RWE AG

XETRA:RWE

Earnings Call Transcript 2019-Q1

[Operator]

Welcome to the RWE Conference Call. Markus Krebber, CFO of RWE AG will inform you about the developments in the first quarter of fiscal 2019. [Operator Instructions] I will now hand over to Gunhild Grieve.

[Gunhild Grieve, Head of Investor Relations]

Thank you very much. Hello to everyone on the phone and to those who are joining us via webcast. I'm joined here by Markus Krebber for the presentation on the first quarter of fiscal year 2019. As with our previous presentations, we will concentrate on RWE standalone. In order focus on your questions, we've kept it short. So let's hand over straight to Markus.

[Markus Krebber, CFO & Member of the Executive Board]

Yes, thank you, Gunhild, and welcome, everyone. It has been a good start into fiscal year 2019 for RWE. On the back of an outstanding performance by Supply & Trading as well as solid earnings from Lignite & Nuclear, it has been a good first quarter. Even so, the European Power division had a weak start into fiscal year 2019. Distributable cash flow in Q1 was strong at EUR 484 million supported by the expected reversal in working capital. At the end of March, our net debt stood at EUR 4.7 billion. As expected, we saw a reversal of variation margins with the realization of the underlying contracts. In addition, the development of commodity prices led to an outflow of margins. Furthermore, we exercised the right to redeem the GBP 700 million hybrid bond on its first call date. We now have 3 hybrid bonds with a total value of approximately EUR 1.1 billion outstanding. We confirm the outlook for the RWE Group and RWE standalone as well as our targets to pay a dividend of EUR 0.80 per share for fiscal 2019. When it comes to our energy transaction with E.ON, we continue to make good progress in the preparation for the swift integration of both renewable businesses. We recently announced further appointments to the management team of our future Renewables business. We also signed a new EUR 5 billion syndicated credit agreement. It replaced the previous EUR 3 billion credit agreement and will enable the smooth integration of the renewables operations of innogy and E.ON. While we have received clearance from the European as well as the German and U.K. Competition Authorities for our part of the transaction, the European Commission stopped the clock twice and thereby, extended the deadline on its review of the planned takeover of innogy's network and retail assets by E.ON. This kind of procedure is normal for such a complex transaction. Merger clearance is currently expected by the end of Q3/early Q4. Operational control of the Renewables business of E.ON and innogy is still expected by year-end. In order to conduct a thorough customer due diligence and allow the Renewables management to settle into the new company, we will hold our Capital Market Day in March next year. Let's take a look at the development of our adjusted EBITDA. For RWE standalone, it amounted to EUR 510 million. The increase is mainly driven by an outstanding trading performance and the strong gas and energy business. Despite lower generation volumes, earnings at Lignite & Nuclear are on previous year's level due to higher realized generation margins. Earnings of the European Power division suffered from lower production volumes and a weak commercial asset optimization as well as the suspended U.K. capacity payments. The adjusted EBITDA does not yet include the innogy dividend, which will be accounted for in Q2. Slide 4 provides the performance details of the Lignite & Nuclear division. Year-on-year, the production volumes came down. Among others, driven by the restrictions at the Hambach mine and outages. However, slightly higher generation margins have been realized and led to a solid earnings contribution on the previous year's level. The increase in depreciation is mainly influenced by changes from the IFRS 16 application and interest adjustments for nuclear provisions, which led to higher asset values for the operating plants. For the full year, we confirmed the outlook for an adjusted EBITDA between EUR 300 million and EUR 400 million. The European Power division realized an adjusted EBITDA of EUR 63 million. Higher renewable feed-ins and the warmer weather conditions led to lower generation output at our power plants as well as weaker earnings from commercial asset optimization. In addition, we missed EUR 19 million of U.K. capacity payments which we received in Q1 last year. While we confirm the outlook for the full year, we now expect to be at the lower end of the provided range. Now on to our current hedge position on Slide 6. For 2019 and 2020, hedge prices stayed flat as we are almost fully hedged. For 2021, we increased the hedge position to more than 90% and the hedge price moved from EUR 37 to EUR 39 per megawatt hour. The increase of approximately of EUR 2 was driven by higher carbon prices which means that hedge margins are unaffected. We have now also included our hedge position for 2022. More than 50% of the outright generation is already hedged. With a hedge power price of EUR 44 and a hedge carbon price of EUR 14, margins also remain stable in 2022 despite the rally in carbon prices. However, we still retain upside from our implicit fuel hedge in case fuel spreads increase in the future. Let me also remind you of our long-term carbon position, which we have financially hedged through until the mid-2020s. In other words, a change in carbon prices should not affect our generation margins for the coming years. As mentioned, we have seen this affect our hedge prices for '21 and '22. On Page 7, you can see the development of fuel spreads. Until the end of Q1 2019, which are relevant for our hedge prices you saw on the previous slide. Since the beginning of the year, we have seen a minor increase in fuel spreads. The fuel spread curve for calendar year 2022 is also included for the first time where we still see some upside. Now onto the earnings development of the Supply & Trading division on Slide 8. The Supply & Trading business had a very good first quarter, especially compared to a negative contribution in Q1 2018. The division achieved an EBITDA of EUR 255 million on the back of an outstanding trading performance and strong earnings from gas and LNG. We maintain our guidance for the full year but we are optimistic that we'll end the year at the upper end of the range of EUR 100 million to EUR 300 million. Ladies and gentlemen, Slide 9 provides the earnings drivers down to adjusted net income. Our adjusted net income amounted to EUR 273 million in Q1 2019. Besides the typical adjustment of the nonoperating result and the corresponding tax position, we have mainly corrections in the financial results resulting from IFRS 9 and changing to discount rates for long-term provisions. Now onto our distributable cash flow on Slide 10. The distributable cash flow in Q1 is also on a high level amounting to EUR 484 million. It is dominated by 2 drivers: Firstly, the high adjusted EBITDA; and secondly, the positive effects from changes in working capital. The latter is a timing effect from last year which we already indicated in our 2018 result presentation in March. At the end of last year, we saw unusually high levels of gas inventories and higher-than-usual accounts receivables which have now come down. This overcompensated the typical seasonal effect of an increase in working capital due to the purchase of CO2 certificates. We also expect to end the year with a positive effect from change in working capital. Changes in provisions and other noncash items are also impacted by the accounting of CO2 emissions. By the recognition and provisions run throughout the year, the utilization takes place in Q2. For the full year 2019, we can confirm our expectation from March to reach a level of approximately minus EUR 500 million in change in provisions and other noncash items. For our British pound hybrid, we paid the full year coupon of some EUR 60 million in Q1. This is the last payment for this hybrid bond, as we called it in March. Details on the development of net debt are shown on Slide 11. At the end of March, net debt stood at EUR 4.7 billion, which is an increase of approximately EUR 2.4 billion compared to the reported net debt at year-end 2018. Essentially, the increase is driven by an outflow variation margins as well as realization of the underlying transactions for which we had received variation margins last year. Furthermore, the call of the British pound hybrid increased our net debt as we did not refinance it with another hybrid and consequently, lost the equity credit. The first time implementation of IFRS 16 increased net debt by EUR 138 million. Finally, this brings me to our RWE standalone earnings outlook for 2019 on Slide 12. As already mentioned at the beginning of my presentation, we can confirm our earnings outlook for fiscal year 2019. With this, I conclude my remarks, and we are now happy to take all your questions.

