Transcript Kein Folientitel

German Investment Seminar
Dr. Erhard Schipporeit, E.ON AG
January 15, 2002
Page 1
E.ON Group - Strategy
Expand to become a top global integrated energy service provider
via focus and growth:
• Concentrate exclusively on core energy services business
• Pursue accretive acquisitions to cement leading position in
Europe and to establish solid position worldwide
• Dispose of non-utility activities
• Continually cut costs and restructure throughout the Group
Page 2
E.ON Group – Focus on core business
E.ON AG
Energy
E.ON Energie
– Electricity
• Generation
• Trading
• Transmission/
distribution
• Supply
– Gas
– Water
*Divestment initiated
Non-core activities
100%
Oil
VEBA Oel*
100%
Chemicals
Degussa
64.6%
Real Estate
Viterra
100%
Other Activities
VIAG Telecom
E.ON Telecom
Stinnes
VAW aluminium*
100%
100%
65.5%
100%
Page 3
E.ON Group - Divestment of non-core assets ahead of plan
€ in millions
Stake
%
Listed companies
Degussa
Stinnes
MEMC
Schmalbach-Lubeca
Gerresheimer Glas
Other companies
VEBA Oel
Viterra
VEBA Electronics
VAW aluminium
Klöckner & Co.
E-Plus
Cablecom
VIAG Interkom
Orange Communications SA
Bouygues Telecom
Connect Austria ONE
1
Sales 1999
2
At E.ON consolidated sales
Sales
2000
Proceeds
Comments
(equity value)
64.6
65.5
71.8
49
71
20,139
11,981
944
1,891
8361
215
100
100
100
100
100
31
32
45
42.5
17.5
50.1
28,062
1,300
3,9262
3,438
5,355
77,872
2,800
1,000
1,900
300
3,800
870
7,250
1,320
19,455
Divested
Divestment initiated
Divested
Put option with BP
Divested
Divested
Divested
Divested
Divested
Divested
Divested
Page 4
E.ON Group - Implementing E.ON‘s global growth strategy
Growth outside Europe
Broad expansion in
Europe
Strengthen core
business in
Germany
• Acquire integrated utilities in North America (eg. LG&E)
• Selectively engage in South America
• Expand around Germany (eg. majority in Sydkraft)
• Establish European-wide wholesale presence
• Enter into non-contiguous markets (eg. UK through Powergen)
• Establish premier supply business in Germany (eg. #1 - brand)
• Participate in further privatization of municipalities
• Increase stakes from minority to majority interests
Page 5
E.ON Energie - Second-largest utility in Germany
SCHLESWAG
EWE
EMR
PESAG
EAM
e.dis
Avacon
TEAG
E.ON Bayern
E.ON Bayern
Majority participations
Minority participations
Includes only participations => 25%
Page 6
E.ON Energie - Acquisitions of Municipalities (Examples)
Participation
%
Municipal utilities
Stadtwerke Germersheim
Stadtwerke Stade
Stadtwerke Chemnitz
Gemeindewerke Ansbach
Gemeindewerke Haßloch
Stadtwerke Homburg
Stadtwerke Villingen Schwenningen
Stadtwerke Pforzheim
Energieversorgung Hildesheim
Wasser- und Energieversorgung Salzgitter
Stadtwerke Ennigerloh
Stadtwerke Grünstadt
Stadtwerke Kirchheimbolanden
Stadtwerke Braunlage
25
20
15
40
25
25
25
35
13
24
40
21
20
20
Sales
mill €
Number of customers
50
64
400
82
40
125
85
50
160
90
24
30
17
7
10,000
23,000
176,000
25,000
10,000
25,000
33,000
75,000
64,000
29,000
13,500
25,500
8,300
4,300
Page 7
E.ON Energie - Strong market share in gas distribution in Germany
2000 (pro forma)
SCHLESWAG
Heingas EWE
EWE
Turnover
(mill €)
Sales volume
(bn kWh)
1,594
72.5
AVACON
• The leading local distribution
company in Germany*
Gelsenwasser
Thüga
E.ON Bayern
• Further participations in Italy,
Austria, Czech, Hungary, Latvia,
Sweden, Netherlands and
Poland (co-operation)
Thüga
*Including minority participations => 20%
• German gas market:
European gas market:
€ 20 bn
€ 60 bn
Page 8
In Germany‘s gas market, E.ON needs to make up ground in the
import and long-distance delivery segments
GAS
ELECTRICTY
IMPORT
GENERATION
* Includes shareholdings greater than 20 %
LONGDISTANCE
TRANSMISSIO
N
LOCAL
DISTRIBUTIO
N
SUPPLY
SUPPLY
Market position*
Excellent
Good
Weak
Source: E.ON
Page 9
Through Gelsenberg (total stake: 25.5%) E.ON can obtain a
substantial interest in Ruhrgas
E.ON
0.2%
100.0%
0.1%
23.6%
Gelsenberg
Mannesmann
10.1%
13.5%
RWE
ThyssenKrupp
50.0%
ExxonMobil
RAG
50.0%
Shell
52.5%
Bergemann
Gelsenberg
58.2%
Brigitta
49.2%
ExxonMobil
17.7%
