UniCredit European Energy & Utilities Credit Conference 2017

Transcription

1 UniCredit European Energy & Utilities Credit Conference st November 2017 Henryk Wuppermann, Head of Corporate Finance, E.ON SE

2 Key highlights for debt investors Highly stable business profile with ~2/3 of EBITDA from regulated, long-term contracted businesses 1 De-risking completed: transfer of ~ 10 bn to government fund finalizes KFK solution Deleveraging: from 5.3x Net Debt/EBITDA (FY 2016) to ~4.0x Net Debt/EBITDA (mid-term target) Potential overachievement of deleveraging targets offers potential room for profitable growth and dividends Rigid focus on capital return and discipline 1. Including Energy Networks and a portion of Renewables and Heat 2

3 E.ON at a glance Customer Solutions Renewables Outlook 2017 bn 57% 1 28% 1 15% 1 Adjusted EBIT bn ~ 19bn Regulated asset base mainly in Germany and Sweden >22m Customers across Europe with strong cash flow generation New solutions: operator of largest e-mobility charging network in Denmark >6GW Renewable capacities delivered across Europe and the US 3 GW onshore pipeline to drive growth in the US Adjusted net income bn bn EBIT (FY 2016) 0.8bn EBIT (FY2016) 0.4bn EBIT (FY2016) 1. FY2016 EBIT adjusted for non operating effects, representation in pie charts excluding Corporate Functions/ Other 3

4 Very stable business profile Business profile FY EBITDA High share of regulated and long-term contracted earnings (~2/3 of EBITDA ) Operations in Energy Networks under stable, well established frameworks in low risk markets with strong regulatory track record Predominantly quasi-regulated or contracted earnings in Renewables and heat operations Remaining merchant exposure in Renewables and PreussenElektra largely hedged 12% 15% 21% 3.7bn 51% Energy Networks Customer Solutions PreussenElektra (non-core) Renewables ~2/3 from regulated/long-term contracted businesses 2 1. Adjusted for non operating effects, representation in pie charts excluding Corporate Functions/ Other; total figures including Corporate Functions/ Other, 2. Including Energy Networks and a portion of Renewables and Heat 4

5 KFK solution: De-risking completed Remains with: Transferred to: KFK -Fund Dismantling & retirement of nuclear power plants Certain timing and amounts Intermediate nuclear waste storage Uncertain timing and amounts Final nuclear waste storage ~ 10 billion payment Business risk improved Detailed time schedule for defueling and dismantling set up Going forward, much stronger focus on core businesses Financial risk improved Uncertain and extremely long dated provisions transferred 5

6 Nuclear decommissioning is comparable to a debt redemption IFRS approach Utilization of nuclear provisions is currently part of operating cash flow and thus implies a burden on free cashflow bn Economic view Nuclear decommissioning provisions ( 11.2m) are part of E.ON s economic net debt (END) Economically the utilization is comparable to a redemption of debt All rating agencies adjust FFO/RCF accordingly Nuclear decommissioning could therefore be paid and replaced with financial debt (END neutral) and thus does not change leverage Illustrative maturity profile incl. nuclear ARO s bn EBITDA 1 ~ Utilization of nuclear provisions OCF bit EUR USD Other GBP YEN Provision utilization (nuc. decom.) Adjusted for non operating effects;

7 Potential over-achievement of deleveraging could create balance sheet head room Economic net debt bn 26.3 Debt Reduction ~5.3x EBITDA NFT 3 ~ 2.85bn ABB 4 ~ 1.35bn 19.7 > 4.0x EBITDA ~4.0x EBITDA Debt reduction measures + Monetization of Uniper shares + Transfer of NS1 2 into CTA + Nuc. decommissioning cost savings + Additional measures (mainly non-core disposals excl. Urenco) ~3.8 1 ~1.0 ~1.0 ~1.0 FY M 2017 post deleveraging potential balance sheet head room mid term target No hybrid issuance necessary 1. Based on share price of 22 (Fortum s bid for E.ON s Uniper Shares), 2. Nordstream 1 stake, 3. Nuclear Fuel Tax, 4. Accelerated Book Build 7

