RWE AG Fiscal 2013 Press Conference
Essen, 4 March 2014
RWE – working hard to successfully master the crisis
» RWE is in a difficult economic situation – conventional power generation in particular is declining fast
» RWE wants to regain its financial strength, as net debt bears no sensible relation to earnings capacity
» RWE as a partner in the transformation of the energy system – in networks, sales and power stations
Page 2 RWE AG Fiscal 2013 Press Conference
Positive effects:
» One-off effect from Gazprom payment
» Efficiency-enhancement programme progressing faster than expected
» Massive decline in earnings in conventional power generation » Impairment losses of €4.8 billion » Operating result down by 8% to €5.9 billion » Recurrent net income down by 6% to €2.3 billion
First net loss in 60 years
Page 3 RWE AG Fiscal 2013 Press Conference
Renewable energy pushing conventional power stations out of the market
1) Net capacity 2) At lignite-fired power station 3) Depending on the final decisions on the Dutch “Energieakkoord”
Measures Power station MW1 Fuel Location Date
Decommissioning Amer 8 610 Hard coal NL Q1-2016
Long-term conservation
Claus C 1,300 Gas NL Q3-2014
Moerdijk 2 430 Gas NL Q4-2013
Gersteinwerk F 355 Gas/steamturbine DE Q3-2013
Gersteinwerk G 355 Gas/steamturbine DE Q2-2014
Weisweiler H 270 Gas2 DE Q3-2013
Weisweiler G 270 Gas2 DE Q3-2013
2 medium-sized generation units 853 Gas NL Q1-2013
Conservation in summer months
Emsland B 360 Gas/steamturbine DE Q2-2014
Emsland C 360 Gas/steamturbine DE Q2-2014
Contract terminations
STEAG, among others 2,195 Hard coal DE Q4-2013 –
Q4-2014
Total 6,590
Measures taken since 2011 MW1
Westfalen A, B 304
Biblis 2,394
150 MW stations, lignite 1,954
Ensdorf 282
Gersteinwerk I 355
Donge 120
Claus A 591
Fawley 1,000
Didcot A 2,025
Tilbury 772
Littlebrook 1,370
Contract terminations 1,800
12,967
Comparison: new-build 12,482
Page 4 RWE AG Fiscal 2013 Press Conference
Conventional Power Generation » ~40% reduction in overhead costs » Reduction in operating and maintenance costs » Improvement in availability and flexibility of power station portfolio
Supply/Distribution Networks Germany » Reduction in overhead functions in the grid and sales business » Leaner sales processes and development of new products » Optimisation of grid operations
Supply UK » Operating cost reductions due to outsourcing and services,
among other things
Trading/Gas Midstream » Focus on optimisation of locations, IT and support functions
RWE AG and cross-divisional effects » Implementation of a new steering model » Harmonisation of IT equipment
Efficiency measures of €2 bn implemented by end of 2016 - saving targets met faster than planned
Page 5
Efficiency enhancements by division
Measures of €2 bn
= €1.5 bn (net)
by 2016
~ 50% Conventional Power
Generation ~ 10% RWE AG, other divisions and cross-divisional effects
~ 10% Trading/Gas Midstream
~ 10% Supply UK
~ 20% Supply/Distribution Networks Germany
RWE AG Fiscal 2013 Press Conference
Difference between measures and net figures = cost inflation; % figures indicate net benefit to operating result
Everyone contributes
Share-holders Halving of
dividend to €1 per share
Board €500,000 voluntary
reduction in compensation
Workforce No salary
increase for managers and salaried staff in
2014
RWE
Page 6 RWE AG Fiscal 2013 Press Conference
Our contribution to the transformation of the energy system
RWE operates modern and efficient power stations whose output (MW) can be decreased or increased within minutes. In 2013 RWE was the No. 1 in Germany in terms of gas capacity
In 2015, Innogy will be one of the three largest off-shore operators in Europe, with an output of 1,000 Megawatts
RWE is one of the leading energy service providers in Germany
RWE’s power distribution network is 344,000 kilometres long and we have connected 300,000 renewables systems up to it so far
In Europe we supply power to more than 23 million customers. Four-fifths of our German clients are “very satisfied” with us
Page 7 RWE AG Fiscal 2013 Press Conference
5.2
4.7
1.7
1.2
0.2
RWE
Eon
Vattenfall
EnBW
GDF Suez
25.3
19.5
15.6
14.3
13.0
8.3
4.4
3.9
3.7
1.2
GDF Suez
Eon
RWE
Enel
EDF
Iberdorla
Vattenfall
EdP
Centrica
EnBW
E.ON
RWE is No. 3 in the E.U. in gas-fired power stations and No. 1 in Germany in 2013 RWE and large European competitors1: Gas capacity in the EU and Germany (GW)
Gas capacity (partially dual-fuel) 1 including customer power stations as well as shareholdings, at RWE for example including enviaM, also including temporarily “mothballed” capacity The main sources (to mark off gas capacity, further sources were required in some cases) RWE: Facts & Figures and Annual Report 2012 E.ON: Annual Report 2012, Facts & Figures March 2013 GDF Suez: Asset Table 2012 EDF: Facts & Figures 2012, Analyst Fact Pack 2012, Platts Kraftwerksdatenbank 2010 ENEL: Presentation of results 2012, Plan 2013-2017, Website Endesa, ENEL List of thermal power stations in Italy EnBW: Annual Report 2012 Vattenfall: Infopack 2012, Website Kraftwerksliste, Federal Network Agency (BNetzA) Kraftwerksliste (DE) Iberdrola: Annual Report 2012, Website Iberdrola (Interactive analysis)
RWE AG Fiscal 2013 Press Conference Page 8
E.ON
In 2015, RWE will be one of the leading offshore operators in Europe, with around 1,000 MW of installed capacity Strong competitive position (capacity in MW)
Source: RWE Innogy internal analysis - Offshore competitor database.
