renewables cleaner & better energy - e.on · 3 transparent financial targets for coming years...
TRANSCRIPT
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Cleaner & better energyRenewables
2
Position E.ON for the future
Cleaner & better energy
Key drivers of E.ON’stransformation
Divest non-core assets
Safeguard financial strength
Expansion outside Europe
Increase efficiency, improve organization
Improve capital management
Disciplined investment approach, mainly organic development (generation)Agreement with MPX marks first step
Total target ~€15bn disposals by end 2013, ~€12.5bn achievedDivested broad range of assets at attractive conditions
Target debt factor <3x, solid single A ratingFinancial debt reduced by ~€10bn in last 24 months, comfortable liquidity position
Target to reduce controllable costs to €9.5bn in 2015, simplify GroupIndividual measures in execution, framework agreement with German unions signed
Increased return requirementsChange business approach (e.g. capital velocity, partnering)
Europe OutsideEurope
Performance
Cleaner & better energy
Investment
3
Transparent financial targets for coming years
E.ON Group key financial targets
2012E EBITDA1 €bn 10.4 – 11.0 Underlying EPS €/share 2.15 – 2.35
2013E EBITDA1 €bn 11.6 – 12.32
Underlying EPS €/share 1.7 – 2.02
2015E EBITDA1 €bn 12.5 - 13.03
Underlying EPS €/share 2.0 – 2.33
Results
Dividend payout policy % adj. net income 50 – 602011A €/share 1.02012E €/share 1.12013E €/share ≥1.1
Dividends
Rating target Solid single AMedium-term debt factor <3xInvestments 2012-14 €bn ~19Total disposals until 2013 €bn ~15
Other
1. Adjusted for extraordinary effects 2. 2013 post €0.9bn effect of achieved disposals (€9.1bn) 3. 2015 post ~€1.7bn effect of total disposals (€~15bn)
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E.ON Climate & Renewables focuses on industrial-scale renewables (wind, biomass, solar)
Renewables within E.ON’s structure
44
Generation Renewables1 E & P Support functions
Trading & Optimization
Other EU countriesGermany Russia
Group Management
Global Units Regional Units
Onshore wind
Hydro1
Offshore wind
Biomass
Photovoltaic
Solarthermal
Biomethane2
Small biomass
Biogas
Small hydro
Small solar & roof-top PV
Heat pumps & geothermal plants
Industrial-scalerenewables
Small-scalerenewables
1 All technologies managed by E.ON Climate and Renewables, except large hydro (managed by Fleet Management Centre Hydro)2 Biomethane upstream business managed by Global Unit Gas, downstream business managed by Regional Units
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Industrial approach to deliver profitable growth and enhance competitiveness of renewables
Renewables – Executive summary
EU: Share of renewables generation to increase from ~21% in 2010 to ~36% in 2020, according to EU targets
US: Lacking federal policy, most states pursue own targets
New growth regions in addition to EU and US, such as China, India or Brazil
Renewables costs continue rapid decrease, making renewables more competitive
Current regulatory interventions reflect stronger demand on competitiveness of renewables
Increasing intermittency from renewable feed-in create attractive conditions for pumped storage hydro
Rapid expansion in renewables: >40% growth of installed capacity until 2013 vs. 2010
Focus on industrial-scale renewables (wind, solar, biomass) to leverage E.ON’s core competences
Strict investment discipline with IRRs exceeding group minimum requirement of 250bp over WACC
Large hydro: Attractive but constrained by geography
Grow and optimize onshore wind (annual addition of >500 MW)Develop true leadership in offshore wind:
New project in operation about every 18 months Reduce installation costs by 40% until 2015
Bring E.ON’s solar competence (PV & CSP) to wind levels in 3 yearsIn biomass, focus on selectively converting fossil E.ON plants to realize scale and portfolio effectsLarge hydro – fleet management concept to improve asset performance
Portfolio development
Industrialization and cost reduction
Market environment
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Outlook
Healthy earnings growth in solar, wind and other foreseen for 2011 to 2013
Renewables – Financials and outlook
Main earnings drivers
Wind, solar and other: Continued capacity build out
