Transcript PowerPoint-presentation
© Vattenfall AB
Vattenfall Q3 Results 2007
Presentations by Lars G. Josefsson, CEO and Jan Erik Back, CFO 31 October 2007
© Vattenfall AB 31 Oct 2007
Highlights – 9M results 2007
Net sales rose 9.3% to SEK 105,310 million (96,374) EBIT decreased 2.8% to SEK 21,225 million (21,827) Profit after tax increased 28.4% to SEK 17,010 million (13,249) due to reduction of German corporate income tax Net debt decreased by SEK 4,883 million to SEK 44,524 million compared with 31 December 2006 2
© Vattenfall AB 31 Oct 2007
Highlights – Q3 results 2007
Net sales rose 12.9% to SEK 31,589 million (27,990) EBIT increased 37.9% to SEK 4,557 million (3,304) Profit after tax increased 88.3% to SEK 3,523 million (1,871) due to reduction of German corporate income tax 3
Highlights – Q3 results 2007
Net debt decreased by SEK 2,241 million to SEK 44,524 million vs 30 June 2007 Return on Net Assets was 15.7% LTM (FY 2006: 16.6%) Return on Equity was 20.5% LTM (FY 2006: 19.1%) Net Gearing was 37% as of 30 Sept 2007 vs 46% as of 31 December 2006 © Vattenfall AB 31 Oct 2007 LTM = Last twelve months 4
© Vattenfall AB 31 Oct 2007
EBIT development
Quarterly figures, SEK million
30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
Bewag consolidated HEW consolidated GZE consolidated Danish assets consolidated
Q 4 20 00 Q 2 20 01 Q 4 20 01 Q 2 20 02 Q 4 20 02 Q 2 20 03 Q 4 20 03 Q 2 20 04 Q 4 20 04 Q 2 20 05 Q 4 20 05 Q 2 20 06 Q 4 20 06 Q 2 20 07 Quarterly figures in SEK million, excluding items affecting comparability Last 12 months figures in SEK million, excluding items affecting comparability 5
© Vattenfall AB 31 Oct 2007
Increased fossil and hydro power generation
Electricity: Q3 2007 total: 37.3 TWh
0.4
7.7
18.7
10.5
6
Electricity: Q3 2006 total: 34.5 TWh
0.4
6.7
Hydro Nuclear Fossil Other 16.8
Other=wind, biofuel, waste 10.6
Heat: Q3 2007 total: 3.8 TWh
0.9
1.2
Heat Q3 2006 total: 3.0 TWh
41 % 0.7
1.1
Nordic Germany Poland 1.8
1.2
Electricity spot price development
Monthly Spot Average
85 75 NordPool (SYSEUR) EEX 7 65 55 45 35 25 15 jan-05 apr-05 jul-05 okt-05 jan-06 apr-06 jul-06 okt-06 jan-07 apr-07 jul-07 As of 26 Oct © Vattenfall AB 31 Oct 2007
Nordic hydrological balance
Hydrological Balance and System Price 1996 - 2007 TWh 40 30 20 10 0 -10 -20 -30 -40 -50 1996
System Price Hydrological Balance
1997 1998 1999 2000 2001 2002 2003 2004 2005
8
2006 SYSSEK/MWh 1000 900 800 700 600 500 400 300 200 100 0 2007
Source: Markedskraft and Nord Pool © Vattenfall AB 31 Oct 2007
Increasing electricity forward prices
Daliy Forward Closing Prices EUR/MWh 65,00 60,00 55,00 50,00 45,00 40,00 35,00 30,00 25,00 20,00 jan-05 apr-05 jun-05 sep-05 dec-05 ENOYR-08 m ar-06 EEXYR-08 jun-06 sep-06 ENOYR-09 dec-06 EEXYR-09 m ar-07 jun-07 sep-07
9 © Vattenfall AB 31 Oct 2007
140 USD
Oil, coal, gas and CO
2
allowances
120 100 80 60 40 20 0 ja n -0 5 a p r 0 5 ju n -0 5
Oil (USD/bbl), Brent Front Month
s e p -0 5 d e c -0 5 m a r 0 6
Coal (USD/t), API#2, Front Year
EUR
10
40 30 0 ju n -0 6 s e p -0 6 d e c -0 6
Emission allowances CO2 (EUR/t), 2008
m a r 0 7 ju n -0 7 s e p -0 7
Gas (EUR/MWh), NBP, Front Year
20 10 80 70 60 50
© Vattenfall AB 31 Oct 2007
10 5 0 ja n 0 6 30 25 20 15
CO
2
allowances
35 EUR/tonne 2007 2008 a pr 0 6 jul -0 6
© Vattenfall AB 31 Oct 2007
ok t 0 6 ja n 0 7 a pr 0 7 jul -0 7 ok t 0 7
11
Nuclear update – post outages on 28 June
• • • • Damage at German nuclear plant Krümmel has been repaired, some work is still under way (e.g. installation of new transformer).
