vattenfall q3 results 2009...28 000 30 000 32 000 q4 2 0 00 q2 2 0 01 q4 2 0 01 q2 2 0 02 q4 2 0 02...
TRANSCRIPT
© Vattenfall AB
27 October 2009
Vattenfall Q3 results 2009
Presentations by
Lars G. Josefsson, CEO andDag Andresen, CFO
27 October 2009
© Vattenfall AB 227 October 2009
Agenda
CEO Lars G. Josefsson:
• Financial highlights• Generation volumes• Electricity price development• Nuon integration
CFO Dag Andresen:
• P&L • Debt development• Capex & asset disposals• Hedge ratios
© Vattenfall AB 327 October 2009
Financial highlights Q3 2009
Net sales increased by
22.5% to SEK 45,346 million (37,016)
EBITDA decreased by
1.6% to SEK 9,123 million (9,272)
EBIT decreased by
37.0% to SEK 3,524 million (5,591)
Profit after tax decreased by
74.9% to SEK 622 million (2,481)
Net debt increased by
SEK 93.8 bn to SEK 157.3 bn compared with 30 July 2009(including remaining purchase price of SEK 51 bn to Nuon shareholders)
© Vattenfall AB 427 October 2009
Financial highlights 9M 2009
Net sales increased by
19.0% to SEK 140,002 million (117,679)
EBITDA increased by
5.4% to SEK 36,417 million (34,553)
EBIT decreased by
4.6% to SEK 22,265 million (23,333)
Profit after tax decreased by
17.3% to SEK 11,338 million (13,708)
Net debt increased by
SEK 91.3 bn to SEK 157.3 bn compared with 31 Dec. 2008(including remaining purchase price of SEK 51 bn to Nuon shareholders)
© Vattenfall AB 527 October 2009
Return on Net Assets11.7% LTM (FY 2008: 15.1%)- target 11%.
Return on Equity11.0% LTM (FY 2008: 13.6%)- long-term target 15%.
LTM = Last Twelve Months
Financial highlights Q3 2009
© Vattenfall AB 627 October 2009
02 0004 0006 0008 000
10 00012 00014 00016 00018 00020 00022 00024 00026 00028 00030 00032 000
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Quarterly figures, SEK million
Quarterly figures in SEK million, excluding items affecting comparability
EBIT development
Last 12 month figures in SEK million, excluding items affecting comparability
© Vattenfall AB 727 October 2009
8.019.5
7.50.6
17.0
9.8
7.90.4
Q3 2008: 35.1 TWhQ3 2009: 35.5 TWh
Electricity generation slightly increased
Nuclear FossilHydro Other
Other = wind, biomass, waste
© Vattenfall AB 827 October 2009
Heat and gas sales
2.6
1.0
0.1
2.0
0.9
Q3 2009: 3.1 TWh Q3 2008: 3.6 TWh
Central EuropeNordic Benelux
• Heat sales decreased slightly
• Gas sales amounted to 5.3 TWh (Benelux)
© Vattenfall AB 927 October 2009
Electricity price development
Q3 2009 vs. Q3 2008: Lower spot prices on all markets
Decreasing forward prices during Q3 2009
Daily Forward Closing Prices
20
30
40
50
60
70
80
90
100
110
jan-07 apr-07 jul-07 okt-07 jan-08 apr-08 jul-08 okt-08 jan-09 apr-09 jul-09 okt-09
EUR/MWh
NP 11 EEX 11 APX 11NP 10 EEX 10 APX 10
Monthly Spot Average
0
10
20
30
40
50
60
70
80
90
100
jan-07 apr-07 jul-07 okt-07 jan-08 apr-08 jul-08 okt-08 jan-09 apr-09 jul-09
NordPool EPEX APX
© Vattenfall AB 1027 October 2009
Integration of Nuon
TradingBusiness GroupBenelux
Power, Heat & Services
Exploration & Production
Sales
N.V. Nuon Energy
Wind
Nuclear
Engineering
Business GroupPan Europe
• N.V. Nuon Energy was consolidated on 1 July 2009. Integration is well underway.