8 Capex budget under review Medium-term Gross capex bn ~ % ~8.0 Strict focus on capital discipline across all business units CAPEX budget for the mid-term under review Update with FY17 results Gross capex bn Energy Networks investments of 1.6x regulatory depreciation driven by new renewables connections, grid maintenance and digitization 1.4 Energy Networks 0.7 Customer Solutions 1.5 Renewables 3.6 Group Customer Solutions investments in heat and new solutions (i.e. contracted onsite generation) and IT upgrades in UK/Germany Renewables investments : European offshore (~800 MW) and US onshore (~500 MW) 8

9 Embedding operational excellence and establishing a strong performance culture: the Phoenix project Scope Controllable cost 1 baseline 1.2 Targets bn Phoenix target: 400 m EBIT contribution p.a. from 2018 onwards 5.3 About 300 m predominantly 4.1 from central overhead & support functions Restructuring of pension plans & other measures deliver ~ 100 m Phoenix well on track ~ 300m ~ 40m ~ 30m ~ 30m H Q Q Beyond Phoenix 400m Total Total E.ON Costs in scope of Phoenix Performance culture to be sustainably embedded across all functions Focus on operational excellence Improve customer centricity Digitization to improve processes and customer experiences 1. Controllable Costs include operational costs that management can meaningfully influence, such as material expenses, consultancy and personnel expenses. Margineffective components such as fuel costs as well as cost item that are largely uncontrollable by the management are not included. 9

10 E.ON Focus Our basis for steering the company Update of E.ON Focus with FY 2017 results Increased payout ratio to minimum of 65% 4 Striving for payout ratio in line with peers (specification of exact range with FY 2017 results) Target of absolute dividend growth (base year 2017) Strong alignment of management and investors E.ON KPIs without Uniper contribution, 1. Adjusted for extraordinary effects and divested operations, FY 2017 guidance range as basis for medium-term outlook, 2. OCFbIT divided by EBITDA, 3. Based on EBIT (= pre-tax), 4. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards, 5. Total Shareholder Return 10

11 Financial Liabilities Liquidity Sources bn Maturity profile (as of end 9M 2017) 1 bn Sept 2017 Liquid Funds 5.5 Non-current securities 3.8 Total 9.3 Syndicated loan (undrawn) / $ CP programs (undrawn) / EUR GBP USD YEN Other 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. Refinanced on Nov. 13, Redeemed as per Oct. 2,

12 Appendix: 9M results Financial Details

13 Solid 9M 2017: well on track to achieve FY 2017 target Highlights Key Financials 1 m Solid EBIT development: + 13% Q vs Q ,640 3,540 Adj. Net Income up ~50% YoY Economic Net Debt reduced to 19.7 bn (vs bn in H1 2017) 2,311 2,117 FY 17 guidance confirmed: EBIT bn, Adj. Net Income bn EBITDA EBIT Adj. Net Income 1. Adjusted for non operating effects 9M M

14 Catch-up continues in Q EBIT 1 9M 2017 vs. 9M 2016 m 9M 2016 w/o div. operations Energy Networks Customer Solutions Renewables Corp. Functions & Other, Consolidation Preussen Elektra 9M Adjusted for non operating effects, 2. Energy Company Obligation (ECO) 3. Prepayment Meter (PPM) 165 Key 9M Effects Energy Networks Customer Solutions Renewables + Higher regulated revenues in Germany and CEE + Tariff increases in Sweden + Price increases in Germany and UK Higher costs (e.g. ECO 2 ), PPM 3 cap, competitive dynamics in UK, Energy procurement crisis in Romania (Q1 2017) Arkona book gain in Q (offshore) Lower prices & volumes, additional depreciation of asset retirement costs (ARC) + End of nuclear fuel tax, one-off effects in relation to court case & KFK solution 14

15 Adjusted Net Income supported by lower interest accretion and taxes 9M 2017 m Group EBIT Interest on fin. assets/ -522 liabilities 2 Other interest -53 expenses Profit before Taxes Income Taxes -386 ~ 55m decline yoy mainly due to lower interest income ~ 600m improvement yoy mainly due to significant lower interest accretion of nuclear provisions and other interest expenses Tax rate of 25% (vs. 32% in 9M 2016) Minorities -191 Adjusted Net Income EPS ( per share) Adjusted net income up 51% over prior year 1. Adjusted for non operating effects, 2. Without interest accretion of nuclear provisions 15

