions every two years • Target annual build-out of 1-2GW to reach 30GW capacity by 2030 United Kingdom • Hornsea 3 consent process moving forward as planned • Race Bank Extension lease agreement exp
Slide 8: Offshore market development – APAC
Offshore market development – APAC • FID on 900MW Greater Changhua 1&2a project. Good progress on the Formosa 1 phase 2 project Taiwan • Taiwan has met its target of awarding 5.5GW to be commissioned by 2025 • Auctions of additional 4.5GW are being planned for post 2025 • 600MW Greater Changhua 3 pr
Slide 9: Strong progress in US onshore business
Strong progress in US onshore business Near-term capacity Development pipeline with offtake contracted MW 400 1,965 Plum Creek Wind - 230MW - SPP, NE Operating • 12 year PPA with Smucker Co, Avery Dennison and FID Vail Resort for >70% capacity Expected 2019 FID 230 • Turbine Supply Agreement and Int
Slide 10: Results in line with expectations
Results in line with expectations CFO EBITDA Net profit Free cash flow CAPEX DKKm DKKm DKKm Divestments 408 152 3,032 5,519 67 5,130 2,639 -365 -4 -647 2,678 835 -398 -118 -2,071 -3,899 -1,634 -1,339 Q1 2018 Offshore Offshore Onshore Bioenergy Customer Other Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 s
Slide 11: Distribution of dividends and solid financial ratios
Distribution of dividends and solid financial ratios Net interest-bearing debt development FFO / Adj. net debt ROCE (LTM) DKKm % % 2,219 46 46 28 27 -1,339 2 -4,237 -5,223 -533 -9,111 31 Dec Free cash Dividends Disc. Leasing Other 31 Mar 2018 flow & hybrid operations obligation 2019 31 Mar 2018 31 M
Slide 12: Offshore – Q1 financial performance
Offshore – Q1 financial performance Denmark Sites, O&Ms & PPA Power generation United Kingdom EBITDA Partnerships Free cash flow TWh Germany DKKm Other, incl. DEVEX DKKm 3.0 3.1 3,956 3,999 482 0.6 0.6 3,233 3,641 1.9 2.0 1,082 888 0.4 0.6 -359 -530 -213 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 20
Slide 13: Onshore – Q1 financial performance
Onshore – Q1 financial performance Sites Power generation EBITDA PTCs and tax attributes Free cash flow GWh DKKm Other, incl. DEVEX DKKm 826 152 74 142 -64 -634 Q1 2019 Q1 2019 Q1 2019 Power generation of 826GWh EBITDA of DKK 152m FCF of DKK -0.6bn • First quarter with full contribution from • EBITD
Slide 14: Bioenergy – Q1 financial performance
Bioenergy – Q1 financial performance Heat EBITDA Ancillary Free cash flow Free cash flow DKKm Power DKKm DKKm 439 435 401 283 330 101 103 51 6 -148 Q1 2018 Q1 2019 Q1 2018 Q1 2019 EBITDA in line with Q1 2018 FCF decreased DKK 0.5bn • EBITDA from Heat slightly below Q1 • Higher inventories and lower
Slide 15: Customer Solutions – Q1 financial performance
Customer Solutions – Q1 financial performance Distribution EBITDA Sales EBITDA - Markets Free cash flow DKKm Markets DKKm DKKm LNG 1,214 794 432 -232 5 567 261 411 794 261 Q1 of storage Trading Q1 Revaluation Renego- optimisation Portfolio tiation -17 -31 2018 2019 -978 -74 Q1 2018 Q1 2019 Q1 2018 Q
Slide 16: 2019 Guidance and long-term financial estimates and policies
2019 Guidance and long-term financial estimates and policies 2019 guidance Financial estimates Target EBITDA expected to be DKK 15.5-16.5 billion Total capex spend, 2019-2025 DKK 200bn Gross investments expected to be DKK 21-23 billion Capex allocation split, 2019-2025: - Offshore 75-85% Business un
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: Renewable capacity as of 31 March 2019
Renewable capacity as of 31 March 2019 Indicator Unit Q1 2019 FY 2018 Q1 2018 Installed renewable capacity MW 8,303 8,303 6,336 - Offshore wind power MW 5,602 5,602 4,448 - Denmark MW 1,006 1,006 1,006 - United Kingdom MW 3,182 3,182 2,523 - Germany MW 1,384 1,384 919 - US MW 30 30 - - Onshore wind
Slide 20: Offshore wind build-out plan
Offshore wind build-out plan Installed capacity MW 954 12,874 920 Under construction 1,142 Awarded 900 9,858 1,386 752 1,218 6,820 5,602 Operational Hornsea 1 Total by Borssele Hornsea 2 Greater Decided (FID) German Greater Deepwater Decided & Q1 2019 2020 1&2 Changhua capacity Development Changhua
Slide 21: Onshore wind build-out plan
Onshore wind build-out plan Installed capacity MW 400 1,965 FID Expected 2019 FID 230 338 184 813 Operational Lockett Sage Draw Plum Creek Permian Solar Total Q1 2019 Region ERCOT, TX ERCOT, TX SPP, NE ERCOT, TX Expected 2020 2021 Q3 2019 Q1 2020 completion (Pending FID) (Pending FID) Turbine GE GE
Slide 22: Sustainability and ESG at Ørsted
