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Presentation - Analyst conference call, Year-end report 2012
 

Presentation - Analyst conference call, Year-end report 2012

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Conference call for analysts, 12 February 2013

Conference call for analysts, 12 February 2013

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    Presentation - Analyst conference call, Year-end report 2012 Presentation - Analyst conference call, Year-end report 2012 Presentation Transcript

    • Vattenfall Full Year 2012 resultsØystein Løseth, CEO and Ingrid Bonde, CFOConference call for analysts and investors, 12 February 2013
    • 2012 Highlights• Underlying EBIT for comparable units almost on par with previous year - SEK 27.7 bn (28.1)• Net income sharply higher - SEK 17.2 bn (10.4), of which SEK 3.5 bn due to lowered Swedish corporate income tax rate• Record high electricity production in Sweden thanks to high availability in hydro and nuclear plants• Vattenfall’s owner, the Swedish state, decided on new financial targets at an Extraordinary General Meeting on 28 November.• The Board of Directors proposes a dividend of SEK 6,774 million, corresponding to 40% of profit for the year after tax (2011: 4,433)2 | Conference Call | 12 February 2013
    • Vattenfall continued to deliver its consolidation strategy Divestments of non-core assets initiated in 2011 executed. Divestments Total proceeds in 2011 and 2012 of SEK 37 billion. Strengthened Net debt reduction of SEK 32 billion since 2010. Very strong liquidity Balance Sheet position. Cost reduction target of SEK 6 billion was achieved by year-end Cost savings 2012, one year earlier than originally planned. A new target to reduce costs by a further SEK 3 billion by 1 January 2014, has been launched. Capex Capex plan for 2013-2017 reduced to SEK 123 billion, down from reduction SEK 147 billion for the period 2012-2016. Operational Group wide initiative to improve performance management through excellence Operational Excellence. Structure Vattenfall’s organisational structure was refined in November 2012.3 | Conference Call | 12 February 2013
    • Continued pressure on spot prices • Nordic spot prices down 34% vs 2011. EUR/MWh Nord Pool EPEX APX - Q4 Nordic prices 9% higher vs Q4 2011. Q4-12 (Q4-11) 37.3 (34.3) 41.4 (50.0) 51.9 (51.1) - Significant recovery vs Q3 2012 % 8.8 -17.3 1.5 • Nordic hydrological balance weakened to 2012 (2011) 31.3 (47.2) 42.7 (51.1) 47.9 (52.3) -2,4 TWh at the end of 2012 % -33.7 -16.6 -8.4 • German and Dutch spot prices also declined compared with 2011 – but less than the Nordic prices Monthly Spot Average Hydrological balance EUR/MWh TWh SYSSEK/MWh 90 80 40 1000 70 60 20 800 50 40 0 600 30 -20 400 20 10 -40 200 0 1 2 10 11 12 13 0 1 2 -60 0 10 11 12 l-1 l-1 l-1 -1 -1 -1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 n- n- n- n- r- r- r- ct ct ct Ju Ju JuJa Ja Ja Ja Ap Ap Ap O O O Nord Pool Spot EPEX APX System Price Hydro Balance 4 | Conference Call | 12 February 2013
    • Lower electricity futures prices • Electricity futures prices lower on all • Coal prices decreased 14% compared with Vattenfall markets compared with 2011. 2011. • Gas prices were fairly stable. • CO2 prices were on average 7.6 EUR/ton for 2012, 41% lower compared with 2011. Electricity futures prices Commodity prices EUR/MWh USD EUR 140 70 65 60 120 60 55 100 50 50 80 40 45 60 30 40 35 40 20 20 10 0 1 2 10 11 12 13 0 1 2 10 11 12 l-1 l-1 l-1 -1 -1 -1 n- n- n- n- r- r- r- ct ct ct Ju Ju Ju 0 0Ja Ja Ja Ja Ap Ap Ap O O O Se 10 Se 11 Se 2 Ju 0 Ju 1 Ju 2 M 10 M 11 M 12 13 M 10 N 0 Ja 0 M 11 N 11 Ja 1 M 12 N 12 Ja 2 l-1 -1 -1 -1 1 -1 -1 -1 NP 13 NP 14 EEX 13 p- p- p- l- l- n- n- n- n- - - - ov ov ov ay ay ay ar ar ar Ja EEX 14 APX 13 APX 14 Oil (USD/bbl), Brent Front M onth Coal (USD/t), API 2, Front Year Emission allowances CO2 (EUR/t), Dec 07-11 Gas (EUR/M Wh), NBP, Front Year 5 | Conference Call | 12 February 2013
