Statkraft Investor Update Q3 2018

Transcription

1 Statkraft Investor Update Q3 2018

2 Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Statkraft AS (the "Company"). By attending the meeting or otherwise viewing this presentation you agree to be bound by the following conditions. This document and the information therein are being furnished to you solely for your information and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution or reception, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not a prospectus and does not comply with rules or regulations regarding investor information, and has not been approved by or filed with any stock exchange or regulatory authority. Amongst others, this document does not disclose risks and other significant issues related to an investment in any securities. Investors should only subscribe for any transferable securities on the basis of information in a relevant prospectus and term sheet, and not on the basis of any information provided herein. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company, or any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. This document may not be distributed or delivered to any person or in any jurisdiction where such distribution is unlawful or restricted. This document may not be delivered in the United States or to any person or entity in the United States. 2

3 Agenda Statkraft overview Strategy and investment ambition Funding and liquidity Financial update 3

4 Statkraft at a glance CONSOLIDATED CAPACITY MW NORWAY SWEDEN POWER PRODUCTION 62.6 TWh UK IRELAND NETHERLANDS GERMANY 97% renewable USA FRANCE TURKEY NEPAL ALBANIA CREDIT RATING A- / BBB+ SOUTH EAST EUROPE INDIA S&P and Fitch NORWEGIAN STATE OWNED PERU BRAZIL 100 % EMPLOYEES CHILE = Hydropower = Wind power = Gas power = Bio power = District heating = Solar power = Trading and Origination

5 Strong ownership support Statkraft 100% owned by the Norwegian State - Norwegian State rated Aaa / AAA / AAA Support through equity injections - NOK 14 billion in 2010 and NOK 5 billion in 2014, after parliamentary approval Ownership support Statkraft s corporate credit ratings - Uplift from both S&P and Fitch Revised dividend policy - Based on recommendation from Board of Statkraft - Reduced dividend payout ratio for non-norwegian hydropower earnings 5

6 Key credit strengths Owned by the Norwegian state (AAA/Aaa) Stable cash flow Strong market position Balance sheet flexibility 6 Historically strong support from owner Long-term industrial contracts stabilize cash flow A low-cost and flexible generator of renewable electricity Investment program adapted to financial capacity

7 Solid EBITDA despite volatile Nordic and European power prices Quarterly average electricity prices Underlying EBITDA incl. share of profit from equity accounted investments EUR/MWh 80,00 70,00 60,00 Nordics Germany Bn NOK 11,8 12,2 13,5 12,8 10,9 13,9 14,4 50,00 40,00 30,00 20,00 10,00 0, * 7 Source: Prices from Nord Pool Spot, Nasdaq OMX and EEX as of Q * Items in underlying EBITDA changed in 2017

8 Primarily a Nordic hydropower company Segments and underlying EBITDA* contribution 2017 European Flex Market Operations International power Wind power District Heating 70.0 % 2.9 % 2.9 % 3.1 % 2.3 % 8 * Excluding gain/loss from acquisitions/divestments of business activities

9 European flexible generation: Maximize value of hydropower assets Priority #1: Protect and improve value of Nordic hydropower Production assets with low marginal cost, high flexibility, great longevity and almost zero carbon emissions Unique optimizations skills leading to a premium price capture through an integrated business model Operate gas-fired power plants in Germany European flexible generation Europe s largest producer of electricity from hydropower 242 hydropower and 5 gas fired power plants totalling MW capacity 1/4 of Europe s reservoir capacity Priority #1: Protect and improve value of Nordic hydropower 9

10 Statkraft has a unique cost position 60 EUR/MWh Average price Nordics 2018 (YTD Q3): ~ 42.8 EUR/MWh Statkraft Statkraft production cash cost cost hydro Cash cost gas Cash cost coal Cash cost nuclear Full cost incl. depreciation: ~ 9.83 EUR/MWh Annual Report 2017: Production cost 95 NOK/MWh. Production cost, incl. property tax and depreciation, excl. sales costs, net financial items and tax. This is divided by 7 years average output from power plants under own management. 2 Cash costs for coal and gas: Estimates for modern plants. 3 Estimates for nuclear plants in Sweden / Finland is around EUR/MWh. In Sweden nuclear tax adds to this, but Parliament has decided to phase-out nuclear tax.

