E.ON SE

Dear ladies and gentlemen, welcome to the webcast of UNSC. At our customer's request, this conference will be recorded. After the presentation, you have the opportunity to ask questions via the telephone lines. If you have a question for the speakers, please dial 0 and 1 on your telephone keypad to enter the queue. If any participant has difficulty seeing the conference, please press star key followed by 0 on your telephone for operator assistance. May I now hand you over to Verena Nicolaas-Gronberg of Investor Relations, who will lead you through this conference. Please go ahead.

Many thanks. And yeah, hi, everybody. Welcome to our Q1 results presentation. Thank you for joining via telephone or webcast. Today, I'm here with Mark. He will update you on operational and financial performance in the first three months of 2021 and our outlook for the remainder of the year. As usual, we will only highlight the main messages to leave enough room for questions. With that, over to you, Mark.

Thank you, Verena, and good morning and a warm welcome from my side. Dear analysts and investors, we have seen a fantastic start into the year. During the first quarter of 2021, we achieved a strong operational and financial performance throughout actually all our business. Even and adjusted net income are up 14% and 19% respectively. Our synergies ramp up is unfolding as planned despite ongoing COVID COVID-19 did also not have any real impact on our other operations, which is in line with our expectations. This gives us a lot of confidence for the remainder of the year. On the leveraging plan, we are making excellent progress. We are fully on track towards achieving our target of a debt sector between 4.8 and 5.2 times already by the end of this year. Our pension provisions have improved by 1.7 billion euros. Due to the seasonal pattern of our operating cash flow, this massive improvement will only translate into our economic net debt numbers during the course of the next two quarters. You should actually be familiar with that by now, that Q1 brings a seasonal buildup in working capital, which then fully reverts in the second half of the year. In essence, I can fully confirm our guidance for 2021, as well as our mid-term delivery plan, including our synergy target of 780 million euros by 2024 and our dividend commitment. Before I update you on the operational highlights of the quarter, let me spend a few words on the new E.ON Management Board remuneration system that we put up for resolution on approval at the upcoming AGM next week. One of our priorities at Aon is sustainability. Sustainability is the integral part of our corporate strategy and guiding principle for all our decisions. As a consequence, it is obvious that the sustainability performance of Aon should be part of the long-term incentive of Aon's board remuneration. With a proposed remuneration system, the following sustainability dimensions are planned for the 2022 long-term incentive tranche. First of all, climate action. We measure our progress of carbon emission reduction. Secondly, diversity. We will further increase the share of our female executives. Thirdly, health and safety of our employees and therefore the reduction of serious incidents and fatalities frequency. The fourth dimension is our performance in key ESG ratings and therefore an overarching element when it comes to sustainability. In this context, I would also like to point out that as a financial performance element, we will include a return on capital employed component next to the established total shareholder return into the long-term incentive for our management board. I'm confident that investors will appreciate the new elements of the remuneration system and largely result from the approval of the plan at our AGM next week. Let me now turn to some operational highlights in Q1, which further back our confidence on guidance delivery. In energy networks, we are committed to grow our power up by 45% per year for many years to come. Sorry, I repeat. In energy networks, we are committed to grow our power up by 45% per year for many years to come. With record demand in Germany for connections in new residential areas as well as for renewables connections, we are very confident to deliver on this pledge. We are also very happy with the progress in customer solutions due to several positive developments. First, the NPower customer migration in UK has been completed. We have started to close down NPower systems with a majority of people leaving by end of Q2 and the full end power wind down expected by the end of 2021. In parallel, the migration of E.ON UK customers is already significantly progressing, with currently already around 500,000 E.ON customers migrated to E.ON Next. Expect that number to significantly increase over the coming weeks. We plan to have migrated the majority of E.ON customers by the end of this year already. We are also fully on track to renew our IT stack in our German retail operations, with more than 4.5 million customers having been migrated so far. Second, we see a significantly growing demand for our future energy home services. In Q1 alone, we have sold