– Sales, Generation and Exploration operations formthe new Business Group Benelux
– Wind operations are integrated in Business UnitWind under Business Group Pan Europe
– Trading operations are integrated into Business Unit Trading
© Vattenfall AB
27 October 2009
Financials
Dag Andresen, CFO
© Vattenfall AB 1227 October 2009
Amounts in MSEK Q3 2009 Q3 2008 Change FY2008 LTMIFRS IFRS %
* IAC = items affecting comparability
Net sales 45,346 37,016 22.5 164,549 186,872Cost of products sold - 37,101 -28,542 -30.0 -122,961 -143,966Gross profit 8,245 8,474 2.7 41,588 42,906Operating profit (EBIT) 3,524 5,591 -37.0 29,895 28,827Operating profit, excl. IAC* 3,463 5,579 -37.9 29,797 28,682Financial income 1,036 341 203.8 3,412 3,755Financial expenses -3,734 -2,389 -56.3 -9,809 -13,115Financial net -2,698 -2,048 -31.7 -6,397 -9,360Profit before taxes 826 3,543 -76.7 23,498 19,467Taxes -204 -1,062 -19.2 -5,735 -4,074Profit for the period 622 2,481 -74.9 17,763 15,393
Consolidated income statement
© Vattenfall AB 1327 October 2009
EBIT development, Q3 2009
SEK million
3 524
5 591
795
711
264524
1451 661
1 612
1 932
Q3 2008
Electric
ity pric
eElec
tricity
volum
e
O&M
Fuel
Deprecia
tion
Other
Nuon (e
xcl. d
epric
ation
surpl
us va
lue)
Nuon (d
epricia
tion su
rplus value)
Q3 2009
© Vattenfall AB 1427 October 2009
Nuon – purchase price allocation and goodwill
• Equity value (based on actual payment): EUR 9,951m (incl transaction costs)• Enterprise value: EUR 8,796m• Book value of assets and liabilities: EUR 2,541m
• Surplus value net: EUR 6,255m
• EUR 3,942m allocated to intangible and tangible assets– Surplus value will be depreciated (in line with depreciation rate for the
respective asset)– Surplus value depreciation during Q3 2009 EUR 77,7m (795 MSEK)
• EUR 3,574m residual goodwill– Consists of assets and/or future cash-flows (e.g. synergies, development
projects, future customer relationships). Will be subject to impairment testing in accordance with IFRS rules
• Deferred tax liability: EUR 1,261m
• Numbers are preliminary as integration process is still ongoing
© Vattenfall AB 1527 October 2009
EBIT development, Q3 2009 – by Product & Services
SEK million5 591
3 52484902
2358564273
Q3 200
8Gen
erati
on
Heat
Electri
city n
etwor
ksSup
ply &
Trading
Other
Nuon
Q3 200
9
© Vattenfall AB 1627 October 2009
*Includes loans to minority owners in foreign subsidiaries of SEK 1.5bn (excluded from liquidity calculation on slide 36)
SEK billion
Debt development 2009
157.3
66.0
218.8
0.4
4.30.89.17.0
69.533.1
61.5*
54.0
Net debt 31Dec, 2008
Cash flowfrom
operatingactivities
Cash flowfrom
investingactivities
Dividend paid Exchangerate
differences
Valuation atfair value
Acquiredliabilities
Liabilites toshareholders
in Nuon
Change ininterest-bearing
liabilities fromleasing
Net debt 30Sept, 2009
Cash 30Sept, 2009
Gross debt30 Sept, 2009
27 October 2009Vattenfall Capital Markets Day, 23 September 2009© Vattenfall AB 17
Reduced capex limit 2009 - 2013
0
50
100
150
200
250
bn S
EK
191 210
+ 40- 21
Vattenfall (February 2009)
Reduction Prel. limitNuon
Vattenfall incl. Nuon
27 October 2009Vattenfall Capital Markets Day, 23 September 2009© Vattenfall AB 18
Capex allocation 2009 - 2013
37%
12%6%5%7%
33%
Fossil RenewablesNuclear NetworksOthers Not yet allocated
37%
25%
5%
33%
Mainly growth Mainly maintenanceNetworks Not yet allocated
Total capex limit SEK 210 bn including Nuon
27 October 2009Vattenfall Capital Markets Day, 23 September 2009© Vattenfall AB 19
Asset disposals
• The current divestment programme includes a total of ~10 assets in Germany and the Nordic region.