[Gunhild Grieve, Head of Investor Relations]

Thank you, Markus. And with this, I would hand over to the operator to provide the first question.

[Operator]

[Operator Instructions] The first question comes from the line of Martin Tessier from MainFirst.

[Martin Tessier, Research Associate]

Two questions, actually. For the first one is on the variation margins. So you recorded a EUR 2.9 billion outflow in Q1 out of EUR 4.4 billion in full year '18. Given the large portion already offset. Is it fair to assume that the remaining EUR 1.5 billion will revert in full year '19? And my second question is on your 25% stake in Amprion. Given that it's not pure renewables generation business, do you consider it as core, noncore or under assessment?

[Markus Krebber, CFO & Member of the Executive Board]

Yes, thanks, Martin, for the question. Let me start with the easier one, that's the second one, our stake in Amprion is a strategic investment so it's core. It is there to stay with RWE. On the variation margin, the outflow in 2019 the first quarter had 2 elements. One was the settlement of underlying transactions. This was roughly around EUR 1 billion and then an outflow from price movements, which was the remainder. And as you might have seen, especially carbon and power prices turning around in Q2, we currently have seen an inflow. So we should we not expect that the remainder of EUR 1.5 billion will outflow this year. Actually, we have seen that the number come -- the outflow came down and we have seen an inflow in Q2. The EUR 1.5 billion relates -- which you rightly derived from the 2 figures we have provided in the footnote on the slide, but the EUR 1.5 billion is to be expected outflow of the full lifetime of the transaction and since we have also a very long-term carbon hedge in place, this is an outflow which would come over years. But of course, especially due to price movements in the first quarter, we have seen an unexpectedly high outflow from -- not from settlements, but from commodity price movements.

