Focused Disciplined Striving. BofAML European Credit Conference 2016

Transcription

1 Focused Disciplined Striving BofAML European Credit Conference 2016 Henryk Wuppermann, Head of Corporate Finance, E.ON SE London, 07 September 2016

2 Agenda New E.ON and strategic update Financial and operating update 1

3 Attractive portfolio and sound earnings foundation Key Financials Energy Networks New EBIT Customer Solutions Renewables EBITDA bn E.ON Group Deconsolidation Uniper New E.ON 1 EBIT bn bn 0.8 bn 0.4 bn -0.9 E.ON Group Deconsolidation Uniper New E.ON 1 PreussenElektra 0.6 bn Corporate Functions/Other bn Divested Operations 0.4 bn 4 Underlying Net Income bn bn E.ON Group Deconsolidation Uniper New E.ON Pro-forma figures without Uniper contribution 2. Pro-forma figures 3. Including group consolidation effects 4. Contribution from E&P, Hydro, Generation Italy and Spain

4 EBITDA 2015 A higher share of regulated / long-term contracted earnings following Uniper spin-off Business profile post spin-off E.ON s attractions + Substantially increased earnings stability ~65% from regulated / long-term contracted businesses 2 High share of regulated / longterm contracted earnings ~ 5.0 bn 1 Diversified portfolio Energy Networks Customer Solutions Renewables PreussenElektra and others + Operations mainly under stable, well established regulatory frameworks in low risk markets + Sharply reduced commodity & FX risk exposure - Reduction of overall size and diversification High cash conversion Attractive return on capital 3 1. Pro-forma figures without Uniper contribution and excluding results from divested operations 2. Including Energy Networks, ~40% of Heat and ~60% of Renewables

5 Energy Networks E.ON s network presence Overview Leading European operator of electricity and gas networks supplying several million customers E.ON ensuring efficient grid expansion using ultramodern technologies Well diversified footprint Regulated asset base ( bn) Sweden 3.9 bn 2 ~ 18 bn 1 EBIT breakdown CEE & Turkey 5 6 SWE 20% 18% 62% GER CEE (CZE, SVK, HUN, ROM) 4.1 bn 3 Germany 10.0 bn Gas ~70% Power 4 1. Current total RAB of country/region, relevant for 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. For example in Sweden, the calculation of the asset base takes into account standard costs instead of actual costs. 2. Converted at SEK/EUR rate of Hungary converted at EUR/HUF of 318.5, Czech converted at EUR/CZK of 27.2, and Romania converted at EUR/RON of 4.6; Including 100% of Slovakia, not including Turkey 4. Pro-forma figures 5. Including at-equity result from Slovakia and Turkey 6. Differences might occur due to rounding

6 1 Renewables E.ON Renewables footprint (2015) Operated Capacity (GW) EBIT development bn % GW GW Revenue mix Onshore/PV US Onshore EU Offshore EU Operated capacity countries Project pipeline only 52% 48% 60% 40% 63% 37% Regulated / long-term contracted Merchant 5 1. Hedging strategy substantially mitigating risk of merchant exposure in the near- and midterm 2. Revenue mix includes subsidies/incentives (e.g. Production Tax Credit (PTC), Renewable Obligation Certificates (ROCs) etc.). E.ON reported financials classifies some of these components as other income

7 Customer Solutions Customer Solutions E.ON s Customer Solutions presence Overview Covers energy sales (power & gas), heat as well as new solutions Serving B2C/ B2B SME customers with asset-light and mass market solutions Serving B2B large/ B2M customers with asset-intensive / tailored solutions Energy sales EBIT breakdown EBIT District heating New solutions Power/ gas volume sold 2015 Customer accounts 23 m 1 ~ 0.8 bn / 167 TWh 2 Other 16% 35% UK 49% Germany Average EBIT margin ~3% Excluding Turkey, including 49% stake in ZSE (Slovakia) 2. Excluding power/ gas volumes for heating 3. Pro-forma figures