Preussag
3.1%
Gelsenberg
30.0%
41.8%
Schubert
Pooling agreement
59.8%
25.0%
15.0%
Other
0.2%
Ruhrgas
Page 10
Geographically, Ruhrgas activities outside Germany fit E.ON‘s
strategy very well
E.ON‘s gas interests
Ruhrgas shareholdings
Page 11
E.ON Energie - Largest privately-owned water operator in Germany
2000 (pro forma)
swb
Turnover
(mill €)
Sales volume
(mill m3)
217
259
T
T
• 15% market share in Germany*
T
T
N-ERGIE
• Broad experience in drinking
and sewage water
REWAG
• German water market:
European water market:
T
T
T
€ 25 bn
€ 80 bn
T Thüga participations
*Including minority participations => 20%
Page 12
E.ON Energie - Strong international expansion
Graninge
Lenenergo
Viking Cable
E.ON Latvijas Eesti Energia
RAO "EES Rossii"
Scandinavia Gaze
Latvenergo
RAO "Gazprom"
EV3 I/S
Sydkraft
Lietuvos Energija
Baltic
Cable
Jantarenergo
E.ON Benelux
E.ON Polska Poland (9 Distribution Comp., PSE and PGNiG)
Polenergia
E.ON Bohemia
BKW
Electra
Italia
Watt
RAG
E.ON Hungária
E.ON Italia
shareholding
subsidiary
co-operation
Page 13
The UK - A key European market
•
Third largest European electricity market (~ 300 TWh sales)
•
Leading country in energy liberalization
•
Value creating opportunities exist for
– flexible portfolio generators
– experienced asset backed traders
– efficient operators of distribution assets
– innovative retailers with strong nationwide brand
•
Scope for further synergistic consolidation
Page 14
Powergen: UK excellence
Assets
• World-class, flexible and diversified generation portfolio
• Efficient distribution assets
Trading
• Integrated trading strategy
• Leading market player
Retail
• Targeted marketing strategy with strong brand
• More than 3 million customer accounts - and growing
Page 15
The US - World‘s largest power market
•
Larger than total European electricity market
•
Offers higher growth and return potential than Europe
•
Integrated utility as the accepted business model
•
Value creation opportunities from introducing European best practices
•
Further opportunities arising from
– fragmented nature of the market
– market liberalization
– convergence of gas and electricity
Page 16
Midwest an attractive region within the US power market
North American Electricity Pools(1)
• Midwest(2) with around 30% of US
electricity demand
• Crossroads of major energy flows,
well interconnected and with
good fuel supply options
MAIN
Detroit
New York
Chicago
MAAC
ECAR
Philadelphia
• Heavily industrialized region
• Consolidation opportunities in a
fragmented market
LG&E
Frankfort
• Positive regulatory environment
(1) MAIN = Mid-America Interconnected Network; ECAR = East Central Area Reliability Coordination Agreement; MAAC = Mid-Atlantic Area Council
(2) Including Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and Wisconsin
Page 17
LG&E: US excellence
Generation
• Reliable, low cost generation assets
• Opportunities for off-system sales at attractive rates
Distribution
• Top quartile regional efficiency ranking in distribution - and improving
• High service levels and customer satisfaction
• (#1 JD Power survey1))
Regulation
• Favourable regulatory environment
– incentive based rate plan
– pass-through of fuel costs
– recovery of environmental costs
(1) USA, 1999 National and Midwest, 2000 Midwest.
Page 18
Chemicals - Systematic focus on specialty chemicals
€ in billions
Divestment of non-core activities
ASTA Medica-Group
AWD Pharma
Onkologie
Healthcare/RX
Zentaris
German Remedies (27.7%)
2
dmc
Phenolchemie
Degussa Dental
Agro Chemicals
Metallurgical Chemicals
Gelatin
Salt
TFL (50% JV with Ciba SC)
KWH (51% Degussa)
Textile Additives
Other (Zeolites, DMT, Oxo-C3)
Degussa Bank
Total
Sales 2000
0.8
0.1
0.2
0.5
----2.5
1.2
0.5
0.2
0.3
0.2
0.2
------0.5
---
approx. 6.5
Divested Enterprise
value






Comments
0.05
0.53
Sold to Pliva Group (Croatia)
Sold to Baxter International Group (USA)
1.20
0.42
0.58
Sold to Calida (India)
Sold to OM Group Inc. (USA)
Sold to Ineos Plc. (GB)
Sold to Dentsply International Inc. (USA)
1st step: Joint venture with Pechiney



n.a.
n.a.
n.a.
n.a.
n.a.