[Gunhild Grieve, Head of Investor Relations]

Is that okay, Martin?

[Martin Tessier, Research Associate]

Very clear, yes.

[Operator]

The next question comes from the line of Ahmed Farman from Jefferies.

[Ahmed Farman, Equity Analyst]

I just wanted to start with the Lignite & Nuclear division where you posted fairly solid set of numbers and actually a bit above consensus expectation. Although I think when the volumes data was released it seemed a bit light versus your sort of full year targets. So I just wanted to understand if there was an extra efforts or any new initiatives on the cost-cutting within that division that happened over the first quarter '19? That would be helpful. The second thing, you mentioned 2 sort of key milestones you expect in the merger clearance in Q3 and then expect to take control of the Renewables business by the end of the year. Could you just help us understand, what are the sort of steps in between that need to happen between those 2 milestones? That will be very helpful.

[Markus Krebber, CFO & Member of the Executive Board]

Yes. Ahmed, thanks for the question. On Lignite & Nuclear, to start with the summary, there were no extraordinary items in the results and no extraordinary efforts. You rightly pointed out that production volumes are significantly down, but I mean, out of the 5.4 terawatt hours we have produced less in the first quarter last year, 1.2 terawatt hours are from Mátra. So from our Hungarian operations, which was not making any profit. And 1 terawatt hour was because we moved additional capacity into the lignite reserve and that is compensated under the agreement with the government. So also no lost net earnings here. And on the remainder, we just had approximately 3 terawatt hours partly coming from the Hambach mine restrictions. Of course, there, we lose some margin but that was exactly compensated by the higher realized generation -- or the higher realized power prices or spreads, which compensated net loss in production volume. So more or less, it was a development as expected and this is in line with the full year guidance. So no extraordinaries. On the merger clearance, the question on what needs to happen between the 2 steps. So the first step is the formal merger clearance, which would allow us to close the transaction with E.ON by selling the innogy shares to E.ON. And then it takes 2 steps. One is maybe one which takes 1 or 2 weeks, which we need to get operationally fully ready to take back the E.ON Renewables business so that E.ON sells their Renewables business. And the second step is that the innogy Renewables business needs to be moved back to RWE. That needs a bit more work where we are currently looking into how we actually do that because E.ON cannot instruct innogy to do so because they have no legal integration measures achieved by that time. But we are optimistic that we achieve it and that we have full operational control of both Renewables business by the end of the year.

[Operator]

Next question comes from the line of [ Jane Evans ] from Goldman Sachs.

[Alberto Gandolfi, Head of European Utilities Research]

Hello? Can you hear?

[Gunhild Grieve, Head of Investor Relations]

Yes. It's Alberto. Hi Alberto.

[Alberto Gandolfi, Head of European Utilities Research]

I see there was a mistake so I dialed from my phone and it said the name of a colleague of mine that has nothing to do with it, so I don't know what happened, I am sitting at my desk. Apologies for the [ slight substance ]. I have 2 please. The first one is on, again, on the economic net debt. I take that there's quite a lot of items moving around here a little bit. But just to be a little bit more precise I would say the following. So you have a EUR 1.5 billion of cash position in there and carbon has gone up. Can you maybe talk a little bit more about the constituents, i.e., what type of swing in working capital would you expect for the remainder of the year, excluding variation margins? And the moving carbon we have already seen since the end of March up until now, how much is that worth in terms of cash? And any other item we should be thinking about? And the second question is a little bit more on your Renewables business. I mean you talked about a gross annual addition target between 2 and 3 gigawatt. I know you technically don't on the businesses yet, but you've put in place the org chart, you talked about targets. So considering the high visibility, you normally have over 12, 24 months where you can almost name project by project. Could you tell us, on a pro forma basis, on a gross level, how much would you expect to add during 2019 and how much you are looking at adding for 2020 and maybe what type of confidence, in terms of what's already coming, I guess, you contracted machines, you have civil works which have begun, connection, permits, all the rest. If you can give us a bit of clarity on that it will be great?

