Vattenfall Q1 results 2011 Øystein Løseth, CEO and Dag Andresen, CFO Press conference, 5 May 2011
Fukushima accident in Japan consequences for nuclear Earth quake and tsunami in Japan and accident in the nuclear power plant Fukushima have led to discussion about the future of nuclear power EU is going to conduct stress-tests for all European nuclear power plants GERMANY: Government ordered the closure of seven reactors, commissioned prior to 1980 Moratorium of three months on extending operating licenses, including a security check of all nuclear power plants Ethic-panel to prepare government s decision on the future of nuclear in Germany decision expected in June Assessment about potential financial consequences has to be made after decision
Timeline nuclear power plants in Germany Activity Mar Apr May Jun Jul Aug May 2012 Fukushima Shutdown of 7 German Nuclear reactors Moratorium Questions RSK* Final report RSK Stress tests EU Ethic - panel Government decision Meeting Angela Merkel/ Presidents Bundesländer Bundesrat: Decision on Moratorium 06.06.2011 03.06.2011 17.06.2011 *) Reaktor Sicherheits - Kommission
Nuclear Update: High availability in Swedish nuclear plants Vattenfall s Swedish nuclear power plants Forsmark and Ringhals had availability close to 100%. Vattenfall s German nuclear plants, Brunsbüttel and Krümmel, continuously out of operation during Q1, 2011. Estimated earnings impact (loss of revenues) for nuclear standstills during Q1 2011 amounted to: - German plants: SEK 1 186 million (~EUR 133 million) SKB (Swedish Nuclear Fuel and Waste Management Company) submitted a formal application for a permit to build a final repository for nuclear waste in Sweden.
Discussion around renumeration issues Severance pay for former CEO led to changes in Board and EGM: Björn Savén new Chairman of the Board, Kerstin Ahlfont acting Head of HR in EGM High severance packages in Germany were the consequence of old contracts; those contracts are no longer made Vattenfall implements the guidelines for compensation for senior executives in state-owned companies from the Swedish government Process of reviewing all agreements with senior executives at Vattenfall (around 300) shall be finished till summer
Important events First turbine installed at Ormonde Offshore Wind Farm DanTysk Offshore Wind Farm: installation vessel contract signed InterConnector Norway UK Agreement with NGO s on Magnum project in the Netherlands Launch of Volvo V60 diesel plug-in hybrid in Geneva Biomass agreement with the State of Berlin Long-term contract on electricity with Stora Enso in Sweden signed One Tonne Life family moved in the house
Divestments Rostock hard coal-fired plant, 25 % share sold to RheinEnergie AG (1 February) Energieversorgung Sachsen Ost AG (ENSO), 21,3 % share sold to EnergieVerbund Dresden GmbH (EVD); 147 Mio Euro; approval of authorities of City of Dresden necessary (13 April) Vattenfall Power Consultants in Sweden, units with about 360 employees at 22 offices in Sweden, Norway and UK agreed to sell to Pöyry PLC (13 April) Evaluation of potential divestments in non-core markets ongoing; progress in the process, but no decisions taken yet
Satisfactory result in Q1 2011 EBITDA, EBIT and Net Sales RoE and Profit after tax SEK bn 70 SEK bn 250 SEK bn 25 % 20 60 50 45.8 46.0 51.8 60.7 200 20 20.7 17.8 18 16 14 40 150 15 13.4 13.2 12 30 20 10 28.6 29.9 27.9 29.9 20.8 10.1 16.9 11.8 100 50 10 5 7.2 10 8 6 4 2 0 2007 2008 2009 2010 Q110 Q111 0 0 2007 2008 2009 2010 Q111 0 EBITDA (LHS) EBIT (LHS) Net Sales (RHS) Profit after tax (LHS) 1) = Last twelve months RoE (RHS) Net sales decreased 26.6% mainly due to the divestment of 50Hertz Transmission GmbH in May 2010. EBITDA decreased 18.6% EBITDA adjusted for non-cash items decreased 7.6% EBIT increased 17.1% RoE improved to 12.6%, but still below target level of 15%. Excluding IAC RoE was 15.9%
Reduced debt levels and improved credit metrics SEK bn Debt development Key credit metrics 250 200 FY 2009 FY 2010 Q1/11 150 100 50 0 Gross Debt Net Debt 31-m ar-10 30-jun-10 30-sep-10 31-dec-10 31-m ar-11 FFO Interest cover (x) FFO/net debt (%) FFO/adj. net debt(%) Adj.net debt/ EBITDA (x) 2 4.8 23.7 17.9 4.0 6.2 27.8 23.1 2.9 1) Last twelve months 2) Adj.net debt/adjusted EBITDA: Q1/11: 2.5 (x) 7.5 1) 32.8 1) 26.7 1) 3.0 1) Debt reduction mainly due to stronger Swedish krona. Stronger credit metrics.