Sustainability and ESG at Ørsted Green leadership Contributing to the global goals ESG ratings of Ørsted • In 2018, 75% of our energy generation was green. By Rating agency Rating Benchmark 2025, we target 99%. Ørsted has been a signatory to the UN 2018 Global Compact for 13 years and adheres • We h
Slide 23: Group – Financial highlights
Group – Financial highlights FINANCIAL HIGHLIGHTS Q1 2019 Q1 2018 D FY 2018 FY 2017 D EBITDA DKKm 5,130 5,519 (7%) 30,029 22,519 33% • Offshore 3,999 3,956 1% 27,809 20,595 35% • Onshore 152 - n.a. 44 - n.a. • Bioenergy 435 439 (1%) 367 152 141% • Customer Solutions 567 1,214 (53%) 1,970 2,082 (5%)
Slide 24: Offshore – Financial highlights
Offshore – Financial highlights FINANCIAL HIGHLIGHTS Q1 2019 Q1 2018 D WIND SPEED (m/s), offshore wind farms EBITDA DKKm 3,999 3,956 1% • Sites incl. O&Ms and PPAs 3,641 3,233 13% • Partnership agreements and farm-down gains 888 1,082 (18%) • Other incl. project development (530) (359) 48% ROCE1 % 3
Slide 25: Onshore – Financial highlights
Onshore – Financial highlights FINANCIAL HIGHLIGHTS Q1 2019 EBITDA DKKm 152 • Sites 74 • Production tax credits and tax attributes 142 • Other incl. project development (64) ROCE1 % 1.9 KEY BUSINESS DRIVERS Power generation GWh 826 Wind speed m/s 7.8 Availability % 97 Load factor % 47 Installed capa
Slide 26: Bioenergy – Financial highlights
Bioenergy – Financial highlights FINANCIAL HIGHLIGHTS Q1 2019 Q1 2018 D EBITDA DKKm 435 439 (1%) • Heat 283 330 (14%) • Ancillary services 101 103 (2%) • Power 51 6 750% Free cash flow (148) 401 n.a. KEY BUSINESS DRIVERS Heat generation TWh 3.7 4.8 (23%) Power generation TWh 1.9 3.3 (42%) Degree day
Slide 27: Customer Solutions – Financial highlights
Customer Solutions – Financial highlights FINANCIAL HIGHLIGHTS Q1 2019 Q1 2018 D EBITDA DKKm 567 1,214 (53%) • Distribution 411 432 (5%) • Sales (31) 5 n.a. • Markets 261 794 (67%) • LNG (74) (17) 335% ROCE1 % 10.3 12.7 (2.4%p) KEY BUSINESS DRIVERS RAB Power DKKm 10,957 10,623 3% Gas sales TWh 26.5
Slide 28: Currency and energy exposure
Currency and energy exposure Currency exposure - 1 April 2019 to 31 March 2024 Energy exposure - 1 April 2019 to 31 March 2024 DKKbn Before hedging DKKbn Before hedging After hedging After hedging 63.3 18.8 18.3 7.2 1.4 0.5 1.2 0.9 -0.1 -2.0 -1.9 -3.9 GBP* USD Power Gas Oil Spread Risk after hedging
Slide 29: Capital employed
Capital employed CAPITAL EMPLOYED, DKKm Q1 2019 FY 2018 Q1 2018 Capital employed by segment Intangible assets and property and equipment 92,918 84,832 79,666 %, Q1 2019 Equity Investments and non-current receivables 1,350 1,445 1,179 Offshore Bioenergy Net working capital, work in progress 9,012 9,6
Slide 30: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT, DKKm Q1 2019 FY 2018 Q1 2018 EBITDA – Business Performance 29,640 30,029 24,750 Interest expenses, net (926) (877) (761) Reversal of interest expenses transferred to assets (458) (506) (703) Interest element of decommission
Slide 31: Debt overview
FUNDING Debt overview Gross debt and hybrids Long term gross debt maturity schedule Q1 Q1 2019 2019, DKKbn Cost of Modified Avg. time to debt (%) duration (%) maturity (years) Bond loans 4.0 8.4 10.4 Bank loans 2.1 0.3 5.9 9% Total 3.8 7.5 9.8 12 32% 41.5 10 DKKbn 59% 8 6 4 2 Bonds 0 2028 2019 2020
Slide 32: 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 33: Ørsted Green Bonds
Ørsted Green Bonds Allocated amount: Allocated amount: Bond type Green Senior Bond Green Hybrid Bond Projects Green Senior Bond Green Hybrid Bond Face Value (EURm) 750 500 Total Offshore Wind 2018 2017 2018 2017 DKKm Green Bond net proceeds 5,499 3,674 Borkum Riffgrund 2 2,149 500 500 2,649 (DKKm) S
Slide 34: 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 35: 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 (GBP
Slide 36: 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 37: Energy risk management
Energy risk management Risk picture ‘We manage market risks to protect @rsted against market price volatility and ensure stable and robust financial ratios that support our growth strategy For Offshore, a substantial share of energy production is subsidized through either fixed tariffs or green cert
Slide 38: Investor Relations contacts
Daniel Lerup Sabine Lohse Head of Investor Relations Senior Investor Relations Officer DANIL@orsted.com SABLO@orsted.com Rasmus Hærvig Dennis Callesen Senior Investor Relations Officer Lead Investor Relations Officer RAKOL@orsted.com DECAL@orsted.com