Creating the future of energy - Growth Focus - EOn
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Growth Focus Discipline Creating the future of energy H1 2019 Results 7th August 2019
On track to deliver FY 2019 outlook
E.ON H1 2019 results
Highlights Key Financials1
€m € bn
• EBIT down 12%, Adj. Net Income down 16% as 1,942
expected, compared to high base in H1 2018 1,717 20.2
• Economic Net Debt up €3.6 bn as a result of adoption
of IFRS 16 and lower interest rates
1,052 16.6
• Full year 2019 outlook confirmed
885
• Preparation of innogy takeover fully on track
• Unfavorable regulatory developments in Sweden
and Germany to be addressed
EBIT Adj. Net Income Economic Net Debt2
H1 2018 H1 2019 2
1. Adjusted for non operating effects 2. Economic Net Debt as per 30 Jun 2019 and 31 Dec 2018
Update on regulatory returns E.ON H1 2019 results
Germany
Nominal return • Lower returns reflect lower bond
on equity (RoE) yields
post trade tax1 • RFR2: 3.80% • RFR2: 2.49%
9.05% • E.ON also benefitting from lower
• MRP3: 4.55% • MRP3: 3.80%
6.91% re-financing costs over time
• Beta: 0.38 • Beta: 0.40
• Regulatory return ≠ achieved return
Reg. Period
due to outperformance elements
Reg. Period
2013/14 – 2017/18 2018/19 – 2022/23
CAPM4: RoE = RFR + Beta*MRP • Regulatory model has to incentivize
long term investments
Sweden
• Constant and constructive dialogue
Real WACC pre tax with regulators and politicians to
• RFR2: 4.00%
• MRP3: 5.00% ensure adequate return
5.85%
• Beta: 0.39 • RFR2: 0.90% environment
• Extra RP5: 0.5% • MRP3: 6.70%
2.16% • Beta: 0.29 • E.ON is prepared to challenge the
regulator in court if necessary
Reg. period Reg. period
2016-2019 2020-2023
1. RoE for new assets only 2. Risk-free rate 3. Market risk premium 4. Simplified CAPM model disregarding taxes or leverage 3
5. Additional risk premium, omitted in regulatory period 2020-2023
Improving and stabilizing retail business E.ON H1 2019 results
Customer numbers Growing customer base outside UK Performance programs on track
• More than 100,000 additional
~22m ~22m customers in Germany and growth
Cost ~€120m impact
in Other driven by Italy with
30,000 additional customers Impact ~£150m impact
Germany >100k
Situation in UK retail business
remains tough
Other • Clear management goal to be free
>60k cash flow positive in 2021 (E.ON
stand-alone)
• Customer losses stopped in July
UK ~400k
• Preparation regarding npower 2018 2019 2020 >2020
ongoing
FY 2018 H1 2019 Programs in Germany and UK with
target to offset margin pressure
4
First tranche of production rights for PreussenElektra E.ON H1 2019 results
secured – terms to be challenged
E.ON Vattenfall
Nuclear power plant 10 TWh
Krümmel1
88 TWh of ~€27.8/MWh PreussenElektra
remaining production
rights Preliminary
price
10 TWh
Remaining October ’19 April ’20 June ’20
production rights until2
Plant Grohnde Brokdorf Isar II
∑
Required
production rights2 15-20 TWh 10-15 TWh 20-25 TWh 45-60 TWh
1. Krümmel is a joint venture between E.ON and Vattenfall, each party owning 50% equity share 5
2. Volumes shown before any transfers/purchases and excluding minority stakes (16.7% minorities in Grohnde, 20% in Brokdorf and 25% in Isar II)
Transaction update E.ON H1 2019 results
Remedies offered to speed up transaction process • Decision by anti-trust authorities expected
Czech Republic:
in September 2019
• Divestment of innogy’s retail business
• EBIT impact: low triple digit million
• Integration project ongoing
Germany:
- First phase of senior management
• Divestment of ca. 360,000 electricity accounts
• Discontinuation of operatorship for certain EV selection process completed
