E.ON SE

Hello everyone and welcome to our 9-month 2025 results call. Thank you for taking the time to join us today. I am here with our CFO, Nadja Jacobi, who will give you an update on our financials. As with every occasion, we will leave enough room at the end for your questions. With that, over to you, Nadja.

Thank you, Iris, and a warm welcome to all of you from my side as well. Before I turn to our financials, I would like first to touch upon the latest regulatory developments in Germany. The German regulator has announced the start of the final consultation process concerning the framework concept with a committee of representatives from regional regulatory authorities. Compared to its draft proposals published in the summer, the regulator has introduced amendments to certain items, most of which affect smaller network operators. The main aspect for us is that the regulator intends to maintain the seven-year average approach for determining the cost of debt on the existing asset base without annual adjustments. This fails to consider that material debt must be refinanced at current market rates. The proposed higher rating of years with higher investment is a step in the right direction, but it does not solve the problem as the average would still be below current market rates. Consequently, the current draft of the framework does not fairly reflect grid operators' financing cost. Allowing for an annual adjustment would have ensured a more appropriate reflection of actual market developments for both customers and grid operators. The proposals are still in draft format and so far we have only seen a brief BNetz-R release. However, the regulator has indicated that the current version is close to final and plans to keep its year-end target for finalizing the framework and the methodology on capital returns and efficiency benchmarking. However, the final values for return on capital will only be determined much later in the process, between 2026 and 2028, as was the case for former regulatory periods. Given the status and recent announcements of the regulator, specifically for the cost of debt treatment, the uncertainties regarding RP5 are greater than we had expected by now. We would have expected to be able to narrow down the ranges for capital remuneration further. As we have always said, ultimately the RP5 proposals as a whole must be sufficiently attractive to promote investments. In his latest announcement, the regulator stated that the new NEST proposals will increase the revenue cap by 1.4% or €1.3 billion for power DSOs during the next regulatory period. The regulator must now move from words to actions, as we do not see the necessary increase of the regulator's returns so far in the publications. In view of the enormous investment needed for a successful energy transition, we however remain confident that the final result will deliver the outcome needed. But we would have expected to have more clarity already at this first stage of the process to invest further investments in detail. We will continue to advocate for an internationally competitive, market-based regulatory framework that supports a successful energy transition in Germany. At the same time, we remain committed to our value creation promise and will only invest provided regulatory returns create value for our shareholders. I'm sure we will continue the topic in our Q&A, but let me now turn to our financial results for the first nine months. There are three key messages I want to highlight. First, in the first nine months of the year, we achieved an adjusted EBITDA of €7.4 billion and an adjusted net income of €2.3 billion. This represents a year-over-year increase of 10% and 4% respectively. Based on our full year guidance, that means that we have achieved roughly 76% of our adjusted EBITDA and 78% of adjusted net income at group level. Second, our investment-driven earnings growth and strong operational execution remain the key driver of our sustainable growth. Our planned investments have developed well, with a year-over-year increase of 8% at group level. The main share comes from our energy networks business. This shows that our long-term procurement strategy, including our highly skilled workforce, enables us to successfully execute our networks investment plan. And third, Based on our nine-month economic net debt outturn, we expect our debt factor to come in at around 4.5 times economic net debt to adjusted EBTA for the full year 2025. Our balance sheet continues to provide a strong foundation for our investment plans. Let us now move on to the details of our nine-month year-over-year adjusted EBTA development. The increase in EBITDA was largely driven by our energy networks business, reflecting accelerated investments in our regulated asset base across our regions. We continued to see a substantial contribution to our earnings growth coming from value-neutral timing effects. In Germany, the positive timing effects were driven by increased volumes and lower redispatch expenses, primarily during the first half of this year. In Southeastern Europe, we continue to see additional network loss recoveries and volume effects. We don't expect significant impacts from value-neutral timing effect in Q4 2025. Turning now to our energy infrastructure solution business. EBITDA growth was driven by higher volumes due to normalized operations and weather compared to last year. On top, we saw business growth from new projects coming online and increased smart metering installations in the UK. Our energy retail business delivered in line with our expectations. The usual operational year-over-year development in Germany is masked by phasing effects from two-ups for volume and price assumptions and by restructuring provisions in connection with our efficiency programs. However, the decline is partially balanced by temporary price effects from earlier this year. As already communicated in our H1 call, the earnings development in the UK continued as anticipated and is already fully reflected in our guidance. In our UK B2C customer segment, we continue to see customers switching from SVT tariffs to fixed-term tariffs. In our UK B2B business, contracts from previous years continued to roll off. Our nine months 2025 adjusted net income came in at around 2.3 billion euro. The conversion of the operational growth into the bottom line came in as expected. We observed slightly higher depreciation costs driven by increased digital investments with shorter useful lives. Interest costs rose due to the higher coupons compared to maturing debt, as well as higher debt levels relative to prior years. In addition, the positive value-neutral timing effects mainly came from our southeastern Europe network business, which has a higher minority interest. Let us now move on to our economic net debt development. The execution of our investment program remains strong. In our energy networks business, we saw a 15% increase in year-over-year investments. Our group capex fill rate now stands at around 60%, which is in line with our typical nine months level. Our economic net debt improved by roughly €2 billion in the third quarter. The main driver was a strong seasonal operational cash flow. In addition, there was a positive structural effect of around €700 million coming from the deconsolidation of one of our regional utilities participants in Germany, NEW AG, at the end of September 2025. In the third quarter, we also benefited from a tailwind in pension obligations, which decreased by a mid-triple-digit million euro amount, mainly due to the rising interest rates between the end of Q2 and Q3. We have also continued to streamline our portfolio as part of our discretionary 2 billion euro disposal programme. Most recently, we announced that we have signed an agreement to divest our gas networks business in Czechia. This step enables us to continue pursuing our ambitious growth and investment goals. In summary, our robust E&D trajectory continues to support our confidence in maintaining strong balance sheet flexibility to finance our ongoing investment program. At year-end, we expect our debt factor to come in at around 4.5 times economic net debt to adjusted EBITDA based on the current interest rate environment. Finally, I would like to conclude today's presentation with my key takeaways and outlook. First, we have delivered strong nine months group results and are well on track with our investment ramp up. Our strong balance sheet provides a solid foundation for continued organic growth. Second, on our outlook. Our nine-month performance supports our 2025 earnings expectations. In our energy network segment, we continue to expect to reach the upper end of the guidance range, driven by value-neutral timing effects. This also positions us at the upper end of our group EBITDA guidance range for the full year 2025. For our adjusted net income, we still expect to land comfortably within our guidance range. With that, we fully confirm our full year 2025 guidance and 2028 outlook, including our dividend policy. With that, back to you, Iris, for the Q&A.

Thank you, Nadja. And with that, we will start our Q&A session. And as always, I would like to ask you to please stick to two questions each. So everyone or everyone who would like to ask a question has the opportunity to do so. And we will start today's call with a question from Harry Weybert from Exxon. Hi, Harry.