Virksomhedsdag DDF. 12 June, 2013

Transcription

1 Virksomhedsdag DDF 12 June, 2013

2 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently available to the management. Forward-looking statements (other than statements of historical fact) regarding our future results of operations, financial condition, cash flows, business strategy, plans and future objectives can generally be identified by terminology such as targets, believes, expects, aims, intends, plans, seeks, will, may, anticipates, continues or similar expressions. We urge you to read our annual report available on our website at for a discussion of some of the factors that could affect our future performance and the industry in which we operate. Should one or more of these risks or uncertainties materialise or should any underlying assumptions prove to be incorrect, our actual financial condition or results of operations could materially differ from that described herein as anticipated, believed, estimated or expected. These statements are not guarantees of future performance and involve certain risks and uncertainties. Therefore, actual future results and trends may differ materially from what is forecast in this annual report due to a variety of factors, including, but not limited to, changes in temperature and precipitation levels; the development in oil, gas, electricity, coal, CO2, currency and interest rate markets; changes in legislation, regulation or standards; renegotiation of contracts; changes in the competitive environment in DONG Energy s markets; and security of supply. DDF VIRKSOMHEDSDAG, 12 JUNE

3 DONG Energy overview Overview Integrated business model Integrated Utility focused on NW Europe #1 in Danish energy markets Global leader in offshore wind Sizeable E&P operations Rated BBB+ neg. / Baa1 stable Decisive action plan launched to restore financial robustness Strong market positions Ownership Largest Utility company Sizeable E&P operations Offshore wind market leader Local market positions 11% 9% Kingdom of Denmark SEAS-NVE Holding Others 80% DDF VIRKSOMHEDSDAG, 12 JUNE

4 Wind Power overview Wind Power at a glance Global market leader with 1.7 GW installed capacity Largest pipeline among all major players First mover in the offshore wind industry In-house development and construction expertise and O&M know-how Proven track record of industry leading load factors Installed capacity, GW** Owned by others DONG Energy owned % 13% GW fully commissioned 1.5 GW under construction GW in pipeline 17% 1.1 GW operated by DONG Energy Fully commissioned 0.7 GW Walney 1&2 Westermost Rough Barrow Horns Rev 2 Anholt Middelgrunden Wind farms in operation Wind farms to be commissioned Under construction 1.0 GW Pipeline ~ 2.9 GW West of Duddon Sands Lincs Nysted Fully commissioned 0.6 GW Under construction 0.4 GW Pipeline ~ 0.5 GW Burbo Bank Borkum Riffgrund 1 Gunfleet Sands 1&2 New Market Opportunities NL pipeline ~ 0.5 GW FR pipeline ~ 0.5 GW London Array 1 Under construction 0.8 GW* Pipeline ~ 0.95 GW * Gode Wind 1+2 (~ 0.6 GW) with expected FID in 2013 is included ** Fully commissioned: capacity built by DONG Energy, parks have completed commissioning phase Under construction: capacity built by DONG Energy, parks where FID has been taken; Lincs included with current share (25%) Operated: capacity operated by DONG Energy, e.g. London Array 1 included at 100% 4

5 E&P overview DONG Energy E&P at a glance DONG Energy E&P explores and produces natural gas and oil in Denmark, Norway, the United Kingdom, Faroes and Greenland Value creation throughout the entire upstream value chain from exploration to production, both as operator and active partner Strong focus on safety and environment with top quartile performance Key figures (2012) Production 78,000 boe/day 2P reserves 454 Mill. boe Market position 71 Licences Revenue DKK 11.9bn UK West of Shetlands Largest regional licence holder 10 discoveries since entry Strategic partnership with Total Co-owner of regional infrastructure Active participant in further development of the area Denmark ~30 years experience Second largest player in Danish North Sea Hub-focused strategy West of Shetlands North Sea Barents Sea Norway Strong gas position Ormen Lange gas field as well as several other production activities Operator on Trym and Oselvar Active explorer across the region, including the Barents Sea Greenland Exploration position "High risk / high reward" area Co-operation with ConocoPhillips EBITDA (post HCT) DKK 4.8bn Operates a number of developments and discoveries, including the Hejre field 5