motorway charging stations - Second phase to be finalized at closing
• EBIT impact: low to mid double digit million1
Hungary: • Target of €600-800m of net synergies
• Divestment of E.ON’s commercial electricity retail re-confirmed
business
• EBIT impact: mid single digit million
6
1. Effect expected to be partly mitigated over the medium term
Transaction steps E.ON H1 2019 results
1st Closing (within 1-2 weeks after anti-trust approval) 2nd Closing – (a) 2nd Closing – (b)
• Transfer of innogy shares from RWE to E.ON Transfer of E.ON’s Transfer of innogy’s
• Capital increase at E.ON (RWE becomes 16.67% shareholder) renewables assets renewables assets,
Anti-trust
• €1.5 bn payment from RWE to E.ON and nuclear Kelag participation
approval minority partici- and gas storage
• PTO closing and payment by E.ON of consideration1 for tendered innogy
shares pations2 assets
• Closing 1 triggers change in accounting treatment of E.ON and innogy
transfer assets
Integration & synergies
1. Consideration including any necessary adjustments 7
2. E.ON minority shares in the two RWE-operated nuclear power plants Gundremmingen (25% stake) and Emsland (12.5% stake)
Technical adjustments in E.ON’s guidance after closing E.ON H1 2019 results
EBIT Adj. Net Income
€2.9-3.1 bn
Depreciation of
Purchase Price
Proportional
Allocation (PPA)
EBIT of innogy
excluding
EBIT of E.ON renewables,
renewables & Kelag & gas
PEL assets1 storage
Technical
adjustments2 €1.4-1.6 bn
Existing guidance Schematic illustration New guidance Existing guidance New guidance
FY 2019 FY 2019 FY 2019 FY 2019
8
1. PEL assets include participations in power plants Gundremmingen C and Emsland 2. Aligning E.ON and innogy accounting practices
EBIT development in line with expectations E.ON H1 2019 results
EBIT1 H1 2019 vs. H1 2018 Key H1 Effects
€m
Energy +/–
• Germany: new regulatory period power,
H1 2018 1,942 Networks one-off effect in Q2 2018
+/–
• Sweden: power tariff increase, adverse FX
Energy development
-31
Networks
Customer +•– Germany: timing effect from higher grid fees
Customer Solutions and gas procurement costs
-237
Solutions –•– UK: regulatory effects (i.e. SVT price cap),
competitive dynamics
Renewables +39 -225
Renewables
Corp. Functions
•+ Onshore: capacity additions (US)
& Other, -17 •– Onshore: support scheme expiries
Consolidation •+ Offshore: capacity additions (Germany & UK)
Non-Core +21 Non-Core +/–
• Preussen Elektra: higher achieved prices,
plant outages, higher depreciation, absence of
H1 2019 1,717 2018 one-offs
•+ Turkey: oper. improvements (mainly hydro)
9
1. Adjusted for non operating effects
Adj. Net Income reflecting EBIT development E.ON H1 2019 results
H1 2019
€m
Group EBIT1 1,717
Interest on
Unchanged yoy: refinancing benefits compensated by
fin. assets/ -292
higher interest charges following IFRS 16 adoption
liabilities2
Other interest
-43
expenses
Profit before
1,382
Taxes1
Income Taxes -345 Stable tax rate of 25%
Minorities -152
Adjusted
885
Net Income1
€0.41 EPS (€ per share)
10
1. Adjusted for non operating effects 2. Without interest accretion of nuclear provisionsEND impacted by technical and seasonal effects E.ON H1 2019 results
END1 H1 2019 vs. FY 2018
€ bn -3.6
-10.3 AROs -10.3
Pension provisions
Net financial position
-3.3
Plan assets +€0.9bn Initial adoption of IFRS 16
DBO2 - €1.8bn leading to technical increase -4.0
Other +€0.2bn of Economic Net Debt
-3.0
+0.5
-16.6 -5.9
-1.3 +0.1
-1.1 0.0
-0.7
-0.8 -0.2 -20.2
END FY 2018 OCF Investments Dividend Divestments AROs Pensions IFRS 16 Other END H1 2019
1. Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs 11
