Capital Market Story. March 2015

Transcription

1 Capital Market Story March 2015

2 Executive summary Executing new strategy and spin-off: now getting into the details Growing resilience in a still tough environment Staying focused on running and improving our businesses Visual One2Two project 1

3 E.ON to split into two publicly listed companies E.ON to spin off a majority stake in its power & gas up- and midstream businesses ( New Company ) to its shareholders Empowering customers New Company Shaping markets Intention to divest remaining stake in the new company over the medium term post spin-off Spin-off expected to be completed in 2016 Divestment of Spanish activities agreed to; divestment of Italian activities in progress; E&P North Sea under review Two highly competitive companies with distinct identities 2

4 Two very different energy worlds emerging Distributed generation VPPs Value-added products Central generation Upstream Energy efficiency Renewables Customers Customers Sales Data-driven services Transmission Commodity markets Heat Distribution E-mobility Demand response City solutions Conventional energy world System-centric Security of supply Global/regional perspective Large scale, central Conventional technologies New energy world Customer-centric Sustainability Local proximity Small scale, distributed Clean technologies 3

5 Two leading companies for two energy worlds Generation New Company Renewables Hydro Wind/Solar/Other Upstream Distribution E&P Global Commodities Germany Other EU Countries Global Commodities Customer Solutions Russia Turkey Brazil Power Generation Distinct opportunities, mindsets and capabilities 4

6 Accelerating E.ON s transformation Strategic Stronger and more focused companies More responsive to changing customer requirements and market dynamics Expands strategic options Operational Improves alignment between rewards and results Simplifies organizational structures Accelerates decision making Financial Optimizes the financial profiles of each company to enable distinct investment and growth opportunities Enhances capital allocation efficiency Provides two different and compelling investment opportunities Compelling benefits from the transaction 5

7 Business portfolio of Future E.ON 1 Renewables Distribution Customer Solutions ~4.0 GW capacity ~15 GW global pipeline Europe onshore 1.1 GW Europe offshore 0.5 GW US onshore 2.3 GW >1 million km networks ~26m grid customers Germany km Sweden km Other EU km Turkey km ~32 million sales customers UK 7.7m Germany 6.3m Other EU 2 9.4m Turkey 2 9.0m Portfolio focused on the new energy world figures, corrected for Spain/Italy disposals agreed to 2. E.ON holds 49% in ZSE and 50% in Enerjisa. Figures for ZSE and Enerjisa included at 100%

8 Strategy of future E.ON Renewables Internationally leading provider of large and midscale wind & PV solutions Distribution Benchmark for network performance and the new DSO integrator role Customer Solutions Leading provider of customer solutions for the new energy world Stronger growth in wind on- and offshore Expand and build in new geographies Significantly improve position in solar PV Higher investments in networks, stronger push towards remote and digital capabilities Selective, synergistic acquisitions in existing regions Reach scale in energy efficiency and on-site generation Intensify innovative offerings for the physical and digital new energy world Stronger growth in heat and sustainable cities Customers choice for powering energy solutions 7

9 Business portfolio of New Company 1 Upstream 2 Global Commodities Power Generation Russia 46 GW of capacity 3 Production 37.3 mm boe Coal supply 29 m t Germany 17.2 GW Gas LTCs 35 bcm UK 7.5 GW Gas storage 9 bcm Sweden 6.5 GW LNG regas 4.7 bcm Other Europe 5.0 GW Russia 9.9 GW Among the top in European power and gas figures, corrected for Spain/Italy disposals agreed to 2. Strategic review of E&P North Sea 3. E.ON holds 83% of E.ON Russia and 43% of Eneva. E.ON Russia included at 100%, Eneva not included.