16 END improves significantly due to high cash flow and refund of nuclear fuel tax END 1 9M 2017 vs. FY 2016 bn Operating Cash Flow: END FY 2016 OCF 2 Cash impact of NFT refund 3 KFK payment to government fund 4 Investments ABB 5 Dividend Divestments Pensions AROs 6 Others END 9M 2017 AROs Pension provisions Net financial position 1. Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS ARO s. 2. OCF adjusted for KFK and NFT effects, 3. Nuclear Fuel Tax (NFT) including positive interest income effect, before taxes and payment to minorities 4. Kommission zur Überprüfung der Finanzierung des Kernenergieausstiegs (KFK), 5. Accelerated Book Build (ABB), 6. Includes transfer of nuclear storage liabilities to government fund 16

17 Segments: Energy Networks Energy Networks Highlights EBIT 1 m Germany Sweden CEE & Turkey +18% 1,417 1, Germany: + Regulatory effects + Lower maintenance costs Sweden: + Tariff increases CEE & Turkey: + Tariff increases in Hungary + Higher allowed revenues in Czech Republic & Romania 9M M 2017 Details m Germany Sweden CEE & Turkey Total 9M M 2017 % YoY 9M M 2017 % YoY 9M M 2017 % YoY 9M M 2017 % YoY Revenue 10,288 10, ,183 1, ,207 12, EBITDA 1 1,084 1, ,923 2, EBIT ,196 1, thereof Equity-method earnings OCFbIT 1,809 2, ,601 2, Investments Adjusted for non operating effects 17

18 Segments: Customer Solutions Customer Solutions Highlights EBIT 1 m Germany UK Other M % M 2017 Germany: Lower power margins due to increased TSO 2 fees (Q1 2017) Lower gas margin due to price decrease in Nov Price increases as per Q UK: Higher ECO 3 costs & FX weakening Price cap on PPM 4 customers Competitive dynamics Other: Energy procurement crisis in Romania in Q Details m Germany UK Other Total 9M M 2017 % YoY 9M M 2017 % YoY 9M M 2017 % YoY 9M M 2017 % YoY Revenue 5,526 5, ,676 5, ,877 4, ,079 15,479-4 EBITDA EBIT thereof Equity-method earnings OCFbIT , Investments Adjusted for non operating effects 2. Transmission system operator (TSO) 3. Energy Company Obligation (ECO) 4. Prepayment meter (PPM) 18

19 Segments: Renewables Renewables Highlights EBIT 1 m Offshore/Other Onshore/Solar % Offshore: Arkona book gain in Q Lower wind conditions in UK, FX (GBP) weakening Onshore: + COD of Colbeck s Corner in May Higher production of US wind farms Lower wind conditions in Europe (esp. Italy & UK) 9M M 2017 Details m Onshore Wind / Solar Offshore Wind / Others Total 9M M 2017 % YoY 9M M 2017 % YoY 9M M 2017 % YoY Revenue ,022 1, EBITDA EBIT thereof Equity-method earnings OCFbit Investments Adjusted for non operating effects 19

20 Segments: PreussenElektra PreussenElektra Highlights EBIT 1 m % 357 Lower volumes due to Brokdorf outage Lower achieved power prices Additional depreciation of asset retirement costs (ARC) + End of nuclear fuel tax payments in One-off effects in relation to court case & KFK solution 9M M 2017 Details m PreussenElektra 9M M 2017 % YoY Revenue 1,068 1, EBITDA EBIT thereof Equity-method earnings OCFbIT 259-7,069-2,829 Investments Hedged Prices Germany ( /MWh) as of 30 Sept % % % % Adjusted for non operating effects 20

21 Financial Highlights E.ON 9M 2017 results m 9M M 2017 % YoY Sales 28,198 27,937-1 EBITDA 1 3,640 3,540-3 EBIT 1 2,311 2,117-8 Adjusted net income OCF bit 3,827-3, Investments 1,981 2, Economic net debt ² 26,320 19, Adjusted for non operating effects, 2. Economic net debt as per 31 Dec 2016 and 30 Sept 2017; Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS ARO s 3. Kommission zur Überprüfung der Finanzierung des Kernenergieausstiegs (KFK) 4. Nuclear Fuel Tax (NFT) including positive interest income effect, before taxes and payment to minorities EBIT Energy Networks: +18% YoY. Higher regulated revenues in Germany and CEE and tariff increases in Sweden Customer Solutions: -36% YoY. Lower margins and increased competitors dynamic Renewables: -20% YoY. Arkona book gain in Q and lower wind conditions OCF bit Cash provided by operating activities 6.3 bn below prioryear level Key drivers: 10.3 bn payment to nuclear fund (KFK 3 ) (-) and 3.4 bn 4 nuclear fuel tax (NFT) refund (+) Adj. Net Income 324 m above last years 9M result Improvement YoY mainly driven by significant lower interest accretion of nuclear provisions, other interest expenses and a tax rate of 25% (vs. 32% in 9M 2016) Investments Energy Networks: 864 m (vs. 866 m YoY) Customer Solutions: 350 m (vs. 392 m YoY) Renewables: 961 m (vs. 637 m YoY ) 21