2. Defined Benefit Obligation: Actuarial interest rates for German pensions down 70bps to 1.3%, for UK pensions down 60bps to 2.3% (30 June 2019 vs 31 Dec 2018)FY 2019 outlook confirmed
E.ON H1 2019 results
Outlook 2019 Effects for the remainder of 2019
€2.9–3.1 bn
Energy Networks Customer Solutions
EBIT1
•+ Germany: new regulatory period power •+ Germany: impact of price adjustments
•+ Sweden: power tariff increases •+ Germany & UK: restructuring charges
(already implemented) in 2018
€1.4–1.6 bn •– UK: regulatory interventions (i.e. SVT cap)
Adj. NI1
Renewables Non-Core
+/–
• Onshore: capacity additions, support +/–
• PEL3: increased wholesale prices, higher
Dividend2
€0.46 scheme expiries depreciation, one-offs in 2018, purchase
•+ Offshore: capacity additions (Arkona, of production volumes
Rampion)
12
1. Adjusted for non operating effects 2. Fixed dividend per share proposal to AGM to be paid in 2020 3. Preussen ElektraGrowth Focus Discipline
H1 2019 – Financial Appendix
E.ON standaloneFinancial Highlights E.ON H1 2019 results
€m H1 2018 H1 2019 % YoY
Sales 15,356 16,089 +5
1
EBITDA 2,799 2,710 -3
EBIT 1 1,942 1,717 -12
1
Adjusted Net Income 1,052 885 -16
OCF bIT 2,068 1,467 -29
Investments 1,414 1,319 -7
Economic Net Debt ² -16,580 -20,201 -22
1. Adjusted for non operating effects, 2. Economic net debt as per 30 Jun 2019 and 14
31 Dec 2018; Economic net debt definition takes into account the decommissioning
provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROsSeasonally low Cash Conversion Rate2 E.ON H1 2019 results
H1 2019
€ bn
54%
2.7
-0.1
1.5
-1.1
-0.4
0.5
-0.6
-1.3 -0.8
EBITDA1 Cash Change in WC OCF bIT Interest Tax Payments OCF Capex FCF
Adjustments3 Payments
1. Adjusted for non operating effects, 2. Cash Conversion Rate: OCF bIT ÷ EBITDA, 3. Net non cash effective EBITDA items incl. provision utilizations and payments related to 15
non operating earningsSegments: Energy Networks E.ON H1 2019 results
Energy Networks Highlights
EBIT1 € m • Germany
-3%
+/–
+ New regulatory period for power
1,070 1,039 + Regulatory effects in 2018
– One-off effect in Q2 2018
Germany 565 543 • Sweden
+ Power tariff increase
Sweden 254 262 – Adverse FX development
CEE & Turkey 251 234 – Disposal of gas network in Q2 2018
H1 2018 H1 2019 – Costs for storm “Alfrida” in Q1 2019
€m Germany Sweden CEE & Turkey Total
H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY
Revenue 3,079 3,161 +3 511 512 +0 776 815 +5 4,366 4,488 +3
Details
EBITDA 1 848 849 +0 331 340 +3 368 350 -5 1,547 1,539 -1
EBIT 1 565 543 -4 254 262 +3 251 234 -7 1,070 1,039 -3
thereof Equity-method earnings 33 32 -3 0 0 - 68 53 -22 101 85 -16
OCFbIT 580 280 -52 421 323 -23 404 403 -0 1,405 1,006 -28
Investments 231 346 +50 163 136 -17 186 161 -13 580 643 +11
16
1. Adjusted for non operating effectsSegments: Customer Solutions E.ON H1 2019 results
Customer Solutions Highlights
EBIT1 € m • Germany Sales
-50% – Timing effect from delayed pass-on of higher grid fees
477 – Higher procurement costs for gas
Germany Sales 135 • UK
– Regulatory effects, mainly SVT2 price cap
240
UK 202 – Competitive dynamics
76
71
Other 140 93
H1 2018 H1 2019
€m Germany Sales UK Other Total
H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY
Revenue 3,555 3,814 +7 3,981 3,903 -2 3,943 4,392 +11 11,479 12,109 +5
Details
EBITDA 1 150 97 -35 244 132 -46 225 188 -16 619 417 -33
EBIT 1 135 76 -44 202 71 -65 140 93 -34 477 240 -50
thereof Equity-method earnings 0 0 - 0 0 - 4 6 +50 4 6 +50
OCFbIT -112 -171 -53 20 56 +180 231 191 -17 139 76 -45
Investments 10 24 +140 92 94 +2 107 225 +110 209 343 +64
17
1. Adjusted for non operating effects, 2. Standard Variable TariffSegments: Renewables E.ON H1 2019 results
Renewables Highlights
EBIT1 € m +17%
• Offshore/Other