10 Strategy of New Company Strong base Attractive power and gas portfolio, among the top in Europe Excellent reputation in engineering and operations of conventional assets Leading generator and delivery quality in Russia Global trading house Strong future Contributing to security of supply in power and gas to Germany and Europe Platform for consolidation of European generation Trustworthy counterparty for global energy arbitrage and 3rd party services Upside potential Capacity mechanisms across Europe ETS revitalization Commodity markets recovery Opportunities from global arbitrage Selected growth in international generation in later years Reshaping the conventional energy world 9

11 Proposition for customers, employees and other stakeholders Empowering customers Retains and attracts employees as it offers opportunities in a growing market and with a clear purpose Responds to the fundamental customer need wanting solutions and not commodities or technologies Enables societies to build their lives and future on cleaner and more sustainable answers New Company Shaping markets Offers employees opportunities in a leading company with significant upside potential Offers partners a platform to cooperate and benefit by raising efficiency via consolidation and 3 rd party services Enables societies to transform energy systems at high standards of security of supply Two highly attractive companies 10

12 Financial indications EBITDA break-down 100% of EBITDA Future E.ON Renewables Customer solutions Distribution New Company Global commodities Upstream Power generation Capex 1 Financial aspects Capex roughly twice depreciation, close to OCF, at Future E.ON Capex significantly below depreciation at New Company Capital structure Most financial debt at E.ON, including all bonds Nuclear provisions at New Company Pension provisions to follow employees (~40k E.ON / ~20k New Company) Positive net financial position at New Company Capex , based on MTP

13 Dividend during transition phase 0.60 /share 0.50 /share Dividend of 0.50 /share for 2014 and 2015 intended Fixed dividend to bridge transition phase Fixed dividend to remove uncertainty stemming from divestments 2013 paid in to be paid in to be paid in /share dividend for 2014 and

14 Key milestones Q Governance & Steering of both companies defined Organizational set-up and segmentation Governance principles Management teams Carve-out concept 1 Jan 2016 Both companies legally and operationally independent Carve-out effective Employees allocated to both companies Binding tax rulings obtained May 2016 AGM invitation Detailed financial & legal documentation Spin-off ratio defined Capital market day & roadshows Capital structure determined Equity story, incl. strategy, KPIs, dividend policy, etc 8 Jun 2016 AGM decision H Roadshows & capital market communication BaFin approval of prospectus Eyeing a completion of the spin-off in the second half of 2016 H Listing 13

15 Strategy and business developments Sustaining performance culture Disciplined investing in growth areas Generation: capacity markets gaining momentum Renewables: offshore wind projects on track Distribution: strong foundations for steady growth Customer Solutions: empowering customers 14

16 Sustaining performance culture E.ON 2.0 targets already achieved in 2014 Targeted ~ 1.3bn of net cost savings already achieved by 2014 ~ FTE reduction achieved by end 2014 Cost savings in 2015 and beyond Net cost savings of bn in 2015 Cost reductions in established businesses to clearly beat inflation Part of cost savings will be reinvested in operational excellence and in growing activities Working Capital Excellence Aim to improve net working capital by at least 1bn like-for-like between end 2012 and end 2016 ~ 0.4bn already realized by year end 2014 Net cost savings 0.2bn 2012A 2013A 2014A 2015E A 0.7bn E.ON 2.0 HR impact Portfolio effects 0.4bn Other effects bn E.ON 2.0 Other cost savings E.ON 2.0 In thousand full-time equivalents A 15

17 Disciplined investing in growth areas Capex bn 2014 capex of 4.6bn, ~8% lower than initially planned 2015 capex planned at ~ 4.3bn, including additional capex announced in December 2015 capex in Wind & Solar, Distribution Networks and Customers Solutions ~ 3.1bn, up ~ 0.4bn YoY A 2013A 2014A 2015E Russia & Brazil Generation + Hydro Wind & Solar Distribution Networks E&P & Global Commodities Turkey Customer Solutions >70% of 2015 capex in Wind & Solar, Distribution Networks and Customers Solutions Excluding 1.5bn asset swap with Verbund in 2013

18 Generation: capacity markets gaining momentum Hedging & achieved prices Hedging Central Europe A 2014A 2015E 2016E /MWh E.ON achieved /hedged prices Average spot / forward price Power hedging delivered substantial benefits in last few years Hedged ahead of our competitors Hedged prices now converging towards current forward prices Regulatory developments Capacity markets EU Commission to develop reference model for Capacity Remuneration Mechanisms UK Auction for capacity in Dec 2014 ~6 GW of E.ON generation portfolio won capacity agreements More than 100m EBITDA impact Progress in Italy, France and Belgium Germany lagging behind European Emissions Trading EU parliament supports Market Stability Reserve with ambitious targets Next important step is agreement among EU Member States 17

