German Downstream Powerhouse

Transcription

1 German Downstream Powerhouse Bernd Böddeling CFO RWE Deutschland Essen, 7 April 2016

2 Forward Looking Statement This presentation contains certain forward-looking statements within the meaning of the US federal securities laws. Especially all of the following statements: > Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items; > Statements of plans or objectives for future operations or of future competitive position; > Expectations of future economic performance; and > Statements of assumptions underlying several of the foregoing types of statements are forward-looking statements. Also words such as anticipate, believe, estimate, intend, may, will, expect, plan, project should and similar expressions are intended to identify forward-looking statements. The forward-looking statements reflect the judgement of RWE s management based on factors currently known to it. No assurances can be given that these forward-looking statements will prove accurate and correct, or that anticipated, projected future results will be achieved. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Such risks and uncertainties include, but are not limited to, changes in general economic and social environment, business, political and legal conditions, fluctuating currency exchange rates and interest rates, price and sales risks associated with a market environment in the throes of deregulation and subject to intense competition, changes in the price and availability of raw materials, risks associated with energy trading (e.g. risks of loss in the case of unexpected, extreme market price fluctuations and credit risks resulting in the event that trading partners do not meet their contractual obligations), actions by competitors, application of new or changed accounting standards or other government agency regulations, changes in, or the failure to comply with, laws or regulations, particularly those affecting the environment and water quality (e.g. introduction of a price regulation system for the use of power grid, creating a regulation agency for electricity and gas or introduction of trading in greenhouse gas emissions), changing governmental policies and regulatory actions with respect to the acquisition, disposal, depreciation and amortisation of assets and facilities, operation and construction of plant facilities, production disruption or interruption due to accidents or other unforeseen events, delays in the construction of facilities, the inability to obtain or to obtain on acceptable terms necessary regulatory approvals regarding future transactions, the inability to integrate successfully new companies within the RWE Group to realise synergies from such integration and finally potential liability for remedial actions under existing or future environmental regulations and potential liability resulting from pending or future litigation. Any forwardlooking statement speaks only as of the date on which it is made. RWE neither intends to nor assumes any obligation to update these forward-looking statements. For additional information regarding risks, investors are referred to RWE s latest annual report and to other most recent reports filed with Frankfurt Stock Exchange and to all additional information published on RWE's Internet Web site. PAGE 2

3 RWE Group Overview Formation of a unique and a leading European utility RWE AG shareholders 100% Conventional power generation RWE AG ~90% NewCo shareholders Supply & Trading NewCo ~10% Grid Retail Renewables > RWE to establish a new leading European utility comprising the grid, retail and renewables businesses > Conventional power generation and trading businesses retained as separate functional units with RWE AG > Key milestones: December 2015: Supervisory Board approval March 2016: Nomination of management team 1 April 2016: Operational start planned 30 June 2016: Full implementation of new structure planned Listing of ~10% of NewCo via primary offering envisaged for late 2016 > IPO proceeds mainly used to finance growth investments in NewCo > Placing of further stakes of NewCo by RWE AG via secondary offer possible at the same or later point in time > RWE AG plans to remain majority shareholder in NewCo PAGE 3

4 RWE Group Overview NewCo: Strong downstream business and attractive renewables footprint Grid Supply Renewables > RWE operates 550,000 km of grid assets in five European markets (GER, PL, CZ, HU, SK) > Leading positions in core markets (e.g., largest electricity DSO in GER 1, largest gas DSO in CZ 1 ) > Excellent distribution grid management for electricity and gas supply > Operating result of ~ 2.0bn (2015 Division Grids/Participations/Other) > Strong retail organisation with 23m customers in 12 European markets > RWE is No. 3 in terms of electricity sales and No. 5 in terms of gas sales in Europe > Well positioned in various B2C markets in terms of profitability, customer growth and satisfaction (e.g., GER, NL) > Operating result of ~ 0.8bn (2015) > Renewables portfolio of more than 3.5 GW capacity mainly in six European markets (GER, UK, SPA, NL, PL, ITA) > RWE belongs to the top 5 in offshore wind globally with ~1 GW of capacity > Focus on operational excellence and value-adding growth across entire fleet > Operating profit of ~ 0.5bn (2015) 1 Measured by transported volumes in Germany and by grid length in CZ. Assumption: NewCo based on current RWE AG divisions Supply/Distribution Networks Germany, Supply/Netherlands Belgium, Supply United Kingdom, Central Eastern and South Eastern Europe and Renewables. PAGE 4