Page 9 RWE AG Fiscal 2013 Press Conference
0 500 1.000 1.500
EDFIberdrola
SWM*EnBW
StatkraftStatoil
CentricaRWESSE
E.ONVattenfall
DONG
0 500 1.000 1.500 2.000
EDFStatoil
StatkraftIberdrolaCentrica
EnBWSSE
SWM*Vattenfall
RWEE.ON
DONG
Already in operation
Under construction(scheduled for commissioning in2015)
5
2013 2015
3
* Stadtwerke München
RWE is largest German energy service provider, with over €500 million in revenues Energy transition in practice
» Energy concept for 180 terraced houses in Kelsterbach with CHPs, PV systems, storage systems and intelligent control
» Refitting of existing systems to environmentally friendly biogas CHPs
» 1,300 CHP solutions for SMEs and industry with installed capacity of 3,000 MWth and 500 MWel
» PV storage solutions and heating services for residential and commercial customers
» Virtual power station with 1,000 MW » Energy control systems for industry » Home automation for residential customers with RWE SmartHome » Telephone hotline on how to save energy
“A new CHP system is set up every working day”
Local and remote district heating
Decentralised solutions
Innovations
Page 10 RWE AG Fiscal 2013 Press Conference
RWE has the most efficient grids, with the highest feed-in of energy
24
18
10
5
RWE EnBW E.ON Vattenfall
Annual peak load (GW) Annual output (TWh)
3
51
103
143
Vattenfall EnBW E.ON RWE
Source: internal research, status: 2012
Page 11 RWE AG Fiscal 2013 Press Conference
RWE Vertrieb positioned strongly on the market: No.1 in residential customer supply, leader in B2B supply
RWE is the No. 1 in energy supply in Germany and delivers high levels of customer satisfaction
Segment Market position Customer satisfaction
B2C – residential customers
B2B – business customers
B2B – energy utilities
No. 1 in residential customer seg-ment with over 8 m customers » 16% electricity market share » 10% gas market share
Leading position in business customer segment » 13% electricity market share » 10% gas market share
Leading position in energy utilities segment » 12% electricity market share » 6% gas market share
» Over 500,000 customers in online customer care
» 90% of customers appreciate the speed of reaction to their queries
» Over four-fifths of all customers say “we are very satisfied!”
» Best performance in terms of advice and courteous service
» Highest points for friendliness and courtesy » Highest points for dealing successfully with
customer queries
Page 12 RWE AG Fiscal 2013 Press Conference
RWE is the customers’ energy manager
We offer a modern, efficient system for automated home control – “SmartHome”. At the moment, it can only control lights, windows and heaters. In future you will be able to control your entire heating system, even from your smart phone.
“RWE Smart Company” is designed for medium-sized companies that want to capture their consumption data and reduce their consumption at different locations.
With “RWE WebMarket”, large customers, regional energy utilities and municipal utilities can participate in energy trading.
With our partners, we are driving forward the expansion of electric vehicle infrastructure, so that in future these cars will not simply be the modern method of transport, but also part of the system of storing renewable energy.
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“RWE Windheizung” is also a solution for storing excess green energy, which is designed to help households to use their self-generated electricity efficiently.
RWE is applying its expertise to enable customers to efficiently control their energy requirements
Reconciliation of (recurrent) net income
€ million
Fiscal 2013 (+/-)
» Non-operating result shows the impairments, mainly in our Conventional Power Generation Division and significant restructuring charges
» Financial result improved due to better net interest and interest accretion to provisions
» Tax rate for determining recurrent net income at 34% (previous year 34%)
» Adjustments for recurrent net income comprise non-operating result including tax effects and one-off items from taxes
EBITDA
Depreciation
Operating result
Non-operating result
Financial result
Tax
Minorities/hybrids
Net income
Adjustments
Recurrent net income
8,762
-2,881
5,881
-5,475
-1,893
-956
-314
-2,757
+5,071
2,314
-552
+17
-535
-3,381
+199
-430
+84
-4,063
+3,920
-143
Page 14 RWE AG Fiscal 2013 Press Conference
Access to debt capital market at all times is key
Leverage target mid-term: ≤ 3.0x; more flexibility short-term
1 Leverage factor ((Net financial debt (incl. 50% of hybrids) + pension, mining and nuclear provisions)/EBITDA)
€ billion
29.9 33.0 30.7
13.0 13.1 11.2 16.9 19.9
19.4
2011 2012 2013 2014e
Net financial debt Pension, mining and nuclear provisions
Net debt In the order of 2013
Significantly >3.5x1 Leverage factor1 3.5x 3.5x 3.5x
RWE AG Fiscal 2013 Press Conference Page 15
Political reforms for a successful transformation of the energy system
Page 16 RWE AG Fiscal 2013 Press Conference
We need a redesigned energy market, which assigns value to retaining conventional power station capacity. This is a matter of security of supply.
We need a reformed Renewable Energy Sources Act to ensure that energy for industry and households remains affordable. Energy must not become a luxury good for the privileged few.
We need ambitious climate protection measures, including a strong European emissions trading law with a CO2-reduction target to be implemented by 2030.
Outlook for 2014 – we have a difficult path ahead of us
Page 17 RWE AG Fiscal 2013 Press Conference
We are expecting our performance to decline significantly again in 2014
We are working to achieve the objectives of our RWE 2015 programme