[Markus Krebber, CFO & Member of the Executive Board]

Yes. Thanks, Alberto. On the first question, there is -- in the working capital, there is no variation margin in there. So the carbon effect in working capital is only that we buy the certificates in Q1 and we have to hand them into the regulator in Q2. So the carbon effect on the working capital for the full year is always 0. And the same actually if you don't assume any big price movements on the utilization of provision. So on a year -- on a full year basis, the effect is always 0. You only have the cyclicality that you have a negative effect in carbon -- from carbon working capital in Q1 and a negative effect in Q2. And then balancing over the year that the net effect is 0. So the margining effect -- margin effect is only in our net debt figure because we have excluded it from distributable cash flow. Now you want to understand what the positive effect of the carbon price movement is in Q2 or up to now, which I cannot give you because you know the market price movement, you could easily calculate our implicit carbon positions, which we are not able or not willing to disclose. But what is right, I mean -- and partly stemming from the carbon position but also from other commodities, from end of Q1 until now, we have seen significant inflows compared to the EUR 1.9 million net outflows purely stemming from commodity price movements. The other EUR 1 billion was expected settlements of transaction. I think that's it on the first question. The second one, on the Renewables side. I mean whenever you talk about -- you have contracted or you have high visibility, that actually means that the innogy guys and the E.ON guys. Of course, to the extent it is allowed for competition reasons, we have transparency. But actually, we need to ask the question to the innogy and E.ON colleagues and then add up what they are willing to disclose publicly. And of course, you know from what they have communicated that especially we are definitely not falling short of the ambition to invest EUR 1.5 billion net capital from ourselves over the next 2, 3 years. There is already high visibility from the committed CapEx they have communicated. And the target of adding 2 to 3 gigawatts was always a question. Is the pipeline so healthy that we leverage up a bit and also take on both partners that we go beyond the EUR 1.5 billion? But for the valuation of the company, the most relevant figure is net investment of EUR 1.5 billion of our own money. And there, we don't see -- we hardly don't see any limitations to be able to invest that on an annual basis over the next 3 years because that must come from the already existing business of E.ON and innogy because we have a higher lead time to develop projects. And I'm optimistic that we can go on a gross basis beyond that. But I cannot give you any more details because what I don't have is what innogy and E.ON have already disclosed and I don't want to mix up what they have disclosed and what I know.

[Gunhild Grieve, Head of Investor Relations]

I can maybe just add to -- I mean, I can add because I don't have the insights which Markus has so I just comment on a public number knowledge and you can find actually the numbers in our company presentation. So far, what the 2 companies have publicly announced, the additions are annually roughly 0.7 gigawatts although that was end -- their announcement for end of 2018 and I believe that both companies have meanwhile announced the one or the other project on top of that. So yes, that's as far -- what we can say.

[Alberto Gandolfi, Head of European Utilities Research]

Right. And sorry just to be super clear because I didn't hear a number. On the working capital, because you've both issued to certificates in Q1, can you give us a number on that? You said not on the variation margins or you know, the entire hedge position, but can we know a million-euro number, which is supposed to revert in Q2? So at least we can forecast the debt?

[Markus Krebber, CFO & Member of the Executive Board]

No. In order to forecast the debt, what you need to assume is what will be the net effect on distributable cash flow and what I said in my speech is that for the working capital item on the -- in the distributable cash flow composition, we expect at the end of the year a positive effect on working capital. That's a couple -- I mean, EUR 100 million to EUR 200 million positive.

[Operator]

Next question comes from the line of Vincent Ayral from JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

So most of my questions were actually on the net debt. So I think we've gone through that in detail. But now, I would just would like to check 1 or 2 things, when we look at the change of hedging and the outright and the implied price would be about EUR 55. I know there's quite a narrow margin given the rounding in the numbers you give. But is it for you something which makes sense as an estimate, I know we see a fork around EUR 50 at the moment. So that seems a bit high. The second, I would like to ask is just to get a bit more clarity on the comment you made regarding -- or more detail, we'll call it, regarding the nuclear discount rate and the impact on the pensions -- on the liabilities provisions, sorry, on nuclear in Q1. A bit more color there would be appreciated.

[Markus Krebber, CFO & Member of the Executive Board]

I don't know whether I got the first question correct. It was the implied hedge price of the closed position in Q1, right?

[Vincent Jean Michel Ayral, Analyst]

Yes. Yes, indeed.

