Energie
braucht Impulse
EnBW Energie Baden-Württemberg AG
Presentation by
Dr. Christian Holzherr Chief Financial Officer
and
Ingo Peter Voigt
Senior Vice President and Head of Finance/IR
Adding Values With Energy
Dresdner Kleinwort German Investment Seminar January 16, 2008
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Disclaimer
› No offer or investment recommendation
This presentation/report has been prepared for information purposes only. It does not
constitute an offer, an invitation or a recommendation to purchase or sell securities issued by EnBW Energie Baden-Württemberg AG (“EnBW”), a company of the EnBW Group or any other company. This presentation/report does not constitute a request, instruction or
recommendation to vote or give consent. All descriptions, examples and calculations are included in this presentation/report for illustration purposes only.
› Future-oriented statements
This presentation/report contains future-oriented statements that are based on current assumptions, plans, estimates and forecasts of the management of EnBW. Such future-oriented statements are therefore only valid at the time of initial publication. Future-future-oriented statements are indicated by the context, but may also be identified by the use of the words “may”, “will”, “should”, “plans”, “intends”, “expects”, “believes”, “assumes”, “forecasts”, “potentially” or “continued” and similar expressions.
By nature, future-oriented statements are subject to risks and uncertainties that cannot be controlled or accurately predicted by EnBW. Actual events, future results, the financial position, development or performance of EnBW and the companies of the EnBW Group may therefore diverge considerably from the future-oriented statements made in this presentation/report. Therefore it cannot be guaranteed nor can any liability be assumed otherwise that these future-oriented statements will prove complete, correct or precise or that expected and forecast results will actually occur in the future.
› No obligation to update the information
EnBW assumes no obligation of any kind to update the information contained in this presentation/report or to adjust or update future-oriented statements to future events or developments.
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Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook4
Significant market shares along the whole value chain:
›
About 15 GW power generation 100 GWin Germany*
›
About 15% of the German transport and distribution grid based on revenues›
More than 5 mn customers 40 mnin Germany*
›
Competition oriented business model with a structurally unbundled production›
Strong position in gas, among the top ten distributors figuresas of 2006
EnBW is the “Number 3” in Germany
which is Europe’s largest Utility Market
5
EnBW is well positioned to deal with the future market
challenges in a more integrated European Utility Market
›
EnBW has sufficient financial flexibility to pursue significant investments in its core business›
EnBW’s CO2 emissions are well below the industry average in Germany›
EnBW’s power plants are among the youngest›
EnBW has a significant marketing and sales power›
EnBW takes an active role in the implementation of a well balanced regulatory system and will continue to promote competition in the energy market6
Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook›
Investor Calendar 2008EnBW is well equipped to deal with the current and future challenges of the energy market.
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›
On October 1, 2007, Hans-Peter Villis (49) succeeded Prof. Dr. Claassen asChief Executive Officer.
After having held several Top Management positions at Gelsenwasser AG and E.ON Westfalen Weser AG, his previous position was deputy CEO and CFO at E.ON Nordic in Sweden.
