Strong annual results 2018 Investor presentation, 19 March 2019
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 2 FY 2018: strong results – the successful transformation continues • Revenue increased by 7% despite negative energy price effects • Reported operating profit +10% • Profitable growth of Services: revenue +20%, EBIT +26% • Successful repositioning of the Energy business • Continued consistent reduction of operating cost CHF F m +7% +7% +10% +10% 2, 2,675 675 2, 2,503 503 379 379 417 417 2017 2018 2017 2018 Operating profit Operating revenue
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 3 BKW strong business model: growth and robustness Aligning energy to the future Developing grids further Growing services business
Financials FY 2018
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 5 Comparable income statement CHF F m change 2017 2017 2018 2018 comparable reported adjustments comparable comparable adjustments reported in % Op Operati ting revenue nue 2, 2,503 503 -11 11 2,492 2, 492 2,675 2, 675 2, 2,675 675 +7% +7% EBITDA 529 -11 518 544 52 596 +5% EBIT EB 379 379 -11 11 368 368 364 364 52 52 417 417 -1% 1% Net t prof ofit 271 271 -56 56 215 215 239 239 36 36 203 203 +11% +11% EBIT on PY-level, net profit increased – despite lower electricity prices
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 6 Comparable operating revenue, EBIT and net profit CHF F m +7% +7% 2,675 2, 675 2,492 2, 492 -1% 1% 368 368 +11% +11% 364 364 239 239 214 214 2017 2018 2017 2018 2017 2018 Operating revenue EBIT Net profit Growing operating revenue, EBIT on PY-level, net profit increased
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 7 EBIT development / price effect on revenue CHF F m - CHF 750m 750m Hedged prices 140 140 140 140 80 80 240 240 150 150 60 EUR/MWh 364 364 368 368 346 346 347 347 324 324 317 317 309 309 239 239 30 EUR/MWh 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 price effect on revenue Negative price effect 2018 of CHF 80m on revenue largely compensated on EBIT-level
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 8 Operating cost: consistent efficiency gains achieved CHF F m +127 1,193 1,099 -33 846 820 1,065 2017 cost reduction/ 2018 acquisitions 2018 reported efficiency gains before acquisitions adjusted Significant efficiency gains in established business areas: More than CHF 160m in last five years
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 9 2/3 of Investments in growth: services and renewable energies CHF F m Inv nvestment nts 64% i 64% in grow owth 311 311 - Services 176 - Energy 132 - Other 3 485 485 36% 36% i in maint ntena nanc nce/repl eplacement 174 174 maintenance/ - Grid 127 replacement growth - Energy 21 - Efficiency, quality, digitalisation 26 Inv nvestment nts pa partner er plant nts 36 36 3/4 of maintenance/replacement investments in grid, securing regulatory asset base
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 10 10 Strong liquidity at CHF 1.1bn CHF F m Operating Investing activities Financing activities activities 373 373 -401 401 26 26 -103 103 1,223 1, 223 -24 24 1, 1,094 094 Liquidity above CHF 1bn despite substantial investments
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 11 11 Sound financial situation CHF F m Cash & equivalents & 2017 2018 current financial assets 1'500 1,223 1, 223 Financial debt 1,095 1, 095 Net financial debt 1'000 500 0 -500 -377 377 -474 474 -1'000 -1'500 -1, 1,569 569 -1, 1,600 600 -2'000 2017 2018 Net debt remains on low level – despite significant investments
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 12 12 Long-term financing framework ensures financial flexibility CHF F m Bonds Registered bonds 1,400 1400 Bond issued in 2018 1,200 1200 Bond expires in 2019 1,000 1000 800 600 400 200 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Financial liabilities 0.75% bond of CHF 200m successfully issued in 2018
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 13 13 Sound balance sheet: equity ratio at 38.4% 38.4% 38. 4% CHF F bn bn Non-current assets 37. 37.5% 5% Current assets Equity 9.1 9. 9.1 9. Liabilities 5.6 5. 2.4 2. 5.7 5. 2. 2.3 Equity ratio 6.8 6. 6.7 6. 3.5 3. 3. 3.4 2017 2018 Increased equity ratio thanks to net profit