However, following the events, deviant installations of some anchors were detected at Brunsbüttel and Krümmel. The evaluation of the findings is still in progress.
Both plants will remain disconnected from the grid until all replacement work is finished, all questions are clarified and all relevant measures are taken. Q3 financial impact totals approximately EUR 60 million (SEK 555 million) 12 © Vattenfall AB 31 Oct 2007
Krümmel (1,346 MW) Brunsbüttel (771 MW)
© Vattenfall AB 31 Oct 2007
Increased retail customer churn in Germany
13 • • Some 200,000 customers lost in Germany primarily due to: – – mounting competition in the retail market and customers being increasingly inclined to switch electricity suppliers Vattenfall’s notice of price increases as of 1 July, which resulted in very negative customer reactions – Inadequate information to the general public following the nuclear outages Losses should be viewed against the background of very high market shares (>80%, corresponding to nearly 2.9 million customers) in Berlin and Hamburg • • •
Measures taken
: Improved product offers – – launched a very competitively priced internet product expanded marketing activities throughout Germany, i.e. to areas outside our core German markets in Berlin and Hamburg Launched a large-scale dialogue, inviting all customers as well as the general public to put questions to Vattenfall Establishment of a customer advisory council
© Vattenfall AB 31 Oct 2007
We are growing our market shares in Sweden
14 • We have now exceeded one (1) million customers in the Nordic countries • Our Swedish retail customer market share has grown from 13% to 15%.
• Customer satisfaction index has improved • Vattenfall’s products are considered best in the market
© Vattenfall AB 31 Oct 2007
Major ongoing investment projects
• Lillgrund – the world’s 3 rd largest offshore wind power farm soon to be fully operationable (48 windmills, 110 MW) • Schwarze Pumpe now in place.
– the world’s first CCS oxyfuel pilot plant, to be commissioned in August 2008. Agreement on CO2 storage is • Boxberg – 675 MW lignite power plant under construction • Moorburg – 1,640 MW CHP plant still pending final approval from the City of Hamburg • Reopening of the Reichwalde lignite mine in Germany • Extensive transmission grid investments in Germany • Several renewable energy projects in Germany and Sweden 15
© Vattenfall AB 31 Oct 2007
EU’s 3
rd
Energy package launched 19 September
16
Vattenfall’s response:
• This offers a unique opportunity to further improve the market’s function and to speed up market development through integration of national markets into regional markets and finally the Internal Market for Energy • We believe that an integrated energy market is a prerequisite for the competitiveness of Europe • We believe having Regional System Operators (RIO) is the best way to achieve integration • We are positive to creating an Agency for Cooperation of National Energy Regulators • We support the proposed new Network for Transmission System Operators (ENTSO) • We believe, however, that additional measures are needed to reach the target
© Vattenfall AB 31 Oct 2007
Vision and growth strategy remains firm
• Vattenfall’s vision is to be a leading European energy company • Within our “growth ambition” we will – Continue to be an integrated company and focus on generation of electricity and heat – Expand in core and geographically close markets where value can be created – Use both M&A and greenfield investments as tools for growth • More focus on renewables, CCS, nuclear and CHP • Increased focus on our “benchmark ambition” and operational performance 17
© Vattenfall AB
Financials
Jan Erik Back, CFO
Consolidated income statement
Amounts in MSEK Net sales Cost of products sold
Gross profit Operating profit (EBIT) Operating profit, excl. IAC*
Financial income Financial expenses
Financial net
Profit before taxes
Taxes
Profit for the period
19
Q3 2007 IFRS 31,589 24,335 7,254 4,557 4,542 472
-
1,515
-1.043
3,514 9 3,523
Q3 2006 IFRS 27,990 21,956 6,034 3,304 3.286
841 -1,184
-343
2,961 -1,090 1,871 Change FY2006 % 12.9
10.8
20.2
37.9
38.2
-43.9
28.0
-204.1
18.7
88.3
135,802 96,844 38,958 27,049 26,676 3,839 -5,363 -1,524 25,525 -5,667 19,858
LTM 144,738 105,575 39,163 26,447 26,373 3,623 -5,758
-2,135
24,312 -693 23,619 © Vattenfall AB 31 Oct 2007 * IAC = items affecting comparability
Cash flow development
MSEK 30,000 20,000 10,000 0 -10,000 -20,000 -30,000 -40,000 -99 2000 2001 2002 2003 2004 2005 2006 2007
20
Free cash flow from operations - Rolling 4 quarter (1) Cash flow before financing activities Rolling 4 quarter (1) Cash Flow from operating activities minus reinvestments 1) Figure s according to Sw GAAP until Q4 2004.