    • Record high Swedish hydro- and nuclear generation• 7% higher electricity generation output (178.9 TWh in 2012 vs 166.7 TWh in 2011) - Hydro power generation increased by 22% due to high reservoir levels - Nuclear generation increased by 15% due to higher plant availability • Forsmark reached an availability of 89.3% (86.2) - production output was the third highest since 1980 • Ringhals reached an availability of 75.4% (59.9) - production output was the highest since 2008 - Fossil generation was down by 2.7% but lignite generation increased by 3.4% due to higher plant availability and the startup of the Boxberg R unit• Lower heat sales due to divested operations TWh TWh90 82.7 85.0 9080 8070 7060 60 52.4 53.8 48.950 42.5 42.2 50 41.040 34.5 40 30.330 3020 2010 5.1 4.7 10 0 0 Fossil Nuclear Hydro Wind & other Heat sales Gas sales 2012: 178,9 2011: 166,7 2012 20116 | Conference Call | 12 February 2013
    • Large part of generation already hedged % hedged of planned electricity production 100 100 90 Nordic region Continental Europe 80 75 77 70 60 51 50 50 44 40 30 20 10 0 2013 2014 2015 Hedge prices EUR/MWh 2013 2014 2015 Nordic region 45 42 41 Continental Europe 55 52 507 | Conference Call | 12 February 2013
    • FinancialsIngrid Bonde, CFO
    • FY 2012 Financial highlights MSEK FY 2012 FY 2011 Change (%) Net Sales 167,313 181,040 -7.6 EBITDA 54,488 54,538 -0.1 EBIT 26,175 23,209 12.8 Underlying EBIT* 27,747 30,793 -9.9 Underlying EBIT comparable units** 27,693 28,148 -1.6 Financial items, net -7,874 -8,911 11.6 Profit after tax 17,224 10,416 65.4 Cash flow (FFO) 34,419 38,256 -10.0 Net debt 111,907 141,089 -20.7 Adjusted net debt 153,943 176,031 -12.5* Underlying profit: EBIT excluding Items affecting comparability** Excluding divested operations in Belgium, Finland and Poland9 | Conference Call | 12 February 2013
    • Underlying EBIT FY 2012 per operating segment • Underlying EBIT decreased by SEK 2.1 bn MSEK FY 2012 FY 2011 - Lower achieved prices – mainly in the Nordic market, higher production volumes, cost Generation 20,484 22,579 savings, and higher fuel and CO2 costs • Underlying EBIT decreased by SEK 2.6 bn MSEK FY 2012 FY 2011 - Lost earnings contribution from divested operations in Belgium, Finland and Poland Distribution and 7,855 10,496 (SEK -2.6 bn) Sales - Improved profitability within B2C, cost savings, and lower result in heat business As from 2012 costs for Staff Functions, except for Treasury activities, have been allocated to the operating segments Generation and Distribution and Sales. In 2011 those costs for Staff Functions were included in “Other”10 | Conference Call | 12 February 2013
    • Development of underlying EBIT FY 2012bn SEK • -0.7: higher fuel costs, mainly gas • -1.1: CO2 allowances -0.6 -1.8 +2.5 -2.6 +7.9 -2.9 -5.5 7.6 -1.6 • -0.6: compensation in 2011 in the German generation operations • -0.4 repair costs Thanet cabel • -0.4: lower earnings contribution from GASAG • -1.3: various project related items 30.8 27.7 26.2 23.2 EBIT FY IAC Underlying Electricity Electricity Fuel costs Opex New Structure Other Underlying IAC EBIT FY 2011 EBIT FY price volume and CO2 assets in EBIT FY 2012 2011 operation 201211 | Conference Call | 12 February 2013
