Welcome, ladies and gentlemen. Thank you for joining today's call on ENBW's results for the first half of 2026. I'm pleased to be joined by our Deputy CEO and CFO, Thomas Kustera, who will lead you through the presentation in just a moment. Afterwards, as always, we'll open the floor for questions. For those of you joining via webcast, please feel free to submit your questions at any time using the chat function. And with that, let me hand over to you, Thomas.
Yeah, thank you, Marcel, and welcome all of you. NVIDIA delivered a solid and resilient financial performance in the first half of 2026, despite elevated geopolitical tensions in the Middle East and ongoing volatility across energy markets. Earnings remain stable, supported by the resilience of our integration. At the same time, it continued to execute consistently on our strategic agenda. We made tangible progress across our growth priorities and further strengthened our well-balanced earnings structure. Let's now move on to the next slide and take a closer look at our key financial metrics. At 2.3 billion euros adjusted EBDA was largely stable year-on-year to provide a solid basis for achieving therefore confirm our guidance for fiscal year 2026 our financial performance was built on a record contribution mobility business continued turning to investments we deployed 2.4 billion euros in the first half of the year the focus remained firmly on low risk and sustainable infrastructure with 84 percent located 88.9 billion euros at the end of June Funding strategy remains aligned with our growth ambitions. And on to the next slide to share some operational highlights. Across Europe, energy security has moved back to the top of the policy agenda. Recent geopolitical developments have again highlighted the importance of domestic infrastructure. This is exactly where MBW's investment makes a difference. Across grids, power generation, flexibility, and customer infrastructure, we are helping to strengthen security of supply, affordability. In system grid infrastructure, our major north-south transmission grid projects continue to make strong progress. The 2-Gigawatt converter station for SUDLINK in Transnet BW's grid area is now closed to completion. Ultranet is in the final stretch and remains on track for commissioning by year end. Both projects are key building blocks for a secure and efficient energy system. In sustainable generation infrastructure, the share of renewables in our installed capacity reach a record of 72%. At the same time, we are expanding flexibility. Through large-scale battery storage projects in Marbach and Philipsburg, the combined capacity of 900 megawatt-hours are currently under construction. Together, they support a more resilient and increasingly self-sufficient energy system. In Smart Infrastructure for Customers, we further expanded our leading fast-charging network in Germany. We surpassed the milestone of 9,000 fast-charging points in the first half of the year. it supports the electrification of mobility and helps reduce dependence on fossil fuels. And with that let's move to slide five. On slide five let me briefly turn to Hedreit, a project that is setting a new benchmark for German offshore wind. Installation for all turbines is virtually complete. Hedreit now in the final phase of construction and nearing completion against this backdrop let me briefly note the recent rotor blade incident that some of you may have seen reported in the media the matter is currently being investigated and certain activities have been temporarily paused as a precaution while the river is ongoing we remain confident in the project overall progress at 960 megawatts head right is currently largest offshore wind farm in germany and will almost double mbw's installed offshore wind capacity to right around 1.9 gigawatts the project also highlights how far offshore wind technology has come over the past 15 years compared with 41 germany's first commercial offshore wind farm, which MBW commissioned in 2011. HeadRide delivers 20 times the capacity by requiring only around three times the number of turbines. Beyond its scale, HeadRide was one of the first offshore wind projects worldwide to be awarded without public support. Backed largely by long-term PPAs, it will make a meaningful contribution to our long-term earning space. Finally, European suppliers played a leading role across key components underlining both supply chain resilience and European industrial strength. Against this backdrop, let's now turn to the major energy policy reforms that continue to shape the investment environment for projects like it right. Please turn to slide 6. during the first half of the year we saw encouraging progress on several key energy policy initiatives while important details they need to be finalized the overall direction of travel is being increasingly supportive to investment and energy transition execution first the recent adoption of Germany's new framework for dispatchable generation the so-called Stroh VKG makes an important step towards establishing a capacity market provides greater investment visibility for dispatchable generation ahead of the first planned auctions later this year second the grid