2) Figure s according to IFRS from Q1 2005.
© Vattenfall AB 31 Oct 2007
30% 25% 20% 15% 10% 5% 0%
Return on equity
© Vattenfall AB 31 Oct 2007 Rolling 4-quarter IFRS excl IAC Rolling 4-quarter Sw GAAP excl IAC Average 4-years (16 quarter) Sw. GAAP.
IFRS from Q4 2004. Excl. IAC Requirement 15% 21
Financial targets and outcome
Key Ratio Targets
Return on Equity (RoE) 15 % on average equity Return on Net Assets (RoNA, excl. IAC) 11 % before tax (= 15 % RoE recalculated into the Groups RoNA requirement) Cash flow interest coverage after maintenance investments 3.5 – 4.5 times Credit Rating Single A category rating Dividend pay-out 40-60 %
Q3 2007 20.5% 1 15.7%* 7.0* A2
/
A Stable outlook 40 % 2
© Vattenfall AB 1) Q3 2007 figure = LTM 31 Oct 2007 2) Paid in May 2007 22
EBIT Q3 2007 vs Q3 2006
Millions of SEK 6 000 5 000 4 000 3 304 3 000 2 000 1 000 0 Q3 2006 942 Price 619 Volume 356 60 648 540 4 557 O&M Sales and admin Write-downs Other Q3 2007
© Vattenfall AB 31 Oct 2007 23
EBIT 9M 2007 vs 9M 2006
Millions of SEK 28 000 26 000 24 000 22 000 20 000 18 000 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 21 827 Q1-Q3 2006 2 192 Price 1 289 Volume 308 83 5 3 697 21 225 O&M Sales and admin Depreciations Other Q1-Q3 2007
© Vattenfall AB 31 Oct 2007 24
EBIT Q3 2007 vs Q3 2006 – secondary segments
25
Millions of SEK 5 000 896
VTS= Vattenfall Trading Services
VTS Sales 122 -191 68 212 4 557 4 000 552 338 3 304 3 000 2 000 1 000
© Vattenfall AB 31 Oct 2007
0 Q3 2006 Generation Heat Networks Markets Other Q3 2007
EBIT 9M 2007 vs 9M 2006 – secondary segments
26
Millions of SEK 26 000 24 000 22 000 20 000 18 000 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 21 827 Q1-Q3 2006 2 651 Generation 1 383 Heat 1 279
VTS= Vattenfall Trading Services
Sales -1 214 VTS 756 457 Networks Markets 134 21 225 Other Q1-Q3 2007
© Vattenfall AB 31 Oct 2007
Hedging position as of 30 September 2007
% hedged of planned electricity generation (percentage values are rounded)
Germany & Poland Nordic
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% remaining 2007 2008 2009 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% remaining 2007 2008 2009 27 © Vattenfall AB 31 Oct 2007
© Vattenfall AB 31 Oct 2007
Highlights Q3 2007 - Nordic
28 • EBIT almost flat compared with Q3 2006 • Sharp decline in Nordic spot prices mitigated by hedging.