›
Pierre Lederer, Chief Operating Officer was appointed deputy chairman of EnBW, effective October 1, 2007.›
Dr. Bernhard Beck was reappointed as Chief Human Resources and Information Officer, effective October 1, 2007.›
Dr. Christian Holzherr was reappointed as Chief Financial Officer, effective January 1, 2008.›
On October 1, 2007, Dr. Hans-Josef Zimmerwas appointed as Chief Technical Officer. Prior to that he was chairman of the management board of Energie Baden-Württemberg Kernkraft GmbH and member of the board of EnBW Kraftwerke AG.New Board of Management will increase efforts for
operational excellence and strategic growth in the
core business
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›
After the Operational Safety Review Team (OSART) mission* in EnBW’s Philippsburg nuclear power plant in 2006, EnBW has claimed for a similar assessment of itsNeckarwestheim nuclear power plant by the International Atomic Energy Agency (IAEA)
›
The IAEA has stated that many of the recommendations and suggestions from thePhilippsburg’s assessment have already been implemented by the Neckarwestheim nuclear power plant
›
With the mission in Neckarwestheim, EnBW is the only operator of nuclear power plants in Germany whose entire production sites have been completely assessed by the IAEA within a few years**›
EnBW is expecting a positive decision of the German Ministry of the Environment concerning its application for the transfer of residual electricity volumes from Neckarwestheim II to Neckarwestheim I* The OSART mission is the world’s most demanding inspection for nuclear assets
** Results should be published in the next few months
EnBW is confident in its nuclear operations as a
successfully audited nuclear operator
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Strategic partnership in the Rotterdam-based LionGas LNG terminal project:
›
The agreement, signed June 4, 2007, provides EnBW with capacity rights to 3 bn cubic meters of natural gas per year from the LionGas terminal as well as a 15 percent equity stake in the facility›
Thus, EnBW will substantially strengthen its position in the gas market, with flexibility in the midstream gas market which in turn creates the basis for further growth›
The partnership between EnBW and 4Gas›
is in line with EnBW´s strategy to deepen the supply chain/to increase capacity›
will help to secure the supply of natural gas to northwest Europe›
will strengthen the position of the Port of Rotterdam as a major European energy port›
will strengthen the position of the Netherlands as a central gas trading hub›
The commissioning of LionGas is expected to be operational in 2010/2011EnBW strengthened its midstream gas position in
signing a MoU with 4Gas*
*4Gas is an independent company dedicated to developing and operating LNG import terminals. 4Gas is the world’s only independent LNG -terminaling company with a global reach. The LionGas project of 4Gas in Rotterdam is the only LNG import terminal project in the Netherlands for which all required approvals have been given.
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LionGas Regasification Project
in Rotterdam
4Gas (independent Project developer) Rotterdam (Netherlands)
2011 – 2012
9 bn cbm / year (option for expansion up to 18 bn cbm / year)
Profile of the LionGas Terminal
›
Project developer:›
Terminal site:›
Commissioning date:›
Total regas. capacity:11
›
On September 3, 2007, the electricity brand Yello was launched in the Swedish power market.›
The launch started successfully with the first customers already in delivery.›
The extensive deregulation of the Swedish power market (churn-rate of approx. 40%) offers the potential for successful growth outside of Germany.›
While tapping additional regions Yello also expands its growth potential in the German power sector.›
Being, once again, a frontrunner in the market liberalization and in order to meet the customer demand to control and measure their consumptionefficiently, Yello introduced an intelligent electric meter.
EnBW widened its downstream activities by going
international with Yello Strom and pursuing additional
growth in Germany
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Pilot Schemes: Yello Gas and Smart Meter „Sparzähler
online“
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Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook›
Investor Calendar 2008EnBW takes an active role in the implementation of a well balanced
regulatory system and will continue to promote competition in the energy market.
14
›
Nuclear phase-out and goals for CO² emissions reduction set a big challenge for German energy policy›
Substantial investments in new generation capacity - mainly coal and gas fired plants - are needed to meet future demand›
Market rules and market structure are under discussion:›
Tightening of German antitrust law (GWB29): Additional threats for the competitive elements of the value chain›
Drafts of the 3rd European Union liberalisation package: Additional threats for the competitive positioning of German utilitiesEnBW’s position :
› Regulation should focus on monopolies, not on market activities