package is progressing through a legislative process better coordination between grid expansion and renewal build-out should support a faster and more efficient energy transition we continue to see scope for more and further improvements during the parliamentary process and we'll leave incentive-based approaches at the best way forward to reduce this redispatch costs and third discussions around the future renewables framework are moving in a constructive direction proposed support mechanisms including two-sided CFDs should enhance long-term revenue visibility and strengthen the business case for the for future renewable projects taken together these reforms should help unlock the next phase of investment in grids renewables and system stability with that let's turn back to our financial performance on slide seven as highlighted earlier adjusted evda reached 2.3 billion euros after six months and was in line with our expectations earnings continue to be in underpinned by a strong contribution from low-risk activities which accounted for 79 percent of adjusted evda at half year system career infrastructure alone contributed almost 60 percent reflecting the continued earnings impact of our investment program remaining segments also perform broadly as expected all by a lower at the lower end of the scale in sustainable generation infrastructure. In renewable energies, eco-hydro conditions were largely compensated by favorable wind conditions and organic growth. Server power generation and trading was impacted by softer market conditions but still remained a solid contributor. By contrast, smart infrastructure for customers recorded strong growth led by e-mobility. Let's now take a closer look at performance of our three business segments and move on to slide eight starting with system critical infrastructure adjusted evda of our grids business reached 1.3 billion euros in the first half of 2026 broadly in line with prior year earnings benefited from higher regulated revenues across all grid assets led by electricity distribution our regulated asset base is the key earnings driver for the segment and reflect the consistent expansion of our grid infrastructure. At the same time personal and maintenance costs increased in line with high operational activity and partly offset the asset based earnings growth. Overall the segment once again demonstrated the resilience and predictability of its earnings profile. Moving on sustainable generation infrastructure on slide nine that's that EVDA in sustainable generation infrastructure amounted to 806 million euros in the first half of 2026 and was below the prior year level while the earnings contribution from our renewables portfolio remained resilient despite exceptionally dry weather conditions segment earnings were impacted by a weaker performance in thermal generation and trading. Let me start with renewable energy. Adjusted EBDA amounted to 495 million euros. Earnings through resilience despite below average water flows and declining margins affecting hydro generation. This was largely offset by strong wind and solar performance supported by additional capacity. This included the continued ramp up of our offshore wind farm hit right which contributed positively to earnings. In thermal generation and trading adjusted EBDA was at 311 million euros after six months. Earnings were stable quarter on quarter but remained below prior year-level. Year-on-year earnings were affected by lower hedged generation margins and the scheduled phase out of coal capacity. This included our lignite exit at the end of 2025 as well as the transfer of high-grown hardcore power plant into grid reserve the combined capacity of around 1.7 gigawatts trading performance improved compared with the first quarter but remained impacted by continued market volatility that said margin movements were fairly moderate but our liquidity position remained strong it was fully consistent with our respective risk appetite underlining the effectiveness of mbw's risk management framework before moving on let me briefly touch on our hedge generation position for 2026 we are almost fully hatched looking further ahead hedge ratios for 2027 stand above 80 percent while 28 is between 40 and 70 percent also started hatching for 2029 already let's go ahead with smart infrastructure for customers on slide 10. in smart infrastructure for customers adjusted ebda increased by 33 year over year to 309 million euros reflecting a continued strong momentum in e-mobility Charging volumes continued to grow and translated into further earnings growth. IAFOSA fuel prices provided additional support. With more than 9,000 bus charging points and accelerating electric vehicle adoption, our market-leading network is well on track to achieve EBIT break-even this year. In addition, commodity sales delivered a strong performance and further supported earnings growth. Let me now turn to adjusted net profit and the reconciliation on slide 11. Adjusted net profit attributable to EMBW shareholders reached 595 million euros in the first half of 2026, broadly matching the prior year. A strong adjusted financial result particularly offset the decline in operating earnings. Positive valuation