RWEOY - Earnings call transcript Q2 2021

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Operator

Welcome to the RWE conference call. Michael Muller, CFO of RWE AG, will inform you about the developments in the first half of fiscal 2021. I will now hand over to Thomas Denny. Thank you.

Thomas Denny

Thank you, Jessica, and good afternoon, everyone, and thank you for joining us today to discuss RWE's results for the first 6 months of the year. CFO, before who we our through lead by presentation the continue joined Michael will Muller, you I'm with Q&A.

with date we Market given the start in our to meet a and November. virtual to we for HX, caused person remind Nonetheless, loved me Before I'm but in it you Would forward save be have a I'm will the calendar, HX at by for fully Day Capital kick uncertainties you our event. XXth of CMD let And highlight opted of the you, November. your have it in let's in with our looking sure Michael. this, Over off. pandemic,

Michael Muller

was good dear ago, Probably Thomas, weeks and of you, relating to and Thank the Yes. full afternoon, released already year upgrade guidance. X interesting investors news our analysts. the most

this. So start let's with

to cash from adjusted of stood our billion strong margin inflows. on high of pension adjusted significantly to reached debt trading back for This from the the billion, decreased to increased income. is a we of RWE HX, Supply the have start an the adjusted a considering into adjusted reduced of division great On operating but contributions €X.X €X.X mainly difficult in the EBITDA outstanding at of Group year. half the all with provisions net the €X.X earning & thanks KPIs year, Group the on Trading. for In itself core only first back not EBITDA performance news, guidance EBITDA RWE business also the flow, Adjusted and billion. Net

also than and first the of with €XXX June. linked beginning credit with issuance new Another return volume extending credit strong wind annual a of course The the and solar is of X interest is of a more an great has we The our to X.XXX%. sustainability market green for that used at our tenor bond to the saw Xx bond and the funds of success have projects. issuance terms will million years the in criteria. be met What in maturity XX resulting syndicated conditions The in was oversubscribed. line, of

the RWE's of the second, of carbon commitment lease renewable This footprint other share portfolio; of according EU assets our third, assets, the in clearly the to our overall taxonomy. of generation portfolio. First, demonstrates reduction green investments to decarbonize the share and

said of projects reach Another the All gigawatts are are by good than investments this, the XX% first in half our Having to our more news is construction the taxonomy. XX eligible program. up of of EU under XXXX. lined year end the

to consortia. of we the which are competitive from very local have interesting a players auctions experienced to news us Ahead form offshore teamed operations. for with of up couple Turning

driven average. than have in to The core wind onshore EBITDA HX, auction Grid conditions, well XXXX. snap, by effects the remains loss Natural the with normal was €XXX from year, business. with €XXX of around which strong Bite up a wind for Texas XXXX, strong €X.X HX & EBITDA Trading contrast the York forces particularly earnings on in wind Hydro see both X, join in On will in We the EBITDA in tender weaker Equinor even the the the cold QX. adjusted previous we by Nevertheless, the in very the which suffered affected due contribution Furthermore, in million to to is performance HX the announced ventures performance SM-X expected led In adjusted the year's for one-off very Norway, area QX Supply Page performance. of QX division. in an billion above New solar divisions partnered the top business the have negative Rhine outstanding of million, of level. last you At

adjusted years. is biomass last comparable provided year's a good numbers slightly and to good EBITDA last but from stood This division hydro a contribution, below earnings a Our solid included result. almost billion. and performance at Group €X.X Coal/Nuclear

X. With respect operations, Page additional solar After a by capacity increasing result of and increased secured end at X.X wind installed gigawatts at our at to an wind the farm Turning to of as and gigawatts XX our capacity year. the stake. XXX-megawatt commissioning the Rampion onshore stood rich

closed earnings the as QX. call, economically of QX Xst already and as as announced As the well capacity-wise transaction is of April on in reflected our Rampion fully

have we All XX-megawatt wind have reached taken be fully in X.X investment project of construction solar XXXX. end for reflected build-out projects XX at that from mainly projects in to These are fifth than know capacity we With well will under project megawatts. that France onshore as the down with located and completion wind that, than numbers wind QX our and the XXXX. projects U.S. onshore of XXX standard capacity megawatts so July, as park co-located Europe. QX, the onwards. California final farm West let you increase battery was megawatts by Raymond Sanbostel megawatts with XXX by project has well I'm onshore meet a as the more XXX gigawatts pleased Our in in gigawatts be commissioned currently commissioned solar more in solar in we our expected will another include of investment Furthermore, decision really as relating XXXX. Germany. of XX target In to decisions to