Hydro: Driven by market based transfer prices (which are a function of NordPool and German baseload prices)
Outlook 2012 compared to 2011
Declining transfer prices for hydroelectricity not offset by increases in capacity of wind solar and other
Target 2013 compared to 2011
Wind, solar and other: Performance improvement and further capacity build out
Hydro: Lower market based transfer prices compared to 2011
Earnings drivers
23.9
13.8
10.1
TWh€m Revenue EBITDA1 EBIT1
Wind, solar and other 986 550 295
Hydro 1,453 909 793
Total 2,439 1,459 1,088
2011A 2012E 2013E
€1.2bn
Increase in wind, solar & otherDecrease in hydro
Renewables – FY 2011 financials
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Cleaner & better energyDiscussion Material
Wind, solar and other
8
Strategy
Operations
Political framework
9
Our ambition: To make clean energy better
Renewables at E.ON – Group strategy implementation
EuropeFocused & synergistic positioning
Responsible, portfolio-driven investment policy“Build, sell & operate” approach
Sell selected assets when operationalEC&R best positioned to pioneer new approach
Partnerships with other leading players
Build on pioneering advantage in offshore windRealize biomass conversions of fossil plantsin close cooperation with other E.ON unitsDevelop solar, e.g. in collocation with E.ON plantsSupport regional units with renewables expertise
Outside EuropeTargeted expansion
Further develop existing onshore position in USUS also focus market for PV and CSPSupport E.ON International Energy with renewables expertise: Further opportunitiesin Brazil, India and Turkey
Ambition to make renewables competitiveAim for top quartile assets and performanceDefined performance targets for all technologiesMaintain lean and efficient organization & internationally-minded performance culture
PerformanceEfficiency & effective organization
InvestmentLess capital, more value
10
Renewables investments in 2010
15% YoY increase in global RES investments in 2011
€160bn global RES investments – continue to catch up with fossil generation investments (€210bn)
Recent market developments
Broadly stable policy commitment for EU 2020 targets
Higher volatility in national support schemesIncreased reactivity to overincentivisation
Stronger focus on cost reduction
New growth regions such as China, India, Brazil
Key drivers for future growth
Climate change: Low-carbon generation
Security of supply: Fuel independence
Competitiveness: Renewables cost decreasing
Key facts
Renewables will continue their remarkable growth and become ever more competitive
Global renewables – market environmentGlobal installed capacity 2010 (GW)
15-20% annual capacity growth realistic until 2020
Marine
11Geothermal
1
Biomass 58
Solar 73
Wind 22%
Small hydro
239
184
74%
Existing 2010 Added 2011
Top Five Countries1 China 1342 United States 933 Germany 614 Spain 335 India 19
566
Renewables
370
Nuclear
1,700
Coal
1,285*
Gas
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Strong growth in capacities and earnings since setup of EC&R in 2007
Renewables at E.ON – key figures 2007-20111
1111
1. Figures as of year end or for full year, if not noted otherwise2. Adjusted for extraordinary effects
Investments (€m)
400
2010
643
2009
978
2008
975
2007
604
May 2007
5904,190
20112010
1,163
2009
1,031
2008
1,485
20071
2,298
2011
1,249
2010
452
2009
293
2008
152
2007 2011
551
2010
7.9
2009
5.3
2008
3.2
10.2
2011
EBITDA2 (€m)
Capacity (MW)
Production (TWh)
Onshore wind
Offshore wind
Other
Formationof EC&R
1. Figures as of year end or for full year, if not noted otherwise2. Adjusted for extraordinary effects
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Renewables portfolio of top players 2010 (GW)
Fast move into top 10 of the global wind players and pioneering advantage in offshore wind
Renewables at E.ON – competitor comparisonTop 20 global wind plant owners 2010 (GW)
International Power UKAES Wind US
CGNWP CNGuohua CN
RWE Innogy DEInvenergy US
Infigen Energy AUGDF SUEZ FR
MidAmerican Energy USHuadian CNEDF EN FR
Enel ITEC&R DE
Huaneng CNDatang CNAcciona ES
Longyuan CNEDP Renováveis PT
NextEra Energy Resources USIberdrola ES
4 8 12
Europe
North America
Asia Pacific
Rest of World
E.ON EDP
Iberdrola EDF EN
Enel NextEra
0.5
3.1
Onshore wind
