Investor presentation, March 20th 2018 - bkw-portal … · •Investments in power plants ... fluctuating flexible base load ... Project on track Revenue above CHF 700m, margins

Investor presentation, March 20th 2018

| BKW |

Another year of strong results

Growth achieved on all levels: revenue +5%, operating profit +10% and net profit +16%

Strong operating cash flow: CHF 493m

Successful repositioning of Energy business: EBIT +16%

Profitable growth of Services: revenue +30%, EBIT +46%

Continued consistent cost reduction

2015 2016 2017 2015 2016 2017

Operating revenue Operating profit

CHF m +5%

2,300*

2,452*

CHF m

20.03.20182017 ANNUAL RESULTS 2

2,577

* Comparable figures

+7%

309*

+12% 379

346*

+10%

Financials FY 2017

| BKW |

Income statement


CHF mFY 2016

reported*One-off effects

FY 2016comparable

FY 2017change

comparablein %

Operating revenue 2,490 -38 2,452 2,577 +5.1%

Energy procurement/transport -966 -966 -950

Operating costs -943 -943 -1,098

EBITDA 581 -38 543 529 -2.6%

Depreciation, amortisation and impairment -220 -220 -199

Income from associates 23 23 49

EBIT 384 -38 346 379 +9.6%

Financial result -0 -60 -60 -10

Income taxes -61 9 -52 -94

Net loss from discontinued operations -1 -1 -4

Net profit 322 -89 233 271 +15.9%

*restated for discontinued operations

| BKW |

EBIT development / price effect on revenue


Operating profit increased again – despite negative price effect of CHF 140m

239

324 317347

309

346379

0

100

200

300

400

500

2011 2012 2013 2014 2015 2016 2017

CHF m

60 EUR/MWh

30 EUR/MWh

Market priceof electricity

240 150140

- CHF 670m

price effect on operating revenue

140

| BKW |

Cost reduction before acquisitions


Significant cost savings before acquisitions: More than CHF 130m in last three years

846-65

820

+220

2016reported

cost reduction 2017 before acquisitions

acquisitions 2017 reported

CHF m

943

878

1,098

| BKW | 20.03.20182017 ANNUAL RESULTS 7

Investments 2017: Successful acquisitions

60% invested in growth - in line with long-term capex plan

Investments

60% in growth CHF 265m

whereof

- Services CHF 155m

- Energy (wind & small hydro) CHF 110m

40% in maintenance/replacement CHF 185m whereof

- Grid CHF 130m

- Energy CHF 35m

- Other CHF 20m

Investments partner plants CHF 60m

CHF 450m

Energy

Services

Grid

Energy

Other

| BKW |

Funds from operations at CHF 465m


Consecutive strong funds from operations: investments fully covered by own generated funds

446

365

486

410

486465

0

100

200

300

400

500

2012 2013 2014 2015 2016 2017

CHF m

6year average

| BKW |

Liquidity at CHF 1.2bn


Liquidity unchanged at strong CHF 1,2bn despite high investments

CHF m

1,248

Operatingactivities

Investing activities Financing activities

493 -402

9

-37

1,223

-87

| BKW | 20.03.20182017 ANNUAL RESULTS 10

1,248 1,223

-1,687 -1,600

-439 -377

-2'000

-1'500

-1'000

-500

0

500

1'000

1'5002016 2017CHF m Cash & equivalents

& current financialassets

Financial debt

Net financial debt

Sound financial situation: Net debt reduced

Net debt reduced thanks to strong funds from operations – despite significant investments

| BKW |

Maturity profile of financing20.03.20182017 ANNUAL RESULTS 11

Long-term financing framework ensures financial flexibility

CHF m

CHF 150m

CHF 350m

CHF 130m

CHF 200m

EUR 40m

EUR 85m

EUR 150m

CHF 300m

Liquidity

0

200

400

600

800

1000

1200

1400

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 203431.12.2017

Convertible bond

Bonds

Registered bonds

| BKW |

Sound balance sheet: equity ratio at 37.5%


2016 2017

5,6

3,0

2,4

6,2

CHF bn34.3%

8,6

Non-current assets

Current assets

EquityLiabilitiesEquity ratio

Increased equity ratio thanks to strong net profit, conversions and FX

2,4

6,7

5,7

3,4

37.5%

9,1

| BKW |

Share price development and shareholder structure


Performance FY 2017: +18%, doubled in 3 years; free float at 37.5% (incl. convertible bond)

52.5%

10.0%

37.5%

Canton of Berne

Groupe E Ltd.