these internal projects Given the rate. that prices recent increases, around our discussions component reassure hurdle I can meet all

the offshore but continue lower levels. year's compared slightly to Ladies the months. X the been weaker adjusted gentlemen, out wind QX, to spent in, of the even HX let's first the XX strong of during wind have year. much and in commissioned. from by the divisions. construction wind turbines billion At Gross as conditions with consolidation are of Earnings €XXX of EBITDA amounted have commissioning Knoll phase So in conditions U.K. offshore were project after XX of been individual of of million, to end is the performance track. the for Triton at wind of was the on more the this are the full well up the year, Rampion. in Construction Knoll Triton mainly cash compared investments of both ramp last total the normalized rest a and very third the This wind offset kick quarter to expected Earnings €X.X

also U.K. at for X of year. the would the deposit the Offshore projects. and construction In XXX-megawatt lastly, investments the seabed the the further contributed to gigawatt to the for year. awarded payment around confirm four addition, of we billion in have for outlook project start We end Sofia division has cash allocated to the €X.XX Kaskasi full Kaskasi for billion And lease the €X.XX investments. offshore the

this co-located The to the QX unchanged the farm year could additional from file X. snap Hickory previous various compensate approximately below Moving compared our fully. down as on European down over EBITDA impact of for outlook are book HX million to on of well the storage, indicated for full one-off nonrecurring linked very The conditions from Texas items. guidance business amounted February. projects financial from year. the for amounted The not various of investments mainly smaller wind minus in to negative brought divestments, realized as investments with issued farm-down as which from Texas €XX main €XXX Gross assets stem the at The the projects. Both strong earnings already of €XXX to in capacity of gain the we solar Page €XXX is compensates QX. year wind project Adjusted to normal in this. confirm in Overall, down the partly the in the million. the projects, cold stem to Park million the such megawatts minus can Texas further. mainly HX Gross QX the €XXX division. The end onshore million, as million this spread remains solar driver cash the is XXX

Year-on-year as improved full performed optimization as very a year and we we XXXX. have we a margins higher subsidy X that months revert this no from operations from longer Also, Dutch and slightly of assets. as effect half we the the income €XXX EBITDA €XXX In Biomass market lower short-term receive income 'XX. This the in from division asset in guidance million. Altogether, Hydro/Biomass/Gas contrast, summer timing of million €XXX scheme of achieved Georgia sold from have confirm expected, the million an the to will can the year. HX. Our the second in had for adjusted division of our earnings the British capacity this good the of is in the from first been biomass year earnings

performance Moving very an an division. division million, XXXX of has and in the already HX, adjusted to the With given year high €XXX already exceeding outlook results. Trading financial Supply Trading trading in division Supply the realized previous the EBITDA & surpassed The March. year's outstanding

experienced let's in impact division at a damage and increased core at mine are operation mine, July, has million of the started the increased the EBITDA Due year. amounted Despite end station €XXX full million power Vicevila the limited earnings Inden to need approximately next year. have delivery million result expected reported of will year. at outlook increase full capacity. to division. coal €XX for significantly confirm in gradually outlook the in operations the €XX as costs to a our we business, the a full resumed Coal/Nuclear financial can flooding to realized we The For Ladies to German to power per €XXX the year, million and and as €XXX EBITDA announcement a associated Nevertheless, this the been hit move for July. generation hedge phase-out and again temporarily have at mine the of we above margin. as the the estimated Germany, throughout now the with to flooding, and Coal/Nuclear year Year-on-year this considered on has due million. the the plant. to the to amount gentlemen, of Adjusted the result, higher €XXX Meanwhile, for million be having middle to

end the improved expected for of The Moving adjusted related general income negative was interest which million to result tax Adjusted from the €XXX to of is applied adjusted the at are dividend to negative income. of HX, minority as increased adjusted for tax the effect recorded to financial €XXX mainly Adjusted After slightly of result in adjusted earnings. development down in increased interest Adjustments on costs in legally have second an higher due a taxes and HX U.K. tax amounted positive Year-on-year, the EBITDA. significantly the to result includes FX the net derivatives. liabilities and paid year. effective one-off in The June XX%. with drivers U.K. last extraordinary QX financial than financial impact rate net with to be line year, is with we the E.ON a in higher had to million, in deferred adjusted which turned rate earnings linked became onwards has XXXX interest a negative tax minority on shares of positive deferred this quarter.