Higher electricity prices Nordic 11% higher average Nordic spot prices (system price) (Q1-11 vs.q1-10). - Average Swedish area prices for Q1 2011 were 8.7% lower. - The hydrological balance recovered from -43 TWh to -24 TWh in the first quarter 2011. Germany, Netherlands 26% higher average spot prices in Germany and 28% higher average spot prices in the Netherlands (Q1-11 vs. Q1-10). Future prices increased. Monthly Spot Average Daily Future Closing Prices EUR/M Wh 10 0 90 80 70 60 50 40 30 20 10 0 jan-07 apr-07 jul-07 okt -07 jan-08 apr-08 jul-08 okt -08 jan-09 apr-09 jul-09 okt -09 jan-10 apr-10 jul-10 okt -10 jan-11 apr-11 EUR/ MWh NordPool EPEX APX PolPX 100 90 80 70 60 50 40 30 jan-08 apr-08 jul-08 okt -08 jan-09 apr-09 jul-09 okt -09 jan-10 apr-10 jul-10 okt -10 jan-11 apr-11 NP 13 EEX 13 APX 13 NP 12 EEX 12 APX 12
Higher electricity generation, +4.6% Q1 2011 Nuclear power increased 37.7% - Almost 100% availability of Vattenfall s Swedish nuclear power plants. TWh 30 25 25.9 25.1 Hydro power decreased 14.7% 20 15 14.6 Fossil power decreased 3.1% 10 8.7 10.2 10.6 Wind, biomass & waste increased 55% to 1.4 TWh. - Wind power increased 125% to 0.9 TWh mainly due to the commissioning in H2 2010 of the 300 MW Thanet offshore wind farm in the UK and the 78 MW Stor-Rotliden onshore wind farm in Sweden. 5 0 1.4 0.9 Hydro Nuclear Fossil Wind & Other Q1 2011: 49.8 TWh Q1 2010: 47.6 TWh
Financials Dag Andresen, CFO
Q1 2011 Financial highlights SEK million Q1 2011 Q1 2010 Change (%) Net Sales 51,868 70,657-26.6 EBITDA 16,932 20,799-18.6 EBIT 11,842 10,115 +17.1 EBIT excl. IAC* 11,153 15,376-27.5 Profit after tax 7,203 3,787 +90.2 Profit after tax excl. IAC* 6,714 9,045-25.8 FFO 15,053 9,820 +53.3 Cash flow from operating activities 7,607 2,259 +236.7 Cash flow before financing activities 2,656-6,497 - *IAC = Items affecting comparability
EBIT development Q1 2011 In SEK billion -2 546 +890 +366-520 +690-155 -1 707 +4 709 11 842 10 115 Q1 2010 Electricity price Electricity volume O&M, S&A Fees and taxes Capital gains/losses Other IAS 39 50Hertz Transmission Gm bh Q1 2011
EBIT, Q1 2011 - by Operating Segment in SEK million Q1 2011 Q1 2010 Change FY 2010 Generation 7,510 12,024-4,514 30,388 Distribution and Sales 4,791 3,780 1,011 8,340 Renewables 180-132 312-1,620 Other 1-639 -5,557 4,918-7,255 Total 11,842 10,115 1,727 29,853 1) Mainly include Treasury operations and Other group functions.
Hedging position and prices as of 31 March 2011 % hedged of forecasted electricity generation 100 97 90 85 80 77 76 70 60 50 40 38 30 20 10 0 2011 2012 2013 21 Nordic region Continental Europe EUR/MWh 2011 2012 2013 Nordic region 45 44 44 Continental Europe 55 54 59
Updated Capex plan 2011-2015 - fuel split Well diversified fuel split 2011-2015 Trisection of the investments 165 Total Investments 2011-15 42 Distribution Heat grids Gas storage IT "No fuel" investments 123 Wind 26 Investments allocated to a fuel type Nuclear 20 Hydro 7 Bio 4 Coal, CCS 4 Gas, BFG 29 Hard coal 16 Lignite 17 No fuel investments El.-distribution Heat grids Storages IT Sales 42 (25%) total: 165 60 (36%) Investments in CO 2 free production Hydro Wind Bio Nuclear CCS-demo Investments allocated to electricity and heat production causing CO 2 emissions Lignite Hard coal 64 (38%) 51 (25%) 50 (25%) Gas Mining For comparison: Plan 2010-14 total: 201 100 (50%) The capex portion for CO 2 -free production is rising compared to the previous plan.
Financial targets and outcome Key Ratio Targets Q1 2011 Return on Equity (RoE) 15% on average equity 12.6% 1 15.9% excl. IAC 1 Cash flow interest coverage after maintenance investments 3.5-4.5 times 6.1 1 Credit rating Single A category rating Moody s: A2, stable outlook S&P: A, negative outlook Dividend pay-out 1) Last twelve months 40-60% 50% 2 (SEK 6.5 bn paid out 3 May 2011)
Questions & Answers