8 PreussenElektra Geographic presence in Germany Three active power plants 1 Brunsbüttel Brokdorf Stade Unterweser Emsland Grafenrheinfeld Krümmel Hannover Grohnde Würgassen Active and operated by PreussenElektra Active and minority share PreussenElektra Shut down Decommissioning Shut-down dates 2021 Grohnde (1,360 MW) 2021 Brokdorf (1,410 MW) 2022 Isar II (1,410 MW) Isar 1/2 Gundremmingen A/B/C Excellent fleet track record On average >90% availability over the last 5 years Earnings with near term visibility through forward hedging (>2 years) % Controllable costs, indexed to 2011 = Efficient management of controllable operational costs (incl. capex) 2 : Nuclear plants which have been shut down and are in majority owned by E.ON include Grafenrheinfeld, Unterweser, Isar 1, Stade, Würgassen. Active joint nuclear plants are Gundremmingen B & C and Emsland 2. Including Brokdorf, Grohne and Isar 2. Controllable costs only include cost components that can directly be influenced and are not mainly driven by external factors (e.g. no nuclear fuel tax and nuclear fuel costs are included) 3. Average across German nuclear power plants operated by E.ON

9 Uniper spin-off approved by AGM 1 Jan 2016 E.ON and Uniper organizational separate Carve-out effective Employees allocated to both companies Binding tax rulings obtained 26 Apr 2016 Capital market day Equity story, incl. strategy, KPIs, dividend policy, capital structure AGM invitation Spin-off report: detailed financial & legal documentation 8 Jun 2016 AGM decision 99.7% approval rate BaFin approval of Uniper prospectus Publication of Uniper prospectus (incl. H figures) September 2016 Pre-Listing Roadshows & capital market communication Listing of 8

10 Agenda New E.ON and strategic update Financial and operating update 9

11 2016 Outlook confirmed bn EBITDA bn EBIT Underlying Net Income bn In transition year 2016 including at-equity contribution of Uniper on an underlying basis after assumed spinoff & deconsolidation; as of 2017 without Uniper contribution

12 Solid operating performance in challenging environment H vs. H H Highlights 2.1 bn 2.0 bn EBIT 1,2 up by ~ 0.1 bn; Core EBIT 1 up by ~ 0.2 bn EBIT FY 16 Outlook confirmed H H Spin-off approved by AGM (99.7%) Underlying Net Income bn 0.7 H bn 0.6 H BBB+ / Baa1 Rating affirmed 3.8 bn disc. op. loss mainly driven by Uniper impairments Divested Operations Adjusted for non operating effects 2. Excluding divested operations in H1 2015

13 E.ON s rating in line with key peers Positive Ratings (S&P/Moody s) and outlooks 1 A / A2 Negative Positive A- / A3 Negative Positive BBB+ / Baa1 Negative Positive BBB / Baa2 Negative Positive BBB- / Baa3 Negative E.ON Iberdrola SSE EnBW Vattenfall Enel RWE Current group rating S&P Standalone rating S&P (rating excluding any influence from full or partial state ownership; if applicable and different from group rating) Current group rating Moody s Standalone rating Moody s (rating excluding any influence from full or partial state ownership; if applicable and different from group rating) 12 (1) As per August 26, 2016

14 E.ON Focus our basis for steering the company E.ON FOCUS medium-term framework Capital structure BBB+ / Baa1 Profit Group EBIT 1 Cash Cash conversion rate 2 Return ROCE 3 Growth EPS 4 80 % 8 10 % 5-10 % p.a. Dividend payout % of Underlying Net Income Executive compensation closely linked to EPS and relative TSR 5 (in addition: Share ownership obligations) 13 1.Adjusted for non operating effects and divested operations in 2015 without Uniper contribution 2.OCFbIT (Operating cash flow before interest and tax) divided by EBITDA without Uniper contribution 3.Based on EBIT (= pre tax) without Uniper contribution 4.Based on Underlying Net Income, compound annual growth rate, adjusted for divested operations in 2015 without Uniper contribution 5.Total Shareholder Return