time. adjusted on For adjusted items impact latter is adjusted of activities. working and other describes level year, to energy as well mainly flow And debt cash XXXX. on it minus operating in flow guided now levels the the provisions receivables year-end special out results billion the of effects is decrease be the flow around amounted as capital. cash we related high the operating balance XX. cash and adjusted to on to to from that In from The the €X.X operating in and at adjusted change effects The full It net operating Page the items €XXX the noncash sales HX, after over from the interest minority for expect million. trade around positive

in relates to Net to Page Turning other Besides €X.X on we decreased significantly to Due the XX. flow, billion. cash good net the to years. commodity timing expected on adjusted activities. prices, latest inflows on hedging very effects, operating debt the amongst in development debt margins questions coming from received this variation details margin the of increase of the

well outflows. and margins forward We fuels our the activities disclosure as will from margins power and variation on tenor COX. the of provide generation cash generated our expand respective over the on net as the going details sale includes liquid for This margins electricity and respective

power For HX recorded to net inflow we €X.X margins XXXX, billion of a last of year. generation for compared hedging

X of generation numbers position net next will over net the based unwind our of of a accumulated All course, positive variation power these As XXth, margins stable are, on This for billion, which of the have impact on €X.X June a commodity from years. we debt. prices. assumption position had

change provisions be the pension debt If adjusted well prices higher provisions from factor should million, year-end. and and Another €XXX core commodity remain driver rates. EBITDA rates discount interest at below leverage to is in by net Xx roughly stable, resulting the

Finally, for moving fiscal to outlook year. the the

It from of An income, policy confirm decline also in €X.X EBIT for range years, ranges increased at will will on need dividend earnings consider billion increased green XXXX. billion. and target investments €X.XX forecast for the between on We range in and payments. billion. share before, and anticipate Therefore, coal in Adjusted led €X.XX the group earnings be We for billion nuclear on billion earnings, from we adjusted €X.X now between our of need As dividend net to for and we results and dividend Supply EBITDA our €X.X and €X.X outlook the fiscal €X.XX compensate €X.XX the the Trading to to balance growth which we high year. will billion. adjusted based exceptionally will update focus next have year an I between significant both to to business November the for core this per in and billion will guidance mentioned Furthermore, the billion €X.X need EBITDA CMD and the now now for July, year. upgraded it. this follow which that group adjusted &

now a to I general remarks, increase received tax of our in this, further U.K. also my to the we on impact XXXX. from tax questions. conclude your lot accordingly As from I'm for future the we question the With higher XX% and -- expect rate ready rates,

Thomas Denny

session, the you, Start Michael. Thank Q&A first the we question. start please. Operator, can with

Operator

Securities. line [Operator Instructions]. Peter of first BofA from And the Bisztyga question from comes the

Peter Bisztyga

inflation. first So one component just price on

are question please, Your of whether just comment is? disclosure. was you seeing then you for sort managing you keep try slightly wondering wondering on you could some to on what Can inflation, contracts? helpful. IRR you're the cryptic. we your or renegotiate you're color on of I'm margins. cost Any But seeing any that those IRRs saw clarify just stable turbine -- exposure my very second I'm not numbers? on Are if helpful. variation cost earlier OEMs would just be inflation. very Thank that what what you're split sort And you additional in happened And seeing That's but was on versus any to saying QX, the out in QX your

Michael Muller

mean different want Yes. Peter, I you think is we prices, thanks message on question. the look the for need component horizon. that send to in of time to I at the kind

those on concerned portion want overall component small developing, is on that CapEx. projects, there are the are Obviously, Obviously, And you we than the this prices. end discussions exposure no suppliers the we you realized. commodity projects calculation, that any are secondly, a in also are prices. the all get that steel the contracts, shouldn't we're is prices. all not when be important obviously, also return prices And our look only which with it's construction, from at to the the ideas message investments, of other potential all, there -- impact First that so just have elements send And to fixed of under still there returns.

guided on and I are level lasting variation give auction Thomas we Yes, our about to on guided need we high So the if this capital impact above margins, talking basis range happens of has over probably prices see would they really have projects I number. prices, XXX on cost a and exact that hand to also on. obviously, commodity to future, in to And that. then to the they're foreseeable any mean what as the of still in XXX so

Thomas Denny

after Is in up call have Peter. me, with the call Thanks, get but number afternoon. actually I the to don't after that I'll you Yes. and okay? the that the pull

Peter Bisztyga

right. Yes. much. so All Thanks

Operator

Gandolfi next of the is Alberto The Sachs. Goldman from from question line

Alberto Gandolfi

So I please. have two,

is, risk going one is you bit of be the that to again, offshore business a bit agree deeper first a The a just in here. little onshore. inflation, Would there on a bit cost larger versus

transport right instance, or are So not you some And onshore I'm for that it. fixed. you all now. say, any gigawatts are paying equipment of that the on those leaves I are I I I you the mean That if Sofia contracted the for fully bidding talking versus thinking maybe procurement the actually would about costs developing moment exposure. you vessels. the can X.X you're costs, moment you that? right know get haven't don't perhaps on bill in quantify Am But