[Markus Krebber, CFO & Member of the Executive Board]

Yes, I mean, you should expect that was around the average market price of Q1. So your assumption, I mean, slightly below or around EUR 50 is not bad. I think that is what -- where it was. Of course, you have overlying effects when we sometimes deviate the hedge passes, especially on the fuel legs which is also going into the average hedge price, but yes, I think in Q1 we achieved, on average, for the additional hedge volumes, the average price for -- which we have seen in Q1 for that specific year. On the nuclear provision side, the discount rate, the real discount rate was lower by 20 basis points and that -- by that the provisions increased by around EUR 100 million. And maybe also interesting, on the pension provision side, we also saw 20-basis-points drop in the discount rate but that was overcompensated by a positive performance of the assets. So we saw a slight release or reduction in pension provisions of also close to EUR 100 million in the other direction, so a reduction.

[Operator]

Next question comes from the line of Deepa Venkateswaran from Bernstein.

[Deepa Venkateswaran, Senior Analyst]

I have 2 questions as well. First one is on the lignite discussions with the government. Would you be able to provide an update on what's happening and where you expect the timeline, particularly with reference to what you've previously stated? And secondly, on the European Power Generation. I understand that the commercial asset optimization opportunities were lower than the quarter. Do you think that this is seasonal? Or is this something structural? Anything we need to read through for future years given that you've revised your guidance for the entire year to the lower end of the guidance on that one?

[Markus Krebber, CFO & Member of the Executive Board]

Yes. Thanks, Deepa, the questions. The first one, on the discussions with government. We are on working level in discussions with the government. The timeline, which we have communicated earlier has not changed. So we expect it to take some time. The government is firstly addressing the topic of how to find agreement on the support for the affected regions, especially since we expect now state elections over the year. And the question of how to exactly find agreement and put a law around it on the coal exit, that should be expected for the second half or maybe even end of this year. So it will take some more time before we can communicate any news on it. On European Power, maybe let me take the opportunity to explain a bit more in detail what are the drivers of the weak results in Q1. Starting with the summary, we don't see any structural cross-read into other quarters. So it was specific development in this first quarter. And the drop compared to the first quarter last year, was so significant because we also had extraordinary positive effect in Q1 last year. Not extraordinary, but the strong result from the circumstance. I mean if you may potentially remember in the first quarter last year, we had the so-called East from the Beast -- no, the Beast from the East. So the Beast from the East with -- I mean, the specific situation in the U.K. with very high power prices, very high gas prices, gas shortages and this resulted in very, very healthy DAX spreads for our Dutch fleet because I mean, we were exporting power to the U.K. at maximum capacity to interconnectors. And this year, in the Q1, we had exactly opposite, a very mild winter and very flat merit order, which doesn't give you lots of opportunities to optimize and also given that there was not much need for flexibility, very low prices for flexibility in the system and that is overall. And also lower production volumes because we had higher wind feed-ins. So this was an artificially low Q1 or very difficult environment for the existing conventional fleet, while the first quarter last year was a very favorable quarter for this fleet. So overall, our expectation is that for the rest of the year, we will more or less earn with this fleet what we earned last year. We, of course, lose the capacity payment in the rest of the year, but we have ramped up our biomass production in the Netherlands, where we -- from the agreement with the government, we have seen a pickup there. We see higher profitability from that and this will be an offset. So for the rest of the year, we expect to earn in European Power what we earned in Q2 through Q4 last year. And that brings you exactly at the lower end of the range.

[Operator]

Next question comes from the line of Sam Arie from UBS.

[Samuel James Hugo Arie, Managing Director and Research Analyst]

My question was going to be -- actually, just coming back to what, I think, was the big news this morning, which was your strong results from the trading division. It looks like you beat expectations there by a factor of 5, but your comments in your presentation were quite high level. So I just wondered if you could tell us a bit more about what was really going on there? How did you get to that result? And then I suppose in terms of your guidance for the high end of the range at the end of the year, I suppose you're assuming the rest of the year is normal but is there anything you been doing in Q1 that repeats or that could cause us to be more positive longer term about what the trading division can deliver? I'll start with just that one.

[Markus Krebber, CFO & Member of the Executive Board]

Yes. Thanks, Sam. Maybe disappointing because I cannot highlight anything specifically in the trading division. I mean, as you know, and we experienced that in the past, we typically run arbitration strategies and sometimes, it takes longer to -- that they pay off, sometimes, faster. And we had a situation that more or less all desks across all regions were making good money in the first quarter. So there's definitely no read across. There were also no extraordinary items which will revert in the remainder of the year. So that is why our expectation is for the remainder of the year, we should expect normal results. And of course, even with normal results for the rest of the year, the statement to expect to end up around EUR 300 million is very conservative, yes? But you know that the business is volatile. Maybe we are a bit on the conservative side here but there is nothing -- there has nothing happens in the end of Q2 -- Q1, which needs to make us more conservative.

