Creating the future of energy. FY 2018 Results 13 th March 2019

Transcription

1 Growth Focus Discipline Creating the future of energy FY 2018 Results 13 th March 2019

2 Strong delivery of FY 2018 results Highlights Key Financials 1 Top end of 2018 guidance range achieved Dividend 2018 increases >40% to 0.43/share m 3,074 2, bn bn 19.2! Preparation of takeover of innogy fully on track Upgrading network capex to fuel accelerated RAB growth 1,427 1, bn 16.6! Predictability Outlook confirmed, commitment to annual DPS growth! Visibility Fixed dividend of 0.46/share to be proposed for Adjusted for non operating effects EBIT FY 2017 FY 2018 Adj. Net Income Guidance Range Economic Net Debt 2

3 Continuous track record of delivery EBIT 1 vs. guidance Adj. Net Income 1 vs. guidance Deleveraging achieved Significant reduction of END 3.1bn bn 3.1bn bn 3.0bn bn 0.9bn 1.4bn bn 1.5bn bn 26.3bn ~ 10bn 19.2bn 16.6bn bn 5.3x 3.9x 3.4x Guidance Range 1. Adjusted for non operating effects. 3

4 Dividend continues to grow Dividend per share growth 2018 & 2019: Fixed Dividend Commitment to annual DPS growth , , FY 2016 Dividend FY 2017 Dividend FY 2018 Dividend FY 2019 Dividend Future Dividends 1. Fixed for FY 2018 (paid in 2019) 2. Fixed for FY 2019 (paid in 2020) 3. Dividend proposals in line with existing dividend policy 4

5 Energy Networks Proven efficiency leadership Regulatory review in German power networks Performance culture in practice All four E.ON DSOs with efficiency score of 100% vs. 94% industry average 2 Individual efficiency factor E.ON excels in efficiency benchmarking All DSOs 100% efficient 1 50% of E.ON DSOs even receive an additional efficiency bonus vs. 13% for industry average 2 General efficiency factor Proof of E.ON s leading operational excellence Cost audit Reduction of general efficiency factor From 1.5% 0.9% Cost audit successfully completed 1. Two DSOs exceed 100% efficiency and will receive a bonus of 1% of controllable costs p.a. as additional allowed revenue DSOs have been included in the benchmarking process; 27 are entitled to additional super efficiency bonus 5

6 Upgrading long-term network capex growth Energy networks capex ( m) Additional ~ 100m p.a. for long-term capex run-rate Disciplined & gradual ramp-up Cautious planning Main driver is additional replacement investments Conservative assumptions on Renewables and E-mobility roll-out Potential upsides to new normal level Acceleration of Renewables build-out Digital layer & fully digital equipment E-mobility Electrical heating Smart meter beyond 2020 Germany Sweden CEE "new normal" 6

7 Accelerating power RAB growth Germany Sweden Czech Republic Power RAB ( m) Targeting upper end of growth range % +10% +8% +6% New Old Power Power RAB RAB 1 ( m) 1,2 New growth range % +30% +15% +25% +11% +15% +11% New Old Power RAB ( m) 1 New growth range % +25% +20% +16% +12% New Old ~8.0 ~ 8bn ~8.3 ~3.7 ~1.5 ~3.5 ~ Based on constant FX rates (SEK/EUR 2018: 10.26; CZK/EUR 2018: 25.65) 2. Growth includes revaluation of RAB from 2020 onwards according to new methodology (due to change in depreciation times). Effect ca. ~ 0.5bn in

8 Customer Solutions with profitable customer growth outside UK Customer numbers EBIT Performance programs (upgraded) UK ~22m ~22m 479m 413m Cost Impact ~ 120m impact ~ 150m impact Germany +2% CS UK Other +1% CS ex UK +17% >2020 Growing customer base outside UK More than 100,000 additional customers in Germany In the UK, best performance among the Big Six in terms of customer numbers 1 1. Source: Q Cornwall report Improving EBIT outside UK UK decline mainly caused by regulatory interventions and restructuring costs Pro-actively working on next wave of performance measures Programs in Germany and UK with target to offset margin pressure UK program already expanded during 2018 to mitigate SVT price cap impact 8

9 Renewables Performance culture in practice EBIT 1 delivery 2018 Project delivery m +15% 521m Rampion Offshore wind (UK) 400 MW Arkona Offshore wind (GER) 385 MW FY 2017 FY 2018 Downsides from very low wind yields and roll-off of support schemes in the US over-compensated: Project completion ahead of schedule and below budget (e.g. Arkona, Rampion) Successful partnering in Sweden (Nysäter) Cost discipline applied with highly agile mindset 1. Adjusted for non operating effects Stella Onshore wind (US) 201 MW Texas waves Storage (US) 2*10 MW / 5 MWh 9