– Vattenfall's German Transmission is a substantial part of the programme.
• The proceeds of divestment are estimated at >1,5 bn EUR of cash proceeds.
• The plan is to have signed agreements or closed transactions for a large part of the programme by year-end 2009.
• 3 divestments announced so far:– 30% stake in Luleå Energi AB, Sweden for SEK 312 million (~ EUR 30 million) -
completed– 50% stake in AB PiteEnergi, Sweden for SEK 238 million (~ EUR 23 million) -
completed– 80.3% stake in the supply and networks company WEMAG, Germany for 170
MEUR to 268 municipalities of Mecklenburg-Western Pomerania and Brandenburg (closing of the transaction will require approval by the government authority supervising the municipalities as well as by the German Cartel Office)
© Vattenfall AB 2027 October 2009
Nordic
0102030405060708090
100
2009 2010 2011
Central Europe
0102030405060708090
100
2009 2010 2011
Benelux
0102030405060708090
100
2009 2010 2011
Hedging position as of 30 September 2009
% hedged of forecasted electricity generation.
Hedge for 2009 is for the remaining part of the year.
© Vattenfall AB 2127 October 2009
Conclusions
• Q3 results below our expectations
• Reviewing and scaling back investment programme…
• Intensifying measures focused on value creation…– Divesting low-yielding assets– Cost reductions
• … in order to deliver on our financial targets and maintain rating in single-A category (at least A3/A-)
© Vattenfall AB
27 October 2009
Q &A
© Vattenfall AB
27 October 2009
Back-up slides
© Vattenfall AB 2427 October 2009
Events at Krümmel nuclear plant
• 4 July 2009 – Krümmel went off-line due to a short circuit inone of the two transformers that connect the plant to the grid.The reactor was shut down (scrammed) completely in accordance with existing routines. The safety system workedproperly.
• The event has preliminary been classified as zero (0), which isbelow the seven degree International Nuclear Event Scale(INES), i.e., deviations with “No safety significance”.
• 7 July 2009 – Vattenfall announced that both transformers willbe replaced before the plant goes back online. This willtake more than six months and cost about 20 MEUR.
Krümmel nuclear plantInstalled capacity: 1,346 MWVattenfall’s ownership: 50%
© Vattenfall AB 2527 October 2009
Transmission update
• In July 2008, Vattenfall approached potential investors for the possible sale of our German Transmission operations
• We are optimistic that the sale will be closed in H2 2009
• The investor must fulfill the following criteria:• have a long-term focus• ensure substantial investments in network extension• grant continued free grid access for all power producers• promote the flow of electricity across European borders
• Final decision has not yet been made
© Vattenfall AB 2627 October 2009
Oil, coal, gas and CO2 allowances
0
50
100
150
200
250
jan-
07
apr-0
7
jul-0
7
okt-0
7
jan-
08
apr-0
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jul-0
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Oil (USD/bbl), Brent Front Month Coal (USD/t), API#2, Front Year Emission allowances CO2 (EUR/t), 2009 Gas (EUR/MWh), NBP, Front Year
USD EUR
© Vattenfall AB 2727 October 2009
Improving Nordic hydrological balance
-50
-40
-30
-20
-10
0
10
20
30
40
0
100
200
300
400
500
600
700
800
900
1000 System Price Hydro balance
SYSSEK/MWhTWh
1996 199919981997 2003200220012000 2004 2005 2006 2007 2008 2009
Nordic countries