19 Renewables: offshore wind projects on track Amrumbank West Robin Rigg Humber Gateway Scroby Sands Rampion Amrumbank West Alpha ventus Rödsand 2 London Array Kårehamn Arkona In operation Under construction In development 288 MW ~ 1bn capex Start in Autumn 2015 Humber Gateway 219 MW ~ 1bn capex Start in Autumn 2015 Continued growth in wind & solar 211 MW Grandview I wind farm in Texas commissioned in December 2014 ~ 4.7bn of investments in Wind & Solar between 2012 and 2015 Three build-and-sell transactions between 2012 and 2014 for ~ 1.3bn 18

20 Distribution: strong foundations for steady growth Regulatory asset base Distribution capex vs. regulatory depreciation 1,5 1,0 bn Current regulatory discussion Germany Network regulator BNetzA published major report Incentive Regulation 2.0 Example of attractive reform proposal: carry-over mechanism for operational outperformance 0,5 0,0 2014A 2015E 2016E Regulatory depreciation Capex Capex above regulatory depreciation for the coming years Underlying growth of regulated asset base Additional benefit Allowed revenues with carry-over Currently allowed revenues Effective costs Additional earnings potential for efficient network operators 19

21 Customer Solutions: empowering customers Evolution of customer numbers (in million) UK Germany Other Evolution Net Promoter Score per market UK Germany Sweden Customer numbers: Focus on margins rather than volumes First rise of customer numbers in Germany for many years European base expected to be stable, strong focus on value Customer satisfaction: Very important management focus NPS with positive trend in key markets Best-in-class NPS by 2018 CustomerFirst program launched Czech Republic Focus on improving sales capabilities & customer focus Sustainable earnings improvement 20

22 Backup Outlook Financials Economic net debt Dividend Operations IR contacts Reporting calendar & Important links 21

23 2015 outlook Outlook EBITDA 1,2 FY 2014 EBITDA 8.3 bn Net cost savings Capacity growth Organic improvement regions Power portfolio E&P Disposals FX Other FY 2015 EBITDA Adjusted for extraordinary effects EBITDA reflecting the treatment as discontinued operations of the Regional Units Spain and Italy

24 2015 outlook Outlook bn 2014A 1,3 2015E EBITDA Depreciation 3.7 Economic interest expense 1.6 Taxes 1.1 Non-controlling interests 0.4 Underlying net income Including pro forma adjustment regarding IFRS 10/11 2. Adjusted for extraordinary effects 3. With Regional Units Italy and Spain treated as dicontinued operations

25 2015 EBITDA 1 outlook per unit Outlook bn 2014A 2015E Main drivers Germany 1.8 Organic improvements and weather normalization Other EU Countries 1.7 Renewables 1.5 Generation 2.2 Organic improvements and weather normalization vs. impact of FX and storm cost Hydro: Lower hydro prices, lower volumes (due to disposals), EC&R: Offshore wind CODs during H2 Impact of falling power prices, early shut-down of Grafenrheinfeld, disposals Exploration & Production 1.1 Lower volumes and lower prices Global Commodities 0.0 Improvements in the power and gas business Non-EU Countries 0.4 Mainly lower Rubel exchange rate EBITDA Adjusted for extraordinary effects

26 Financial highlights Financials m % YoY Sales 119, ,556-7 EBITDA 2 9,191 8,337-9 EBIT 2 5,624 4, Underlying net income 2 2,126 1, Operating cash flow 4 6,260 6,253 - Investments 7,992 4, Economic net debt -32,218-33,394-1, Including pro forma adjustment regarding IFRS 10/11 2. Adjusted for extraordinary effects 3. Change in absolute terms 4. Operating cash flow from continuing operations

27 2014 EBITDA and EBIT by unit Financials m EBITDA 1 EBIT % YoY % YoY Generation 1,936 2, ,017 1, Renewables 1,464 1, ,014 1, Global Commodities Exploration & Production 1,070 1, Germany 2,387 1, ,667 1, Other EU Countries 3 2,012 1, ,436 1, Non-EU Countries Group Management / Consolidation Total 9,191 8, ,624 4, Adjusted for extraordinary effects 2. Including pro forma adjustment regarding IFRS 10/11 3. Reflecting the treatment as discontinued operations of the Regional Units Spain and Italy