6 Q1 13 highlights & Financial action plan Strategic Direction 2020 Outlook and Targets DDF VIRKSOMHEDSDAG, 12 JUNE

7 Unsatisfactory 2012 results EBITDA Challenging situation in Energy Markets Low thermal production and spreads Group EBITDA DKKbn Siri repair Higher oil & gas prices and higher production % Gain from construction agreements in Wind Power Increased production from new wind farms Net Result and Dividend Net result of DKK -4.0bn impacted by write-downs and provisions totalling DKK 5.8bn No dividend proposed for 2012 in accordance with dividend policy DDF VIRKSOMHEDSDAG, 12 JUNE

8 Four of five BUs on track EBITDA DKKbn E&P Higher production and higher oil & gas prices Higher Siri repair costs WP Earnings from construction for co-investors Higher production from new wind farms TP Lower production and spreads due to higher hydro levels Cost reductions S&D Stable earnings on par with 2011 EM Challenged mid-stream gas business Non-cash provisions of DKK 2.9bn DDF VIRKSOMHEDSDAG, 12 JUNE

9 Challenges in Energy Markets Energy Markets from 2011 to 2012 Negative impact from oil/gas spread on long term gas sourcing contracts Negative impact from reduced volumes from legacy gas purchase contracts One-off gain in 2011 from renegotiation of gas contracts Gas fired power plants under pressure from low green spark spreads Non-cash provisions on loss-making long-term gas storage and LNG capacity contracts EBITDA DKKbn One-off renegotiation gain in 2011 Midstream gas operations 2.1 CCGTs Non-cash provisions DDF VIRKSOMHEDSDAG, 12 JUNE

10 Financial Action Plan 1 Divest DKK 10bn of non-core assets Current status Agreement to sell Polish onshore wind business (DKK 1.8bn) Execution of other divestments progressing as planned 2 Selective farm-down of core assets Execution of farm-downs progressing as planned 3 Reduce costs by DKK 1.2bn, full effect in cost reduction target fully implemented 4 Restructure Energy Markets Significant cost reductions and new organisation in place Sound progress on renegotiations of gas contracts 5 Inject equity of at least DKK 6-8bn Equity process continuing according to plan and expected to close in 2013 DDF VIRKSOMHEDSDAG, 12 JUNE

11 DKKbn Restructuring of Energy Markets Road to profitability in 2014 Key drivers for regaining profitability Secure continued positive contribution from optimisation and hedging in challenging market conditions Energy Markets' EBITDA development 1 Recurring cost savings 0 - Headcount reduction of 30% carried through - Reduction of other fixed costs having full impact in Reduced infrastructure costs through new capacity booking strategy -2 Settlement of remaining price reviews of long term gas contracts with gradual impact through 2013 and 2014 Execution of non-core asset divestments with impact in 2013 and Non-cash Provisions Non-cash Provisions DDF VIRKSOMHEDSDAG, 12 JUNE

12 Injecting equity DONG Energy will seek to raise at least DKK 6-8bn of additional equity Process is supported by the majority shareholder, the Danish State DONG Energy will seek to raise the equity from new and/or existing shareholders [PICTURE] The Danish State will remain majority shareholder Process expected to close towards the end of 2013 DDF VIRKSOMHEDSDAG, 12 JUNE