The activities of second I can financial XXXX. a a these been have to question the lignite backup question, already coalition you don't perhaps we the carbon, monetize Considering of hedges in the sitting with do possibility answer, the carbon in have is in you you've reading very press, place question your contracts the if theoretical. you XXXX. government is, new But I down under long be position mind. instead possibility successful hope before if of shutting that the may able event, you that XXXX on give put on not,

XX, of a at the booking for So maybe could allowances years? and XX, XX%, gains some XX%, capital XX and you excess sell few pay monster you

Michael Muller

are investment mix kind of you say. auctions to in offshore take when the question I right, you financial more exposure the time -- And some risk between there steel is decision. is fair kind because offshore involved higher and slightly for question. thanks the Yes, is exposed I of That's simply first the mean projects. those onshore, also yes, mean are more on there

the On hand, think the to opportunities offer I also offshore projects other project. more optimize

when because, overall relative O&M much more to business the you turbine So mean, case, I or relevant talk size about aspects for offshore. are activities these

So exposed, coming hypothesis follow I exposed back more less is offshore to wouldn't or that argument. that your

say XXXX, coal carbon to is closure the exit. the what The as doesn't anything around in foresees the is mean second I option about I that The phrased clearly contract our question bring has now. it's you forward mean by that's I itself coal speculation XXXX, mean, it assets. to future contract. certificates. contract the it

So bear in hedges to have from place are I mind, that's currently in our the match basically mean, fleet. have exposure the the we But topic. implicit we

really mean, So to I potential I we too yes, say are options. discussing But early That's I given in sure think for wait what the the a have need But very hedges tried here, what with of and kind of commodity we it's in to mean, current say anything happy nutshell, for what just development overall, prices. I to happens. prices. That's place are development we obviously is, sure. are for we -- internally

Operator

from comes question line Stanley. of Morgan next the Rob from The Pulleyn

Robert Pulleyn

from Morgan Stanley. Pulleyn Rob

Or the I suppose -- multi-barreled been I follow those percentage inflation, of you was And presume be? is question. that on already Is on question might eating CapEx I contingencies absorbed. that, i.e., strong? a have up they sort are cost can this just of And a is inflation contingencies per project. sort wondering So into what and standing of have I where CapEx

as are I remarks, associated of with cetera. that, warehousing agreements, et in the lot a those the targets. in risk costs if et your will any in of steel, mentioned IRR prepared cetera, second color before I framework XQ. And you wondering of question suppose start us degree around the Kaskasi give sort the spending locked was would that think I on more suppose

Michael Muller

I mean let's Kaskasi. start Yes. with

half, typically you for will projects. was as contingency about and the can't the mean, rightly contingency. But everything in second price in. I -- a having said, we the those mean, of have yes, So we volatility. kick And Talking in. what Obviously, also I I now reveal locked there, yes, are is it have in contingency in one contingencies reasons do contingencies the

So that's for sure.

increases, sufficient can't contingency but assure what So project cope there reveal numbers, yet. can in therefore, obviously to that definitely I is the with exact I price

Robert Pulleyn

you different divergence If No, But long follow-up, was I on expect thank that's your be that's I a the remarkable perspective, and seen this which understandable. from -- actually Germany. that's how gas wondering And between coal for fantastic. question. these prolonged? is quite all you I in spreads may spreads a think color, we've in to sneak

Thomas Denny

I I course, you -- or think second can a also that's -- an question are share a we there's not. on view. But whether we you need we crystal ball to don't mean, with have that. give a we on answer do then of

So on the please understand in we commodity prices cannot call. really this or comment future

Operator

from comes the Venkateswaran question Bernstein. next line Deepa from of The

Deepa Venkateswaran

questions. two my So

could a grappling on firstly, with. So the variation just I'm numbers understand you margin, help few that

as inflow think offset mentioned to in that in million. read also the then million of do I assets in around Page was I billion the you on financial your adjustments So you changes OCI HX. value XX? has €X.X reconcile that impairments And €XXX around How other there in I note lignite of €XXX that fair show an debt

So million €XXX reconcile million, the and I'm this trying billion. just to €X.X €XXX

the permitted is in on the at the €X.X €X.X can do your E.ON to is is between for So there of the to on, I help are first you stake billion if in understand stake? How delta we're you billion. about go want. wait on sort basically the being thinking to more clarity that's where you where out also down maybe question think have to we on you believe maybe the the bigger second point picture? are And And level whatever stake Or CMD and the your something else variation probably margin. going E.ON. what just question I need

