Press Conference on the Release of E.ON SE s Interim Report for the First Quarter of 2014

Transcription

1 Press Conference on the Release of E.ON SE s Interim Report for the First Quarter of 2014 Düsseldorf, May 13, 2014 Statement by: K l aus Schä f e r, CFO, E.ON SE Please check against delivery.

2 Statement by Klaus Schäfer, 1Q14 Press Conference; May 13, Good morning, everyone, and welcome to today s press conference. As usual, I ll provide you with an overview of our numbers for the first quarter of 2014 and talk about some of the main aspects of our business performance so far this year. Afterward I d be happy to take your questions. The E.ON Group s businesses performed as anticipated in the first quarter of I ll get to our numbers in a moment. I ll start with a few remarks on the developments of recent months. I m encouraged by an important development indeed, a turnaround in our retail sales business in Germany. On a net basis, we added 17,000 new customers in Germany in the first quarter of this year. That s 17,000 little successes. It marks the first time in a while that we ve won over more customers than we ve lost. We re working hard to make our entire company even more customer-oriented. This is an area where our future success is in our own hands. At the same time, however, Germany s energy market continues to be out of balance. An example of how drastic the dislocations in Germany have become is the premature closure of Grafenrheinfeld, an E.ON nuclear power station in southeast Germany. Under the German federal government s phaseout plan, Grafenrheinfeld could have continued operating until the end of The reason for the closure is that Germany s nuclear-fuel tax makes it impossible for even a highly efficient nuclear power station like Grafenrheinfeld to operate profitably anymore. Many power plants including new and technologically advanced plants have been closed or mothballed, while Germany s regulatory agency is calling for reserve capacity. France, Italy, and the United Kingdom have already taken a path that Germany should soon take as well: to have power plants that are permanently available to serve as back up for intermittent power production. Then Germany s power market would again have a reliable foundation. Nuclear-fuel tax We believe that the nuclear-fuel tax was and is a clear violation of German constitutional and European law. As part of our efforts to obtain temporary legal redress, the Hamburg Fiscal Court clearly affirmed our legal opinion in a ruling issued on April 14 and granted our motion for a preliminary refund of the nuclear-fuel tax payments we ve made since January 1, We assume that the state will respect the court s ruling. We therefore anticipate a prompt refund of the nuclear-fuel tax we ve paid so far. The ruling substantiates the complaints we filed against the tax, which has been levied since January 1, We need to wait for subsequent court rulings before the matter is definitively adjudicated and we can record the refunds in income. Investments/Financial situation Regardless of the favorable ruling on the refund of the nuclear-fuel tax, we continue to work systematically to improve our financial situation. We continue to make good progress in this area. As of the end of the first quarter,

3 Statement by Klaus Schäfer, 1Q14 Press Conference; May 13, we d reduced our net debt by 1.1 billion relative to year-end One reason for the improvement was the successful sale of a majority stake in Rødsand 2 offshore wind farms, one of our biggest wind assets. This enables us to swiftly unlock the value we created and give us the flexibility to make new investments, particularly in renewables. In January we installed the first foundations for Amrumbank West, our new wind farm located north of the island of Helgoland in the North Sea. It s scheduled to enter service in the late summer of ENEVA Not surprisingly, entering new markets in Brazil and Turkey which is laying the foundation for future growth has presented us with challenges. In the last few weeks ENEVA has worked with its shareholders and banks to put together a refinancing plan to improve its financial structure in a lasting way. Commensurate with our stake in ENEVA, we ll commit up to 200 million. The plan will enable ENEVA to return to focusing on further improving its operating business. With approximately 2.4 gigawatts of capacity, ENEVA s generation fleet is already making a significant contribution to security of supply in Brazil s power market, which is characterized by high demand and tight supply. Next Generation We reduced our controllable costs by another 0.7 billion in 2013 alone. Our organization is becoming more efficient, effective, and agile than before. Another aspect of this is a project called Next Generation in which we re combining our renewables and conventional generation businesses into a single entity. Ahead of competitors, we re tailoring our organization to tomorrow s energy market by creating a single unit in which different generation technologies complement each other efficiently. As you can see, E.ON is staying on course in difficult times. We re reducing our debt and costs without neglecting investments. By making targeted investments in growth businesses and establishing an efficient organizational setup we re putting things on track for the future. I ll turn now to our first-quarter numbers, which were in line with our expectations: Our sales of 31.8 billion were below the prior-year figure. The decline of 4.1 billion is, in particular, attributable to a reduction in the Global Commodities segment s trading activities and to lower wholesale prices. Warmer weather relative to the first quarter of 2013 and currencytranslations in numerous markets outside the euro zone constituted were other key factors. The disposal of regional distribution companies (E.ON Mitte, E.ON Thüringer Energie, E.ON Westfalen Weser) and E.ON Energy from Waste also had an adverse impact on sales. First-quarter EBITDA declined by 0.4 billion year on year to 3.2 billion. On a like-for-like basis (factoring out changes to our portfolio and currency-