› Support for the establishment of a unified market for European players
In a European context Germany as the largest
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The setup of the regulatory system encounters
challenges to maintain the level of reliability
›
Since market liberalisation in 1998: Freely negotiated third party access agreements (“Verbändevereinbarungen”)›
Since 2006 : Federal grid agency (“Bundesnetzagentur”) for regulation of grids›
Transport and distribution grids›
Cost based tariffs for 2007/2008 each; the approved costs for 2008 will be the basis for the incentive based regulation›
Incentive based regulation from 2009 onwards for two regulatory periods of 5 years each; first gas regulatory period lasts for four years onlyEnBW’s position :
› Generally supports/promotes the incentive based regulation
› The strong market/sales position off-bound benefits from regulation › Regulation requires early implementation of quality standards
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The German gas business is moving towards competition
›
Still historical structures, but increasing competition›
EEX: trading with gas contracts since July 2007›
Consolidation of market areas in 2008 under discussion›
Key factors for success in a competitive environment›
Access to gas volumes at competitive prices›
Network access›
Portfolio optimization; structuring of gas offers›
EnBW has a profitable downstream position in the marketEnBW already has a profitable downstream position in the gas market
EnBW is extending its midstream position in deepening the supply chain and extending its capacity
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Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook›
Investor Calendar 200818
Growth as the logical next step
Market
Opening
1998 2003 2007
Business
Model
Consolidation
Growth
2001
EnBW is well set for growth:
›
Sales: strong home market, successful growth off-bound›
Generation: cost effective & reliable asset base›
Business model & risk management : well set for competition›
Gas: growth on base of a favourable downstream position19
Strategic areas for growth
-1-›
EnBW aims to double its enterprise value to approx. € 30 bn within the next 8-10 years, meaning a future CAGR of 7%›
Supervisory board approved € 7.6 bn for investments for the next three years›
Growth mainly via acquisitions on an international scale and theexpansion of renewable energies
›
Sales: Growth potential through Yello›
Currently 1.4 mn customers›
New customers: nearly 200,000 in 200720
Strategic areas for growth
-2-›
Dual strategy in the field of generation:›
Expansion of conventional generation facilities (the objective is to build four or five new power plants in the next six years)›
Construction of new coal-fired power plants›
Full use of cooperation options›
STEAG, EDF, major customers›
Expansion of green electricity:›
20% quota by 2015, currently 16% quota›
Expansion in wind energy›
Product development “Energy Efficiency”›
Growth on an international scale:21
Strategic areas for growth
-3-›
Maintain and extend grids as a core competence on the basis of a strict cost regime›
Pursue further growth due to acquisitions, cooperation and additional concession agreements›
Focus and adjust trading activities›
Leverage of risk management (additional commodities, extension of value chain)›
Integration of subsidiaries›
Trading activities as a service provider for third parties›
Gas: Expansion in the mid-/upstream business›
LNG›
Gas storage facilities22
EnBW´s business model: An integrated and optimized
management of the value chain
“Standard” integrated utility approach
Advantages:
›
Reduction of P&L volatility (hedging & wholesale-based pricing)›
Ability to generate value from the flexibility of EnBW’s assets›
Ability to back growth in EnBW’s customer baseGeneration Portfolio Sales Portfolio
Fuels & CO2 Sales Wholesale Market for Electricity Pricing “Back-to-Back” Hedge Optimisation Dispatch
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Clear customer orientation remains EnBW’s focus in its
successful segment orientated multi-brand approach
EnBW as Premium energy brand with a clear profile for the Baden-Württemberg mass market based on
Yello as EnBW‘s unique national brand for the German national mass market as a valid alternative for every customer
The national brand for ecological oriented households and SME's
Key Accounts Key Accounts LDC LDC Public Authorities Public Authorities Small Accounts Small Accounts Accounts Accounts Mid Accounts Mid Accounts
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EnBW’s financial strategy remains unchanged:
focus on a strong financial position and sustainable
value generation
›
Balanced dividend policy based on EnBW’s financial strength›
Commitment to maintain a rating in the A range in the medium term to keep financial flexibility›
Focus on value creation in all business units: continuous increase of value added›
Acquisition and investment criteria on the basis of strict25
Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook›
Investor Calendar 2008Based on EnBW’s strategy EnBW wants to grow externally and organically further improving its key figures.
