E.ON's Overall Strategy

Transcription

1 E.ON's Overall Strategy Lutz Feldmann, Member of E.ON's Board of Management, Corporate Development / New Markets Capital Market Day CEE Budapest, September 20 th, 2007

2 E.ON is one of the world s leading energy companies with a strong market presence in Europe and the U.S.-Midwest E.ON market positions 1,2 Nordic #4 in power generation #3 in power/gas retail US Midwest -Kentucky #1 in power generation #1 in power/gas retail United Kingdom #2 in power generation #2 in power/gas retail Russia Leading position in power generation (OGK4) France #3 in power generation European gas supply #1 in gas supply Spain #4 in power generation #4 in power retail/distrib. 1. Including Viesgo/ Endesa Europa assets, transaction still pending, closing exp Including the envisaged acquisition of the majority in OGK-4 Italy #3-4 in power generation #5 in gas distribution CEE including Germany #2 in power generation #1 in power/gas retail 2

3 E.ON s balanced growth strategy is the key driver for future value creation E.ON s growth strategy Organic growth (e.g. generation new build) prerequisite for continuous value creation Given rather moderate growth rates in many mature European markets, external growth (e.g. acquisition of Endesa assets/ Viesgo) to build a platform for further value creation Key growth areas Grow E.ON s European generation capacity by 50% by 2010 (69 GW target) Expand renewable energies significantly Strengthen gas up- and midstream position, integrate new supply sources (in particular via LNG) Enter new European (e.g. Spain, Italy) and neighboring markets (Central Eastern Europe, Russia, Turkey) 3

4 E.ON actively pursues and delivers on its growth ambitions Organic growth in generation: Envisaged acquisition of 70% 12 bn planned investment 1, 2 in OGK-4 for 4.1 bn Planned capacity additions 1,2 +21% 46 GW 56 GW Energi E2 Renovables Ibérica: ~ 0.7 bn purchase price ~ 0.6 bn development CAPEX Value enhancing growth Gas fields Skarv/Idun Norway: ~ 0.7 bn purchase price ~ 1.0 bn development CAPEX 1. Excluding generation capacity of assumed acquisition of Endesa assets/viesgo, but including organic growth project pipeline 2. Excluding Russia 4

5 E.ON will enter the attractive Russian power market through the envisaged acquisition of the majority in OGK-4 Overview OGK-4 Transaction structure Equity investment (70%) Purchase price: USD 5.7 bn EUR 4.1 bn 2 OGK Generation assets Key figures 2006 Installed capacity 8,630 MW Electricity production 51.0 TWh Heat production 2.2 GCal/h Employees Financials 2006 Revenue: 766 mn EBITDA: 64 mn Net Income: 154 mn 1 Shareholder structure (post transaction) 70% E.ON, 23 % RAO UES, 7% Others 3 Timing 09/2007 Final decision by RAO UES 10/2007 Closing Q4/2007 Mandatory offer 3 Investment criteria will clearly be met Hurdle rate for investment >10% post tax ROCE clearly exceeds hurdle rate after completion of investment program and full market liberalization (exp. in 2011) 1. Including reversal of impairment loss of 147 mn after tax USD/ 3. Mandatory Offer Required under Russian capital market law if 30% or 50% threshold is exceeded to all minority shareholders 5

6 E.ON has the most internationally diversified generation portfolio providing an excellent platform for organic growth Adjusted E.ON generation capacity by country 1,2 Netherlands (2%) France Others (1%) Spain 3% 7% Italy 7% 35% Germany US 10% Nordic 10% 11% Russia ~ 76 GW 14% UK Diversified country portfolio offers optimized risk balance International presence offers excellent platform for future growth Organic growth pipeline of ~ 12 GW additional capacities until Including Endesa assets/ Viesgo, transaction still pending, closing of transaction in first half of 2008 expected 2. Including the envisaged acquisition of the majority in OGK-4 3. Figures as of

7 E.ON's 60 bn investment plan is well under way significant progress achieved in all growth segments Investment initiated between ( bn) ~ 60 ~ 10 Acquisition of Endesa assets/viesgo Closing expected first half bn for growth ~ 12 ~ 3 Organic growth generation excl. renewables Renewables 4 plants under construction ~ 1.5 bn Energi E2 Renovables Ibéricas ~ 1.3 bn ~ 10 Gas upstream & LNG ( 3 bn) Gas storage & gas networks 28% in Skarv-Idun area ~ 1.7 bn Gas storage and networks ~ 2.0 bn ~ 6 Neighboring markets Other growth (~ 1 bn) Envisaged 70% in OGK-4 ~ 4.1 bn ~ 18 Maintenance & Replacement 3 plants under construction ~ 2.2 bn 7

8 Neighboring markets offer dynamic growth opportunities for E.ON particularly in power generation Investment rationale neighboring markets Emerging economies with strong economic growth dynamics and starting market liberalization - energy sector key industry Expansion of organic growth platform und further broadening of geographical presence resulting in more balanced market risks Significant organic growth potential from demand growth Need for generation new build (capacity addition or replacement) will allow E.ON to leverage its superior capabilities and experience CEE Envisaged acquisition of majority in OGK-4 Joint Venture with STS Evaluation of further opportunities Project team established Evaluation of market entry opportunities in progress timing depending on privatization schedule Active monitoring of further privatization opportunities 8

9 This document may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management. 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. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Annual Report on Form 20-F, in particular to the discussion included in the sections entitled "Item 3. Key Information: Risk Factors", "Item 5. Operating and Financial Review and Prospects", "Item 11. Quantitative and Qualitative Disclosures about Market Risk"). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. 9