5 German Downstream Powerhouse Overview A leading market player at a glance German downstream business of RWE 8 million customers served Market position Germany Electricity supply No. 1 Gas supply No. 3 Key figures (2015) External revenue ( billion) 24.8 EBITDA ( billion) 2.6 Operating result ( billion) 1.9 Workforce 18,339 1 Grid length electricity (km) 330,000² Grid length gas (km) 48,000² External electricity sales 2015 (billion kwh) External gas sales 2015 (billion kwh) Industrial & corporate customers 28.6 Residential & commercial customers Distributors 69.8 Industrial & corporate customers Distributors 53.3 Residential & commercial customers Converted to full-time positions ² Grid operated PAGE 5

6 German Downstream Powerhouse Overview German Downstream Business with growing importance for RWE Group key value drivers in focus Earnings contribution to RWE Group share of operating result (in %) RWE AG Downstream business 48% RWE Deutschland (of which circa 60 % regulated) Distribution Supply Operating result FY bn Development of operating result RWE AG - illustrative Upstream Gas & Oil Renewables Distribution and 47% Supply Conventional power generation 51% Trading Gas Midstream FY 2012 FY % 14% > Regulatory management > Asset mgmt. of RAB 1 > O&M costs Value drivers > Sales margin > Customer base > Operating costs > Selective growth investments 1 RAB = Regulated Asset Base PAGE 6

7 German Downstream Powerhouse Overview Strong track record strategic agenda fulfilled Review operating result in m 1 Strategic Agenda and achievements ~ 5% p.a. 1,856 > Cost reduction through efficiency programmes efficiency improvements 450/increase operating result per employee (from 73k to 100k) 1,046 > Increase margins in supply business and optimise purchase costs develop customer base > Mitigate negative effect of regulation in grid business by active regulatory management > Develop portfolio of participations > Renew grid concessions 1 Pro forma figures for current organisational structure (RWE Deutschland/German Downstream Powerhouse) PAGE 7

8 German Downstream Powerhouse Distribution Today: Excellent position in distribution Solid income base > Stable income situation until end of regulatory period (2017: gas; 2018: electricity) solid cost base and good regulatory efficiency potential for revenue growth through the recognition of costs for the integration of renewables > Distribution grid long term required to link areas with high renewable feed-ins with areas of high demand Well positioned grid management and operation > Integrated management of regulatory, technical and commercial aspects > Regional target grid investments of the past yield high performance grid > High level of security of supply Advanced smart grid expertise > Smart grid and metering technologies are needed our smart grid projects and enable us to take advantage of opportunities presented by the Energiewende. > With research and development projects like AmpaCity and Smart Country we revolutionise the future energy supply delete extra space for cities and rural areas. As a pacesetter and solution provider we have already won several innovation awards (e.g. Green Tec Award 2015, Ampacity awarded by Klima.Expo.NRW) > Projects provide the infrastructure for the delivery of innovative commodities and non-commodities (retail) as well as new products and services PAGE 8

9 German Downstream Powerhouse Distribution Our strategic aspiration: Secure current value driver position and provide platform for the Internet of Energy Secure current value driver position Regulatory management > Use stable regulatory framework to secure income situation > Use potential for revenue growth through the recognition of costs for the integration of renewables Asset management of RAB 1 > Continue to invest in highly automated target grid structures > Develop asset base by using most efficient and economic technologies > Develop RAB by fulfilling technical requirements of the German Energiewende (energy transition) Provide platform for Internet of Energy Develop distribution grid as technical, digitalised platform for the Internet of Energy > Keep current frontrunner position in R&D and attract public funding as trusted partner for German politics > Provide technology and data to enable innovative solutions > Invest in communication technologies (broadband) > Provide technical infrastructure for e-mobility > Provide grid stability services > Market smart grid know-how and services to third parties O&M costs > Maintain cost management efforts especially using continuous improvement programs > Further use of ICT-technologies to optimise maintenance levels and workforce management 1 RAB = Regulated Asset Base PAGE 9