Free float

CHF

BKW

SPI

+107%

10

20

30

40

50

60

| BKW |

Dividends


Increasing dividends reflect successful transformation

CHF dividend per share

1.00

1.20 1.20

1.60 1.60 1.60

1.80

20%

30%

40%

50%

60%

70%

80%

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2011 2012 2013 2014 2015 2016 2017

Target range of pay out ratio

Dividend per share

Pay out ratio

Pay out ratio

| BKW |

Operating revenue and EBIT per business area20.03.20182017 ANNUAL RESULTS 15

All business areas achieve higher EBIT

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017

Energy Grid Services

CHF m

+30%

-7%

+7%

158136

211198

46

Operating revenueOperating profitOne-off effects

32

+16%

+7%38

+46%

*restated for discontinued operations

38

1,2621,353*

736

565

666

618*

| BKW |

Energy: negative price effects more than compensated


2016 2017 2016 2017


CHF m

-5%

– Negative price effect on revenue: ~CHF -140m

– Compensated by

• Acquisition of AEK

• Investments in power plants (renewable energy)

• Higher thermal production volumes

– Overcompensated on EBIT-level by

• Successful management of energy position (trading)

• Reduction of expenditures

Ongoing transformation of Energy business already successful

158

136

+16%

1,3531,262

| BKW |

Grid: acquisition of AEK in 2016 leads to increased revenue


198211

CHF m

+7%

+7%

– Increased revenue due to acquisition of AEK in 2016

– Reduction of operating cost

– 2016: One-off compensation for expropriation of transmission grid (+CHF 38m)

EBIT-contribution increased in line with expectations

2016 2017 2016 2017


38

one-off effect

618

38666

| BKW |

Services: continued strong growth leads to EBIT increase


46

CHF m

+30%

– Sales over CHF 0.7 billion, up by 30% again

– 20 acquisitions in 2017

– Continued improvement of EBIT-margin despiteacquisition and integration cost

Expansion on track with margin increase

32

+46%

2016 2017 2016 2017


565

736

Outlook and strategy update

| BKW |

Outlook FY 2018

BKW expects to successfully continue its transformation

Large part of negative energy price effects expected to be compensated through

– further profitable growth of Services business

– repositioning of Energy business - aligned to changing market drivers

– consequent cost management

BKW expects FY 2018 operating profit to be in the range of CHF 340 to 360m


| BKW |

BKW invests in attractive markets20.03.20182017 ANNUAL RESULTS 21

We build a robust business model by investing in attractive new markets

- Transform Energy business

- Develop Grid

- Grow Services

| BKW |

Energy business influenced by changing market structures


European power plants: Net increase of installed capacity until 2040 Trading: increased volatility and extreme price situations

fluctuating flexible base load

International market drivers require repositioning of energy business

5%

10%

<=0 €/MWh >100 €/MWh

Hours per year with price extremes

Lowest prices Highest prices-60

-30

0

30

60

90

120

Solar Wind Gas Wasser Kern Kohle

GW

nuclear coalgas hydrosolar wind

tomorrow

today

| BKW |

BKW well positioned to exploit market opportunities


- Transformation of energy trading to capitalize on opportunitiesin a volatile energy market

- Competencies in direct marketing allow optimized and efficientintegration of renewable energies in the energy market

- Competitive edge with high share of own flexible power plants:

- Advantageous geographical location

- High flexibility

- Competitive prices

- Investments in renewable energies: wind & small hydro power

BKW successfully adapts its energy business to market changes

| BKW |

BKW well positioned in growing market of infrastructureservices


BKW provides integrated, tailored solutions for customers in increasingly complex systems