15 E.ON has a range of measures available Catalyst Measures Decision criteria Deterioration in business environment Opex cuts Capex efficiency Asset rotation Committed Additional deterioration in financial environment Selective asset disposals Dividend policy Capital measures EPS impact Cash generation Cost of equity Government nuclear policy decision Capital measures Special situation 14

16 Financial Liabilities Split Financial Liabilities 1 Maturity profile (as of end H1 2016) 2 bn bn 30 June Bonds in EUR -4.7 in GBP -4.1 in USD -2.7 in CHF 0.0 in SEK 0.0 in JPY -0.2 in other denominations -0.3 Promissory notes -0.4 Commercial papers EUR GBP USD YEN Other Other liabilities -1.7 Total As of 30 Jun 2016 based on Future E.ON 2. 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)

17 Key takeaways Spin-off preparations nearing the finishing line; listing expected for September KFK discussions are progressing Core businesses well positioned but also exposed to competitive and regulatory dynamics especially in medium term perspective Future E.ON will continue to have absolutely strict focus on financial discipline and proper capital allocation 16

18 Backup Financials Economic net debt Operations Spin-off Reporting calendar & Important links 17

19 Financials H EBIT ~ 100 million above previous year EBIT 1 H vs. H m 2, ,001 1, H Divested Operations H w/o div. operations Energy Networks Customer Solutions Renewables Corp. Functions & Other, Consolidation Preussen Elektra H Adjusted for non operating effects

20 Financials Financial Highlights bn H H % YoY Sales EBITDA EBIT Underlying net income OCF bit Investments Economic net debt ² 27.7³ Adjusted for non operating effects 2. END FY 2015 refers E.ON going concern, END H without Liabilities of Uniper Group (difference to pro-forma END figure shown on p. 13 reflects 0.7 bn loan to Uniper, which is excluded as intercompany transaction under IFRS) 3. END as per FY 2015

21 Financials From EBITDA to Net Income m H H % YoY EBITDA 1 3,293 2, Depreciation/Amortization/Impairments -1, EBIT 1 2,122 2,001-6 Economic interest expense (net) Net book gains Restructuring Mark-to-market valuation of derivatives Impairments (net) Other non-operating earnings Income/Loss from continuing operations before income taxes 1,267 1, Income taxes Income/loss from discontinued operations, net 329-3,884-1,281 Non-controlling interests Net income/loss attributable to shareholders of E.ON SE 1,149-3, Adjusted for non operating effects

22 Financials Underlying Net Income m H H % YoY EBITDA 1 3,293 2, Depreciation/amortization -1, EBIT 1 2,122 2,001-6 Economic interest expense (net) EBT 1 1,348 1, Income Taxes on EBT % of EBT 1-27% -38% - Non-controlling interests Underlying net income Adjusted for non operating effects

23 Financials Underlying Net Income affected by high tax rate H bn Group EBIT 2.0 Interest on fin. assets/ liabilities Other interest expenses (incl. Nuclear AROs) % YoY improvement due to bond repayment in January 17% YoY weakening driven by valuation effects on other long-term provisions and lower interest capitalization Profit before Taxes 1.2 Tax expense 0.5 Minorities % YoY: 38% tax rate due to aperiodic tax charges 13% YoY decrease mainly driven by German networks development Underlying Net Income Adjusted for non operating effect EPS ( per share) 2. Without accretion of nuclear provisions

24 Financials Cash conversion in line with guidance H bn CCR 1 : 79% EBITDA 1 Non-cash effective EBITDA items Provision utilization Changes in NOWC Payments related to non-op earnings OCF bit Interest Tax Payments Payments OCF Divest CAPEX FCF Adjusted for non operating effects 2. Cash Conversion Rate: OCFbIT / EBITDA