© Vattenfall AB
27 October 2009
Back-up slides
Financial information
© Vattenfall AB 2927 October 2009
EBIT development, Q1 – Q3 2009
SEK million
22 26523 333795
711
9 293
5 249
4 4892 093 1 538
3 092
Q1-Q3 2
008
Electric
ity pric
eElec
tricity
volum
e
O&M
Fuel
Deprecia
tion
Other
Nuon (e
xcl. d
epric
ation
surpl
us va
lue)
Nuon (d
epricia
tion su
rplus value)
Q1-Q3 2
009
© Vattenfall AB 3027 October 2009
EBIT development, Q1 – Q3 2009 – by Product & Services
SEK million
23 333
22 265841 274
45509
1 075
811
Q1-Q3 2
008
Genera
tion
Heat
Electric
ity ne
twork
sSup
ply & Trad
ing
Other
Nuon
Q1-Q3 2
009
© Vattenfall AB 3127 October 2009
EBIT by Operating Segment
SEK million
-1 000
-500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
BusinessGroup
PanEurope
BusinessGroupNordic
BusinessGroupCentralEurope
BusinessGroup
Benelux
Supply &Trading
Other
Q3 2009Q3 2008
© Vattenfall AB 3227 October 2009
Amounts in MSEK 30/9/09 30/9/08 Change 31/12/08 IFRS IFRS %
Non-current assets 428,063 277,672 54.2 317,912Current assets 221,220 83,915 163.6 127,915Total assets 649,283 361,587 79.6 445,827Equity 137,668 124,068 11.0 140,886Interest-bearing liabilities 218,815 77,501 182.3 107,347Interest-bearing provisions 67,842 57,59 17.9 69,047Pension provisions 19,884 18,517 7.4 20,752Deferred tax liabilities 40,695 23,890 70.3 26,107Other non-interest-bearing liabilities 164,379 60,082 173.6 81,688Total equity and liabilities 649,283 361,587 79.6 445,827
Consolidated balance sheet
© Vattenfall AB 3327 October 2009
Amounts in MSEK Q3 2009 Q3 2008 Change FY 2008 LTMIFRS IFRS %
Funds from operations (FFO) 3,997 8,687 -54.0 30,735 36,211Change in working capital 7,154 3,526 102.9 5,459 4,463Cash Flow from operating activities 11,151 12,213 -8.7 36,194 40,674Investments -68,466 -6,312 984.7 -42,296 -103,597Divestments 268 84 219.0 865 1,328Cash and cash equivalents in acquired/divested companies 14,904 4 -- 158 15,077Cash Flow from investing activities -53,294 -6,224 756.3 -41,273 -87,192Cash Flow before financing activities -42,143 5,989 -803.7 -5,079 -46,158Cash Flow from financing activities -20,809 -4,548 357.5 14,294 50,130Cash Flow for the period -62,952 1,441 -- 9,215 3,612Net debt at the end of the period -157,317 -48,476 224.5 -66,000 -157,317
Consolidated cash flow statement
© Vattenfall AB 3427 October 2009
18 517
30 488
12 525
23 890
2 544
4 7647 20819 884
40 139
14 289
40 695
2 443
3 6667 305
PensionsNuclearMiningTaxesOtherPersonnelLegal
30 September 2009
SEK 128,421 million30 June 2008
SEK 99,936 million
Group provisions (IFRS)
© Vattenfall AB 3527 October 2009
020 00040 00060 00080 000
100 000120 000140 000160 000180 000200 000220 000240 000260 000280 000300 000
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Net asset development
Acquisition of Elsam shares
Acquisition of Bewag and GZE shares
Consolidation of Danish
assets Major wind power investments
Acquisition of N.V. Nuon Energy
© Vattenfall AB 3627 October 2009
Liquidity position
30 September 2009Group liquidity SEK millionCash and cash equivalents 18 726
Short term investments 41 240
Total 59 9661)
1) Of which SEK 37 803 million is fully available. Not fully available liquidity comprises German nuclear ”Solidarvereinbarung” 3 484, Minority owners share of German nuclear subsidiaries cash position 3 889, Margin account 2 241, Credit support Annex (Margin Calls) 11 007 and other not fully available liquidity 1 542.