Offshore wind
Biomass
Solar
6.5
12.1
2.6
2.2
0.2
8.3
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In the years 2012-2014 alone, we plan to invest ~€4bn
Renewables at E.ON – strategy quantified
Wind onshore >500 MW net additions p.a.60% in North America40% in UK, Poland, Nordic, Iberia,Italy, project prioritization depending on market attractiveness
Wind offshore A new COD every 18 monthsNorth Sea, Baltic Sea
Biomass 2–4 fossil plant conversions by 2015
PV >70 MW net additions p.a. US, Italy, France
CSP Focus on mid-sized plantsIberia, Italy, US
Less capital, Additional US onshore, EU more value offshore, and PV projects will be
realized with “Build, sell & operate”approach
Project pipeline (GW) Growth ambitions
Project pipeline by technology
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6.7
50%
9.0
85%Construction
2.3
Total
27.2
Europe63%
NorthAmerica
37%
Origination
9.1
25%
73%
17%
7%3%
Onshore Wind
Offshore Wind
Biomass
PV
Construction Development + origination
0.1
33%
33%
34%
0%
Note Project pipeline GW as of 30 June 2012; rounded
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Targets and investment philosophy
Returns
Hurdle rates for all investments substantially above group minimum requirement (250bp)
Additional risk buffer for offshore investments
EBITDA
2013 EBITDA will not incl. earnings from ~€2bn of projects under construction (mainly offshore)
Portfolio-driven investment policy
Diverse and balanced portfolio across markets, technologies and public support frameworksDemanding hurdle rates
Core competencies as renewables solutions provider
Experts in development and constructionWind fleet approach and O&M strategyUnique offshore experienceLeverage wider E.ON expertise (e.g. for biomass or CSP)
“Build, sell & operate” approachSell ownership of selected assets post commissioning
Offer continued, world-class O&M services
Create additional value with less capital exposure
Capacity and EBITDA development (€m) Invest responsibly and leverage competencies
Value creation as key driver behind investment approach
2011 2013
Other
Europe off-shore
Europe on-shore
US on-shore
Capacity EBITDA1
452
2013E2010
551
500-700
2011 2013E 2011 2013E
~4.2 GW~5.5 GW
1. Adjusted for extraordinary effects
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Strategy
Operations - Ambitions
Political framework
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Exploit sites with best renewables resources
Increase energy yield
Best technology for specific location (micro-siting)
Higher availability
Improved average performance
Reduce CAPEX
Central procurement
Standardization of technical components
Close cooperation with suppliers
Reduce OPEX
Technical excellence, building on experience with more than 2,000 wind turbines
O&M strategy covering continuous supervision, spare parts logistics and predictive maintenance
Levers for improvement
Aiming for top quartile assets and performance
Performance improvement – key success factorPortfolio optimization
Energy yield
Economies of scaleFuture E.ON projectsExisting E.ON projects
Other projects
E.ON benchmark
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Target to become a top quartile player in construction and operation
Performance improvement – in construction & operationDevelopment & construction capabilities
10% unit capex reduction typically equates to ~100bp IRR increase per unit1% availability improvement equates to ~20bp IRR increase
Example highlightsVolume construction in the USMore than 2,000 MW of onshore wind capacity installed and operational since 2007
Cutting edge technology in NordicInstalled one of the highest industrial turbines in Sweden at 170m
Project management expertise in offshore wind Completed Rødsand II (207 MW) in 2010 3 months ahead of time and under budget
Strong stakeholder relationships in the UKReceived exclusive contract to potentially develop more > 800 MW onshore wind
AvailabilityImproved to 97.1% since 2007, now targeting 98%
Load factorImproved from 28% in 2010 to 31% in 2011
Targeting up to 40% mid-term
Operational performance
90
93
96
99 98.0
2010
96.7
2009
95.3
2008
94.0
2007
91.0
2011
97.1
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Reduce onshore wind CAPEX by 25% by 2015 1
Use tier 2 suppliers, bring Asian OEMs to US