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EnBW’s
overall business results are strong, despite theperceivable effects of regulatory measures
Performance:
Financial position:
Portfolio:
›
Performance 2007 driven by negative regulatory impacts being overcompensated in the competitive market areas›
Dividend increased by 29.5% for 2006. EnBW is aiming for a further two-digit increase for fiscal year 2007*›
EnBW’s results exceeded € 10 bn in revenues and € 1 bn in group net profit in Q3 2007›
EnBW’s financial debt declined further mainly due to the strong free cash flow›
EnBW strengthened its position in the core markets: enlargement of consolidated group (full year consolidation of SWD**)›
EnBW plans to invest strongly in expanding generating and distribution facilities to face challenges of German utilities environment: Capex totaled €500 mn in Q3 2007)*subject to the approval of the AGM on April 25, 2008 ** Stadtwerke Düsseldorf AG
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Revenues increased driven by consolidation, volume and
price effects in the electricity segment
* Excluding electricity tax and natural gas tax
› Total revenues*increased by 14.1%
(€1,303 mn) exceeding €10 bn; adjusted for consolidation effects revenues increased by 8.6% (€836 mn)
› Electricity segment:
› Both volume (trading, B2B) and price effects (wholesale market) mainly triggered revenue increase
› Gas segment:
› Revenues dropped by 15.2% (20.1% w/o consolidation effects) owing to the mild weather and increased competition
› Energy and environmental services:
› Increase of 41.9% mainly based on consolidation effects (esp. SWD)
Electricity Gas Energy and environmental
services Total
Jan 1 - Sep 30, 2006 Jan 1 – Sep 30, 2007 Prior-year figures adjusted
502 354 9,215 10,518 6,917 8,367 1,945 1,649 +14.1% +21.0% -15.2% +41.9%
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EBIT increased by 11%; the adjusted EBIT kept its level
bearing the burdens of lower gas sales and regulatory
influences
› Total EBITrose by 11.0% (€126 mn) thanks to the non-operating result; last year’s non-operating result was affected by write-downs with regard to T-plus
› The adjusted EBIT increased slightly due to the effects described on the EBITDA level 126 1 132 6 1,148 1,154
Jan - Sep 2006 adj. EBIT year-on-year Non-operating EBIT year-on-year 1,149 1,281 Jan - Sep 2007 +0.1% +11.0%
Adjusted EBIT in € millions Extraordinary items in € millions Prior-year figures adjusted
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EnBW’s share price indicates the strong operational
performance
› Closing price: € 56.31
› High: € 57.82
› Low: € 48.01
› Market capitalisation: € 13.8 bn
› Performance over the year:
› EnBW: + 11.4%
› DAX: + 18.9%
› DJ Euro Stoxx Utilities: + 13.8%
Development of the EnBW share from January 1 to September 30, 2007
› EnBW has appointed a Designated Sponsor as of 1 January 2007 to increase the fungibility of its share
› EnBW intends to become listed in the Prime Index at the Frankfurter Wertpapierbörse to increase the public awareness of its stock
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Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook31
Outlook for fiscal year 2007 (year-on-year)
Adjusted EBIT
Capex 2007–2009* € 3.2 bn
Electricity
Consolidation***
*Prerequisite: profitability and approval by the proper authorities; **Condition: positive development in earnings ratios on the planned scale, i.e. improvement in operating performance, corresponding development of economic and political conditions relating to the energy industry and of prices for retail and industry customers. However, there is also a risk that operating problems as well as other currently unforeseeable factors could have a negative influence on earnings; *** SWD (January to March), ESW ; ****Including trade
Gas
Energy and environmental services
Outlook given end of
Dividend** External revenues**** Adjusted EBIT External revenues Adjusted EBIT External revenues Adjusted EBIT External revenues € 3.2 bn › Electricity segment:
› Slight increase due to positive operating performance and focus on profitable client segments compensating negative regulatory effects
› Gas segment:
› Decreasing due to regulation, liberalisation and mild climate
› Energy and environmental services:
› Increase due to strong results in the water business, the extension of the waste incineration facilities in
Stuttgart-Münster and T-Plus
› Consolidation effects are mainly driven by the full-year consolidation of SWD and the consolidation of ESW
› EnBW pursues a further positive development of the dividend
i
i
i
i
i = No quarterly review of revenues
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Content
›
Who We Are›
What Happened in 2007›
German Utilities Environment›
Strategy›
Performance›
Outlook33
The next conference call will take place on
February 19, 2008: Results of the fiscal year 2007
February 19, 2008 Annual Report 2007
Conference time: 15:00 CET April 25, 2008
Annual General Meeting 2008 Conference time: 15:00 CET May 9, 2008
Interim report: January–March 2008 Conference time: 15:00 CET
August 1, 2008
Interim report: January–June 2008 Conference time: 15:00 CET
November 13, 2008
Interim report: January–September 2008 Conference time: 15:00 CET