28 2014 EBITDA development 1,2,3 FY E&P 0.1 E.ON Renewables (EC&R) 0.1 bn Financials Nuclear fuel tax 0.2 Disposals -0.6 FX effects -0.2 German regulation -0.3 Region Czechia -0.2 Power price and volume effect -0.2 Gas optimization -0.1 Other -0.1 FY Adjusted for extraordinary effects 2. Individual effects rounded 3. Reflecting the treatment as discontinued operations of the Regional Units Spain and Italy

29 2014 underlying net income 2 Financials m , % YoY EBITDA 2 9,191 8,337-9 Depreciation/amortization recognized in EBIT 2-3,567-3,673 - EBIT 2 5,624 4, Economic interest expense (net) -1,874-1,612 - EBT 2 3,750 3, Income taxes on EBT 2-1,201-1,090 - % of EBT Non-controlling interests Underlying net income 2 2,126 1, Including pro forma adjustment regarding IFRS 10/11 2. Adjusted for extraordinary effects 3. Reflecting the treatment as discontinued operations of the Regional Units Spain and Italy

30 More than half of EBITDA from stable businesses EBITDA 1 split 100% 80% 60% 40% 20% Progressive hedging and risk reduction Stable businesses 53% Stable businesses make up around 53% of E.ON s portfolio mix In addition, the risk-profile of our merchant activities benefits from early hedging and generally declining commodity price risks Financials 0% Regulated Quasi-regulated/LT contracted Merchant Adjusted for extraordinary effects 2. Regulated: revenues set by law and based on costs plus a reasonable return on capital employed. Example: Regulated network activities 3. Quasi-regulated and long-term contracted: revenues with high degree of predictability, price and/or volume largely set by law or individual contractual arrangements for the medium- to long-term. Examples: renewables with support mechanisms, generation capacity sold under long-term PPAs

31 Full year 2014 cash balance 2014 operating cash flow 6.3 bn Financials Cash effective investments -4.6 Dividends (post scrip) -0.8 Free cash flow 0.9 Dividends to non-controlling interests -0.2 Build & sell proceeds +0.8 Cash balance 1.5 Adjustment 2014 nuclear tax -0.4 Adjusted cash balance Adjusted for extraordinary effects

32 Economic net debt m 31 Dec Dec 2014 Liquid funds 7,814 6,067 Non-current securities 4,444 4,781 Financial liabilities -22,724-19,667 Economic net debt Adjustment FX hedging Net financial position -10,512-8,785 Provisions for pensions -3,418-5,574 Asset retirement obligations 2-18,288-19,035 Economic net debt -32,218-33, Net figure; does not include transactions relating to our operating business or asset management 2. Net of Swedish nuclear fund 3. Including pro forma adjustment regarding IFRS 10/11

33 2014 economic net debt development December 31, Dividends -1.0 bn Economic net debt Investments Other Pension obligations Provisions and other Net financial position Divestments +2.8 Operating cash flow December 31, Figures as of include pro forma adjustment regarding IFRS 10/11 (before adjustments YE 2013 economic net debt was 32.0bn) 2. Operating cash flow from continuing operations

34 Strong liquidity and well-balanced maturity profile Liquidity and financial flexibility Revolving credit facility (undrawn) 5bn Liquid funds & non-current securities 10.8bn 1.4bn 1.2bn 2.7bn Maturity Profile bn, as of 31 Dec Economic net debt Liquidity Bond & promissory notes maturities Flexible funding options Debt issuance program 35bn EUR CP program 10bn USD CP program $10bn Revolving credit facility 5bn No benchmark bond issuance since mid Currently no bond funding envisaged for EUR GBP USD CHF YEN Other Upcoming debt maturities easily manageable Long-term and well-balanced debt maturity profile 1. Bonds and promissory notes issued by E.ON SE, E.ON International Finance B.V. and E.ON Beteiligungen GmbH (fully guaranteed by E.ON SE) 2. E.ON Beteiligungen GmbH in 2014 issued a bond exchangeable into shares of Swiss energy company BKW AG with a volume of c. 0.1bn 33

