Market Leader in Power & Gas Downstream. Konrad Kreuzer. Chairman of the Board of Directors of E.ON Hungária

Transcription

1 Market Leader in Power & Gas Downstream Konrad Kreuzer Chairman of the Board of Directors of E.ON Hungária Capital Market Day CEE Budapest, September 20 th, 2007

2 Clear downstream strategy aiming at market leadership Positioning in the market Focus on electricity &gas Leadership Customer focus Developing new markets Continuous and consequent built up of market positions, first mover Aiming at a strong and valuable position in each market Electricity and gas generally have a joint customer base Taking advantage of power-gas convergence Leadership as sole strategic investor Entrepreneurial freedom for restructuring Harmonization, best practice, cost leadership, continuous quality improvement Supply all our customers with assured energy at competitive prices Continuous extension of business in the CEE countries Goal Market leader in downstream power and gas across the CEE region 2

3 Purposeful development of E.ON's downstream portfolio 6000 Revenues in million proportional to amount of holding VARNA AD Gorna Oryahovitsa AD ELECTRICA MOLDOVA S.A To show the historical development all shareholdings 50% are included pro rata, shareholdings > 50% fully. 3

4 E.ON is one of the top players in each CEE country 2006 market shares in % of sales Czech Republic Power Gas 21% 59 TWh Slovakia Power 15% 15% 16% 18% 4% 97 TWh Gas 25% 75% Baltics Power Gas 39% 14% 3% 28% 23 TWh 59 TWh Romania Power Gas 1% 1% 8% 22% Hungary Power 43% 26 TWh Gas 1 32% 62 TWh Bulgaria Power 19% 44 TWh 180 TWh 35 TWh 150 TWh 27 TWh Fully consolidated subsidiaries E.ON's share of companies at equity 1 Including Földgaz direct sales to large/industrial customers Third party share of companies at equity Other 4

5 A comparison with our main competitors shows the top downstream position E.ON has in the region Total retail power sales in TWh in CEE Total retail gas sales in TWh in CEE 1 CEZ 44 E.ON 142 E.ON 40 RWE 142 RWE 23 GdF 80 Vattenfall 12 ENI PGNiG is not included, since PGNiG is significantly present just in Poland and no player in the whole region 2 Including Greece Source: 2006 figures from annual reports, 20F, company presentations. E.ON figures: Fully consolidated=100%; at equity, Congas and Eesti Gas=pro rata 5

6 E.ON has the largest customer base in the CEE region: 7.1 million electricity and 3.4 million gas customers Electricity customers (thousands) Gas customers (thousands) Baltics Bulgaria Czech Republic Hungary Romania Slovakia 146 1,154 1,446 2,477 1, , Fully consolidated=100%; at equity=pro rata 6

7 E.ON is successfully managing business challenges in CEE CEE current status Small national markets Insufficient interconnector capacities Heterogeneous price levels National incumbents with state participation Illiquid, intransparent and dual markets E.ON s market position in CEE Substantial and well performing downstream business portfolio of E.ON in CEE All companies restructured and prepared for market opening Own generation position to be developed Further progress by sharing best practice Key business challenges downstream Regulation Power procurement Cost leadership Satisfying customer needs 7

8 E.ON's position on regulatory issues in CEE markets 1 Generation and wholesale Transmission and distribution networks Retail no regulation needed sustainable regulation limited scope for regulation Retail end user price regulation Improvement of competition in generation/wholesale E.ON believes that regulation should be limited to those cases where customers require additional protection Open regulatory issues which may require intervention by EU are: Sale of generation volumes to power exchanges /abolishment of PPA's Promotion of regional market integration Simplifying third party access to transmission networks and cross border capacity 8

9 E.ON faces regulatory and liberalization challenges in CEE 1 CEE markets are on the way to be liberalized Need for development of wholesale markets in CEE Need for stable energy policy Need for sustainable, consistent and reliable regulation E.ON exchanges experience in regulation with all business units in CEE and uses best practice for negotiations E.ON works proactively on the development of a sustainable regulatory framework in CEE E.ON is prepared for competition in the liberalized markets 9

10 Trading optimizes power procurement for E.ON's substantial downstream business 2 E.ON s trading is the central hub for risk management Power procurement for E.ON s distribution companies and year-ahead position taking D CZ PL SK W-UA Short-term position taking & optimization Position taking in cross-border capacities Trading experience in CEE & SEE since 2001 I A SLO HR BIH H YU RO BG Long-term Cross Border Capacity Short-term Cross Border Capacity plus energy flows in congested direction AL MK GR E.ON traded volume 2005: 20 TWh 10

11 Cost leadership is a precondition in regulated and in competitive markets 3 Business challenge Regulated market: increasing regulatory requirements challenge distribution margin + Non-regulated market: Competition and USP challenges sales margin + E.ON s strict financial criteria i.e. return on capital employed must exceed cost of capital E.ON's answers Harmonized workflows in all Business Units Cross-border Cooperation (ZEUS) Best practice sharing in all business areas Power & Gas Convergence E.ON is committed to run best-in-class processes providing competitive solutions for regulated and non-regulated markets E.ON thereby creates an additional spread on its capital costs 11

12 E.ON aims to lead on customer orientation 4 Ensuring quality of service and security of supply Efficient and accessible customer communication channels (call centres, electronic and walk-in offices) Field Service Management System (FSMS) Significant reduction of outage time Developing new products suited to customer needs Targeted products for business clients Running sustainable operations and upholding our good reputation Responsible corporate behavior towards our internal and external stakeholders Strengthen the E.ON brand 12

13 E.ON has a clear strategy aiming for leadership in the downstream power and gas markets in CEE E.ON has achieved a strong downstream position supplying now over 10 million customers accounting for a revenue of 6 bn Continual profitable growth in downstream since 1995 E.ON is actively managing the challenges of regulation and market opening in CEE E.ON is expanding in new countries in the CEE region by using the already existing know-how and experience E.ON earns an additional spread on its capital costs due to cost leadership E.ON is recognized as a strong and reliable business partner with social responsibility 13

14 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. 14