10 Takeover of innogy progressing well Antitrust approval process Preparation of integration of innogy into E.ON E.ON filed official notification with EU Commission end of January EU Commission initiated Phase II investigations on 8 th March Approvals for RWE part of transaction already received after Phase I Fully on track for closing during second half of 2019 Joint preparation work intensifying Work on future operating model nearly completed Synergies Target of m net synergies by 2022 confirmed 10

11 On track to successfully conclude strategic transformation journey E.ON s guiding principles Customer-led Digitization Operational excellence Capital discipline Position of strength Unique strategic position Focus on regulated networks and infrastructure-like & pacesetting customer solutions Portfolio simplification Transition year Spin-off Uniper & reset of E.ON 2016 Proven performance culture Balance sheet headroom Strong financial & operational delivery Future E.ON pro-forma 2018 (innogy data based on public information) Enhanced earnings quality: ~80% of EBIT1 is regulated Committed to annual dividend per share growth 2020 and beyond 11

12 EBIT development solid despite operational challenges EBIT 1 FY 2018 vs. FY 2017 m FY 2017 Energy Networks Customer Solutions Renewables Corp. Functions & Other, Consolidation Non-Core FY , Adjusted for non operating effects 3, Key FY Effects Energy Networks Customer Solutions Renewables Non-Core Germany: positive one-off effects in Q2 & Q3 2018, reversal of regulatory effects, disposal gas network HH, new regulatory period gas Sweden: power tariff increase, adverse FX dev. +/ +/ + +/ Germany: price increases in Q2 2017, restructuring charges UK: price increases in Q2 2017, competitive dynamics, regulatory effects, restruct. charges +/ Onshore: capacity additions in the US, support scheme expiries Offshore: capacity additions (Rampion), adverse wind conditions (esp. Q4) +/ +/ Preussen Elektra: one-off effects, lower achieved prices, higher volumes due to plant outages in 2017 Turkey: op. improvem., omission of book loss +/ + 12

13 Adj. Net Income up 5% driven by lower interest expenses FY 2018 m Group EBIT 1 2,989 Interest on fin. assets/ liabilities 2 Other interest expenses Profit before Taxes , ~ 85m improvement yoy mainly due to refinancing benefits, partly compensated by lower interest income from asset portfolio Income Taxes -562 Tax rate of 24% slightly below PY Minorities -248 Adjusted Net Income 1 1, Adjusted for non operating effects 2. Without interest accretion of nuclear provisions EPS ( per share) 13

14 END decreases mainly due to sale of Uniper stake END 1 FY 2018 vs. FY 2017 bn +2.7 Pension provisions Net financial position Liquidation of pension scheme in Q results in reduction of pension provisions limited effect on END -3.6 Sale of Uniper stake END FY 2017 AROs 2.9 OCF -3.5 Investments -0.9 Dividend Divestments AROs 0.9 Pensions -0.9 CTA 2 Funding Other END FY Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs 2. Contractual Trust Arrangement 14

15 Capex split 2019 & 2020 Capex Capex Growth Increase in capex drives long-term EBIT growth ~ 3.6bn ~ 3.7bn Focus Capex focused on Energy Networks and infrastructure-like Customer Solutions Discipline Strict adherence to capital return targets (e.g. Group ROCE target 8-10%) Energy Networks Renewables Customer Solutions 1. Gross capex, not including divestments 15

16 Group guidance for FY 2019 Guidance FY 2019 ( bn) Guidance FY 2019 ( bn) Dividend ( /share) 0.46 EBIT 1 Actuals FY 2018 ( bn) 3.0 Adjusted Net Income 1 Actuals FY 2018 ( bn) 1.5 Proposed dividends 2 Dividend ( /share) Adjusted for non operating effects 2. Fixed dividend proposals to AGM to be paid in following year 16

17 Segment EBIT 1 guidance FY 2019 Energy Networks Customer Solutions bn 0.4bn + + Germany: Further increase in RAB, efficiency scores Sweden: Power tariff increases (already implemented) + Germany & UK: Restructuring charges in 2018 UK: Regulatory interventions (i.e. SVT price cap) Renewables Non-Core bn 0.4bn +/ + Onshore: Capacity additions, support scheme expiries Offshore: Capacity additions (Arkona, Rampion) 1. Adjusted for non operating effects 2. Preussen Elektra +/ + PEL 2 : Increased wholesale prices, higher D&A, one-offs Turkey: Operational improvements 17

