German utility RWE AG (RWEOY) Thursday reported unimpressive first-half results, hit by the mild winter that led to low demand for heating, as well as low prices on the electricity markets.
Adjusted for one-off effects, recurrent net income for the period totaled 749 million euros, down significantly from the previous year's 1.99 billion euros, reflecting the difficult operational situation the company is facing.
Net income, however, increased to 1.024 billion euros from 979 million euros a year ago.
Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA fell 32 percent to 3.43 billion euros. Operating result dropped 40 percent to 2.27 billion euros.
RWE said its earnings were hurt by the mild winter that led to low demand for heating, as well as low prices on the electricity markets.
External revenue dropped 9.6 percent to 25.09 billion euros from 27.74 billion euros last year.
Electricity production was 100.1 billion kWh, compared with 112.1 billion kWh last year, reflecting the impact of decommissioning two power stations in the UK, as well as the reduced operating hours of the gas-fired power plants in Continental Europe.
External electricity sales volume slipped 5.5 percent to 128.4 billion kWh, while External gas sales volume dropped 21.6 percent to 148.2 billion kWh.
RWE said that due to the significant deterioration in prices on the wholesale electricity market, RWE Generation plans to decommission around 1,000 MW of additional generation capacity by 2017 as well as terminating further supply contracts for the use of around 500 MW of capacity.
Peter Terium, CEO of RWE AG, said, "Conventional power generation is losing ground - not just at RWE. Figures from the Federal Network Agency indicate that, up to 2018, more secured power station capacity will have to be taken offline than is added through capital investment. This does not bode well for security of supply, to which wind and solar can make little contribution."
Wednesday, RWE's peer E.ON AG (EONGY.PK) reported a sharp decline in profit for the first half of the year, amid a 13 percent drop in sales. E.ON said it performed rather well in a difficult environment, and affirmed its full-year forecast.
RWE today confirmed its annual outlook. As the upstream business RWE Dea is disclosed under "discontinued operations" with retrospective effect from January 1, the upstream business is no longer considered in the outlook for revenue, EBITDA, operating result or capital expenditure.
Excluding RWE Dea, the Group sees fiscal 2014 external revenue of 51 billion euros, EBITDA in the range of 6.4 billion euros - 6.8 billion euros, and an operating result of 3.9 billion euros - 4.3 billion euros.
Recurrent net income, including the interest on the sale price for RWE Dea, should be in the order of 1.2 billion euros - 1.4 billion euros. The sale of RWE Dea is likely to be over by the end of 2014.
RWE closed up 3.1 percent on Wednesday in Frankfurt at 29.31 euros.
For comments and feedback contact: editorial@rttnews.com
Business News