+ GE: Capacity additions (Arkona)
275 + UK: Capacity additions (Rampion)
236
• Onshore/Solar
215 + US: Capacity additions (Stella)
Offshore/Other 163
– Support scheme expiries
– Price effects
Onshore/Solar 73 60
H1 2018 H1 2019
€m Onshore Wind / Solar Offshore Wind / Others Total
H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY
Revenue 452 497 +10 289 310 +7 741 807 +9
Details
EBITDA 1 151 150 -1 245 316 +29 396 466 +18
EBIT 1 73 60 -18 163 215 +32 236 275 +17
thereof Equity-method earnings 17 58 +241
OCFbit 387 407 +5
Investments 449 293 -35
18
1. Adjusted for non operating effectsNon-Core business E.ON H1 2019 results
Non-Core Highlights
EBIT1 € m • PreussenElektra
+9% + Higher achieved power prices
– Higher depreciation
224 245
– Plant outages in 2019
– One-off effects in 2018
Preussen 182 • Generation Turkey
244
Elektra + Operational improvements, mainly higher hydro volumes
63
Generation -20
Turkey H1 2018 H1 2019 PreussenElektra: Hedged Prices
(€/MWh) as of 30 June 2019
€m PreussenElektra Generation Turkey Total
H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY H1 2018 H1 2019 % YoY 2018 100% 26
Revenue 601 573 -5 0 0 - 601 573 -5
Details
EBITDA 1 294 283 -4 -20 63 - 274 346 +26 2019 91% 31
EBIT 1 244 182 -25 -20 63 - 224 245 +9
thereof Equity-method earnings 29 28 -3 -20 63 - 9 91 - 2020 62% 46
OCFbIT 129 158 +22 0 0 - 129 158 +22
Investments 9 4 -56 154 0 -100 163 4 -98 2021 36% 46
19
1. Adjusted for non operating effectsAdjusted Net Income E.ON H1 2019 results
€m H1 2018 H1 2019 % YoY
EBITDA 1 2,799 2,710 -3
Depreciation/amortization -857 -993 -16
1
EBIT 1,942 1,717 -12
Economic interest expense (net) -330 -335 -2
EBT 1 1,612 1,382 -14
1
Income Taxes on EBT -402 -345 +14
1
% of EBT -25% -25% -
Non-controlling interests -158 -152 +4
Adjusted Net Income 1 1,052 885 -16
20
1. Adjusted for non operating effectsReconciliation of EBIT E.ON H1 2019 results
to IFRS Net Income
€m H1 2018 H1 2019 % YoY
EBITDA 1 2,799 2,710 -3
Depreciation/Amortization/Impairments -857 -993 -16
1
EBIT 1,942 1,717 -12
Reclassified businesses of Renewables -227 -266 -17
Interest result -294 -435 -48
Net book gains 855 19 -98
Restructuring -26 -90 -246
Mark-to-market valuation of derivatives 840 -336 -140
Impairments (net) 0 0 -
Other non-operating earnings -75 -30 +60
Income/Loss from continuing operations before income taxes 3,015 579 -81
Income taxes -203 -244 -20
Income/loss from continuing operations 2,812 335 -88
Income/loss from discontinued operations, net 96 209 +118
Net income/loss 2,908 544 -81
21
1. Adjusted for non operating effectsCash effective investments E.ON H1 2019 results
€m H1 2018 H1 2019 % YoY
Energy Networks 580 643 +11
Customer Solutions 209 343 +64
Renewables 449 293 -35
Corporate Functions & Other 16 37 +131
Consolidation -3 -1 +67
Non-Core 163 4 -98
Investments 1,414 1,319 -7
22Economic Net Debt1 E.ON H1 2019 results €m 31 Dec 2018 30 Jun 2019 Liquid funds 5,423 2,659 Non-current securities 2,295 2,680 Financial liabilities -10,721 -11,336 Adjustment FX hedging ² -28 62 Net financial position -3,031 -5,935 Provisions for pensions -3,261 -3,958 Asset retirement obligations -10,288 -10,308 Economic Net Debt -16,580 -20,201 1. Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs, 2. Net figure; 23 does not include transactions relating to our operating business or asset management
Economic interest expense (net) E.ON H1 2019 results
Difference
€m H1 2018 H1 2019
(in € m)
Interest from financial assets/liabilities -293 -292 +1
Interest cost from provisions for pensions and similar provisions -31 -30 +1
Accretion of provisions for retirement obligation and similar provisions -40 -32 +8