25 Economic net debt Economic Net Debt m 31 Dec June 2016 Liquid funds 8,190 7,178 Non-current securities 4,724 4,662 Financial liabilities -17,742-14,081 Adjustment FX hedging Net financial position -4,610-1,853 Provisions for pensions -4,210-5,574 Asset retirement obligations 2-18,894-18,072 Economic net debt -27,714³ -25,499³ Net figure; does not include transactions relating to our operating business or asset management 2. Net of Swedish nuclear fund (ARO as of 31 Dec 2015) 3. END 31 Dec 2015 refers E.ON going concern, END 30 June 2016 without Liabilities of Uniper Group (difference to pro-forma END figure shown on p. 9 reflects 0.7 bn loan to Uniper, which is excluded as intercompany transaction under IFRS)

26 Economic net debt END increasing mainly due to pension revaluation Economic Net Debt H vs. FY 2015 bn Others include: - 1 bn Nordstream 1 Transfer bn Uniper Capital Increase ARO Pension Discount Rates: ARO GER 1.4% vs. 2.7% UK 2.9% vs. 3.8% Cash Balance: bn Pensions -3, ,1-21, , , ,3-0,7-24, , Pensions Provisions FY 2015 NFP END FY OCF Inv B&S Dividend Divest Pensions Others END H NFP Provisions H Liquid Funds: 7.8 bn Non-Current Securities: 4.5 bn Liquid Funds: 7.2 bn Non-Current Securities: 4.7 bn Pro-forma END of Future E.ON

27 Operations Strong Customer Solutions result offsets Networks Energy Networks Customer Solutions EBIT 1 m CEE & Turkey Sweden % EBIT 1 m Other % Germany UK Germany H H H H Highlights Germany: - Base year for new regulatory period - Positive non-recurring effects in H Sweden: - Start of the new regulatory period - H burdened by storm costs CEE: - Positive effects in Czech Republic and Turkey compensate for milder winter in Romania Adjusted for non operating effects 2. Energy Company Obligation Highlights Germany: - Slight decline due to competitive dynamics and the transfer of wholesale customers UK: - Lower ECO 2 and procurement costs - One-off costs in H Other: - Sweden: normalized winter in H Romania & Hungary: organic improvements

28 Operations Strong increase in offshore EBIT contribution Renewables PreussenElektra EBIT 1 m +26% 254 EBIT 1 m % Offshore/Other Onshore/Solar H H H H Highlights Offshore: - Positive contribution from Humber & Amrumbank - Book gain from Arkona stake sale Onshore: - Positive one-off effects in H (incl. book gains & hedges) - Negative price effects in H Highlights Lower volumes due to Grafenrheinfeld shut-down Lower achieved power prices compensated by lower nuclear fuel tax Adjusted for non operating effects

29 Operations Energy Networks & Customer Solutions Energy Networks m Germany Sweden CEE & Turkey H H % YoY H H % YoY H H % YoY H H % YoY Revenue 6,297 7, ,631 8,322 9 EBITDA ,391 1,358-2 EBIT Total thereof Equitymethod earnings OCFbIT , Investments Customer Solutions m Germany UK Other Total H H % YoY H H % YoY H H % YoY Revenue 4,415 4, ,205 4, ,939 3, ,559 11, EBITDA EBIT thereof Equitymethod earnings OCFbIT Investments Adjusted for non operating effects

30 Operations Renewables & PreussenElektra Renewables m Onshore Wind / Solar Offshore Wind / Others Total H H % YoY H H % YoY H H % YoY Revenue EBITDA EBIT thereof Equitymethod earnings OCFbit Investments PreussenElektra Hedged Prices Germany ( /MWh) m PreussenElektra H H % YoY Revenue 1, EBITDA EBIT % hedged 100% hedged thereof Equitymethod earnings % hedged 27 OCFbIT Investments Adjusted for non operating effects