• Higher electricity generation due to increased hydro and nuclear power.
• Lower results in Distribution due to a provision of approx. SEK 100 million for restructuring measures.
• Lower results in Heat due to an impairment loss of SEK 195 million of a CHP plant in Finland.
• The Lillgrund windpower farm has started to generate electricity. When fully operational it will be the largest windpower farm in Sweden and the third largest offshore farm in the world.
Key data – BG Nordic
Amounts in SEK billion
Net sales External net sales * EBIT ** Net assets *** Electr. generation, TWh Heat generation, TWh Employees **** *
Excl. intra group transactions ** Excl. items affecting comparability (IAC) *** At the end of the period **** Full time equivalents (FTE) LTM = last twelve months © Vattenfall AB 31 Oct 2007
Q3 2007
9.2
8.6
1.5
Q3 2006 % Change LTM
7.4
10.4
1.6
+23.7
-17.6
-2.2
45.8
43.6
11.8
FY 2006
40.1
48.2
13.2
FY 2005
42.0
40.7
13.7
87.0
18.9
1.2
81.8
16.4
1.1
+15.2
+9.1
9 540 9 477 + 6.4
+0.7
n.a.
90.8
10.8
81.7
84.9
8.5
77.2
89.8
7.3
n.a.
9 158 8 788 29
© Vattenfall AB 31 Oct 2007
Highlights Q3 2007 - Germany
• Significantly higher EBIT, + SEK1,279 million to SEK 3,173 million (+67,5%).
(+ 71.2% excl. IAC). • Main part of EBIT improvement pertains to an impairment loss of SEK 931 million in Q3 2006 in business unit Distribution.
• Mining & Generation increased its result despite unplanned nuclear outages thanks to higher fossil power and successful hedging. • NAP2 - Total national emissions cut to 453 million tonnes per year (NAP1 was 499 million tonnes). Vattenfall estimates a yearly deficit of approx. 28-33 million tonnes. Estimated cost (after tax) totals EUR 400-500 million • Continued pressure from the Regulator (BNetzA) on transmission tariffs • Lowered German corporate income tax by approx. 10 percentage points.
The impact on profit after tax is 950 MSEK for Q3 and 2,850 for 9M 2007 30
Key data – BG Germany
Amounts in SEK billion
Net sales External net sales * EBIT ** Net assets *** Electr. generation, TWh Heat generation, TWh Employees **** *
Excl. intra group transactions ** Excl. items affecting comparability (IAC) *** At the end of the period **** Full time equivalents (FTE) LTM = last twelve months
Q3 2007
26.0
17.9
3.2
Q3 2006 % Change LTM
22.0
15.2
1.9
+18.1
+18.1
+71.2
111.2
76.8
13.7
FY 2006
101.5
69.9
12.9
FY 2005
105.0
70.3
10.3
67.3
17.7
1.8
62.4
17.7
1.2
+50.0
19 742 20 025 +7.9
-1.4
n.a.
73.2
13.6
61.8
76.2
15.5
68.7
75.9
15.4
n.a.
19 821 20 096 © Vattenfall AB 31 Oct 2007 31
© Vattenfall AB 31 Oct 2007
Highlights Q3 2007 - Poland
• EBIT decreased by 37% from SEK 125 million to SEK 79 million (-50.4% excl IAC).
• EBIT reduction pertains mainly to Distribution due lower volumes and squeezed margins.
• Business unit Heat reports a marginally lower operating profit. • Business unit Sales reports a slightly better result.
32
Key data – BG Poland
Amounts in SEK billion
Net sales External net sales * EBIT ** Net assets *** Electr. generation, TWh Heat generation, TWh Employees **** *
Excl. intra group transactions ** Excl. items affecting comparability (IAC) *** At the end of the period **** Full time equivalents (FTE) LTM = last twelve months
Q3 2007
1.9
1.9
0.1
Q3 2006 % Change LTM
1.9
1.8
0.1
+3.1
+5.9
-50.4
9.6
9.1
0.8
FY 2006
9.4
9.0
0.9
FY 2005
8.8
8.8
0.8
10.0
0.6
0.9
2 736 8.3
0.7
2 824 +20.3
0.3 +100.0
+28.6
-3.1
n.a.