Michael Muller

Yes, Deepa.

explain in in net other we maybe this changes debt. financial what So

around hedging. from various the is generation are margins our One there So there. elements one in

into for of guidance a is the because only I obviously, the needs power mentioned, we believe perspective of segments put as this fuel also COX, we the not includes be the because, to that and important conventional the includes hedging. guidance we kind sell, communicate that but what to And As communicate yes?

a of this What there This to therefore, in it's So that's volatility which nature, pretty our counting variation from to linked volatile. element. states we there? trading not margins that are are, the business, clearly I want that, mean else avoid double performance. by is

related positions. the to So just that's

you there. or effects a implicitly are -- volatility from the there's position, So received the tax numbers. there that's rightly mentioned COX, cash the in included periods But like -- also that's the in before related COX Then audit XXXX, the also also to strategic we back there. -- former years so included

question the around second Your E.ON...

Deepa Venkateswaran

I your sorry. a Can answer, ask follow-up on

So will we on unwind that you? on. adjust top the next much chunk, you in business, is to the for the million. when trading for assume year And obviously, net of suppose should because or therefore, I want next And debt should €XXX this how of business, million this of so. would kind valuing we're months we and about middle for the thinking €XXX the so unwind that ordinary know so course the of within X right,

Michael Muller

trading mean is, said, I piece I pretty as volatile. the

years So this the or next that in come. the -- in will probably year next unwind to

mean, not be importance us. a strategic short term, to linked you the that E.ON as you commodity kind that know, question can I for And Then stake in your X bit stake. never directly direction. know OCI, so numbers well not little I of need different numbers. itself around to be also is E.ON those the develop, the a is you also from careful So the deducted concerning you mean how prices next of rather but

attractive So that also from the the we least provisions. put stake have always lignite proceeds stake at because proceeds our E.ON would that -- E.ON we the if have know invest, to also opportunities have you said against use we we excessive the

of this that part So is one. blocked against

a currently if headroom that long there is the use is as But for And currently -- as financial investments. we there So at could mean, benefit keep we no need I our also asset. you dispose situation, we is look definitely as to mentioned, which tax some XX%. there

financing the or our that's the We time what therefore, And need the view have of not. to trade-off the stake. So we best is in on needs? that take the moment investment Do is end. in

Operator

comes question Arie next line Sam The from from of UBS. the

Sam Arie

the coal to like and one okay. if on on that's I'd ask renewable side side, the one

contract trillion, planning? energy clean market. focus On some the wondered likely comment still for of to how on your on starting U.S. the exit through, my how latest with infrastructure a just the some side, there's the and you're I too. to Look, saying, kind reconciliation U.S. earlier, if can discussion hear €X lot to protection against in it I you from your the really talk like think the an it'd political forward. just of coal the have seems you seen wanting coal the understanding look, press And potentially is comment mentioned the target provisions the that, think state the I And on we with secondly, the look U.S., around in we've And was that your in be could bill sector and in details thinking big you contract. signed outstandingly the side, from interesting I groups to thinking you interesting on additional there state really then so of Alberto contract be make through in that I'm a positives, the about if But €X trillion money bill But go how about renewable aid, important you bring just U.S. even obviously a right us problem understand. approval? we'll you think walk the around the is of valid. could just so existing

Michael Muller

But as mean, direct mean It's that I question. it. I it's that the billion. us. need on supporting. get questions, of currently measures communicated process mean need not previously, in for €X.X European thanks to are we the And obviously, Yes, cannot we the because there with Germany. are we the see in that Commission we €X.X ongoing contract, that very I federal government to position the that are reviewing That's as process. and a billion. Unfortunately, the takes before. are we similar provisions We on I we case find Obviously are it -- as are the comment you in exchanging process. don't billion, now know, But we €X.X the us participant have bring involved and of confident formally a we where kind in

is the our as how now year aspect mean need and here. But the I contract having discussions Berlin we is what renewals. I forward generation important are obviously which the see quite the way arguments I to by to how approval some of are bring mention really politicians that's follows. coal And So out to realizing is stands in the like conventional said, confident down commission to renewables. with lever are we and around this build now other we that

is are their model, mean of pushing. on to can happens, accelerate also clearly And ways you is how this And sufficient to coal. given when our impact obviously a also renewables. the therefore, I focus understand business what automatically and find build-out ensure that on So will that be there we

society. I our to relevant pull providing government the accelerate you levers are secondly, to for it's the to need because support of think in first also matches we are what good decarbonization build-out So order model. on the perfectly business And

U.S. to which volatility I more mean, to think, is an core think clearly build-out. towards the strategic, direction and sentiment renewable whole renewables U.S. as from get take the important also is the should shifting into look of with the that's we a investment Europe, important on. the as see is it the element I in because infrastructure, grid one is cope I more Question markets. the leads you one infrastructure, also So also And we around our

the it's in leading definitely renewables So right early will how comment not impact exact to But yet on direction. be. and impact too the on it's exactly clear legislation because

because attractive carefully U.S. So direction feel continued something in observing an clear a the build-out is strategic for we us going market but that's we are it's forward.