10 German Downstream Powerhouse Distribution Our investments aim at long-term growth of asset base Investment strategy Investments in German grid business of 2.6 bn between 2016 and 2018 Investments higher than RAB 1 depreciation longer term RAB growth expected Mid term investments 2.6 bn Investments clustered in renewal, extension and special projects renewal extension special projects 1 RAB = Regulated Asset Base We develop efficient grid infrastructure with optimised capital requirement and asset mix PAGE 10

11 German Downstream Powerhouse Supply Today: Excellent position in supply Strong market position > 8 million customers; No 1. in retail 1, good position in B2B sales 2 > Profitable customer base (e.g. household: 16% market share in electricity, 10% in natural gas) 3 maintained in spite of intensive competition and high churn rates > Excellent margin position for electricity and gas in Germany with high growth potential based on our customer base Highly skilled operations > Top customer service and online offers (e.g. Web Study: RWE Vertrieb AG improving result 2015 after best result in 2014) 4 > Excellent in customer care and market oriented products > Acquisition skills via highly successful German discounter brand (> 1.2 million customers) 5 > Based on regular benchmarking RWE is below average cost level with further improvement potential New products > Already 10% of turnover delivered by new and innovative products with a profit share of over 15% 6 > Growth beyond pure commodity sales (e.g. one of Europe s leading e-mobility provider with more than 4,900 charging points in Europe) 7 > RWE in strong position for further margin growth by cross- and up-selling 1 Source: Household customers of RWE as reported in financial statements of RWE DAG 2015; 2 Source: Sales volume RWE DAG 2015, excluding resellers and RWEST 3 Market share electricity based on RWE household customers in relation to number of households in Germany (2014: 40.2 mn. according to StaBu), market share gas based on points of supply to households compared to points of supply to all households in Germany (12.5 mn., BNetzA 2015 monitoring report); 4 Source: Process Consulting Web Research: Webstudie EVU 2015, 2 nd position for RWE Vertrieb AG in overall ranking; 5 Energy Daily, edition 211: eprimo-kundenzahl nähert sich der 1,3 Millionen-Marke, as of ; 6 Source: RWE Deutschland AG: Group-wide internal analysis of retail data for calendar year 2014, as of 10/2014; 7 RWE Effizienz GmbH, Ladeinfrastrukturzahlen 2015 PAGE 11

12 German Downstream Powerhouse Supply Our strategic aspiration: B2C maintain no. 1 position; B2B energy services growth and cost reduction Energy+ B2C SEGMENT Energy+ B2B SEGMENT Build new marketing structures and business fields for decentral products (e.g. evolution of Smart Home, further role out of Home Power Solar and other storage and pv-products) Realise margin growth per customer by asset optimisation (e.g. by further development of products like Power-to- Heat, Portfolio management, Direct marketing of renewable energy) Digital Digital Best online service and best sales platform in the energy sector (development of digital sales oriented in best of class like amazon and google) Established leading position as provider for e-sales with best e-service for B2B customers (e.g. Web market, utility app) Customer Growth Roadmap Grow value oriented by customer acquisition/retention Increase margins by further cost efficiency measures PAGE 12

13 Summary Based on our excellent position today we have three basic strategic pillars for future growth Distribution Supply Innovation Outperform regulatory targets by optimised investment strategy and highest operating efficiency Maintain position as top performer with high value customer base Develop and successfully implement new business models for a smart energy world with valueenhancing growth potential TODAY and TOMORROW: German Downstream Powerhouse aims at continuously high contribution to RWE Group s value. PAGE 13