Financial management
Foundations
- Management of financial transactions within the Group finance department in order to minimise risk, optimise costs and increase transparency
- Deployment of derivates in the operating business generally for hedging purposes only: for example, for forward contracts for electricity and primary energy source trading
- Interest rate risk management for managing and monitoring interest-sensitive assets and liabilities / Interest rate risk strategy to limit the risk of interest rate changes for the Group
- Currency management system to monitor foreign exchange risks
Objectives
- Payment obligations can be fulfilled without restriction
- Balanced financing structure
- Solid balance sheet ratios
- Solid investment-grade ratings
Positive creditworthiness of high importance
To maintain the future viability of the company, EnBW aims to hold solid investment-grade ratings, in order to
- ensure unrestricted access to capital markets
- offer reliable opportunities for financing partners
- be regarded as a dependable business partner in our trading activities
- achieve the lowest possible capital costs
- implement an appropriate number of investment projects
Key performance indicator for creditworthiness management
The central goal of the EnBW 2025 strategy is to increase adjusted EBITDA to €3.2 bn. As it will not be possible to exclusively finance this growth phase using funds from our internal financing capability, we will manage the financial profile from 2021 using the debt repayment potential.
2021 to 2025: Debt repayment potential¹
Controlled growth during the further development into an infrastructure partner
¹ To maintain solid investment-grade ratings, EnBW regularly checks the 2025 target value for the debt repayment potential for managing its financial profile.
Financing strategy
Management of financing needs of operating activities separately from the Group’s pension and nuclear obligations
- Managing financing needs of operating activities
- Constant assessment of capital market trends with regard to
- current interest rate environment
- any potentially favourable refinancing costs
- Constant assessment of capital market trends with regard to
- Coverage of pension and nuclear obligations using asset liability management model
Alongside the internal financing capability, we have various financing instruments at our disposal:
Financing instruments
|
Programme
|
Value0Rounded figures
|
|---|---|
|
Programme
|
Value0Rounded figures
€10 billion, thereof €4.7 billion utilised0As of 30 September 2022
|
|
Programme
Subordinated bonds
|
Value0Rounded figures
€2.5 billion0As of 30 September 2022
|
|
Programme
Promissory notes
|
Value0Rounded figures
€0.5 billion0As of 30 September 20220Issued 6 July 2022
|
|
Programme
US Private Placement
|
Value0Rounded figures
€0.9 billion0Issued 9 November 2022; €860.95 m equivalent (€400 m, US$270 m, £168 m, converted as of the reference date of 9 November 2022)
|
|
Programme
Sustainable syndicated creditline
|
Value0Rounded figures
€1.5 billion, undrawn; Maturity date: 20270As of 30 September 20220Term until the end of June 2027 after exercise of the second extension option for a further year.
|
|
Programme
Commited bilateral credit lines0Includes amongst others €660 m loan agreement of VNG with KfW (until April 2023) as of 5 April 2022
|
Value0Rounded figures
€2.9 billion, thereof €0.1 billion utilised0As of 30 September 2022
|
|
Programme
Uncommited bilateral credit lines
|
Value0Rounded figures
€1.5 billion, thereof €0.1 billion utilised0As of 30 September 2022
|
|
Programme
|
Value0Rounded figures
€2 billion, thereof €0.8 billion utilised0As of 30 September 2022
|
- Project financing and loans from the European Investment Bank (EIB)
- In addition, subsidiaries have other financing activities in the form of bank loans and promissory notes
Maturities of EnBW’s bonds
Management of financing needs for pension and nuclear obligations
as of 30 June 2022
- Ensuring timely coverage of the pension and nuclear obligations
- Coverage of long-term provisions by corresponding financial assets within an economically reasonable period
- Cash flow based model
- Determining the effects on the cash flow statement and balance sheet over the next 30 years taking into account
- Anticipated return on financial assets
- Sector-specific appraisals by external experts on costs for nuclear decommissioning and disposal
- Actuarial reports on pension provisions
- Limiting the impact of payments for the pension and nuclear obligations on the operating business to €360 million a year (plus an inflation supplement) by taking funds from the financial assets
- After fully coverage of the considered provisions by the financial assets, no further funds will be taken from the cash flow from operating activities
- Portfolio strategy considers planned withdrawal of funds from the financial assets
- Broad diversification of the asset classes
- Risk-optimised performance in line with market trends
- Reduction of costs and simplification of administrative processes
Alongside the internal financing capability, we have various financing instruments at our disposal:
Financing instruments
|
Programme
|
Value0Rounded figures
|
|---|---|
|
Programme
|
Value0Rounded figures
€10 billion, thereof €4.7 billion utilised0As of 30 September 2022
|
|
Programme
Subordinated bonds
|
Value0Rounded figures
€2.5 billion0As of 30 September 2022
|
|
Programme
Promissory notes
|
Value0Rounded figures
€0.5 billion0As of 30 September 20220Issued 6 July 2022
|
|
Programme
US Private Placement
|
Value0Rounded figures
€0.9 billion0Issued 9 November 2022; €860.95 m equivalent (€400 m, US$270 m, £168 m, converted as of the reference date of 9 November 2022)
|
|
Programme
Sustainable syndicated creditline
|
Value0Rounded figures
€1.5 billion, undrawn; Maturity date: 20270As of 30 September 20220Term until the end of June 2027 after exercise of the second extension option for a further year.