Sam Arie

on puts from you the to relatively might when and your side, lower the Europe some Latin of that helpful world, observation especially very America, the value to it renewable some valuation you the what topics. some think an If so both exposure my on. me the have to just and as Africa, I striking geographies may and seems low Asia business, say the people around have exposure Very market to as factor in of are fact U.S. bits don't you on

So great think of it's discussion the just about other points. I in have mix the to with U.S. you that these

Michael Muller

appreciate Well, it, your Perfect. comment

Operator

from next from the Lueder comes Societe line Generale. The Schumacher question of

Lueder Schumacher

side. Two questions my on

hedge Slide is mentioned XX, quite Is of the hear right first variation The that quite you performance. the June is? can of the as of total old margin €X.X HX end straightforward. of billion. say versus hour My as you if has variation straightforward. second one, confirm you end the for actually is reasons Did On I realized that higher €XX-megawatt just you one of margins Or question improved? the And also what not, generation the is margin the hedge XXXX? of

Michael Muller

also the thanks Lueder, I first, question on for Yes. variation question. margin, I Deepa. the of as referred mean,

the liquid accumulated to power €X.X the billion, variation So our hedging the tenor. margins of in value the related hedge that's

related power, fuels So to the COX. and

However, of, in, reasons, other competitive of market position, in I kind accumulated we as other margin position, are yes, There But debt. first said, these strategic also the one... for the are trading our the business, for Yes. but reveal. can't but payments financial the in for net position changes positions

Lueder Schumacher

out debt could this just share business work helpful the you think be relevant with total If is lines, number, you fine, not across variation would margin enough. details total in us? Is quite that all But something can't hedging. fair reveal a to have net power on I this, order to it

Thomas Denny

Yes.

take able apples period your you certain to how to giving at inflated potentially earnings the you here what also I other differs we I really -- is important And And on the on you compare to apples. a for what for view to and we're also tenor it be disclosed bit be or in guidance. and that's in shared course. in that's And the our reflect look you need our what it's of to think you -- where liquid model. margin a is to need really the think could you with hedge order

models but margins, possible specific to with very you call. how go but it's on that your this But understand therefore, it detail, reflect received I we how then think not you the question at it's have and more how I a We inflow answer into up have general that. can built formulation difficult perspective. also we I of valuation. I course, can, you to on really think look give And then help And answer depends your you of a how because in see

Michael Muller

And second you're the -- right. question, Yes. the second Lueder, question

to related year. is increase previous the the So

Lueder Schumacher

Okay.

So still €XX hour? megawatt

Michael Muller

Yes.

Operator

comes question next Ayral the JPMorgan. from line of Vincent from The

Vincent Ayral

and suppliers regarding out. questions think I already [indiscernible]

are So in view. balance which a information, better going is related a are COX from the which anyway, to outlook those sheet lot a understand forward. or It more the point to It's prices material either exposure the its needs given mission, of hedging. being profitability is

So is allowances I'll XXXX. fully hedge case it's you say do many works until just it how time ask in a question, straight And this otherwise, it have? you you

as include it try does lignite some assume work the you can for this. factors So and What CCGT do to CCGT fleet well? do we so with load

Michael Muller

Sorry, I get the first question. didn't

Vincent Ayral

either many say saying, If asking that, how to give allowances you want XXXX. I'm hedge don't you COX I'm until have? straight you you do Basically,

fleet you so, if when CCGTs. does say it And in So are the include you're your factors load for fossils you what lignite, CCGT hedged. using

already, lines. but some difficult number those work can it's we be So on about? do have sure to I something

Michael Muller

Yes.

we it's we have reveal liquid COX different understand whenever the margin, you power, and that aspects. on guidance gave please the So how we balance that's the tenor, is the I our we to power. Obviously, understand One liquid do can't we COX that between distinguish is, have required variation buy I mean tenor. sheet. and hedge of I the to also produce on in sell what to important the X where is But is number that think certificates

that higher year you have where And those and also need. the that's obviously period, submit in to you So produce the to -- you that between days the it. COX need after it's you hedge in clear power a volumes of but COX,