Fit-for-purpose design, new tower materials
Non-EPC approach with volume bundling
Reduce offshore wind installation costs by 40% by 20151
Major potential in hardware costs
Standardized, integrated design approach
Reduce solar PV CAPEX by 35% by 2015 1
Competitive modules remain major driver
Expected balance of system cost reduction similar to modules
Identify further potential in operational costs
Investigate OPEX levers for all technologies
E.ON ambitions & levers
Ambitious CAPEX reduction targets; further OPEX savings potential to be identified
Performance improvement – across all technologiesCost structure: Example onshore wind
OPEX
CAPEX
2011
LCOE (€/MWh)
71%Turbines
19% Balance of Plant
3% Contingency
7% Other
Turbine cost key to competitiveness of onshore wind
1. Compared to 2010 levels
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Life time free cash flow profile
Stable growth and value creation
Investment returns in renewablesReturns of realized projects
Jan 10 Mai 10 Aug 10 Nov 10 Feb 11 Jun 11 Sep 11
t0=COD t+20t-4
WACC (post tax)
HURDLE RATE = WACC +250bp
NPV
(€m
)
Phase III:End of life time
Four years of construction and two years (t-1+t-2) of heavy spending ahead of commissioning
Initially end of construction spend
Then rising ROC and wholesale prices overcompensate rising O&M cost
End of life time dominated by one off cost for decommissioning
~ -600 ~ 750 ~ -10
Recent projects at least 250bp above WACC
IRR compared to hurdle rate and WACC Typical UK offshore wind farm
Phase I:Construction
Phase II:Operation
Key
driv
ers
Stable free cash flow in phase II driven mainly by ROCs
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Strategy
Operations – Update
Political framework
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No significant CODs during H1 2012 but over 2GW under construction
Interim performanceInvestments (€m)1
Under constructionH1 2012YE 2011
419
FY 2011
1,114
H1 2011
H1 2011
5.1
FY 2011
10.2
FY 2010
7.9
EBITDA2 (€m)
Capacity (MW)
Production (TWh)
Onshore wind
Offshore wind
Other
7314,191
2,266
H1 2012
452
H1 2011
304
FY 2010
550
FY 2011
~1,600
FY 2012E
303 6.0
H1 2012
4,23746
H1 additions
H1 2012
2. Adjusted for extraordinary effects
1. Incl. hydro investments
22
Good wind in Q1 still helping load factors at half year stage
Interim performance – load factors and availabilitiesAvailability Load factor (net)
97,6% 97,4%
95,8%94,7%
Q1 H1
98,0% 97,8%98,2% 98,3%
Q1 H1
39,3% 37,2%45,1%
39,2%
Q1 H1
32,3%37,2%
39,8%37,1%
Q1 H1
2012 - Good availability of Nordic offshore offset by UK
Continued good availability of over 98% also in Q2 2012
Very strong Q1 still shows through at half year stage
Very strong first quarter, rather weak Q2
European offshore
US onshore
European offshore
US onshore
2011 2012 2011 2012
2011 2012 2011 2012
2011 2012 2011 2012
2011 2012 2011 2012
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Tax credits (merchant) 31%
Tax credits (PPA) 24%
Feed-in tariffs 11%
Feed-in premium 10%
Green certificates 24%
Good load factors in European on and offshore compensate for weaker pricesin US portfolio
Interim performance – portfolio mix and average price
Over 2/3 of global capacity in rather stable schemes
Pure feed-in tariffs currently at only 11% share
Merchant US wind farms (only with PTC support) at 31%
62
68
74
80
H1
FY 2011vs. 2010: Main drivers are increased volumes in high price European regimes such as UK offshore
H1: Weaker prices in US overcompensated by good load factors / volumes in European onshore & offshore
FY
2011 2012
69.471.4
Portfolio mix (as per Q3 2011)Share of support schemes of total capacity
Average price (€/MWh)
2010 2011
73,5 73,8
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Strategy
Operations
Political framework
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Wide range of support schemes to drive the development of renewable generation
Overview of current government support schemes
€ / kWh
ProductionTax Credits (PTCs)
Renewable EnergyCertificates (RECs)
AcceleratedDepreciation (MACRS)
Wholesale price
US schemes
Variable RevenueGreen Certificate
(GC)
Wholesale price
Constant / VariablePremium
Wholesale price
Premium Model
Wholesale price
Direct Marketing
No support in addition to normal market price.