|
|
Programme
Commited bilateral credit lines0Includes amongst others €660 m loan agreement of VNG with KfW (until April 2023) as of 5 April 2022
|
Value0Rounded figures
€2.9 billion, thereof €0.1 billion utilised0As of 30 September 2022
|
|
Programme
Uncommited bilateral credit lines
|
Value0Rounded figures
€1.5 billion, thereof €0.1 billion utilised0As of 30 September 2022
|
|
Programme
|
Value0Rounded figures
€2 billion, thereof €0.8 billion utilised0As of 30 September 2022
|
- Project financing and loans from the European Investment Bank (EIB)
- In addition, subsidiaries have other financing activities in the form of bank loans and promissory notes
Maturities of EnBW’s bonds
Management of financing needs for pension and nuclear obligations
as of 30 June 2022
- Ensuring timely coverage of the pension and nuclear obligations
- Coverage of long-term provisions by corresponding financial assets within an economically reasonable period
- Cash flow based model
- Determining the effects on the cash flow statement and balance sheet over the next 30 years taking into account
- Anticipated return on financial assets
- Sector-specific appraisals by external experts on costs for nuclear decommissioning and disposal
- Actuarial reports on pension provisions
- Limiting the impact of payments for the pension and nuclear obligations on the operating business to €360 million a year (plus an inflation supplement) by taking funds from the financial assets
- After fully coverage of the considered provisions by the financial assets, no further funds will be taken from the cash flow from operating activities
- Portfolio strategy considers planned withdrawal of funds from the financial assets
- Broad diversification of the asset classes
- Risk-optimised performance in line with market trends
- Reduction of costs and simplification of administrative processes
Corporate strategy
Following the successful portfolio transformation, EnBW is now on the way to becoming a key infrastructure partner
Starting in 2013, we transformed the EnBW business portfolio under our EnBW 2020 Strategy. We raised the regulated grid business and renewables share of adjusted EBITDA from around 40% in 2012 to 70% in 2019.
In the logical continuation of our strategy, we are combining our business portfolio from 2021 into three strategic segments:
- System-critical infrastructure
- Sustainable generation infrastructure
- Smart infrastructure for customers
This reflects our transformation into a sustainable and innovative infrastructure partner. The central target under the EnBW 2025 Strategy is an increase in adjusted EBITDA to €3.2 billion.
Total investments 2021-2023
We plan total capital expenditure of some €12 billion. 80% of this will be on growth projects. The expenditure is to be financed out of retained cash flow and also, if necessary, by borrowing. We continue to aim for a balanced financing structure, a solid financial profile and therefore solid investment grade rating.
- Grid expansion
Key projects include the SuedLink and ULTRANET transport networks that are critical for Germany’s future energy supply, and investment in electricity distribution grids to upgrade them and prepare them for the needs of electric mobility. - Expansion of renewables
Including completion of the EnBW He Dreiht offshore wind farm by 2025 - Further evolution of smart infrastructure for customers
Including broadband, telecommunications and electric mobility
Click here for further information on our Corporate strategy.
Climate neutrality by 2035
By 2035, we will reduce the company's CO₂ emissions to net zero. In doing so, EnBW will stick to the requirements and targets of the Paris Climate Agreement.
¹ The EnBW climate neutrality target refers to our own emissions (Scope 1 and 2). Scope 3 is mainly influenced by the gas consumption of our customers and would require the use of climate-neutral gases in the future. The target refers to CO₂eq (CO₂, CH₄, N₂O and SF₆). The reference year is 2018.
² Includes in part the offsetting of remaining residual emissions due to the acquisition of recognized compensation certificates.
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Further information on climate neutrality can be found here.