31 Operations Cash effective investments by unit m H H % YoY Energy Networks Customer Solutions Renewables Corporate Functions & Other Consolidation PreussenElektra Investments 1,127 1, Adjusted for non operating effects

32 Operations Energy Networks: regulatory update for Germany Modernized incentive regulation ordinance Review of allowed return on equity (RoE) Final decision early August Allowed RoE for post 2005 investments in % ? Consultation Determination Highlights Removal of regulatory time-lag for investments via yearly true-up of regulated asset base In exchange, expansion factor to be abolished Bonus revenue for very high efficiency scores Overall earnings impact limited Highlights Start of consultation for RoE for next regulatory period starting 2018/19 with initial proposal of 6.91% Final RoE determination expected for September 31

33 Number of suppliers Market share (red line) Operations Customer Solutions: Challenges in the UK Competitive landscape Number of suppliers and market shares B2C power & gas CMA final report Published end of June % Small & Medium Large 50% Highlights Source: Cornwall Energy Increasing competition by new market entrants E.ON well positioned with industry-leading NPS score Rigorous focus on operating costs, customer retention programs, customer satisfaction Highlights Removal of the simpler choices components positive Introduction of price cap for prepayment customers negative Majority of measures shall enter into force in April

34 Operations Renewables: We continue to deploy capabilities Rampion Colbeck s Corner 400 MW offshore windfarm in English Channel 1/3 of 116 mono-pile foundations already installed Fully on track for completion in MW onshore windfarm in Texas Fully operational since May th E.ON windfarm in the US Arkona 385 MW offshore windfarm in German Baltic Sea Final investment decision taken in April Expected to be fully operational in 2019 Twin Forks 278 MW onshore windfarm in Illinois featuring 139 turbines Expected to be fully operational in late

35 Spin-off E.ON is committed to exit Uniper fully Envisaged spin-off Other shareholders 46.65% 53.35% Spin-off approved by AGM on 08 June (approval rate: 99.68%) Listing envisaged for September 2016 Each E.ON shareholder 1 will receive Uniper shares (allotment ratio 10:1) Envisaged shareholding structure Minority participation to be consolidated at equity post registration of spin-off and after execution of deconsolidation agreement 2 Dividends received from Uniper will contribute to E.ON s free cashflow As of deconsolidation only one current E.ON board member in supervisory board of Uniper Staggered sale of E.ON s participation in medium term driven by compliance with minimum holding periods for tax reasons and market conditions 1. Excluding treasury shares 2. Until execution of deconsolidation agreement, Uniper will be reported under discontinued operations

36 Spin-off Spin-off with significant impact on E.ON reporting in 2016 Reporting structure and Uniper consolidation during spin-off process "At equity" simulated in Spin-off Report Q4 '15 Q1 '16 AGM Q2 '16 Listing Execution of deconsolidation agreement Current reporting structure New E.ON segment reporting Fully consolidated Fully consolidated as "discontinued operations" E.ON pro forma consolidated balance sheet in the Spin-off Report has a simulation of the at-equity consolidation of Uniper Simulation is based on derived book values as of Not considered are any other effects of the business year 2016 (e.g earnings contribution, Nord Stream I transfer, repayment of E.ON loan) Potential differences in Uniper valuation at the respective valuation dates New E.ON segment reporting "At equity" consolidation 35

37 Financial calendar & important links Financial calendar November 9, 2016 Interim Report III: January December 2016 March 15, 2017 Annual Report 2016 May 10, 2017 Interim Report I: January March 2017 May 10, Annual Shareholders Meeting August 9, 2017 Interim Report II: January June 2017 Important links Capital Market Story Other Presentations Annual Reports Interim Reports Shareholders Meeting Facts & Figures Creditor Relations

38 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.