    • Key credit metricsbn SEK Gross Debt • Gross debt200 Net Debt180 Adj. Net Debt decreased by SEK 10 bn to SEK 160.3 bn160 • Net debt140 decreased by SEK 29 bn to SEK 111.9 bn120100 • Adjusted net debt 80 decreased by SEK 22 bn to SEK 153.9 bn 60 40 Comparison with 31 December 2011 20 0 For calculation of adjusted net debt, see Appendix slide 23 10 11 11 11 11 12 12 12 12 20 20 20 20 20 20 20 20 20 2. 3. 6. 9. 2. 3. 6. 9. 2. .1 .0 .0 .0 .1 .0 .0 .0 .1 31 31 30 30 31 31 30 30 31 Key credit metrics FY 2012 FY 2011 FFO Interest cover (x) 5.7 4.9 FFO/net debt (%) 30.8 27.1 FFO/adj. net debt (%) 22.4 21.7 Net debt/equity (%) 72.1 101.6 Adj.net debt/ EBITDA (x) 2.8 3.212 | Conference Call | 12 February 2013
    • Lower capex plan for 2013 – 2017: SEK 123 bn Total investments, SEK 123 bn• Capex plan 2013-2017 totals SEK 123 bn, Replacement bn SEK SEK 24 bn lower than previous capex plan inv. 28% for 2012-2016• Growth investments amount to SEK 35 bn (28%). Maintenance and replacement amount to SEK 88 bn (72%) Maintenance Growth inv. inv. 28%• Low-emitting fuel projects account for 62% 57% of growth investments 123 30 bn SEK Growth investments, SEK 35 bn Biomass Nuclear 2% 4% Wind; 20 Gas 6% Nuclear; 16 Hydro; 8 Other (e.g. Biomass; 6 heat networks) Gas; 20 12% Wind 56% Coal; 24 Total investments Non-production Investments by Coal 20% related investments type of fuel13 | Conference Call | 12 February 2013
    • Financial targets Previous targets Outcome FY 2012 Return on Equity (RoE) 15% on average equity 12.1% Cash flow interest coverage after 3.5-4.5 times 3.0 times maintenance investments Moody’s: A2, negative outlook Credit rating Single A category rating S&P: A-, stable outlook Dividend pay-out 40-60% 40% (SEK 6.8 bn) New targets Outcome FY 2012 Return on Capital Employed (ROCE) 9% on average capital employed 8.4% Net debt/Equity 50-90% 72.1% FFO/Adjusted net debt 22-30% 22.4% Dividend pay-out 40-60% (unchanged) 40% (SEK 6.8 bn) Vattenfall remains committed to maintaining financial discipline with an ambition to retain single A category ratings14 | Conference Call | 12 February 2013
    • Q&A
    • Appendix
    • Q4 2012 Financial highlights MSEK Q4 2012 Q4 2011 Change (%) Net Sales 47,937 50,453 -5.0 EBITDA 10,368 15,447 -32.9 EBIT 5,179 10,159 -49.0 Underlying EBIT* 6,737 7,343 -8.3 Underlying EBIT comparable units** 6,737 6,450 4.4 Financial items, net -1,381 -2,628 47.5 Profit after tax 6,443 5,103 26.3 Cash flow (FFO) 11,583 10,120 14.5 Net debt*** 111,907 141,089 -20.7 Adjusted net debt*** 153,943 176,031 -12.5* Underlying profit: EBIT excluding Items affecting comparability *** As of 31 December 2012** Excluding divested operations in Belgium, Finland and Poland17 | Conference Call | 12 February 2013
    • Underlying EBIT Q4 per operating segment • Underlying EBIT decreased by SEK 0.8 bn MSEK Q4 2012 Q4 2011 - Lower achieved prices – mainly in the Nordic market, higher production volumes, cost Generation 4,406 5,189 savings, and higher fuel and CO2 costs • Underlying EBIT decreased by SEK 0.6 bn MSEK Q4 2012 Q4 2011 - Lost earnings contribution from divested Distribution and operations in Belgium, Finland and Poland 2,526 3,087 (SEK -0.9 bn) Sales - Improved profitability within B2C, cost savings, and lower result in heat business As from 2012 costs for Staff Functions, except for Treasury activities, have been allocated to the operating segments Generation and Distribution and Sales. In 2011 those costs for Staff Functions were included in “Other”18 | Conference Call | 12 February 2013
    • Development of underlying EBIT Q4bn SEK -2.8 -2.4 +4.1 +0.9 -0.9 -2.4 -1.6 10.2 7.3 6.7 5.2 EBIT Q4 IAC Underlying Electricity Electricity Fuel costs Opex Structure Underlying IAC EBIT Q4 2011 EBIT Q4 price volume and CO2 EBIT Q4 2012 2011 201219 | Conference Call | 12 February 2013