Construction period interests¹ 12 8 -4
Others 22 11 -11
Net interest result -330 -335 -5
1. Borrowing cost that are directly attributable to the acquisition, construction or production of a qualified asset.
Borrowing cost are interest costs incurred by an entity in connection with the borrowing of funds (Interest rate: 24
5.37%).Financial Liabilities E.ON H1 2019 results
Liquidity Sources (as of H1 2019) Maturity profile (as of end H1 2019)2
€ bn € bn
4.8
Liquid funds1 ~2.6
Non-current securities ~2.7
Total ~5.3
Syndicated loan (undrawn) 2.75 1.4
0.9
€ / $ Commercial Paper 0.8
10 / 10 0.6
programs (undrawn) 0.4
0.1 0.0
Acquisition facility
1.75 2019 2020 2021 2022 2023 2024 2025 ≥2026
(undrawn)
EUR GBP USD JPY Other
1. Balance sheet value (IFRS) considering discontinued operations 25
2. Bonds issued by E.ON SE and E.ON International Finance B.V. (fully guaranteed by E.ON SE)Funding plan to include green bonds E.ON H1 2019 results
E.ON’s Green Bond Framework Financing considerations
recently established
• Estimated future funding needs:
We strive to implement Green Bonds in €2-4 billion annually
our funding mix going forward • €1.75 billion undrawn acquisition
(estimated volume of €0.5 – 1.0 bn annually1) facility available
• Intention to start bond financing soon
Approx. €1.5 bn green project
volume identified2
eon.com/greenbond
eon.com/sustainability
26
1. Energy Networks and Customer Solutions projects (E.ON stand-alone), 2. 2017/2018 green project volumeE.ON Investor Relations contacts
Dr. Stephan Schönefuß T +49 (201) 184 28 22
Interim Head of Investor Relations stephan.schoenefuss@eon.com
Martina Burger T +49 (201) 184 28 07
Manager Investor Relations martina.burger@eon.com
Sebastian Gaßner T +49 (201) 184 28 05
Manager Investor Relations sebastian.gassner@eon.com
Conny Ripphahn T +49 (201) 184 28 34
Manager Investor Relations conny.ripphahn@eon.com
T +49 (201) 184 2806
Andreas Thielen T +49 (201) 184 28 15 investorrelations@eon.com
Manager Investor Relations andreas.thielen@eon.com
27Financial calendar & important links
Financial calendar
November 13, 2019 Quarterly Statement: January – September 2019
March 25, 2020 Annual Report 2019
May 12, 2020 Quarterly Statement: January – March 2020
May 13, 2020 2020 Annual Shareholders Meeting
August 12, 2020 Half-Year Financial Report: January – June 2020
Important links
Presentations https://www.eon.com/en/investor-relations/presentations.html
Facts & Figures 2019 https://www.eon.com/content/.../presentations/facts-and-figures-2019.pdf
Annual Reports https://www.eon.com/en/investor-relations/financial-publications/annual-report.html
Interim Reports https://www.eon.com/en/investor-relations/financial-publications/interim-report.html
Shareholder Meeting https://www.eon.com/en/investor-relations/shareholders-meeting.html
Green Bond Framework https://www.eon.com/en/investor-relations/bonds/green-bonds.html
Transaction Website: http://www.energyfortomorrow.eu/
28Disclaimer
This presentation contains information relating to E.ON Group ("E.ON") that must not be relied upon for any purpose and may not be redistributed, reproduced,
published, or passed on to any other person or used in whole or in part for any other purpose. By accessing this document you agree to abide by the limitations set out
in this document as well as any limitations set out on the webpage of E.ON SE on which this presentation has been made available.
This document is being presented solely for informational purposes. It should not be treated as giving investment advice, nor is it intended to provide the basis for any
evaluation or any securities and should not be considered as a recommendation that any person should purchase, hold or dispose of any shares or other securities.
The information contained in this presentation may comprise financial and similar information which is neither audited nor reviewed and should be considered
preliminary and subject to change.
Some of the information presented herein is based on statements by third parties. No representation or warranty, express or implied, is made as to, and no reliance
should be placed on, the fairness, accuracy, completeness or correctness of this information or any other information or opinions contained herein, for any purpose
whatsoever.
This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON management and other information currently
available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial
situation, development or performance of the company and the estimates given here. E.ON does not intend, and does not assume any liability whatsoever, to update
these forward-looking statements or to conform them to future events or developments.
Neither E.ON nor any respective agents of E.ON undertake any obligation to provide the recipient with access to any additional information or to update this
presentation or any information or to correct any inaccuracies in any such information.
Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial
standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in all
cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, these
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