Production not traded in market, generator receives revenue from authority. Either constant over support duration or annually adjusted, e.g.by consumer price index.
Generator receives premium in addition to market price. Premium is either constant over support duration or annually adjusted depending on market price development.
Generator sells into market and receive GCs. Suppliers have to fulfill increasing RES quotas, creating national market for GCs. Valueof GCs depends onquota fulfillment.
No unified support across the US. Federal support includes cash grants, tax credits, and accelerated depreciation options. In addition, state certificate systems (RECs).
Feed-in tariff Green Certificates
26
Feed-in-tariffs and green certificates dominate in the EU
Support schemes in the EU
Onshore
Germany 90 €/MWh (first 5yrs) +49 €/MWh (next 15 yrs)
France 82 €/MWh (first 10yrs) +82-28 €/MWh (next 5yrs)
Spain 79 €/MWh (20yrs)*
Portugal 74 €/MWh (20yrs, MW cap)
PV
Portugal 310–317 €/MWh (15yrs, MW cap)
France 116 €/MWh (20yrs) or tender***
CSP
Spain 290 €/MWh (25yrs)*
Examples: Green certificatesExamples: Feed-in tariffs
Italy ~156 €/MWh (15yrs)
UK ~120 €/MWh (20yrs)
Poland ~116 €/MWh (no limit)
Sweden ~93 €/MWh (15yrs or 2035)
Italy ~243–346 €/MWh**No GC, but a premium (20yrs)
Italy ~291–351 €/MWh**No GC, but a premium (25yrs)
1
2
2
Upcoming changesNorway and Sweden to form a joint green certificate market (2012)
UK and Italy plan to move to a feed-in model (2013/14)
1
2
Note 2011 support levels; simplified view* In Spain investors can decide between receiving a FiT or premium on an annual basis
** Italian PV and CSP premiums decrease during the year, e.g. in 2011 PV receives 346€ at the beginning and 243€ at the end of the year*** Feed-in for ground-farms <12 MW; tender process for larger installations starting in September, opportunity to receive significantly higher feed-in
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A combination of federal framework and individual state policies
US Renewables policy
Federal renewables support based on tax instruments like PTC or ITC for renewables (and temporarily Cash Grants), but no federal renewables scheme exists
On state-level, RPS set targets for renewables and the trading of Renewable Energy Certificates (REC), sometimes with specific solar requirements
Important to note
Onshore Wind revenue stream
Renewable Energy Certificate (REC)
Demand driven by state-level Renewables Portfolio Standards
(RPS)
Trade / PPAElectricity sold in the market
or via power purchase agreement
(PPA)
or
Production Tax Credit$22/MWh
Cash grant30% refund of investment
MACRSAccelerated Depreciation
for tax equity investors+ + +
PV and CSP revenue stream
Cash grant/Investment Tax Credit30% refund of investment
Solar Renewable Energy Certificate (SREC)
Demand driven by solar carve-outsas part of state-level RPS (RPS)
PPAElectricity sold via
power purchase agreement (PPA)
+ +
REC sometimes linked to PPA
SREC usually integral part of PPA
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Cleaner & better energyBackup Material
29
Projects under Construction
20127PVUSForesight
2013189Offshore Wind UK London Array I
Project** Country Technology Net capacity(MW*) Planned COD
Anacacho US Onshore Wind 100 2012
Fiumesanto 3 Italy PV 5 2012
Ironbridge UK Biomass Conversion 750 2012
Magic Valley I US Onshore Wind 203 2012
Nepi I + II Italy PV 4 2012
Rosehall UK Onshore Wind 25 2012
Skane II / Örja Sweden Onshore Wind 6 2012
Tween Bridge UK Onshore Wind 44 2012
Wildcat / Grant I US Onshore Wind 203 2012
Camster UK Onshore Wind 50 2013
Halland III / Örken Sweden Onshore Wind 18 2013
Kalmar II / Villköl Sweden Onshore Wind 19 2013
Karehamn Sweden Offshore Wind 48 2013
Blackburn Meadows UK Biomass New-build 33 2014
Wysoka I Poland Onshore Wind 55 2014
Amrumbank West Germany Offshore Wind 288 2015
Humber Gateway UK Offshore Wind 219 2015
TOTAL (MW) 2,266
*E.ON Equity MW ** Project pipeline as of 30 June 2011