22 Adjusted Net Income m 9M M 2017 % YoY EBITDA 1 3,640 3,540-3 Depreciation/amortization -1,329-1,423-7 EBIT 1 2,311 2,117-8 Economic interest expense (net) -1, EBT 1 1,193 1, Income Taxes on EBT % of EBT 1-32% -25% - Non-controlling interests Adjusted net income Economic interest expense (net) Improvement mainly driven by significant lower interest accretion of nuclear provisions and other interest expenses Tax rate Tax rate of 25% (vs. 32% in 9M 2016) 1. Adjusted for non operating effects 22

23 Reconciliation of Adj. EBIT to IFRS Net Income m 9M M 2017 % YoY EBITDA 1 3,640 3,540-3 Depreciation/Amortization/Impairments -1,329-1,423-7 EBIT 1 2,311 2,117-8 Economic interest expense (net) -1, Net book gains n/a Restructuring Mark-to-market valuation of derivatives Impairments (net) Other non-operating earnings -79 3,298 n/a Income/Loss from continuing operations before income taxes 1,618 4, Income taxes Income/loss from discontinued operations, net -10, Non-controlling interests -5, Net income/loss attributable to shareholders of E.ON SE -3,948 3, Adjusted for non operating effects 23

24 Cash effective investments by unit m 9M M 2017 % YoY Energy Networks Customer Solutions Renewables Corporate Functions & Other Consolidation PreussenElektra Investments 1,981 2, Adjusted for non operating effects 24

25 Economic Net Debt 1 E.ON 9M 2017 results m 31 Dec June Sept 2017 Liquid funds 8,573 14,252 5,450 Non-current securities 4,327 3,850 3,801 Financial liabilities -14,227-14,691-14,304 Adjustment FX hedging ² Net financial position ,722-4,895 Provisions for pensions -4,009-3,748-3,586 Asset retirement obligations -21,374-21,459-11,218 Economic net debt -26,320-21,485-19, Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS ARO s, 2. Net figure; does not include transactions relating to our operating business or asset management 25

26 High cash conversion rate 2 of 120% supported by strong operating cash flow 9M 2017 bn +120% EBITDA 1 Cash Adjustments 3 Changes in WC OCF bit 4 Interest Payments Tax Payments OCF Capex FCF 1. Adjusted for non operating effects, 2. Cash Conversion Rate: OCF bit / EBITDA, adjusted for NFT and KFK effects, 3. Net non cash effective EBITDA items incl. provision utilizations, 4. Adjusted for KFK and NFT effects 26

27 Raising payout and striving for dividend growth Payout ratios by E.ON and peers Dividend policy: 80% Raising payout ratio to a minimum of 65% 2 Peer group 1 Striving for payout ratio in line with peers 65% 60% 50% E.ON target Previous payout E.ON 50% - 60% Specification of exact range with FY2017 results Targeting absolute dividend growth (base year 2017) Strong alignment of management and investors through E.ON Focus 1. Peer group: Centrica, Enel, EDP, Iberdrola, innogy, SSE, 2. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards 27

28 Outlook 2017 confirmed Outlook 2017 Effects for the remainder of 2017 EBIT bn Energy Networks Customer Solutions Renewables + Regulatory effects (e.g. pensions), lower maintenance costs + Tariff increase in Sweden + Positive development in CEE + Price increases in Germany & UK, focus on efficiency Competitive dynamics in UK Adj. Net Income bn + Normalizing wind yields Lower hedging prices Additional depreciation of asset retirement costs 1. Adjusted for non operating effects 28