    • Cash flow development FY 2012bn SEK -15.9 28.5 +22.8 21.6 12.6 -13.7 Cash flow from Maintenance Capex Free cash flow Grow th investments Divestments Cash flow before operations financing activities20 | Conference Call | 12 February 2013
    • Strong liquidity positionAs of 31 December 2012 Group Liquidity SEK million Cash and cash equivalents 18,045 Short term investments 28,450 Reported cash, cash equivalents & short term investments 46,495 Unavailable liquidity* -6,064 Available liquidity 40,431 Committed credit facilities Line size SEK million - Amount available RCF (maturity Jan 2016) EUR 2 550 million 21,884 Multi option Facility (12-month rolling) EUR 1 300 million 10,288 Total undrawn 32,172 Debt maturities** SEK million Within 90 days 7,579 Within 180 days 10,673*German nuclear ”Solidarvereinbarung” 2,922, Margin calls paid (CSA) 1,258 and others 1,885**Excluding loans from minority owners and associated companies21 | Conference Call | 12 February 2013
    • Breakdown of gross debtTotal debt 31 Dec 2012: SEK 160 bn (EUR 19 bn) Size UtilizationExternal market debt SEK 112 bn Debt issuing programmes (MEUR) (MEUR) EUR 15 bn Euro MTN 15,000 9,921 Hybrid capital EUR 2 bn Euro CP 2,000 0 5% SEK 15 bn Domestic CP 1,748 0 Bank loans and other Total 18,748 9,921 3% NPV of liabilities to Nuon shareholders • All public debt issued by Vattenfall AB 16% • The debt portfolio has no currency exposure thatLoans from minority has an impact on the income statement. The Bonds issued under shareholders EMTN-programme debt in foreign currency is either swapped to SEK 7% 58% or booked as a hedge against net foreign Loans from investments. associated companies • No structural subordination 6% Margin calls (CSA) 5%22 | Conference Call | 12 February 2013
    • Reported and adjusted net debt Reported net debt Dec 31 Dec 31 Adjusted net debt Dec 31 Dec 31 (bn SEK) 2012 2011 (bn SEK) 2012 2011 Capital Securities -8.5 -8.9 Total interest-bearing liabilities -160.3 -170.4 Bond issues and commercial papers 50% of Hybrid capital 4.3 4.4 -94.3 -102.3 and liabilities to credit institutions Present value of pension obligations -30.2 -22.5 Present value of liability pertaining to -27.1 -30.5 Mining & environmental provisions -12.2 -12.5 acquisition of subsidiaries Provisions for nuclear power (net) -18.4 -18.5 Liabilities to associated companies -9.3 -10.5 Cross currency swaps 3.0 3.3 Liabilities to minority shareholders -11.9 -10.2 Margin calls received 7.2 7.5 Other liabilities -9.2 -8.0 Liabilities to minority owners due to 10.5 9.8 Total interest-bearing liabilities -160.3 -170.4 consortium agreements Reported cash, cash equivalents & = Adjusted gross debt -196.2 -198.9 46.5 28.7 short-term investments Reported cash, cash equivalents & 46.5 28.7 Receivable Swedish pension short-term investments 1.8 0.0 foundation Receivables Swedish pension 1.8 0.0 Loans to minority owners of foreign foundation 0.1 0.6 subsidiaries Unavailable liquidity -6.0* -5.8* Net debt -111.9 -141.1 = Adjusted cash, cash equivalents 42.3 22.9 & short-term investments*Of which: German nuclear ”Solidarvereinbarung” 2,9,margin calls paid (CSA) 1.2, others 1.9 = Adjusted net debt -153.9 -176.023 | Conference Call | 12 February 2013
    • Vattenfall debt maturity profileMSEK Includes deferred payments for Nuon shares (MEUR): July 2013: 1,179.540 000 July 2015: 2,071.3 Undrawn back-up facilities30 000 Capital Securities20 00010 000 0 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039These 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. 31 Dec 2012 31 Dec 2011 Duration (years) 3.2 4.3 Average time to maturity (years) 5.3 5.5 Average interest rate (%) 3.4 3.9 Net debt (SEK bn) 111.9 141.1Including Hybrid capital24 | Conference Call | 12 February 2013