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E.ON project portfolio
467 MW installed capacity
1.6 TWh electricity produced in 2011
Kårehamn (SE), Humber (UK) and Amrumbank(DE)to be constructed next – about 560 MW in total
E.ON ambition
Bring a new project in operation every 18 months
Focus regions: North Sea, Baltic Sea
Target to reduce installation costs by >40% by 2015:
Major saving potential in hardware costs
Standardized, integrated design approach
Offshore wind
Wind will remain at the core of E.ON’s renewable portfolio
Wind – position and strategy
E.ON project portfolio
3,569 MW installed capacity
8.2 TWh electricity produced in 2011
E.ON ambition
>500 MW net additions p.a. (60% in North America)
EU focus regions: UK, Poland, Nordic, Spain, Italy, depending on market attractiveness
Potential further growth in Brazil, India, Turkey*
Target to reduce energy costs by 25% by 2015:
Standardized components and processes
Collaborative approach in procurement
Highly efficient Operations & Maintenance (O&M)
Onshore wind
* Focus markets of E.ON International Energy (EIE)
31
E.ON project portfolio
Project “Helioenergy I” (50 MW) in Southern Spain operational since August 2011. “Helioenergy II”(50 MW) operational since January 2012.
Joint investment with partner Abengoa Solar
E.ON ambition
Grow flexibly with mid-sized plants
Winning technology not yet identifiedNeed to broaden technology experience,including storage solutions
Focus regions: Spain, Italy, US
Potential further growth in India and Turkey*
Strong cost decrease needed, more projects required worldwide to make CSP competitive
Concentrated Solar Power (CSP)
We aspire to manage solar projects with same industrial approach we have in wind
Solar – position and strategy
E.ON project portfolio
~53 MW capacity installed in France and Italy
Largest PV farms (18 MW and 10.2 MW) located at the E.ON power plant site Fiumesanto (Sardinia)
23 GWh electricity produced in 2011
E.ON ambition
>70 MW net additions p.a. post 2012
Focus regions: US, Italy, France
Potential further growth in India and Turkey*
Target to reduce energy costs by 20% by 2015
Focus on ground-farms to drive industrialization
Panel and system costs remain key lever
Photovoltaic (PV)
* Focus markets of E.ON International Energy (EIE)
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Dr. Marc SpiekerHead of IR T+49 2 11-45 79-3 45
[email protected] BlankenhornRegions/Sales, SRI, Retail, T +49 2 11-45 79-4 81Facts & Figures [email protected]
François PoulletGeneration, Gas T +49 2 11-45 79-3 32
Marc KoebernickRenewables, Trading T +49 2 11-45 79-2 39
Dr. Stephan SchönefußPolitics & regulation, Regions/Distribution T +49 2 11-45 79-48 08
Aleksandr AksenovOutside Europe, Russia T +49 2 11-45 79-5 54
Carmen SchneiderTechnology & Innovation, Roadshow planning & management, T +49 2 11-45 79-3 45Shareholder ID & Targeting [email protected]
E.ON Investor Relations Contact
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E.ON IR - Reporting calendar & important links
Dividend PaymentMay 6, 2013
Interim Report I: January – March 2013May 8, 2013
Interim Report II: January – June 2013August 13, 2013
2013 Annual Shareholders MeetingMay 3, 2013
Annual report 2012March 13, 2013
Interim Report III: January – September 2012November 13, 2012
EventDate
http://www.eon.com/en/corporate/1029.jspFacts & Figures
http://www.eon.com/en/investors/26658.jspEquity Story
http://www.eon.com/en/investors/42341.jspSegment Stories
http://www.eon.com/de/investoren/dialog/creditor-relations.htmCreditor Relations
http://www.eon.com/en/corporate/1022.jspInterim Reports
http://www.eon.com/en/corporate/19886.jspAnnual Report
LinkContent
Important links
Reporting calendar
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This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management and other information currently available to E.ON. 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. E.ON AG does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.
Disclaimer