Letter to shareholders

We have been transforming ourselves from a conventional energy company into a strong and innovative partner for energy and infrastructure for the last eight years. We have learned to consider the central themes and trends of our time, such as climate protection, the mobility transition, digitalisation and urbanisation, as opportunities to secure the future viability of our company. We have made the ability to change into one of our key skills.

We developed the EnBW 2020 strategy in 2013 with the target of reaching the same level of earnings in 2020 as in 2012: an adjusted EBITDA of €2.4 billion. The strategy has been rigorously implemented since then and we have already achieved our earnings target for 2020 one year early. In 2020, we will conclude the fundamental transformation of the business portfolio to meet the requirements of a new energy world. The fact that the earnings contributions made by the individual segments have been completely transformed in comparison to 2012 demonstrates how profoundly we have changed over the last few years. We have also been able to improve in the non-financial goal dimensions: The good reputation of EnBW amongst important stakeholders has once again improved, while customer satisfaction and supply reliability are at a high level. The trust placed in the competitiveness and future viability of the company by our employees has increased and occupational safety has also improved further. The expansion of renewable energies is continuing according to plan, while the CO2 intensity of our own generation of electricity has fallen.

We initiated many new things and continued with others – across all segments – in 2019. Here are some examples:

In the Sales segment, we have now achieved growth two years in a row after considerable repositioning efforts. Our subsidiary Senec is one of the top 3 suppliers on the German market for home storage systems for solar power plants. By expanding our public charging network for electromobility and through collaborations with renowned partners, we currently have the most comprehensive charging infrastructure for e-cars in Germany. In Baden-Württemberg, municipal utilities, suppliers and local authorities worked together under our leadership to establish a core charging network for electric vehicles. The acquisition of the broadband provider Plusnet in 2019 was a major step in building a strong position for ourselves on the nationwide telecommunications market in Germany.

The Grids segment is continuing to expand the transmission grids, converting them into smart grids and integrating various measures for electromobility in the process. A new participation model for the transmission grids that enables local authorities to acquire shares in Netze BW and thus play a part in the economic success of our electricity and gas grids has lifted the quality of our partnerships with local authorities to a whole new level.

In the Renewable Energies segment, the acquisition of the French developer of wind and solar projects Valeco is moving us forward and opens up potential for international growth. We have also completed the largest offshore wind project to be built in Germany to date – EnBW Hohe See and EnBW Albatros with a total output of 609 MW. In addition, we made the decision in 2019 to take on the construction of the largest solar park in Germany with an output of 180 MW without state funding. To finance this and other investments, we issued green hybrid bonds with a total volume of €1 billion in 2019 – the first German company to do so.

In the Generation and Trading segment, we continued to push forward the transformation of our portfolio. The proportion of CO2-intensive power plants has fallen by around 40% since 2012. In 2019, we had our bid accepted for the construction of a new gas turbine power plant as special technical equipment for grids and the Philippsburg 2 nuclear power plant was shut down for good on New Year’s Eve.

Please allow me at this point to comment on energy policy: We are following the deviations of the Coal Phase-out Act from the recommendations made by the Coal Commission with some concern. The law is now detrimental to climate protection and detrimental to a sustainable Energiewende, especially in southern Germany. Therefore, we are calling on the German government to return to the recommendations made by the Coal Commission and also to improve the planning of the expansion of renewable energies.

Following our realignment and repositioning phase, we have now switched our priority and are on track for growth. We have set ourselves the target of an operating result of €3.2 billion in 2025. The acquisitions of Valeco and Plusnet in 2019 were already the first steps in this direction. As part of our EnBW 2025 strategy, we are transforming ourselves into a sustainable and innovative infrastructure partner for our customers and other stakeholders. In the process, we are also branching out beyond the traditional boundaries of the energy sector to open up new growth areas for our core expertise – the safe and reliable construction and operation of critical infrastructure. Urban infrastructure is a good example of one of these growth fields. We understand this to be the smart networking of energy, transport, telecommunications, security and more in the public sphere. However, we aren’t going to just approach this from a technical perspective – we want to create liveable districts for people.

We are striving to make the business activities at EnBW even more sustainable in future – an ambitious goal for which the security of supply must be addressed during its realisation. As in the previous strategy period, the achievement of these targets will require the outstanding performance of the whole team at EnBW and plenty of creativity, while always placing the focus on the customer. We have already achieved this once.

Yours sincerely,

Dr. Frank Mastiaux
Chairman of the Board of Management