11 Securing long term revenues in the Nordics Nordic long term industrial contract Majority of Statkraft s 18 TWh/yr LTC portfolio expire in 2020 ~ 2.5 TWh/yr new longterm contracts entered 2017/2018 Statkraft is actively evaluating additional hedging opportunities Yearly average production in Nordics approx. 56 TWh for the period 11

12 Market Operations: Value creation through a market oriented and adaptable organization Market Operations Statkraft offer tailor-made solutions for power producers and consumers Serving needs across the whole value chain; from market access and hedging to green power supply Managing third parties renewable production: MW Market access, Solar PV, Venture Capital, Dynamic Assets Management Portfolio (DAMP), Trading and Origination 12

13 International Power: Building a sustainable and profitable position Securing long term revenues International Power 27 hydropower plants and 4 wind farms in operation in Southeast Europe, South-Asia and South America More than MW in operations Peru Chile Turkey Albania Brazil India Established positions in several emerging markets - Long-term economic growth - Rising energy demand - Increased demand for renewables Evaluating hydro-, wind- and solar power opportunities in selected markets 13

14 Wind power: Utility scale business model in Europe Wind Power Ensure strong North European onshore presence and major player in the Nordic wind power market with 790 MW in operation 11 wind farms in operations in Norway, Sweden and UK Solid track record in delivering projects on cost and time Existing Under construction Planned Europe s largest onshore wind power project under construction in Norway; Fosen 1000 MW ~1500 MW development portfolio in Ireland and UK 14

15 District Heating: Continue to strengthen profitability through efficient operations District Heating Harstad 17 plants in Norway and Sweden with ~1.1 TWh annual production Trondheim Namsos Stjørdal Limited capex going forward Increased profitability through optimization of existing portfolio Sandefjord Nannestad Gardermoen Ås Åmål Moss/Rygge Vagnhärad Trosa Kungsbacka 15

16 Positioning for growth Consolidation Profitable growth PIP: Strengthening of: Competitiveness Cost efficiency Performance Reduced investment level Restructured international power Divestments Offshore wind SN Power Revised dividend policy Capitalize on our competitive advantages Maintain and reinvest in existing asset base Grow in renewable energy and market operations New business development 16

17 Cost reductions from the Performance Improvement Programme Estimated cost savings Realised 260 Remaining 800 Target cost reduction Comments Estimated reduction of the cost base per Q compared to 2015 baseline is approximately 540 MNOK Achieved cost reductions mainly through reductions in personnel, consultancy and travel costs and the ongoing exit of Offshore Wind Power The program is on track to deliver the targeted cost reductions of 800 MNOK 17

18 Large proceeds and financial improvements from asset disposals NOK million Proceeds from asset disposals Net Interest bearing debt SN Power Triton Scira 1 Dudgeon Fjordkraft Knoll Total Proceeds 0 Q Q Q Q Excluding proceeds related to sell down from 50% to 40% in Q Net Interest bearing debt from Interim Report Q3/2018

19 Agenda Statkraft overview Strategy and investment ambition Funding and liquidity Financial update 19

20 Statkraft s new strategy OPTIMISE HYDRO- POWER PORTFOLIO RAMP UP AS WIND AND SOLAR DEVELOPER GROW THE CUSTOMER BUSINESS DEVELOP NEW BUSINESS INITIATIVES 20