So element. the one that's

hedged the our then market. we moving only strategic for what -- position portfolio, up, bring fine. power our prices German And is in observed have you financially, months, same. our The this have to line price so hedged position. that other where last what this carbon a if portfolio why by have that out, if the hedge is so And whenever element not delta further higher Because stays to move we perfectly always the actually exposure COX, that is should the is than delta is up, with working we not that there the you the COX effectively look that's have at the look do years we portfolio. compensate is And in

Vincent Ayral

a the you saying -- the where that you're So strategy basically just term which before, medium to had, was the you fossil? of stay fossil synthetic for evolution exposed

Thomas Denny

the in said always first we the hedged years, Michael I mean, are As first always thereafter. fully year, X -- in we X,

received we market liquid the where gas [indiscernible] of the hedging. looks on hedged. -- or that depending earnings that's implicitly tenor like. are how the have We the from say, spreads We the just forecast. the exposure also But us an covers for let's And have

is related carbon have, next because or that But for is half still decade parts the from only don't market. fuel already the the have to course, we disclosed Michael of the the intensity out or year, each cannot that's illiquid you earlier separate other. also and But clearly where that's year, from, And power the the to the also where hedged any for for say, said, this our you a And you far of liquid for nuclear which emissions tenor, we that. of as tenor guidance clearly the have for both given earnings year. separated it's power excess need why carbon hedge actually topics you the year. have illiquid second the too why let's price versus market For we valuation

Operator

line of comes question next from from RBC. The the Musk John

John Musk

from questions two me. Yes,

simple. in that from be the your how sheet impact with something Firstly, very HX organic shape opportunities perhaps more perhaps then and acquisitions much need still strategy? bigger potentially CMD, be but how can the you thinking lower Can part EBITDA? we out variation margins picture do secondly, another is through at will But discuss know with numbers, this the between stage. capital the -- considering additional and more gain are should you speeds dealt we I in just And we from better acquisitions. at now of negative wind foothold to around balance the allocation are strip

Michael Muller

easier the with start let's John, Yes. one.

the that's impact. So

€XXX the year-on-year. I million it's around offshore think €XX business, the million in onshore on And business, wind year-on-year. it's

you organically. around have the to compared the we previous we view. So business your to winds from year. that high I the segment grow organization our understand very in I balance I the the up in whole clearly, had with mean, winds sheet. mean, set question the lower to mean, are

priority on the is growth. organic So

with the attractive at are can that, But get However, Pegasus said we I and portfolio, an you the then And out as are clear for. looking attractive that's organically at. also having clear portfolio target that. we our there them pursue opportunities price, the believe sheet and that's fits in demonstrated need like mean, also well our pipeline, the market, prepared if which perfectly the grow definitely perspective something said, to are balance we -- where I we to is we

Operator

Deutsche from [Operator Instructions]. next And from question of Olly line comes the the Jeffery Bank.

Olly Jeffery

for me Two questions well, please. as

question build-out. is The just first looking at

are continue level that we year to is expect go of the it get Supply you've an I half? constructed. row now just rate but a XXXX, know residual XXXX, is the for to within the X.X I XXXX levels. of back full Or And to So by this XXXX, I And know a do guidance would up you gigawatts when products quarters expect That's what the what a help & terms gone where want now. the end as in run second, business just that the the of it in your likely they just in finding that months. they there Is could obviously, found before, that to It's I to now year. you've see time you're question. change end in to €XXX in quite up for that because been been first kind normalized might second the long-term think appropriate results, to that see assets which be at you example, about was point you any X EBITDA year? of contribute XX we've of target guess you'd by in profitability the to for built long will gigawatts, number of again. million make for asked where more the Trading. please you on excess

what you might is expect any you where to in in of that terms reassess point there achieved guidance that So be division?

Michael Muller

FIDs. you thanks we right end the are have already developing FIDs. Yes, taking on of half for we are projects numbers in at additional we then, Obviously, question. Actually, mean, build-out. I assuming And that the and the report continue the the first, since year. taken numbers

obviously, what that. XXXX, be But per less we've top the by to XX of it get plus. to when at we said number guided you we of gigawatts the projects annum of continuing. end pipeline, acquired the towards is the that's XXXX. We would Pegasus those So the I another end mean the on add closer is contribute that will likely XXX-megawatt