3.5
10.0
n.a.
8.8
3.3
11.2
2 836 9.3
3.4
11.4
3 029 © Vattenfall AB 31 Oct 2007 33
© Vattenfall AB 31 Oct 2007
Consolidated balance sheet
Amounts in MSEK Non-current assets Current assets
Total assets
Equity Interest-bearing liabilitites Interest-bearing provisions Pension provisions Deferred tax liabilities Other non-interest bearing liabilitites
Total equity and liabilities 30/9/07 IFRS 257,489 67,127 324,616 119,679 66,341 52,280 17,424 25,403
30/9/06 IFRS 266,242 61,543 327,785 94,118 72,222 48,412 17,345 40,104 Change % -3.3
9.1
-1.0
27.2
-8.1
8.0
0.5
-36.7
43,489 324,616
55,584 327,785 -21.8
-1.0
34 31/12/06
251,893 71,273 323,166 107,674 71,575 49,217 16,877 29,875 47,948 323,166
Net debt development
SEK million 80,000 Acquisition of Bewag and GZE shares Acquisition of Elsam shares 70,000 60,000 50,000 Dividend paid 40,000 30,000 20,000 10,000 0 Q 4 20 00 Q 2 20 01 Q 4 20 01 Q 2 20 02 Q 4 20 02 Q 2 20 03 Q 4 20 03 Q 2 20 04 Q 4 20 04 Q 2 20 05 Q 4 20 05 Q 2 20 06 Q 4 20 06 Q 2 20 07 35 Capital Securities SEK 9.1 billion © Vattenfall AB 31 Oct 2007
36 © Vattenfall AB 31 Oct 2007
Questions & Answers
© Vattenfall AB
Backup slides
Consolidated income statement
Amounts in MSEK Net sales Cost of products sold
Gross profit Operating profit (EBIT) Operating profit, excl. IAC*
Financial income Financial expenses
Financial net
Profit before taxes
Taxes
Profit for the period 9M 2007 IFRS 105,310 75,911 29,399 21,225 21,115 2,103
-
4,095
-1,992
19,233 -2,223 17,010
9M 2006 IFRS 96,374 67,180 29,194 21,827 21,418 2,319 -3,700
-1,381
20,446 -7,197 13,249 Change % 9.3
13.0
0.7
-2.8
-1.4
-9.3
10.7
-44.2
-5.9
-69.1
28.4
© Vattenfall AB 31 Oct 2007 * IAC = items affecting comparability 38
© Vattenfall AB 31 Oct 2007
Consolidated cash flow statement
39 Amounts in MSEK
Funds from operations (FFO)
Change in working capital
Cash Flow from operating activities
Investments Divestments Cash and cash equivalents in aquired/divested companies
Cash Flow from investing activities Cash Flow before financing activities Cash Flow from financing activities Cash Flow for the period
Net debt at the end of the period
Q3 2007 IFRS 6,002 261
Q3 2006 IFRS 5,625 1,769 Change % 6.7
-85.2
FY 2006 35,673 -466
6,263 -4,310 239 2 -4,069 2,194 -8,259 -6,065 -44,524
7,394 -4,749 289 39 -5,107 2,287 -634 1,653 -55,380 -15.3
-9.2
-17.3
-94.9
-20.3
-4.1
-19.6
35,207 -16,534 1,720 -686 -15,647 19,560 -10,742 8,818 -49,407
LTM 32,667 1,290 33,957 -18,327 935 10 -17,382 16,575 -18,870 -2,295 -44,524
© Vattenfall AB 31 Oct 2007
Key ratios
Key Ratios (% unless otherwise stated) RoNA (1) RoE (1) Operating margin Pre-tax profit margin Cash Flow interest coverage after maintenance investments, times FFO/net debt (1) Equity/assets ratio Net Gearing - Net debt/equity, times Capitalisation - Net debt/net debt + equity 1) Q3 2007 value = LTM 40
Q3 2007
15.7
20.5
14.4
11.1
Q3 2006 11.8
10.6
4.7
69.0
36.9
0.37
27.1
6.9
28.7
0.59
37.0
LTM 15.7
20.5
18.3
16.8
7.0
69.0
36.9
0.37
27.1
© Vattenfall AB 31 Oct 2007
Net asset development
MSEK 160,000 Acquisition of Bewag and GZE shares Acquisition of Elsam shares Consolidation of Danish assets 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Q 4 20 00 Q 2 20 01 Q 4 20 01 Q 2 20 02 Q 4 20 02 Q 2 20 03 Q 4 20 03 Q 2 20 04 Q 4 20 04 Q 2 20 05 Q 4 20 05 Q 2 20 06 Q 4 20 06 Q 2 20 07 41
© Vattenfall AB 31 Oct 2007
Break down of group liquidity
42 Amounts in SEK million
As of Sep 30, 2007
Cash and bank Interest-bearing investments Special Funds Brunsbüttel Shares Total
Treasury Germany 968 1,034 4,683
5,651
5,419 2,578 5,335 22
14,389
Poland 467 63
531
Nordic 594 316
909 Total 3,063
% 14
10,481 2,578 5,673 22
48 12 26
21,480 100
Undrawn committed credit facilities amount to 9,577 SEK million and other undrawn credit- and overdraft facilities amount to 10,859 SEK million.