effects from the solid performance of financial assets covering dedicated long-term obligations more than compensated for slightly higher interest expenses. At the same time, earnings attributable to non-controlling interests increased, reflecting better performance of minority owned entities and weighing on adjusted net profit moving on to slide 12 with a brief update on our investments at a half year mark cross investment amounted to 2.4 billion euros the year on year decline was fully anticipated and mainly reflects portfolio effects including our value driven exit from two offshore wind projects as well as the timing and maturity of projects currently under construction. Importantly, it does not indicate any slowdown in the execution of our investment program. Overall, 88% of these investments were taxonomy aligned, while 83% were directed towards growth. Our investment priorities remained unchanged and continued to focus on grid. The system-critical infrastructure accounted for 61% of gross investments in the first half of the year, supporting the expansion and modernization of our electricity and gas grids as the backbone of the clean energy transition. Further, 30% of investments were directed towards sustainable generation infrastructure. This primarily included our offshore windpipe, K3T, and the construction of two hydrogen-ready gas-fired power plants. The remaining investments mainly supported the continued rollout of our fast-charging network in smart infrastructure for customers. On the funding side, cash inflows from project partners increased as planned and mainly related to H3T and Transnet BW. These contributions continue to complement our diversified financing framework. And with that, let's take a brief look at our retained cash flow on slide 13. Retained cash flow amounted to 787 million euros in the first half of 2026 and developed in line with our expectations. Compared to the prior year, the decline mainly reflects lower operating earnings, higher non-cash effects in our gas storage business due to the higher price environment and higher cash contributions to shareholders following both the increase in our dividend per share and our capital increase and with that let's move on to net debt on slide 14. the half year mark net debt stood at 13.9 billion euros slightly up from year end 2025 net cash investments of 2 billion euros were the main driver for it partly offset by our solid cash generation structural support came from our permanent hybrid stock capital stock which reached its increased target level of 3.5 billion euros by the end of June. During the first quarter we successfully issued 1 billion euros of new hybrid capital. Following the subsequent redemptions of an existing hybrid instrument the resulting increase in equity credit amounted to 250 million euros as reflected in the bridge. Let's close today's presentation with a few remarks on our full year guidance. Ladies and gentlemen, as outlined at the beginning of the presentation, we are on track to deliver our full year guidance for fiscal year 2026. As discussed, sustainable generation infrastructure is currently trending towards the lower end of our expectations, while the overall group outlook remains unchanged. earnings were solid despite continued geopolitical uncertainty and volatile market conditions the same time we maintain strong operational momentum across our strategic business growth businesses our integrated and predominantly low risk business model continues to provide resilience while ongoing progress in Germany's energy policy framework further supports the long-term investment case. Taken together, this leaves us well positioned for the remainder of the year and beyond. And now let me hand back to Marcel.
Thank you Thomas. Ladies and gentlemen, we'll now start the Q&A session. Moritz, please begin.
Operator
Thank you. Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their telephone. You You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Questioners on the webcast viewers may submit their questions in writing via the relative field. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. There are no questions by phone at this time, so I would like to turn it back to Marcel Munch for any written questions.
Yeah, thank you, Moritz. We have a few questions submitted via the webcast function. So let me start with the first question raised by Joshua Kreisel from Inside Investment. If EBW wins capacity in the dispatchable capacity tenders in September or December, when would the project pass final investment decision? And what would be the annual CapEx profile through commercial operation?
I think that's a question from Joshua Kreisel. if i'm not mistaken uh thanks for the question uh actually first of all we need to make sure that we are going to participate and then win in in the auction so um i will not give you an any indication regarding our potential financial uh final investment decision on on any power plant that's at this point just not possible to in all fairness and secondly I mean it's a tender process so we are certainly not providing any indication regarding volumes or capacity we potentially would be participated in any kind of auction.