13 Sizeable new assets coming on stream next 3 years Assets coming on stream in 2013 Assets coming on stream in 2014/2015 London Array UK, 630MW 1 Ownership: 50% Lincs UK, 270MW 1 Ownership: 25% All 175 turbines installed (Dec. 2012) Final commissioning expected Q2 13 All 75 turbines installed (April 2013) Final commissioning expected summer 2013 West of Duddon Sands (389 MW 1 ) Borkum Riffg. 1 (277 MW 1 ) Westermost R. (210 MW 1 ) Anholt DK, 400MW 1 Ownership: 50% Syd Arne phase 3 DK oil field, 16MMboe 2 Ownership: 36.8% All 111 turbines installed (May 2013) Final commissioning expected Q3 13 Field installations in place (platforms & pipelines) Drilling scheduled to begin in Q2 13 with first oil expected in Q4 13 Laggan- Tormore (UK gas field 44MMboe 2 ) Hejre (DK oil field 102MMboe 2 ) 1) Gross capacity 2) DONG Energy share of reserves DDF VIRKSOMHEDSDAG, 12 JUNE

14 Restoring financial robustness Rating metrics FFO/Net debt and RCF/Net debt DONG Energy to maintain minimum rating target of BBB+/Baa performance Divestment of non-core assets Core asset farm-downs Cost reductions Restructure Energy Markets Inject equity Underlying business incl. new assets on stream Target 2014 DDF VIRKSOMHEDSDAG, 12 JUNE

15 Financial highlights Q1 13 Selected financial figures 1 Q1 13 Q Revenue 21,449 19,896 67,179 EBITDA DKK 4.6bn (up 30% y/y) E&P up DKK 0.4bn y/y Higher oil production and lower costs for Siri repair WP up DKK 0.7bn y/y New wind farms brought on stream and gain from construction agreements in Wind Power TP, EM and S&D Unchanged y/y EBITDA 4,627 3,564 8,639 Financial items, net ,356 Profit after tax 474 2,257-4,021 Assets 156, , ,489 Equity incl. hybrid 49,608 58,394 50,016 Net debt 34,537 24,349 31,968 FFO 3,419 2,681 7,394 CFO 2,233 1,043 7,891 Net investments 5,247 2,023 13,799 CFO DKK 2.2bn (up 114% y/y) Increase y/y driven by higher EBITDA and less negative impact from working capital development Adjusted net debt 2 /EBITDA 3 3.8x 2.1x 4.0x FFO 3 /Net debt 24% 44% 23% DKKbn Net debt DKK 34.5bn (up 8% vs. Q4 12) Proceeds from divestments from Polish onshore wind (DKK 1.8bn) to be received later in Q E&P WP TP EM S&D Q1 13 Note (1): Comparison figures for 2012 changed from implementation of IFRS 11 in 2013 Note (2): Net debt plus 50% of outstanding hybrid capital due 3005 and 0% of hybrid capital due 3010 Note (3): Last 12 months DDF VIRKSOMHEDSDAG, 12 JUNE

16 Debt overview Gross debt incl. hybrid capital (DKKbn) Key ratios loan portfolio 1 Q1 13 Q Hybrid Other gross debt Bank loans Bonds Repo Mortgage loans Duration Average to maturity (years) Average interest rate 3.9% 3.9% Net interest cost sensitivity (DKKm) Note (1): Excluding hybrid capital Note (2): Increase in net interest costs in 2013 from 1 percentage point upward shift in the interest rate Q1 13 Net debt: 34.5bn bn Long term debt maturity schedule per Q1 13 (DKKbn) Loans Bonds Liquidity reserves (DKKbn) Q1 13 Q4 12 Liquid assets (unrestricted) Committed borrowing facilities Total Note (1): Marketable securities in REPO transactions excluded (DKK 4.2bn in Q1 13) Five new bilateral facilities signed in May 2013 with a total net amount of DKK 5.1bn DDF VIRKSOMHEDSDAG, 12 JUNE