18 E.ON FOCUS Framework for Our basis for steering the company Capital Structure Strong BBB/Baa Return ROCE % Cash Cash conversion rate 2 80 % EBIT 3 Group + 3-4% (CAGR) EPS 3 Group % (CAGR) Dividend Annual DPS growth Fixed dividend 2019: Executive Compensation Closely linked to EPS target achievement and relative TSR 4 (in addition: share ownership obligations) 1. Based on EBIT (= pre-tax), 2. OCF bit divided by EBITDA, 3. Adjusted for non operating effects, FY 2018 guidance range as basis for medium-term outlook (CAGR), 4. Total Shareholder Return, 5. Fixed for FY 2019 (paid in 2020). 18

19 Growth Focus Discipline FY 2018 Financial Appendix E.ON standalone

20 Financial Highlights m FY 2017 FY 2018 % YoY Sales 37,965 30, EBITDA 1 4,955 4,840-2 EBIT 1 3,074 2,989-3 Adjusted Net Income 1 1,427 1, OCF bit -2,235 4,087 Investments 3,308 3, Economic Net Debt ² -19,248-16, Adjusted for non operating effects, 2. Economic net debt as per 31 Dec 2017 and 31 Dec 2018; Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs 20

21 84% Cash Conversion Rate 2 FY 2018 bn 84% EBITDA 1 Cash Adjustments 3 Change in WC OCF bit Interest Payments Tax Payments OCF Capex FCF 1. Adjusted for non operating effects, 2. Cash Conversion Rate: OCF bit EBITDA, 3. Net non cash effective EBITDA items incl. provision utilizations and payments related to non operating earnings 21

22 Segments: Energy Networks Energy Networks CEE & Turkey Details EBIT 1 m Germany Sweden 2,034 1,030-9% 1, FY 2017 FY 2018 Highlights Germany + One-off effects in Q2 & Q Reversal of regulatory effects Disposal of gas network Hamburg, 3 rd regulatory period gas Sweden + Power tariff increase Adverse FX development, disposal of gas network CEE & Turkey + Turkey: Higher network/retail earnings Turkey: One-off effects in 2017 & 2018 Romania: Lower regulatory returns m Germany Sweden CEE & Turkey Total FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY Revenue 14,199 6, , ,719 1, ,990 8, EBITDA 1 1,621 1, ,020 2,819-7 EBIT 1 1, ,034 1,844-9 thereof Equity-method earnings OCFbIT 2,429 1, ,674 2, Investments ,419 1, / 1. Adjusted for non operating effects 22

23 Segments: Customer Solutions Customer Solutions Highlights EBIT 1 m Germany Sales UK Other -14% FY 2017 FY 2018 Germany Sales + Price increases in 2017 Restructuring charges UK Restructuring charges, competitive dynamics Regulatory effects, incl. price caps (PPM 2, vulnerable customers) + Price increases in 2017 Other Romania: Higher gas procurement costs B2B solutions: Unavailability of co-generation unit Details m Germany Sales UK Other Total FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY Revenue 7,014 6, ,205 7, ,357 7, ,576 22, EBITDA EBIT thereof Equity-method earnings OCFbIT Investments Adjusted for non operating effects, 2. Prepayment Meter 23

24 Segments: Renewables Renewables EBIT 1 m Offshore/Other Onshore/Solar +15% Highlights Offshore/Other + UK: Capacity additions (Rampion) Adverse wind conditions Onshore/Solar + US: Capacity additions (Bruenning s Breeze, Radford s Run) + SE: Book gain from partnering transaction (Nysäter) Support scheme expiries FY 2017 FY 2018 Details m Onshore Wind / Solar Offshore Wind / Others Total FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY Revenue 927 1, ,604 1, EBITDA EBIT thereof Equity-method earnings OCFbit Investments 1,225 1, Adjusted for non operating effects 24

25 Non-Core business Non-Core Details EBIT 1 m Preussen Elektra Generation Turkey FY % 382 FY 2018 Highlights PreussenElektra One-off effects m PreussenElektra Generation Turkey Total FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY FY 2017 FY 2018 % YoY Revenue 1,585 1, ,585 1, EBITDA EBIT thereof Equity-method earnings OCFbIT -7, , Investments / Lower achieved power prices + Higher volumes due to plant outages in 2017 Generation Turkey + Book loss from asset sale in Q Operational improvements Adverse FX effects from revaluation of loans PreussenElektra: Hedged Prices ( /MWh) as of 31 December % 100% 86% 52% Adjusted for non operating effects 25