Thank you Thomas and we have another question by Bobby Dinkoff from Credit Sites which went into the same direction so Bobby I will pass it because Thomas answered it as he went along if you have a follow-up questions follow-up question please regarding which elements of the new upcoming regulatory period remain most important every area of focus or other aspect are there other and thanks for the question actually and I think it's not just one
number you can pin it down to it's the overall system and we need to ensure that from a regulatory group.
A few questions regarding our ratings target and S&P's most recent update on our credit ratings. I'll try to group them so we can answer them in a coordinated way. It was raised amongst others by Pritvi from BOFA and Alessandra MacDonald. So let me start with the first one. Can I kindly ask on the credit ratings target? In the past, there was a solid commitment to a minus ratings at S&P. How are you viewing those credit ratings in light of S&P's negative outlook? Do you have any obligation to maintain that A- rating with S&P? Clearly you have sufficient levers to maintain A- ratings, including additional hybrid bond issuance. Keen to hear your views.
Thanks a lot actually for the question. And let me be precise actually that we are fully committed to a solid investment. We never said that. What we've seen from S&P lately, all by this negative outlook, and that very much relates to credit metrics might be under pressure. It's not a big surprise that we as a company are currently in a phase of materialized over time. I mean, when you look at our project, our transition grid, they have a substantial lead time and construction time. So it's not a big surprise that we are seeing. So I think it's fair to say that we've managed over the past couple of years a lot of financial discipline, value creation, and you can assume that we are waiting. I think we do have a strong risk earnings. You've seen the cash flows. And also, actually, we are able to, again, still commit it.
Thank you, Thomas. Now, there are a few questions regarding our CapEx program and the expected development of net debt. Let's start with a clarifying question by Alessandra MacDonald.
Alessandra, thanks a lot for the question. However, given a timeline of really relevant until the early 2030s, and we are going to see the latest guidance on the debt for fiscal year 20. Yeah, Bobby, the guidance is, as it was before, around $17 billion. Currently, we are just 26.
Up on that, a question from Michael Charlton from Corpus Santander. there where do you expect that that repayment ratio in our annual report I don't have it in an aspect of question actually I mean what I said in the
presentation is actually that we do have the feeling that that needs to be seen there's still a lot of Thomas now another question from Joshua Cradle from
Insight Investment rather than just hedge percent year hedges currently being added however thank you Thomas and one additional question from Michael Murphy
see with regards to the right in the way I mean obviously we we are not allowed to adapt inside however it's just about to finalize the turbine well our traditional questions came in regarding our capex plans and
let me group them together one came from Alvaro Sanchez from Wellington and the other one from the short treatment from inside investment the first one what explains the lower capex year on year mentioned what was it driven by and was it mainly timing factors what specifically caused the timing shift was site access civil works etc etc could you identify the main project affected by how much capex if any a very detailed question which we
will across most likely not on it it is predominantly timing destruction and already gas power stations at the same time but that's not so by year end
we do assume that today we do not see any kind of now again coming back to the capacity options for gas-fired power plants another question raised by Alvaro Sanchez from Wellington how much incremental EBTA could the proposed German capacity market generate for ENBW once fully implemented it how much are you expected expecting to get from the nine gigawatts i think that's we're provided we do think we we do have economically viable projects on hand however to what extent it's too early to say thank you thomas and then there's one final question from camilla can you provide an update uh camilla good question actually but we are basically located here in southern germany and we do not see an extreme thank you thomas and there was One final question here, why are the back cars that came in again, just from mind repeating the capital?
In line with the specific, so last year we were about $7 billion, and this year we will be around $7 billion. The guidance is pretty much flat.
Thank you, Thomas, for that. Now let me briefly check with the operator, Moritz, whether there are any other questions that came in via the call.
Operator
There are no questions by phone at this time.
Thank you, Moritz. Yeah, then with that, we come to a close. once again thank you very much Thomas and to everyone online as always if you have any further questions please don't hesitate to reach out to IIR team for more details or in-depth discussions all the best have a great rest of the day and for those who still have it in front of you have a great summer break bye