29 Overview: Group & Segments

30 Energy Networks: Multi-decade growth Mega trends support multi decade growth Mega trends driving multi decade growth Emergence of bi-directional flows as opposed to the purely onedirectional flows in the past Higher complexity of asset management, asset operations and asset optimization Renewables build out Majority of renewables connected to the distribution networks (instead of the transmission networks) Increasing role of distribution system operators (DSOs) vs. the transmission system operators (TSOs) for overall system optimization Smart meter roll-out Sector coupling Electrification of e.g. heating, cooling and transport via heat pumps and electric cars DSO is in a preferred role enabling a system-optimal use since all this equipment is connected to the DSO networks RAB growth: potential for higher replacement capex on top of continuing network extensions Example: Power RAB in Germany bn % p.a % p.a m p.a. add. capex potential on back of improved regulation >

31 Energy Networks at a glance Highlights EBIT 1 in m Germany + Regulatory benefits + Lower maintenance cost Sweden + Tariff increases EBIT 9M ,2 70% CEE & Turkey + Positive effects in Czech Republic, Hungary One-off effect (book loss on hydro power plant divestment), low hydro flows and FX in Turkey Germany Sweden CEE & Turkey Further key financials 1 in m M % M Adjusted for non operating effects 2. Does only cover the three core businesses, Energy Networks, Customer Solutions and Renewables 3. Operating cash flow before interest and taxes. EBITDA 9M M 2017 OCFbit 3 Economic Investments 31

32 Energy Networks: E.ON has a strong European regulated asset base Well diversified footprint Presence in countries with AAA rating/ catch-up potential Regulated asset base ( bn) Sweden Germany 3.9 bn bn EBIT 2016 ( bn) ~ 54% 0.9 AAA ~ 24% 0.4 AAA ~ 23% 0.4 IG ~ 19 bn 1 CEE (CZE, SVK, HUN, ROM) 4.4 bn 3 GER SWE CEE 5 Total % of Total Energy Networks EBIT E.ON operates 858,000 networks km Distributed volumes (TWh) 6 Grid length ( 000 km) 1. Current total 2016 RAB of country/region - In general, RABs from different regulatory regimes are not directly comparable due to significant methodical differences. These include for example different regulatory asset lifetimes, asset valuation methods, or treatment of customer contributions for network connections. 2. Converted at SEK/EUR rate of 9.46, 3. Hungary converted at EUR/HUF of 311.4, Czech Republic converted at EUR/CZK of 27.0, and Romania converted at EUR/RON of 4.5; Including 100% of Slovakia, not including Turkey, 4. IG = Investment Grade; Except of Hungary and Turkey, 5. Including at equity income from Slovakia and Turkey, 6. Volumes including grid losses Power Gas Power Gas GER SWE CEE

33 Predictable earnings generated from RABbased returns Pro-forma allowed WACC as solid base 1 Germany 5.9% 2 Regulatory stability in the near term Start of next regulatory period (Power) % of Total EBIT 2016 Sweden 4.56% 3 CEE 4.7% - 8.0% ~90% 1. Power WACC for latest regulatory period. In general, allowed WACCs from different regulatory regimes are not directly comparable (even if they are adjusted for pre-tax/post-tax of real/nominal) because they are applied on RABs that are derived from different regulatory accounting rules, 2. Pro-forma calculated, nominal WACC, pre corporate tax and pre commercial tax. Instead of using a WACC-approach the German regulator publishes allowed equity returns. WACC figures for existing (Return on equity: 7.14% pre corporate tax and after commercial tax) and new investments (Return on equity: 9.05% pre corporate tax and after commercial tax) are assuming c. 4% cost of debt and a 60/40 debt/equity capital structure. The pro-forma WACC figure of 5.9% is then derived by weighting the share of existing assets (WACC: 5.7%) and new assets (WACC: 6.5%), 3. Pre-tax real WACC for Sweden of 4.56%; Current WACC challenged in court by network operators, 4. Hungary: pre-tax real WACC 4.69%, Czech Republic: pre-tax nominal WACC 7.951%, Romania: pre-tax real WACC 7.7%, Slovakia: pre-tax nominal WACC 6.47% 33

34 Customer Solutions at a glance Highlights EBIT 1 in m Germany + Price increase in Q Lower power margins due to increased TSO fees Lower gas margin due to price decrease in Nov % UK + Stabilizing customer numbers & price increases in Q FX weakening after Brexit decision & price cap on PPM customers Other EBIT 9M , 2 Energy procurement crisis in Romania in Q Higher gas procurement costs in Eastern Europe 1. Adjusted for non operating effects 2. Does only cover the three core businesses, Energy Networks, Customer Solutions and Renewables 3. Operating cash flow before interest and taxes. Germany UK Other Further key financials 1 in m 763 EBITDA M M M % 732 OCFbit M Economic Investments 34