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 14 14 Operating revenue and EBIT per business area CHF F m Operating revenue Operating profit +5% +5% One-off effects 1, 1,326 326 1, 1,262 262 +20% +20% 881 881 -4% 4% 736 736 580 580 555 555 -5% 5% 11 11 -10% 10% 200 200 158 158 190 190 +26% +26% 142 142 58 58 46 46 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 Energy Grid Services Low electricity prices with impact on Energy, solid Grid contribution, profitable growth in Services
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 15 15 Energy: negative price effects largely compensated CHF F m Key points Higher revenue in spite of negative price 5% 5% effect on revenue of CHF 80m thanks to: • Higher wind volumes 1, 1,326 326 1,262 1, 262 • Higher wholesale revenue Largely compensated on EBIT-level by • Successful management of energy -10% 10% 158 158 position (trading) 142 142 • Better sales margins • Efficiency gains 2017 2018 2017 2018 Operating revenue Operating profit Ongoing successful transformation of the Energy business
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 16 16 Grid: solid EBIT-contribution CHF F m Key points one-off effect • Lower revenue due to minor tariff reduction 11 11 • Further efficiency gains -4% 4% 580 580 • PY: one-off reimbursement for transfer 555 555 of transmission grid to Swissgrid (CHF 11m) 11 11 -5% 5% 200 200 190 190 2017 2018 2017 2018 Operating revenue Operating profit Comparable operating profit on PY-level despite lower revenue
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 17 17 Services: profitable growth with margin increase CHF F m Key points • Sales above CHF 0.8bn, up by 20% • 18 acquisitions in 2018 (Engineering +20% +20% and Building Solutions) 881 881 • Continued improvement of 736 736 EBIT-margin from 6% to 7% Revenue breakdown +26% +26% 58 58 Engineering 46 46 Building Solutions Infra Services 2017 2018 2017 2018 Energy Services Operating revenue Operating profit Expansion on track with margin increase
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 17 17 Share price and dividends Share price Dividends Volume in pcs. CHF Dividend per share Pay out ratio CHF 2.20 80% 75 50'000 2.00 BKW 1.80 1.80 70% 65 40'000 1.80 1.60 1.60 1.60 60% 1.60 55 30'000 1.40 50% 1.20 1.20 SPI 45 20'000 1.20 1.00 40% 35 10'000 1.00 Pay out ratio Target zone pay out ratio 30% Daily trading volume SIX 0.80 25 0 0.60 20% 2011 2012 2013 2014 2015 2016 2017 2018 Annual total shareholder return of 23% since implementation of strategy
Outlook and strategy update
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 20 20 BKW expects to successfully continue its transformation 2019 is the last year influenced by negative energy price effects. BKW intends to compensate these negative effects through: • further profitable growth of the Services business • repositioning of the Energy business – aligned to changing market drivers • efficiency gains BKW expects FY 2019 operating profit to be in the range of CHF 320 to 340m
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 21 21 BKW competencies for growing markets Renewables and infrastructures Flexibility for decentralised Resource efficiency for urban for an energy hungry world energy systems living and infrastructures Megatrends drive growing markets
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 22 22 Renewables & infrastructures for an energy hungry world
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 23 23 Strong renewables portfolio Diversified wind in terms of Growing in wind and small hydro regulation and weather impact 800 Installed capacity in MW Small hydro Wind 700 600 500 400 300 200 100
ANNUAL RESULTS 2018 INVESTOR PRESENTATION | BKW | 19.03.2019 24 24 BKW's flexible power plants increase value creation High share of flexible energy production Price trend favours flexibility 2030 2030 Electricity price 60% 60% Tod oday Capacity installed and under Jan Dec construction: 3.2 GW
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