Essen, 11 August 2005This pressinformation is more than two years old

RWE improves net income by 5%

• Operating result shows 11% organic growth
• Work force slightly up net of one-off effects
• Positive earnings forecast for 2005 confirmed

RWE posted very solid results for the first half of 2005. Both the operating result and net income rose. Earnings per share increased by 5.4%. Net debt remained at a low level. RWE maintains its forecast for the current fiscal year.

Operating result shows 11% organic growth

RWE continued the positive earnings trend in the first half of the year. The Group’s operating result climbed 5% to EUR 3,455 million year-on-year. Excluding non-operating effects—i.e. deconsolidation and currency effects—the operating result rose by 11%. The Company benefited primarily from the increased earning power of its Continental European energy business.

EBITDA posts 7% organic growth

At EUR 4,439 million, EBITDA was only slightly below the year-earlier level. Excluding non-operating effects, EBITDA rose by 7%.

Net income rises by 5%

In the first half of 2005, RWE increased net income by 5% to EUR 1,427 million. The key drivers were an improved financial result along with the higher operating result. The financial result benefited from continued debt reduction, which had a positive impact on net interest. By contrast, the non-operating result was significantly down on the previous year, due in part to substantially lower capital gains. Earnings per share increased from EUR 2.41 to EUR 2.54.

Revenue shows 13% organic growth

In the first half of 2005, the RWE Group generated EUR 20.7 billion in external revenue. Net of one-off effects and currency exchange fluctuations, external revenue was 13% higher. This was due to revenue growth in all divisions.

Cash flow significantly up year-on-year

In the first half of 2005, RWE’s cash flow from operating activities was up 31% year-on-year totalling EUR 2,965 million, despite the deconsolidation of Heidelberger Druckmaschinen.
Free cash flow—i.e. cash flow from operating activities minus capital expenditure on property, plant and equipment—amounted to EUR 1,626 million, twice the amount recorded a year ago. In addition to the markedly improved cash flow from operating activities, lower capital expenditure on property, plant and equipment had an effect on this. However, this value should not be extrapolated to reflect the year as a whole because of the typical fluctuations in cash flow over the course of the year and the higher level of investments during the second half of the year.

Net debt totals EUR 12 billion

Net financial debt amounted to EUR 12 billion on 30 June 2005. Compared with the end of the fiscal 2004, net debt was reduced by EUR 0.4 billion. This was primarily due to the high level of free cash flow. Adverse factors included high dividend payouts and currency exchange fluctuations.

Work force slightly up net of one-off effects

As of 30 June 2005, the RWE Group employed 86,540 people, about half of them outside Germany. Net of deconsolidations, the workforce expanded by 687 employees, or nearly 1%. The main effects in the first six months stemmed from the deconsolidation of RWE Umwelt (10,408 employees) and of some non-core activities of RWE Solutions (1,379 employees). Including all one-off effects, the Group’s headcount fell by 11% compared with the end of 2004.

Outlook for 2005

RWE confirms its positive earnings forecast for 2005. Excluding one-off and currency effects, RWE expects to post single-digit growth in the operating result. This will be largely due to the positive impact on earnings from the Continental European energy business and from the UK water business. By contrast, burdens on earnings will result from higher costs for hard coal and an insufficient allotment of CO2 allowances. RWE also expects the Group to post a single-digit percent rise in net income.

Net financial debt is likely to be below last year’s level of EUR 12.4 billion at the close of the year. RWE plans to lower annual costs by EUR 680 million by the end of 2006 through two cost-reduction programmes initiated in prior years. The company was on schedule in cutting costs in the first half of the year. RWE expects the two programmes to deliver aggregate cost savings of EUR 210 million in 2005.

RWE plans to increase capital expenditure on property, plant and equipment in 2005 to approximately EUR 4 billion. Spending will focus on measures to modernize power plants in Germany and in the UK.

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RWE Aktiengesellschaft
Investor Relations
Altenessener Straße 27
45141 Essen

T +49 (0) 201-5179-3112
RWE Aktiengesellschaft
Investor Relations
London Office
c/o RWE Supply & Trading
60 Threadneedle Street
London EC2R 8HP
United Kingdom
T +44 (0) 20 7015 5459
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