35 Customer Solutions: Introducing new solutions E.ON Aura: PV & storage B2B Large: continuously gaining traction E-mobility: gearing up All-in-one solution including PV, battery, energy management app, service & guarantee package and green electricity tariffs Successful launch and scaling up across Germany Introduction of virtual storage product E.ON SolarCloud 10x increase in unit sales in 2016 Target 2017: 10-15% market share Significant sales growth with tailormade energy solutions (on-site generation, energy efficiency, flexibility, storage, ) Diversified portfolio of customers (auto suppliers, tires, chemical, retail, ) Innovative solutions like e.g. fuel cells & battery storage 2017 ambition: new contracts with several hundred million in total revenues Established dedicated unit to take leading role in developing Europe s charging infrastructure E.ON has extensive experience in e- mobility market leader in Denmark (2,500 charging points) Data-based development of services for further markets Partnerships with car rental company Sixt and e-mobility specialists 35

36 Customer Solutions: Financial highlights Adjusted EBIT 1 by business pillars bn Energy sales ~0.7 1 Energy sales financials bn Gross Margin Heat Total Adj. EBIT OPEX UK Continental Europe 1. Adjusted for non-operating earnings; Slight differences may occur due to rounding, 2. Costs to serve, costs to acquire and all other cost related to running the energy sales business including D&A 36

37 Renewables: Risk & return focus Focus on PPA and FiT secured pipeline US onshore Safe-harbored pipeline of > 3,000MW with 100% PTC support New project Stella (201MW) with FID expected in Q3-17 ~500 MW on track for completion in GW Europe onshore Opportunistic approach Recent example: FID on Morcone in Italy (57 MW, FiT of 66 /MWh for 20 years) Several hundred MW potential (e.g. in Scotland and Sweden) Offshore Stringent risk & return discipline ~800MW on schedule to be operational in 2018/19 1. Operated sites, where E.ON is the operator, regardless the ownership share, 2. Pro rata 2.1 GW Highlights 5.3 GW Operated capacity GW Owned capacity GW Offshore capacity 3.5 GW Onshore + PV capacity 37

38 CS: Very good progress and growth also from asset-backed solutions District Heating / B2M Strong district heating business in Sweden, Germany, UK with yearly EBIT of ~ 130m Stable and resilient earnings profile often based on network assets New 250m capex project in Högbytorp close to Stockholm to be finalized in 2019; 100 MW CHP plus district heating network extension Heat contributes ~20% of Customer Solutions EBIT 130m ROCE: >10% Energy Solutions B2B Focus on industrial generation (6-120 MW CHPs), on-site generation solutions (small/medium CHPs, PV), energy and CO 2 efficiency and flexibility Order intake 1 YTD of ~ 0.4bn on track to double order intake to > 1bn yoy in 2017 E-Mobility Leading E-Mobility player in Denmark (>50% market share) Established strong partnerships (e.g. Clever and Sixt) Roll-out of service offerings to other E.ON markets Aim for leading role in developing role in developing Europe s charging infrastructure 1. TCV: Total contract value Order intake to pick up significantly > 1bn

39 Renewables at a glance Highlights Offshore Arkona book gain in Q Low wind conditions in the UK EBIT 9M , 2 12% EBIT 1 in m Onshore/Solar Offshore/Other % Onshore + COD of Colbeck s Corner in May Higher production of US wind farms & better wind conditions in Europe 9M 2016 Further key financials 1 in m 9M Adjusted for non operating effects 2. Does only cover the three core businesses, Energy Networks, Customer Solutions and Renewables 3. Operating cash flow before interest and taxes. EBITDA 9M M 2017 OCFbit 3 Economic Investments 39

40 E.ONs capabilities in most attractive technologies and markets Geography Technology Business model 2.1 GW Wind Onshore Wind Offshore PV 3.2 GW Focus on Europe & North America Stable countries / low-risk Still attractive returns achieved Focus on Onshore wind, off-shore wind & utility-scale PV Strong E.ON capabilities and experience Capture trends in line with E.ON s capabilities / markets Integrated renewables player Portfolio optimization strategy, bringing: - Scale advantages - Maintain capabilities - Value creation - Reduce cluster risk 40