1st step: Reduction in share from 64% to 49%
Sold to Schroder Ventures
Sold to Allied Resource Corporation (USA)
Zeolites partly sold to FMC (USA)
approx. 2.8
Page 19
E.ON Group - Cost Management
€ in millions
realized
1993 - 1999
realized
2000
realized
1993 - 2000
planned
2001 - 2003
1,060
430
1,490
1,020
Oil
308
32
340
60
Chemicals
796*
80
876
380
-
-
-
50
2,164
542
2,706
1,510
Electricity
Holding
Total
*Only Degussa-Hüls,without SKW Trostberg and Goldschmidt
Page 20
E.ON Group - Internal Operating Profit
Nine Months
€ in millions
2001
Energy
+/- %
1,335
Pro forma
2000
1,255
Chemicals
431
516
-16
Oil
294
226
+30
Real Estate
109
53
+106
Telecommunications
-100
-670
+85
Distribution/Logistics
236
400
-41
Stinnes
180
153
+18
Klöckner
56
89
-37
0
158
-
Aluminum
229
180
+27
E.ON AG/Other/Consolidation
324
-117
-
2,858
1,843
+55
VEBA Electronics
Total
+6
Page 21
E.ON Group - Results
Group internal operating profit
Net book gains
Cost management and restructuring expenses
Other non-operating earnings
Foreign E&P taxes
Results from ordinary business activities
Income taxes
Minority interests
Results from ongoing operations
Results from discontinued operations
Earnings from first-time application of SFAS 133
Group net income
2,858
193
-174
-188
337
3,026
-926
-245
1,855
-827
-2
1,026
Pro forma
2000
1,843
4,570
-116
264
365
6,926
-2,994
-338
3,594
-5
0
3,589
Earnings per share (in €)
- from ongoing operations
- from discontinued operations
2.74
-1.22
4.94
-0.01
Nine Months
€ in millions
2001
+/- %
-45
-
+55
-96
-50
-8
-56
+69
+28
-48
-71
Page 22
E.ON Group - Outlook 2001
• Full year Group internal operating profit to markedly surpass previous year‘s number
- Energy: Slightly above prior-year figure
– Chemicals: Distinctly below previous year‘s number
– Oil: On par with prior year‘s solid results
– Real Estate, Telecommunications, Stinnes, VAW aluminium: Earnings improvements
• Results from ordinary business activities significantly below the 2000 figure.
Page 23
E.ON AG
Back up charts
Page 24
New agreement for electricity transmission –
Examples for point of connection fees for customers, January 2001
Standard-rate customers
(households)
Medium-sized special rate
customers (manufacturing)
Large industrial customers
(manufacturing)
Largest customers
Grid access fee: This covers
ca. 13.0 Pf/kWh
the grid operator’s costs for
providing the grid and system
services, for meter reading
and for billing.
ca. 6.5 Pf/kWh
ca. 3.0 Pf/kWh
ca. 1.0 Pf/kWh
Protective measures for CHP
0.45 Pf/kWh
0.45 Pf/kWh
0.45 Pf/kWh
0.45 Pf/kWh
Concession fee
Maximum rate: 2.60 Pf/kWh
(communities under 25,000)
to 4.69 Pf/kWh
(communities over 500,000)
Maximum rate: 0.22 Pf/kWh
none
none
Electricity tax
3.0 Pf/kWh
0.6 Pf/kWh
0.6 Pf/kWh
0.6 Pf/kWh
VAT
from 3.05 to 3.38 Pf/kWh
(depending on size of
concession fee)
1.24 Pf/kWh
0.65 Pf/kWh
0.33 Pf/kWh
Total point of connection fee
22.10 to 24.52 Pf/ kWh
9.01 Pf/ kWh
4.70 Pf/ kWh
2.38 Pf/ kWh
Page 25
E.ON Energie - Reduction of installed generation capacity (1)
(2001-2003)
Shutdowns
- Offleben C
- Rauxel 2
- Westerholt 1
- Westerholt 2
- Stade
- Arzberg 5
- Arzberg 7
- Schwandorf D
- Franken II B1
- Franken II B2
Cold reserve
- Staudinger 2
- Pleinting 2
- Emden 4
- Arzberg 6
Reduction
- Staudinger 1 (winter only)
Total reduction of installed capacity
2,279 MW
280 MW
164 MW
138 MW
138 MW
630 MW
104 MW
121 MW
292 MW
206 MW
206 MW
Realized
206 MW
206 MW
1,333 MW
249 MW
402 MW
430 MW
252 MW
249 MW
402 MW
430 MW
3,612 MW
249 MW
3,861 MW
1,493MW
Page 26
E.ON Energie - Reduction of installed generation capacity (2)
(2001-2003)
Realized
Total reduction of installed capacity
3,861 MW
Shutdown of assets currently in cold reserve
- Aschaffenburg 21
150 MW
- Aschaffenburg 31
143 MW
293 MW
Continuation of cold reserve
- Irsching 1
- Irsching 2
- Pleinting 1
755 MW
Total reduction
1,493 MW
150 MW
143 MW
151 MW
312 MW
292 MW
4,909 MW
1,786 MW
Page 27