35 Continuation of scrip dividend scheme Dividend Voluntary scrip dividend Additional option for shareholders to exchange the cash dividend into E.ON shares Cash payment is default Subscription price will be close to market price (considering a discount of up to 3% 1 ) Use of treasury shares E.ON will make use of its existing treasury shares No new shares issued Taxation Tax treatment of dividends in cash and in shares is generally equal in Germany (tax portion ~ 28% 2 ) ~ 72 % of cash dividend is exchangeable into E.ON shares 3 Indicative timeline 17 March 7May 8May Release of detailed scrip dividend information (E.ON website) AGM Ex-dividend date / start of subscription period 27 May End of subscription period / determination of subscription price 5 June Payment of cash dividend and delivery of E.ON shares Final amount of discount is subject to rounding of subscription ratio (dependent on reference price); expected to be in a range of 2.5% to 3.0% 2. Includes German Kapitalertragsteuer, SolZ, Kirchensteuer 3. Proposed cash dividend (gross): 0,50 per share; thereof 0,36 will be exchangeable into E.ON shares

36 Conventional generation: earnings drivers EBITDA Generation + Hydro Outright hedging 1 bn /MWh ~49 ~38 Operations ~38 ~ A 2013A 2014A 2015E ~33 Hydro Wholesale Generation Wholesale Hydro Non-wholesale Generation Non-wholesale ~30 0% 20% 40% 60% 80% 100% Central Europe Nordic Hedging for nuclear and hydro power generation

37 Retirements of conventional generation capacity Capacity retirements since 2012 GW, pro-rata YTD 2014 Fiume Santo 1 & 2 Oil 306 MW Jan 2014 Vilvoorde Gas 385 MW Jan 2014 Datteln 1-3 Coal 303 MW Mar 2014 Lucy 3 Coal 245 MW Mar 2014 Emile Huchet 5 Coal 330 MW Apr Scholven D & E Coal 690 MW Jan 2015 Scholven F Coal 676 MW Jan 2015 Knepper C Coal 345 MW Jan 2015 Grafenrheinfeld Nuclear 1275 MW Q Veltheim 3 Gas 202 MW Q GT Ummeln Gas 37 MW Q Veltheim 4 GT Gas 43 MW Q Emile Huchet 4 Coal 115 MW Q Operations 36

38 Generation - E.ON s nuclear fleet in Germany Operations Start-up date E.ON share (%) Capacity (MW) 2013 output (TWh) 2013 remaining volumes (TWh) 1 Shutdown date Isar Unterweser , Brunsbüttel Krümmel , Grafenrheinfeld , Gundremmingen B , Gundremmingen C , Grohnde , Brokdorf ,410 11, Isar , Emsland , Bundesamt für Strahlenschutz, Tabelle der erzeugten Strommengen und verbleibenden Reststrommengen

39 E&P - Oil & Gas production m boe % YoY Operations Skarv Njord/Hyme Elgin-Franklin Babbage Huntington Rita Total North Sea Yuzhno Russkoje Total

40 E.ON Investor Relations Contact Anke Groth Head of IR T+49 (211) François Poullet France & Benelux T +49 (211) UK francois.poullet@eon.com Marc Koebernick Germany & Switzerland T +49 (211) US marc.koebernick@eon.com Dr. Stephan Schönefuß UK T +49 (211) Germany stephan.schoenefuss@eon.com Oliver Röder Russia T +49 (211) Nordics oliver.roeder@eon.com Carmen Schneider Roadshow planning & management, T +49 (211) Shareholder ID & Targeting carmen.schneider@eon.com 39

41 Reporting calendar & important links Reporting calendar May 7, 2015 Interim Report I: January March 2015 May 7, Annual Shareholders Meeting August 12, 2015 Interim Report II: January June 2015 November 11, 2015 Interim Report III: January September 2015 March 9, 2016 Annual Report 2015 Important links Capital Market Story Other Presentations Annual Reports Interim Reports Facts & Figures Creditor Relations

42 Disclaimer This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group Management and other information currently available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. E.ON SE does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.