© Vattenfall AB 31 Oct 2007
Break down of group debt
43 Amounts in SEK million
As of Sep 30, 2007
Treasury Germany
Subordinated perpetual Capital Securities MTN EMTN Liabilities to assoc. companies Liabilities to minority shareholders Bank loans and others Total
9,082 839 30,526 6,909 559
47,915
4,261 49 6,433
10,743
Poland 142
142
Nordic 5,132 2,410
7,542 Total
%
9,082 839 30,526
14 1 46
11,170
17
5,181 9,544 66,341
8 14
100
Vattenfall debt maturity profile
SEK million 12000 10000 8000 6000 4000 2000 2006 09 30 2007 09 30 0 2006 2008 2010 2012 2014 2016 2018 2020 2022 Excluding loans from associated companies and minority owners 2024 2026 2028 2030 2032 2034 2036 Duration (years) Average time to maturity (years) Net debt (SEK bn)
Sep 30, 2007 3,7
1)
6,5
1)
44,5
Sep 30, 2006 3,7 6,1 55,4 1) Based on external debt. Excluding Capital Securities the duration is 3,1 years and average time to maturity 6,3 years. © Vattenfall AB 31 Oct 2007 44
Adjusted Gross & Net debt
45
SEK million
Reported gross debt (IFRS)
+ PV of net pension obligations (incl actuarial gains/losses) + Mining & environmental provisions - 50% of Hybrid securities
= Adjusted gross debt Reported cash & short term investments
- German nuclear "Solidarvereinbarung" - Minority owner's share of German nuclear cash position
= Adjusted cash & short term investments
Adjusted gross debt - Adjusted cash & short term investments
= Adjusted net debt
Reported net debt
30 Sept 2007 30 June 2007 30 Dec 2006 66 341
20 320 11 308 -4 541
93 428 21 480
-3 136 -3 499
14 845 93 428
-14 845
78 583
44 524
67 996
20 208 11 297 -4 555
94 946 20 849
-3 147 -3 540
14 162
94 946 -14 162
80 784
46 765
71 575
19 670 10 295 -4 455
97 085 22 168
-3 076 -3 594
15 498
97 085 -15 498
81 587
49 407
© Vattenfall AB 31 Oct 2007
Development of adjusted net debt
SEK billion
23,9 -11,6 -7,6 -0,7 -1,0 -0,1 46 © Vattenfall AB 31 Oct 2007 -81,6 Adjus ted net debt Dec 31, 2006 Cas h flow from operating activities Cas h flow from inves ting activities Dividend paid Pens ion provis ions and s im ilar com m ittm ents Mining provis ions and other environm ental undertakings Others -78,6 Adjus ted net debt Sept 30, 2007
© Vattenfall AB 31 Oct 2007
Group provisions down by 10.2%
30 Sept 2007 SEK 95,107 million
4354 1476 7002 17424 25403 11308 28140 47 Pensions Nuclear Mining Taxes Other Personnel Legal 40104
30 Sept 2006 SEK 105,861 million
4464 2234 5511 17345 26447 9756