17 Q1 13 highlights & Financial action plan Strategic Direction 2020 Outlook and Targets DDF VIRKSOMHEDSDAG, 12 JUNE

18 DONG Energy is undergoing a strategic transformation EBITDA development DONG Energy in transformation EBITDA post HCT DKKbn E&P and Wind Power Legacy business** DONG Energy is transforming from a national utility to a leading European upstream energy company Growth coming from new assets: Three steps of transformation Borkum Riffgrund 1 West of Duddon Sands Westermost Rough London Array Gode Wind 1+2 Laggan-Tormore Hejre 1 2 Legacy business has deteriorated as expected offsetting strong growth in E&P and Wind Power Transformation complete in 2012 with legacy business reaching a new steady state plateau Current E&P and Wind Power assets 3 Acceleration of growth driven by known assets coming on stream 2008A 2.5* 2012A 2016F DONG Energy has a unique growth platform compared to European peers * ** Adjusted for provision in Energy Markets in 2012 Thermal Power and Customers & Markets 18

19 Future investment focus INVESTMENT IN NEW ASSETS Offshore Wind Oil & Gas INVESTMENT IN EXISTING ASSETS Danish Power Plants Distribution Grid NO FURTHER COMMITMENT LNG Gas Storage Onshore Wind Hydro Gas Fired Power Plants Waste Fired Power Plants Electric Vehicles DDF VIRKSOMHEDSDAG, 12 JUNE

20 Focus and discipline Focus investments in businesses with competitive advantages Reduce net investment intensity compared to original ambition Restore financial capacity to match investment ambition Simplify operating model and reduce operating costs Reinforced cash discipline and ROCE focus DDF VIRKSOMHEDSDAG, 12 JUNE

21 2020 strategy 1 Sustain market leadership; quadruple capacity 2 Reinforce regional position; double production 3 Convert to biomass; provide flexibility 4 Develop energy solutions and intelligent grid 5 Simplify operating model DDF VIRKSOMHEDSDAG, 12 JUNE

22 Strategic focus Projected share of investments OFFSHORE WIND OIL AND GAS POWER PLANTS SALES & DISTRIBUTION DONG Energy capacity 1 GW 4x DONG Energy production '000 BOE/day 2x DONG Energy biomass share 2 % 2x Energy solutions 3 TWh Flexibility solutions Energy savings x Fastest growing renewable Market leader High share of regulated income Solid returns Strong regional player Driving force in the Danish North Sea Leading exploration company in West of Shetlands High risk, high return Efficient power plant operator Leading biomass capabilities Cost competitive decarbonisation Flexible power production Solid positive cash flow Leading domestic utility Growth in energy solutions Establish intelligent grid Regulated income Stable returns 50% 40% 5% 5% ENERGY MARKETS: OPTIMISATION AND TRADING 1. Offshore wind gross commissioned capacity 2. Of domestic thermal power and heat generation 3. Cumulated energy savings vs baseline DDF VIRKSOMHEDSDAG, 12 JUNE

23 Inherent uncertainties Commodity prices Relative cost competitiveness of offshore wind Large-scale offshore construction projects New offshore wind technology Large E&P projects (Hejre and Laggan-Tormore) Siri repair solution Regulatory framework and political ambition for de-carbonisation DDF VIRKSOMHEDSDAG, 12 JUNE

24 Q1 13 highlights & Financial action plan Strategic Direction 2020 Outlook and Targets DDF VIRKSOMHEDSDAG, 12 JUNE

25 Outlook and financial targets EBITDA ROCE % >10 DKK 13-14bn in 2013 (updated guidance as of 6 June) -7.5 Net investments DKK 30bn in (updated guidance as of 6 June) EBITDA DKKbn ~20 Long term capital structure target Adjusted net debt (1) up to 2.5x EBITDA Maintain a minimum rating of BBB+ / Baa Adj. NIBD/EBITDA x ~ ) Net interest-bearing debt plus 50% of outstanding hybrid capital due 3005 and 0% of hybrid capital due 3010 DDF VIRKSOMHEDSDAG, 12 JUNE

26 INVESTOR UPDATE, JUNE Q&A