about 30,000 additional units from PV, batteries, to efficient heating systems. We already have more than 1.2 million active service contracts, which makes us confident that we will be able to double the earnings contribution of that business in the course of this year to more than 50 million euro. Some may say this is small. I say the momentum is great, and we're just at the beginning of this market to evolve. Thirdly and finally, In our energy infrastructure solutions business, we were able to fully monetize from the colder weather with excellent availabilities of our heating plant, especially in the Nordics. A good example is Hultby Torp in the Stockholm area with 97% availability in Q1 2021. Operational excellence matters, and we are just good at it. Now let me move to the financial performance of E.ON in the first three months on page four. EBIT came in at roughly 1.7 billion, which is an increase of 14% or 200 million compared to the same period last year. I have already elaborated on our strong operational performance. On top of that, we also benefited from a weather-related recovery in margins. You may recall that last year our financials in Q1 were significantly impacted by extraordinarily mild winter months, In contrast, weather conditions this year were pretty much in line with expectations. Also, the impact from COVID-19 has been as expected, including bed-dead provisions. On the segment, earnings and energy networks are roughly stable compared to last year. In Germany, the year-on-year earnings increase from normalized volumes was largely compensated by expected developments on the cost side. The Central Eastern European and Turkey segment benefited from the first-time consolidation of BSE in Slovakia after the acquisition from RWE in Q3 last year. Customer Solutions' earnings momentum was strong, with an increase of almost €300 million year-on-year, doubling the EBIT relative to Q1 last year. Apart from normalized weather conditions, the UK benefited from our restructuring efforts and the full migration of NPower customers onto the new platform. With an EBIT of 86 million euros in the first quarter, we feel very comfortable with our target of above 100 million British pounds for the full year. Be reminded that especially in the UK, the seasonality 2.1 earnings of our non-core businesses are down by roughly 80 million year-over-year. The decline is mainly attributable to the negative impact from the purchase of further production rights for our German nuclear operations. Be reminded, we continue to depreciate the production rights that we eventually obtain for free based on successful settlement of nuclear lawsuits until the very date of law becoming effective. The legislative procedure is fully on track, with the first parliamentary reading already concluded. As indicated, we will most likely adjust our guidance in Q3 already. The result of our Turkish upstream joint venture was negatively affected by a lower hydro generation and an adverse ethics development. Let us have a brief look what the earnings development means for our bottom line. Our adjusted net income came in at more than 800 million euros for the first three months of 21, up 19% versus last year, reflecting largely the increase in our operating results. Economic interest results, income tax rate, and minorities are fully in line with expectations. Let me now turn to the development of our economic net debt. Compared to full year 2020, economic net debt is largely unchanged. While this looks boring from a headline numbers perspective, there is a lot of positive momentum below the headline. Pension provisions improved by roughly 1.7 billion over year 2020. The decrease of the defined benefit application due to an increase in pension discount rates of 40 basis points in Germany was accompanied by a better than expected plan asset performance. This is temporarily compensated by our operating cash flow, which reflects the usual seasonally low cash conversion in the first quarter. In our B2C commodity sales business, high energy consumption during the winter period causes a negative cash balance for us in Q1, as the cash inflow from installment payments is equally spread across the year. In our networks business, likewise, the redistribution of feed-in tariffs for renewable generators in Germany results in a further temporary increase of our working capital. As usual, we expect these seasonal effects to fully reverse during the remainder of the year. Backed by our Q1 performance and assuming interest levels to stay at current levels, we are on good track to achieve our debt factor target of between 4.8 and 5.2 times already this year once the settlement of the nuclear lawsuit is put successfully into law. Let me conclude my presentation with our outlook on page 7. Packed by a strong start into the year, I am happy to confirm all our targets for 2021 and our dividend promise. Furthermore, let me also reiterate that we feel very confident with our EBITDA target of $7.6 to $7.8 billion and our EBITDA target of $4.6 to $4.8 billion for 2022. Thank you very much for your attention, and I will now turn it over to Verena for the Q&A session.