Debt maturities 2)
- within 90 days 917 - within 180 days 6 841
2) Excluding loans from minority owners and associated companies
Other credit lines unutilised: SEK 10 222 million
Committed credit facilities Line size Amount availableRCF (maturity February 2013) EUR 1 000 million 10 235Overdraft facility SEK 100 million 100Total undrawn 10 335
© Vattenfall AB 3727 October 2009
Financial targets and outcome
Key Ratio Targets Q3 2009
Return on Equity (RoE) 15% on average equity 11.0%*
Return on Net Assets (RoNA, excl. IAC)
11% before tax (=15% RoE recalculated)
11.7%*
Cash flow interest coverage after maintenance investments
3.5 – 4.5 times 3.8
Credit Rating Single A category rating A2 / A Stable outlook
Dividend pay-out 40-60% 40.4%
*Q3 2009 figure = LTM
© Vattenfall AB 3827 October 2009
Breakdown of gross debt
5%
51%
8%
3%
24%
9%
Subordinated Perpetual Capital SecuritasEMTNLoans from associated companiesLoans from shareholdersInterest-bearing liabilities to Nuon shareholdersBank loans and others
• All public debt issued by Vattenfall AB or Vattenfall Treasury AB (fully guaranteed by Vattenfall AB)
• No currency exposure in the debt portfolio• No structural subordination
Funding programmes Size (EURm)
Utilization (EURm)
EUR 15 bn Euro MTN 15 000
977
1 369
1 466
18 812
SEK 10 bn Domestic MTN 0
11 187
USD 2 bn Euro CP 0
SEK 15 bn Domestic CP 0
Total 11 187
Total debt at 30 September 2009:SEK 218.8 bn1) (EUR 21.4 bn)
1) Of which external market debt: SEK 194,4 bn (89%)
© Vattenfall AB 3927 October 2009
Adjusted gross and net debt30 Sept 2009 31 Dec 2008SEK million
Reported gross debt -218 8151)
-107 3471)
Present value of net pension obligations -20 941 -21 839Mining & environmental provisions -14 288 -14 604
Nuclear asset retirement obligations -3 739 -5 15450% of Hybrid securities 5 064 5 406Cross currency swaps 1 018 3 131Hedge of net investments in foreign operations -2 855 3 337= Adjusted gross debt -254 556 -137 070Reported cash, cash equivalents & short term investments 59 966
2)40 236
2)
Restricted cash -5 7253) -3 7243)
Minority owner´s share of German nuclear subsidiaries cash position -3 889 -3 744= Adjusted cash, cash equivalents & short term investments 50 352 32 768= Adjusted net debt -204 204 -104 302
1) Of which received CSA, Credit Support Annex (Margin calls) 8 710 (1 856)
2) Of which paid CSA, Credit Support Annex (Margin calls) 11 007 (7 439)
3) Of which German nuclear ”Solidarvereinbarung” 3 484 (3 724), Margin accounts 2 241 (0)
© Vattenfall AB 4027 October 2009
Vattenfall debt maturity profile
1 ) The duration in the liability portfolio was prolonged from 2,5 to 4 years in May 2009
2) Based on external debt, excluding Capital Securities. Including Capital Securities the duration is 4.0, Average time to maturity 7.3, and Average interest rate 3.6%
Capital Securities
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038
2009 09 30Undrawn back-up facilities
SEK million
Sep 30, 2009 Sep 30, 2008
Duration (years) 1) 4.02) 2.5
Average time to maturity (years) 7.42) 6.4
Average interest rate (%) 3.52) 5.1
Net debt (SEK bn) 157.3 48.5
Excluding loans from associated companies and minority owners
© Vattenfall AB 4127 October 2009
Return on equity
0%
5%
10%
15%
20%
25%
30%
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Rolling 4-quarterIFRS excl IAC
Rolling 4-quarter SwGAAP excl IAC
Average 4-years (16quarter) Sw. GAAP.IFRS from Q4 2004.Excl. IACRequirement 15%
© Vattenfall AB 4227 October 2009
Key ratios
1) Q3 values = LTM
RoNA (1) 11.7 16.0 11.7RoE (1) 11.0
7.81.83.8
23.021.2114.353.3
3.34.3
11.0Operating margin
14.015.19.66.3
63.434.339.128.1
1.0
15.4Pre-tax profit margin 10.4Cash-flow interest coverage after maintenance investments, times
4.2
FFO/net debt 23.0Equity/assets ratio (1) 21.2Net Gearing – Net debt/equity (1) 114.3Capitalisation – Net debt/net debt + equity (1)
53.3
Net debt/EBITDA, times (1) 3.3Adjusted net debt/EBITDA, times (1) 1.7 4.3
Key Ratios (% unless otherwise stated) Q3 2009 Q3 2008 LTM