[Gunhild Grieve, Head of Investor Relations]

And those are nothing which kind of structurally in the longer term would kind of lead us to increase our kind of average for the longer term.

[Samuel James Hugo Arie, Managing Director and Research Analyst]

Okay, no, very helpful. And I mean, if you don't mind a quick follow-up. I suppose it would be helpful if you could put to the rest of the question I had coming in this morning which was, whether this performance reflects some increased risk that you took in Q1 and obviously, people have SSE trading events of last year in mind. But you didn't kind of take a punt on any commodity directions or anything unusual like that?

[Markus Krebber, CFO & Member of the Executive Board]

No, I mean there is -- the utilization of our risk limits, we have in place and we have different kind of limits. We have delta limits, of course. We have value-at-risk limits, but what we have also stress test limits. They were all in the normal range and even above -- even below the 50% level. So risk utilization was not higher than usual.

[Operator]

Yes, we have one more question. [Operator Instructions] The next question comes from the line of Ahmed Farman from Jefferies.

[Ahmed Farman, Equity Analyst]

I just would like to sort of draw you back on the net debt and get your expectation for where you see the standalone net debt for the full year? And maybe -- I mean, you've already touched on a couple of moving parts but maybe if you can go through a little bit of the bridge starting from the Q1 number, that would be very helpful.

[Markus Krebber, CFO & Member of the Executive Board]

Ahmed, thanks, again. I know it's very difficult to get the head around our net debt now. It is also difficult under the current definition for us to predict it because we need to foresee a commodity price movement. I mean we said at the end of last year or when we gave our guidance for the full year in March, that we expect net debt to be significant higher. The 3 things we knew about the development when we gave expectation was that we called the British pound hybrid, which increases debt around EUR 400 million. What we knew was the IFRS 16 effect of around EUR 140 million. And what we knew were the settlement of transactions which result in an outflow or reversion of EUR 1 billion of the variation margins we got in over the last years. Everything else then depends on commodity price movements, and there we have seen the first quarter minus EUR 1.9 billion. And as I indicated, a significant reversion of that outflow ready in Q2. That remains to be seen. I mean what you see from the presentation is that we also tell you now what is maybe the remainder which will revert over the next couple of years, which now stood at around EUR 1.5 billion, if you deduct the 2 numbers, EUR 4.4 billion and EUR 2.9 billion. But that this what would we can currently say.

[Gunhild Grieve, Head of Investor Relations]

I think there was an additional question coming up?

[Operator]

Yes. So the next question comes from the line of Lueder Schumacher from Societe Generale.

[Lueder Schumacher, Equity Analyst]

Yes, 2 questions from my side. The first one, Markus, is going back to movement in the variation margin. When you broke it down earlier, you said that about EUR 1 billion of that swing was from the unwind of your commodity positions. Now that used to be the guidance for the full year. Has that all now happened in Q1 and you're done for the year? Or do you expect more to come in the remaining 9 months from the unwind of your positions? That's the first question. And the second one, asking more in hope, I guess, but on European generation, you mentioned in the commercial asset optimization costs were less. It would be great if you could give us the actual numbers, but failing that, what was the swing, the delta between your EBITDA from that in Q1 2018 and Q1 2019?

[Markus Krebber, CFO & Member of the Executive Board]

Yes. Lueder, thanks for the question. I mean the unwind of EUR 1 billion, which we expected to the settlement of position, the majority always comes in Q1 because it is related to our CO2 buying, because we need to buy it in the market because if we then buy it at much higher prices than what we have hedged for but the money was already in the bank from the positive mark-to-market movements. And that is the majority of it, you can say, I mean, plus/minus EUR 100 million, EUR 200 million. The EUR 1 billion, which we expected is already accounted for in Q1. The rest, which comes over the year is very, very minor. On European Power, the commercial asset optimization, so the delta between Q1 '18 and '19 is a mid -- a 2-digit -- mid-2-digit million number, across our model.

[Operator]

No. There's no more questions. So I hand back over to your host.

[Gunhild Grieve, Head of Investor Relations]

Then thank you very much. Thank you for joining us. And if you have any follow-up questions, do not hesitate to call us this afternoon or the coming days, and probably, we'll see a lot of you on the upcoming conferences or reverse roadshows. Have a good rest of your day. Bye.

[Operator]

Thank you for joining today's call. You may now replace your handsets.