26 Adjusted Net Income m FY 2017 FY 2018 % YoY EBITDA 1 4,955 4,840-2 Depreciation/amortization -1,881-1, EBIT 1 3,074 2,989-3 Economic interest expense (net) EBT 1 2,330 2,315-1 Income Taxes on EBT % of EBT 1-26% -24% - Non-controlling interests Adjusted Net Income 1 1,427 1, Adjusted for non operating effects 26

27 Reconciliation of EBIT to IFRS Net Income m FY 2017 FY 2018 % YoY EBITDA 1 4,955 4,840-2 Depreciation/Amortization/Impairments -1,881-1, EBIT 1 3,074 2,989-3 Reclassified businesses of Renewables Interest result Net book gains Restructuring Mark-to-market valuation of derivatives Impairments (net) Other non-operating earnings 3, Income/Loss from continuing operations before income taxes 4,960 3, Income taxes Income/loss from continuing operations 4,157 3, Income/loss from discontinued operations, net Net income/loss 4,180 3, Adjusted for non operating effects 27

28 Cash effective investments by unit m FY 2017 FY 2018 % YoY Energy Networks 1,419 1, Customer Solutions Renewables 1,225 1, Corporate Functions & Other Consolidation Non-Core Investments 3,308 3,

29 Economic Net Debt 1 m 31 Dec Dec 2018 Liquid funds 5,160 5,423 Non-current securities 2,749 2,295 Financial liabilities -13,021-10,721 Adjustment FX hedging ² Net financial position -4,998-3,031 Provisions for pensions -3,620-3,261 Asset retirement obligations -10,630-10,288 Economic Net Debt -19,248-16, Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs, 2. Net figure; does not include transactions relating to our operating business or asset management 29

30 Economic interest expense (net) m FY 2017 FY 2018 Difference (in m) Interest from financial assets/liabilities Interest cost from provisions for pensions and similar provisions Accretion of provisions for retirement obligation and similar provisions Construction period interests¹ Others Net interest result Borrowing cost that are directly attributable to the acquisition, construction or production of a qualified asset. Borrowing cost are interest costs incurred by an entity in connection with the borrowing of funds. (Interest rate: 5.37%). 30

31 Financial Liabilities Liquidity Sources (as of FY 2018) bn Liquid funds Non-current securities Maturity profile (as of end FY 2018) 1 bn 4.8 Syndicated loan (undrawn) 2.75 / $ Commercial Paper programs (undrawn) Acquisition facility (undrawn) 10 / EUR GBP USD JPY Other Bonds and promissory notes issued by E.ON SE and E.ON International Finance B.V. (fully guaranteed by E.ON SE) 31

32 Funding plan bn Indicative funding needs Financing considerations Funding public takeover offer and purchase of RWE s loan to innogy is covered by existing cash and RWE s payment 2019 funding needs: expected to be 2-3 billion 1.75 billion undrawn acquisition facility available E.ON maturities AROs innogy maturities 1 2 Maturities ( bn) E.ON ~1.1 ~1.4 ~0.8 innogy 2 ~2.0 ~0.8 ~1.7 Regular funding volumes determined by - refinancing of upcoming maturities - utilization of asset retirement obligations Future annual funding needs estimated: 2-4 billion 1. Asset retirement obligations ( AROs ) : Indicative utilization of 0.5 billion p.a. 2. Incl. senior bonds and 2019 RWE intercompany loan based on innogy s Fixed Income Investor Update 1 st June

33 E.ON Investor Relations contacts Dr. Stephan Schönefuß T +49 (201) Interim Head of Investor Relations stephan.schoenefuss@eon.com Martina Burger T +49 (201) Manager Investor Relations martina.burger@eon.com Sebastian Gaßner T +49 (201) Manager Investor Relations sebastian.gassner@eon.com Conny Ripphahn T +49 (201) Manager Investor Relations conny.ripphahn@eon.com Andreas Thielen T +49 (201) Manager Investor Relations andreas.thielen@eon.com T +49 (201) investorrelations@eon.com 33

34 Financial calendar & important links Financial calendar May 13, 2019 Quarterly Statement: January March 2019 May 14, Annual Shareholders Meeting August 7, 2019 Half-Year Financial Report: January June 2019 November 13, 2019 Quarterly Statement: January September 2019 March 25, 2020 Annual Report 2019 Important links Presentations Facts & Figures 2019 Annual Reports Interim Reports Shareholder Meeting Bonds / Creditor Relations Transaction Website: 34

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