41 EBITDA contribution from PreussenElektra is limited and well hedged EBITDA % 13% 21% 53% Hedged Prices Germany ( /MWh) as of 30 June % 100% 94% Active and operated by PreussenElektra Active and minority share PreussenElektra Shut down Decommissioning Headquarters PreussenElektra Energy Networks Customer Solutions Renewables PreussenElektra Power plant Total capacity MW E.ON share % German nuclear power plants active/in operation Total Pro rata Accounting production production MW TWh TWh Pro rata MW Accounting production TWh Closure of plant Isar , Brokdorf , Grohnde , Gundremmingen B , Gundremmingen C , Emsland , Total Adjusted for non operating effects, representation in pie charts excluding Corporate Functions/ Other; total figures including Corporate Functions/ Other 41

42 PreussenElektra: Asset overview Geographic presence in Germany Overview nuclear plants Brunsbüttel Brokdorf Stade Unterweser Emsland Krümmel Hannover Grohnde Würgassen Grafenrheinfeld Isar 1/2 Gundremmingen A/B/C Active and operated by PreussenElektra Shut down Active and minority share PreussenElektra Decommissioning 1. Atomgesetz, 2. Start-up year 1971, transfer to Preußische Elektrizitäts-Aktiengesellschaft in

43 Discount rates for nuclear provisions Build up of provisions status quo Real discount rate: +0.9% Total costs in t 0 Build up of provisions post KFK 1 Real discount rate: -0.9% Total costs in t 0 t 0 t 0 t+1 t+2 t+3 Accretion Storage Decommissioning t+100 Accretion t 0 t+1 t+2 Decommissioning t+n Duration effect Remaining provisions with shorter duration Real discount rate of -0.9% (2015: +0.9%) increases provisions to 11.2 bn (new END definition: 10.1 bn 2 with real discount rate of 0.0%) 1. Utilization not taken into account, 2. Current cost value used for FY 2016 END definition 43

44 KFK solution with positive impact on adjusted net income 1. Nuclear fund (KFK) 2. Discount rates 3. Additional asset retirement cost (ARC) Storage related provisions, bn ~10 Decommissioning provisions, bn ARC bn Provisions Premium 1 Provision interest cost Payment Amount 1 FY 2015 Net accr. charge 9M 2016 Increase of provisions FY Payment amount has been transferred to government fund on July 3 rd 2017 Remaining provisions with shorter duration Real discount rate of -0.9% (2015: +0.9%) increases provisions to 11.2 bn (new END definition: 10.1 bn 3 with real discount rate of 0.0%) Duration effect increases Asset Retirement Costs (ARC) Additional ARC are capitalized as of Q Annual depreciation over remaining lifetime of nuclear plants Accretion of interest (4.4% p.a.) on 7.8 bn stops as of 1 Jan 2017 Increases net income by ~ m 2 p.a. Reduces accretion charges by ~ 350 m 4 p.a. Accretion charges based on risk free rate 5 Quarterly fluctuations of provisions Reduces non-core EBIT by ~ 185 m p.a. 1. Excluding 0.2 bn for minority shareholders, 2. Net effect, depending on refinancing costs, 3. Current cost value used for FY 2016 END definition, 4. Depending on discount rate to be applied, 5. Risk-free discount rate of ~0.5% 44

45 Financial calendar & important links Financial calendar March 14, 2018 Annual Report 2017 May 8, 2018 Interim Report I: January March 2018 May 9, Annual Shareholders Meeting August 8, 2018 Interim Report II: January June 2018 November 14, 2018 Interim Report III: January September 2018 Important links Presentations Annual Reports Interim Reports Shareholders Meeting Bonds / Creditor Relations

46 Disclaimer This presentation contains information relating to E.ON Group ("E.ON") that must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other person or used in whole or in part for any other purpose. By accessing this document you agree to abide by the limitations set out in this document as well as any limitations set out on the webpage of E.ON SE on which this presentation has been made available. This document is being presented solely for informational purposes. It should not be treated as giving investment advice, nor is it intended to provide the basis for any evaluation or any securities and should not be considered as a recommendation that any person should purchase, hold or dispose of any shares or other securities. This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON 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 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. Neither E.ON nor any respective agents of E.ON undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any information or to correct any inaccuracies in any such information. Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in all cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts. 46