21 Hydropower and other flexible generation New hydro is challenged on costs, but the need for flexibility increases and provides a good starting point for a flexible hydropower player with market expertise Priorities: 1) Protect and improve value of Nordic hydropower - Focus on refurbishments, operational improvement, regulatory work, hedging 2) Opportunistic acquisitions or portfolio swaps - Restructuring Norwegian regional companies - Bid for French hydro auctions - Actively pursue acquiring hydropower in operation or in construction with particular competitive advantages 3) Operate gas-fired power in Germany 21

22 Massive ramp up as wind and solar developer Solar and wind become the cheapest way to build new power generation - huge growth expected in all countries Priorities: 1) Taking on a developer role - High value creation for Statkraft in the development phase - Develop and construct projects, and then partially sell down 2) Ramp up in onshore wind (6 GW) and solar (2 GW) - Wind: Substantial growth in Europe, and South America and India - Solar: Utility scale solar and commercial size distributed installations. 3) Hedge revenues of wind and solar to mitigate risk 4) Develop batteries and hybrid storage systems 22

23 Grow the customer business More complex energy markets and customers taking stronger interest in renewable energy. Statkraft well positioned with deep market expertise and renewable assets Priorities: 1) Significant ramp up of customer part of market operations - Take a position as a leading provider of market solutions for renewable energy for large customers - Provide market access, hedging, distributed energy solutions and green power supply to large customers 2) One of top three in District Heating in Norway and Sweden 3) Continue growth in EV charging through Grønn Kontakt 23

24 New opportunities in the energy transition Norway is an early mover in the energy transition, through decarbonisation and electrification Priorities: Develop new business arising from the green shift in Norway that has potential internationally: 1) Data centres: Develop, market and sell readyto-build data centre site prospects 2) Biofuels: Aim to produce 2nd generation biofuel from wood feedstock 3) Hydrogen: Investigate business opportunities in production of renewable hydrogen

25 Investment ambition Investment ambition subject to financial capacity: Average NOK 10 bn per year Committed to maintain current ratings NOK billion Maintenance and reinvestments Decided investments Reserved Flexibility 25

26 Post investment ambition - predominantly a Nordic hydropower producer EBITDA Norway Nordic region excl. Norway Europe excl. Nordic region The rest of the world 2 % 14 % % 77 % 15 % 17 % 10 % 58 % Generation Norway 2 % 11 % 8 % 16 % Nordic region excl. Norway 15 % Europe excl. Nordic region The rest of the world 79 % 9 % 60 % 26

27 Agenda Statkraft overview Strategy and investment ambition Funding and liquidity Financial update 27

28 Strong credit ratings A- / Stable BBB+ / Stable Maintaining current ratings with S&P and Fitch Strong support from owner CAPEX adapted to financial capacity Rating impact assessment completed prior to new investment decisions 28

29 Liquidity position Available liquidity and target Liquidity and market access NOK million Q EUR million Revolving Credit Facility Credit Line Cash and Cash equivalents 0 NOK 9.2 bn [1.0] Revolving Credit Facility with 10 core banks - Matures 2022 NOK 1bn [0.11] in committed credit line renewed on a yearly basis EMTN Programme EUR 6bn - EUR 3.1 bn available under current Programme No commercial papers outstanding Liquidity capacity target 1 : >1.5x projected payments over next six months 29 1 Liquidity capacity defined as cash and cash equivalents, plus committed revolving credit facilities, plus projected receipts for the next six months

30 Balanced debt maturity and mixed funding sources Debt maturity profile Distribution of funding sources 30

31 Funding overview Funding strategy Funding centralized on group level Flexibility through diversification of funding sources and maintaining sufficient back-stop facilities Funding need Funding sources Funding need going forward determined by cash flow from operations and capex NOK 2.7 bn redemption in Q Norwegian bond and Commercial Paper market Euro bond market Swedish bond market Sterling and Swiss Franc bond markets considered 31

32 Agenda Statkraft overview Strategy and investment ambition Funding and liquidity Financial update 32

33 Key figures NOK million Q Q YTD 2018 YTD 2017 The year 2017 Net operating revenues and other income Operating profit/loss (EBIT) underlying Net profit Nordic prices measured in EUR up 77% Q-on-Q Overall generation down 3% Q-on-Q Operating expenses down 7% Q-on-Q 33