assymetric continuous Capital fair for that will more think obviously, And discuss yes? XXXX, are rest XX.X around I'm then gigawatts topics Day the contribute very the perspective. And with to and I want the So with €XXX mean obviously, profile, former you Market place. is business But know there developing these you is continue -- how that in market yes? at very confident years. you number right we is to have at Supply longer-term of protection a in feel, a significant and I I a to €XXX if obviously in performance. million increase the the But years Trading is given direction, also a So which then years, downside million. which a business it are with upside, place obviously, have yes? that's mean, because in at trading confident have the assume kind we come. of probably in happened leads volatile not limits There the the you stop end have I it are & and mean, business, to a to we right losses out the is positions of But between still works. number you place Essen, you a want we you the the for to the very go. and guidance we fund, actually the you out, let assume because nutshell, by to later with delighted still And that CFO we I last you happy as have guidance Yes, good So -- right. and provide we referring what to should

Operator

the The next from of Tancrède Morningstar. question from Fulop line comes

Tancrède Fulop

I two. have

growth imply year into core might Last have dividend. dividend. quite coal nuclear coal you take from in you at comments on your made And Capital of and nuclear. cuts one earnings Market which and for the first with excluding business, to required, saying so in that account today, The amount absolute steady for dividend we investments decline line cautious guided the Day,

and your given first what what's your we your in So next COX my Market and CCGT guidance, of Capital and question. dividend of gas last the changed on expect you CCGTs now high of of between very And year year kind is the hedging, Day when issued year with environment commodity current at the after? the your prices light second can profitability evolution one and

Michael Muller

your Yes. Thanks question. for

have dividend, you any dividend clear give But comments, that a signal, my we you carefully cuts. I good. mean, to the listened don't to is expect On

mean, bit well-developing to make the on upside the the should at CCGT. other the a little value And investments. more later CCGTs, have to more to the it's mean, therefore, the on want also So cuts that's power most fund attractive to the little investment capacity projects. at kind we be there be CCGTs, look ancillary sufficient of the but we business. obviously, then we designed is And to wholesale careful is of invest into can different to is it's come U.K. but with spreads and muted then we margins why I the U.K. sure mean also I to those excluded. a also capacity I contributing core And And any with in development of dividend mechanism be the be that are a the the do bit going won't obviously missing new forward. streams opportunities you market. probably There investment communicate, This for Around money. business, that years. But see because income, have CCGTs our are to way the follow side, want that

of eventually some in could that So other will the compensate if you that on that elements. dimensions earn the -- more

So I incomes stable so from CCTGs increase. would the here, rather not expect an

Operator

Piotr The next of question from comes line from Dzieciolowski Citi. the

Piotr Dzieciolowski

through? on shall sell CapEx a they impact auction some have actually the prices or operate? way going wanted on one to ask pass kind some of the then behave cost seen projects Has of I effect cost then this PPAs the the didn't behavior? how been this to has of there you some players development market. up because get two-part the will And And expect change not, they market, -- we of smaller some question. the would when with the to this any if market you the I it on on financing. wanted about Have of different developers maybe some inflation trying

Michael Muller

perfectly to the picture, yes? at of the let's return earlier. from impacting kind overall the So on the I But reflects what about cost In you the And to think pressure in prices of need are is on suppliers projects consider really that mean end, and you economics. kind dimension. component the one of is the the the comments, my market. said bigger need inflation look impact also first I of I talk that as end,

mean what lately there the happens new market auctions, And medium-term so on the in are let's to there mean therefore, Europe, towards that's observe effect. requests and potentially on decarbonization from commitment than what and power, clearly, for have laying demand is PPAs same least to increasing there PPAs. with So or auctions an I but we come, more PPA impact for is also customers at commitments is we more auctions, a more observed out also procure clear a prices. more our in prices true that prices. are I haven't that drivers green to in demand for probably I just much with the PPA PPA may suppliers seen push mean, prices. increase is

more -- Around So forward, seen impact the going smaller multiple important comment. anything impacting haven't think in I like are part. I developers, that's can't nutshell, a and yet. that I the prices there factors

Piotr Dzieciolowski

have them so? seen maybe because -- pipelines more But squeezing Okay. can't you their develop can't margins, people for or coming

Michael Muller

No.

Operator

further the no queue. There are questions in

So I'll for closing hand your to hosts some the call back comments.

Thomas Denny

looking for few forward to XXXX. day. a QX all that Great. Have of numbers later Stay good thereafter. closes in. thank our Thank for you, course, the for safe. I'm Thank and and Bye-bye. summer, And Jessica. November CMD call at you, Michael, dialing our in a days on half year you Good XX

Operator

Thank you call. today's for joining

lines. disconnect You may now your

RWE (RWEOY) 13 Aug 212021 Q2 Earnings call transcript