BKW Network SolutionsBKW Engineering BKW Building Solutions

| BKW |

Growing demand for engineering services


BKW's strong international engineering network meets customer needs

Considerable need to invest in improving and expanding infrastructures

Resilient business due to diversified customer segments (manufacturing, public sector)

Customers need local service providers with capability to operate complex projects

BKW

- Successful growth: more than 20 acquisitions

- Develop strong engineering network of expertise in D-A-CH region

Large international playerswith wide competencies

Small regional playerswith limited competencies

Strong professional network of regional companies

gap BKW

| BKW |

Growing need for integrated building technology solutions


Switzerland: high market volume; fragmented structure

Decentralisation of energy production

Growing need for integrated solutions, driven by increasing complexity of new technologies

Major potential in energy efficiency and need for comfort

BKW

- Successful growth: already #7 in Switzerland

- Professionalism in a highly fragmented market

- Regional approach matches industry structure and ensures margins

BKW solutions meet market trends: Capability to exploit new market opportunities

| BKW |

Growing need for maintenance of extensive and widespread network infrastructures


Extensive and widespread networks need considerable maintenance

Increased complexity of networks requires expertise

Water grid: significant needs for maintenance and renovation

Largely identical customer base for multi-grid infrastructure services

BKW

- Successful growth in water grid: two substantial acquisitions

- Electricity grid: strong track record with major market share

- High competencies enable exploitation synergies of scale

Longtime expertise in operating and optimizing complex network infrastructures

| BKW | 20.03.20182017 ANNUAL RESULTS

BKW: a successful network of companies

28

BKW companies combine competencies to provide tailored customer solutions

Exchange of "best in class" processes competencies and tools improves network

Joint development and use of technology platforms such as

Building information modelling

Knowledge data bases

Customer relationship management

Attractive employer for talents

BKW – a strong international network of competence in infrastructure services

BKW Engineering BKW Building Solutions BKW Network Solutions

| BKW |

Digitialization as an opportunity for profitable growth


Combine competencies to increase efficiency and grow profitably

Energy Monitoring

Energy efficiency

BIM: Building InformationModelling

BKW future CRMTransparency

Digital monitoring ofProduction facilities

Optimization of maintenance

Mobile Office

myBKW.ch Self-consumptioncommunities

Knowledge sharing

Home Energy

Commonsystems

| BKW |

Next 4 years: total investments of CHF 1.3bn / CHF 600m in growth markets


Substantial investments planned – financed by own cash flow generation

Services

Energy

Grid

Other

Growth44%

Maintenance/replacement

56%CHF 1.3bn

in next 4 years

| BKW |

Strategic transformation on track20.03.20182017 ANNUAL RESULTS 31

BKW strategy delivers

Strategic initiative

Transform energy

Invest in new renewable energy production

Decommission KKM in 2019

Grow infrastructure services

Buildup of services network

Improve efficiency and consequent cost management

Already achieved

Align energy trading to volatile market

Growth of 30% in 3 years, 580 MW installed capacity, 170 MW under constr.

Project on track

Revenue above CHF 700m, margins improved, 20 acquisitions

Buildup of strong network of companies Organization according to market needs

Significant reduction of expenditures achieved: -7% / CHF 65m in 2017

| BKW |

BKW – well positioned in attractive markets


Transform Energy

Develop Grid

Grow Services

BKW capitalizes on changing markets

Thank you for your attention

Questions?

| BKW |

Financial calendar and contact information

Financial calendar

– Annual General Meeting: 18 May 2018

– Ex-dividend Date: 23 May 2018

– Dividend Payment: 25 May 2018

– Publication of 2018 Half-year Results: 4 September 2018

For further information, please contact:

Thomas Herren, Investor Relations Officer

Tel (+41) 58 477 53 56

[email protected]


| BKW |

Disclaimer

This presentation contains forward-looking statements which are made on the basis of current expectations and assumptions. Theseforward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Potential risks and uncertainties include, among others, such factors as market andeconomic conditions, governmental regulations, competitive conditions, interest rates and fluctuation in currency exchange rates. Although BKW believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved. BKW undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.


Documents

Investor presentation, March 20th 2018 - bkw-portal … · •Investments in power plants ... fluctuating flexible base load ... Project on track Revenue above CHF 700m, margins