34 Financial performance 9.7% 10.1% 10.6% 10.5% 12.5% 11.9% 13.2% 8.3% 6.5% 6.4% 6.7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q months rolling ROACE of 13.2% - Improvement compared with the year 2017 due to higher underlying operating profit (rolling 12 months), primarily driven by higher Nordic power prices - Average capital employed stable 34 ROACE: Underlying EBIT last 12 months / Average capital employed

35 Price drivers and the German power market 120 Coal, ARA (USD/t) 25 CO2, EUA (EUR/t) 30 Gas, NBP/TTF (EUR/MWh) Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q Q vs. Q Coal, CO 2 and gas prices increased German power prices up by 63% EEX, base (EUR/MWh) - Mainly related to higher gas and CO 2 prices 10 0 Q Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1- Q Q3 35

36 Nordic reservoir level % Median Q1 Q2 Q3 Q4 36 Rapid increase mid-quarter due to high precipitation Weather drier than normal in Q2 Nordic reservoir level (total market) at 87% of median at the end of September

37 Nordic system price, monthly average EUR/MWh Q Q2 Q3 Q4 Q1- Q Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Nordic power prices 50.5 EUR/MWh, up 77% Q vs. Q

38 Energy management Q3 generation down 3% Q-on-Q Stormyr dam, Nedre Røssåga hydropower plant Technology TWh Change in TWh Hydropower Wind power Gas power Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Bio and solar power Total

39 Q3 net operating revenues and other income NOK million Q Q % Generation Customers Grid, sale of gas and other revenues -339 Trading & Origination Other operating income Transmission costs Total net operating revenues and other income Sales revenues less energy purchase 39

40 NOK 2.7 billion in underlying EBIT NOK million Underlying EBIT up NOK 1243 million Q-on-Q Primarily driven by higher Nordic power prices. This was partly offset by lower contribution from Nordic origination, value reduction of long-term contracts in Brazil and negative effects from market access activities. +86% NOK 237 million in reduced opex Q-on-Q Q Q YTD 2017 YTD

41 Financial items Breakdown Net financial items Q NOK million Interest income Interest expenses Currency gains and losses Other financial items Net financial items Q

42 Q3 net profit breakdown Underlying EBIT Q NOK million Q3 Underlying EBIT Q Net Profit Q Q Operating profit/loss (EBIT) underlying Net operating revenues and other income Operating expenses Q Operating profit/loss (EBIT) underlying Unrealised value changes from energy derivatives Gain/loss from acquisitions/ divestments of business activities Impairments Share of profit/loss in equity accounted investments Net financial items Tax Q Net profit Underlying EBIT +86% Q-on-Q Booked net profit affected by unrealised value changes from energy derivatives 42

43 Q3 segment EBIT underlying NOK million Q Q European flexible generation Market operations International power Wind power District heating Industrial ownership 43

44 Q capital expenditure 1 5% 13% NOK 1.6 billion 24% European flexible generation 28% Distribution of CAPEX in the quarter: - 60% new capacity investments - 39% maintenance/other investments - 1% shareholdings New hydropower capacity under construction in Albania 20% Wind power developments in Norway 39% Maintenance primarily within Nordic hydropower and Norwegian grid European flexible generation International power Wind power Other Industrial ownership Shareholding investments mainly related to Silva Green Fuel 44 1 Excluding loans to equity accounted investments Other includes District heating, Market operations and Other activities

45 Cash flow in Q3 NOK million Cash reserves From operations Investing activities Financing activities Currency exchange rate effects Cash reserves

46 Summary Strong underlying performance in the quarter Robust financial position Solid foundation for growth phase Investment plan with large degree of flexibility 46

47 THANK YOU Investor contacts: Debt Capital Markets Funding Manager Stephan Skaane Vice President Tron Ringstad Phone: Phone: