Vattenfall Q2 2012 results · 4 | Conference Call | 31 July 2012 Lower electricity futures prices...
Transcript of Vattenfall Q2 2012 results · 4 | Conference Call | 31 July 2012 Lower electricity futures prices...
2 | Conference Call | 31 July 2012
Q2 Highlights
• Stable net sales from continuing operations • Operating profit in Q2 2012 significantly higher than the negative result in Q2
2011- 2011 result influenced by the large negative effect of the write-down of German
nuclear assets • Underlying operating profit from continuing operations was almost on par with
Q2 2011 - Lower prices were compensated by 9% higher production volumes (hydro and
nuclear) and lower costs • Cost reduction programme ahead of plan
- As of 30 June, SEK 5 billion achieved• Compensation for closure of German nuclear power plants
- Request for the institution of arbitrage proceedings filed at ICSID, Washington, and constitutional complaint to German Federal Constitutional Court
• Application to Swedish Radiation Safety Authority (SSM) to specify terms for new nuclear reactors
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Decline in Nordic spot prices / Improved hydro balance
• Sharp decline in Nordic spot prices Q2-12 vs. Q2-11
• Nordic hydrological balance still strong (+9.6 TWh at the end of Q2)
• German and Dutch spot prices declined but to a lesser extent
Monthly Spot Average Hydrological balance
15
25
35
45
55
65
75
85
Jan-1
0Apr-
10
Jul-1
0Oct-
10
Jan-1
1Apr-
11
Jul-1
1Oct-
11
Jan-1
2Apr-
12
Jul-1
2
Nord Pool Spot EPEX APX
0
200
400
600
800
1000
-60
-40
-20
0
20
40
System Price Hydro Balance 200720032002 2004 2005 2006 2008 2009 2010 2011 2012
EUR/MWh TWh SYSSEK/MWh
-24.6
40.4 (53.6)
EPEX
-45.6
28.4 (52.2)
Nord PoolEUR/MWh APX
Q2-12 (Q2-11) 45.1 (54.4)
% -17.0
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Lower electricity futures prices
• Electricity futures prices decreased Q2-12 vs Q1-12 on all Vattenfall markets- Mainly due to lower spot and commodity
prices and lower economic sentiment in Europe
• Lower coal and oil prices Q2-12 vs. Q1-12 • Fairly stable gas prices • CO2 prices still below 10€/ton
Electricity futures prices Commodity prices
0
20
40
60
80
100
120
140
Jan-1
0Mar-
10May
-10Ju
l-10
Sep-10
Nov-10
Jan-1
1Mar-
11May
-11Ju
l-11
Sep-11
Nov-11
Jan-1
2Mar-
12May
-12Ju
l-12
0
10
20
30
40
50
60
70
Oil (USD/bbl), Brent Front M onth Coal (USD/t), API 2, Front YearEmission allowances CO2 (EUR/t), Dec 07-11 Gas (EUR/M Wh), NBP, Front Year
EUR/MWh USD EUR
35
40
45
50
55
60
65
Jan-1
0Apr-
10
Jul-1
0Oct-
10Ja
n-11
Apr-11
Jul-1
1Oct-
11Ja
n-12
Apr-12
Jul-1
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NP 13 NP 14 EEX 13EEX 14 APX 13 APX 14
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Higher generation output, higher heat and gas sales
• 9% higher electricity generation output (41.1 TWh in Q2/12 vs 37.7 TWhin Q2/11)- Hydro power generation increased due to high reservoir levels - Nuclear generation increased due to timing of audits and shorter
unplanned outages in Q2 2012• Higher heat and gas sales due to colder weather
TWh TWh
1.1
10.611.6
17.8
0.9
7.1
10.2
19.5
0
5
10
15
20
25
Fossil Nuclear Hydro Wind & other
Q2 2012: 41.1 Q2 2011: 37.7
6,5
8,9
6,47,2
0123456789
10
Heat sales Gas sales
Q2 2012 Q2 2011
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78
65
37
100
87
44
0
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30
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100
2012 2013 2014
Nordic region Continental Europe
Large part of generation already hedged
55
45
2012
56
45
2013
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44
2014EUR/MWh
Nordic region
Continental Europe
% hedged of planned electricity generation(2012: remaining part of the year)
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Application to Swedish Radiation Safety Authority
• Vattenfall has made an application to Swedish Radiation Safety Authority, SSM, to specify terms for new nuclear reactors
• Vattenfall wants to ensure continuous production of base-load energy, with low CO2-emissions, when existing nuclear reactors are to be phased out (2025-2035)
• The application is necessary for Vattenfall to investigate conditions set by SSM. It is a multi-step process which takes several years to complete
• No decision has been made within Vattenfall to replace old reactors with new reactors
• Any potential future investment will be decided on a cost versus revenue basis. If profitable, Vattenfall wants to have the option to replace reactors
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Assessment starts now in order to have the option for replacement power
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
New law in place
15
Replacement power in operation
16
Optionally investment
Analysis of the conditions, requirements and processes for a complete basis for decision
Project planning for new plant
Erection and commissioning of a new plant
Stepwise decision process
Year
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Q2 2012 Financial highlights
--3,235877Profit after tax
-35.66,1253,947Cash flow (FFO)
-12.7141,089**123,207Net debt
-1,590
5,382
-3,239
12,566
40,443
Q2 2011
-3,204
4,818
4,775
9,730
36,703
Q2 2012MSEK Change (%)
Net Sales -9.2
EBITDA -22.6
EBIT -
Underlying EBIT* -10.5
Financial items, net -101.5
* Underlying profit: EBIT excluding Items affecting comparability
** As of 31 December 2011
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Underlying EBIT per operating segment
-7.4
Change (%)
3,905
Q2 2011
3,616
Q2 2012MSEK
Generation
• Underlying EBIT decreased by 289 MSEK
- Lower achieved prices
- Higher volumes
- Lower O&M costs
-24.0
Change (%)
1,607
Q2 2011
1,222
Q2 2012MSEK
Distribution and Sales
--
Change (%)
61
Q2 2011
-24
Q2 2012MSEK
Renewables
• Underlying EBIT decreased by 385 MSEK
- Divestment of Polish, Finnish and Belgian operations
- Improved profitability within B2C
• Underlying EBIT decreased by 85 MSEK
- Lower achieved prices
- Poorer wind conditions in the UK
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23.7
7.2
-1.0
17.7
+1.0 -1.4
16.5
8.6
9.1
-1.1 +1.3
EBIT H12011
IAC UnderlyingEBIT H1
2011
Electricityprice
Electricityvolume
Costs Structure Other UnderlyingEBIT H1
2012
IAC EBIT H12012
Development of underlying EBIT H1 2012
bn SEK
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H1 2012 Financial highlights
271.33,96814,732Profit after tax
-8.818,28116,664Cash flow (FFO)
-12.7141,089**123,207Net debt
-3,483
17,676
8,603
29,498
92,311
H1 2011
-5,658
16,493
23,731
33,556
85,697
H1 2012MSEK Change (%)
Net Sales -7.2
EBITDA 13.8
EBIT 175.8
Underlying EBIT* -6.7
Financial items, net -62.4
* Underlying profit: EBIT excluding Items affecting comparability
** As of 31 December 2011
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Cash flow development Q2 2012
bn SEK
+0.5
-2.4
-3.8
8.4
-0.5
-3.2
4.5
Cash f low fromoperations
MaintenanceCapex
Free cash flow Grow thinvestments
Divestments Cash f low fromfinancing activities
Cash flow for theperiod
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Key credit metrics
• FFO Interest cover decreased to 4.3 (x)
• FFO/adjusted net debt increased to 23.4%
• Adjusted net debt/EBITDA decreased to 2.7 (x)
• Gross debtdecreased by SEK 4.6 bn to SEK 165.7 bn
• Net debtdecreased by SEK 17.9 bn to SEK 123.2 bn
• Adjusted net debtdecreased by SEK 19.5 bn to SEK 156.5 bn
Comparison with 31 December 2011
3.22.7Adj.net debt/ EBITDA (x)
21.7
27.1
4.8
FY 2011
23.4
32.2
4.3
Q2 2012Key credit metrics
FFO Interest cover (x)
FFO/net debt (%)
FFO/adj. net debt (%)
0
50
100
150
200
250
30.06
.2010
30.09
.2010
31.12
.2010
31.03
.2011
30.06
.2011
30.09
.2011
31.12
.2011
31.03
.2012
30.06
.2012
For calculation of adjusted net debt, see Appendix page 23
Rolling 12 months values
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Vattenfall’s key strengths:
• Strong owner, clear operating mandate• Diversified production portfolio, competitive low cost production assets
(hydro, nuclear, lignite). Low CO2 exposure in the Nordic market.• Good geographical base and strong market positions (Northwestern
Europe)• Strong liquidity position• Prudent hedging policy• Large end-customer base• Significant share of regulated business• Proven execution ability (divestments, cost reduction, re-organization)
Concluding remarks
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+1.5-1.0
8.6
-3.2
4.8
-0.5+0.3
5.4
-0.90.1
4.8