4 Statement by Klaus Schäfer, 1Q14 Press Conference; May 13, translation effects), earnings were at the prior-year level. Higher earnings at Exploration & Production and Renewables along with cost savings delivered by our E.ON 2.0 program had a positive impact on earnings. These effects were offset by price, volume, and regulatory effects at our other units. I ll say a few words about the main earnings effects: - Exploration & Production s earnings rose by 92 percent year on year to 0.3 billion (prior year: 177 million), chiefly because of higher production at our fields in the North Sea, particularly Skarv (where production rose from 1.2 to 3.8 million barrels of oil equivalent) and Huntington. - Renewables earnings improved by 0.1 billion to 0.6 billion, mainly owing to book gains resulting from the successful implementation of our build-and-sell strategy. This positive effect was partially offset by low achieved prices for hydropower. - E.ON 2.0: we continue to be right on schedule and achieved additional cost savings and efficiency gains of 0.1 billion. From today s perspective, we expect to achieve the planned savings of 0.3 billion for the year as a whole. - Divestment program: the absence of earnings streams from divested companies lowered our first-quarter earnings by 0.3 billion. The decline results from the divestment of several subsidiaries in Germany (E.ON Mitte, E.ON Thüringer Energie, E.ON Westfalen Weser and E.ON Energy from Waste) and E.ON Földgaz Trade and E.ON Földgaz Storage in Hungary. - Other EU Countries and Russia: the main adverse factors at these segments were mild weather compared with 2013 and currencytranslation effects. Underlying net income declined from 1.4 billion in the first quarter of 2013 to 1.2 billion in the first quarter of 2014, mainly reflecting the decline in EBITDA. This was partially counteracted by lower income taxes. With our tax rate at roughly 27 percent, income taxes were, however, at the anticipated level. Slightly higher depreciation charges were offset by lower interest expenditures. Our first-quarter investments totaled approximately 0.7 billion, 0.2 billion below the prior-year figure. The decline is mainly attributable to the fact that in 2013 we acquired a 49-percent stake in the joint venture that owns 100 percent of the equity in E.ON Energy from Waste.

5 Statement by Klaus Schäfer, 1Q14 Press Conference; May 13, Our operating cash flow amounted to 2.6 billion. This increase of 1 billion is mainly attributable to positive changes in working capital. Compared with the figure recorded at year-end 2013, our economic net debt declined by 1.1 billion to billion. The main reason for the improvement was that our high positive operating cash flow and the proceeds from divestments fully covered E.ON SE s investment expenditures. Our net financial position improved as well, from 10.5 to 9.5 billion, marking the first time in awhile that it has been at a single-digit billion figure. As you can see, we continue to make substantial progress reducing our debt. I d like to point out, however, that the dividend payout of approximately 1.2 billion approved at our Annual Shareholders Meeting is of course not reflected in our first-quarter numbers. That concludes my remarks on the first quarter of Our forecast for full year 2014 is unchanged. We expect EBITDA of 8 to 8.6 billion and underlying net income of 1.5 to 1.9 billion. Thank you for listening. I d now be happy to answer your questions. This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group 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 SE 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.