EBIT Q2 2011 IAC UnderlyingEBIT Q2 2011
Electricityprice
Electricityvolume
Costs Structure Other UnderlyingEBIT Q2 2012
IAC EBIT Q2 2012
Development of underlying EBIT Q2
bn SEK
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Strong liquidity position
36,391Available liquidity
-5,923Unavailable liquidity*
42,314Reported cash, cash equivalents & short term investments
25,767Short term investments
16,547Cash and cash equivalents
SEK millionGroup Liquidity
As of 30 June 2012
918Within 180 days
334Within 90 days
SEK millionDebt maturities**
*German nuclear ”Solidarvereinbarung” 2,987, Margin calls paid (CSA) 1,088 and others 1,848**Excluding loans from minority owners and associated companies
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Committed credit facilities
33,080Total undrawn
10,709EUR 1 300 millionMulti option Facility (12-month rolling)
EUR 2 550 million
Line size
22,371RCF (maturity Jan 2016)
Amount available SEK millionCommitted credit facilities
As of 30 June 2012
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Bonds issued under EMTN-programme
57%
Margin calls (CSA)5%
Loans from associated companies
6%
Loans from minority shareholders
7%
NPV of liabilities to Nuon shareholders
17%
Bank loans and other 3%
Hybrid capital5%
Breakdown of gross debt
• All public debt issued by Vattenfall AB• The debt portfolio has no currency exposure that
has an impact on the income statement. The debt in foreign currency is either swapped to SEK or booked as a hedge against net foreign investments.
• No structural subordination
Total debt 30 June 2012: SEK 165.7 billion (EUR 18.9 billion)
9,92118,710Total
01,710SEK 15 bn Domestic CP
2,000
15,000
Size(MEUR)
0
9,921
Utilization(MEUR)
Debt issuing programmes
EUR 15 bn Euro MTN
EUR 2 bn Euro CP
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Development of reported and adjusted net debt
*Of which: German nuclear ”Solidarvereinbarung” 3.0, margin calls paid (CSA) 1.1 and others 1.8
-141.1-123.2Net debt
0.60.2Loans to minority owners of foreign subsidiaries
17.425.8Short-term investments
11.316.5Cash and cash equivalents
-170.4-165.7Total interest-bearing liabilities
-8.0-9.5Other liabilities
-10.2-11.2Liabilities to minority shareholders
-10.5-9.6Liabilities to associated companies
-30.5-27.4Present value of liability pertaining to acquisition of subsidiaries
-99.2
-8.8
June 302012
-102.3Bond issues and commercial papers and liabilities to credit institutions
-8.9Capital Securities
Dec 312011
Net debt(bn SEK)
-176.0-156.5= Adjusted net debt
22.936.4= Adjusted cash, cash equivalents & short-term investments
-5.8*-5.9*Unavailable liquidity
28.742.3Reported cash, cash equivalents & short-term investments
-198.9-192.9= Adjusted gross debt
9.810.4Liabilities to minority owners due to consortium agreements
7.58.0Margin calls received
3.33.7Cross currency swaps
-18.5-18.4Provisions for nuclear power (net)
-12.5-12.3Mining & environmental provisions
-22.5-23.0Present value of pension obligations
4.4
-165.7
June 302012
4.450% of Hybrid capital
-170.4Total interest-bearing liabilities
Dec 312011
Adjusted net debt(bn SEK)
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Vattenfall debt maturity profile
These figures differ from the reported interest bearing liabilities as loans from associated companies, minority owners, margin calls received (CSA) and valuation at fair value are excluded and currency derivatives for hedging debt in foreign currency are included.
Including Hybrid capital
141.1123.2Net debt (SEK bn)
3.93.6Average interest rate (%)
5.55.8Average time to maturity (years)
3.9
30 June 2012
4.3
31 Dec 2011
Duration (years)
MSEK
Hybrid capital
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038
Undrawn back-up facilities
Includes deferred payments for Nuon shares (MEUR):July 2013: 1,179.5July 2015: 2,071.3
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Financial targets and outcome Q2 2012
2.1 times3.5-4.5 timesCash flow interest coverage after maintenance investments
15.7%*15% on average equityReturn on Equity (RoE)
40-60%
Single A category rating
Target
40% (SEK 4.4 bn)
Moody’s: A2, negative outlookS&P: A-, stable outlook
Q2 2012Key Ratio
Credit rating
Dividend pay-out
* Rolling 12 months values