Essen, 09 August 2007This pressinformation is more than two years old

RWE: Group operating result improves by 18% in first half of the year

  • Workforce grows by 2% net of one-off effects
  • EUR 4 billion capital expenditure in the electricity and gas business in 2007
  • Earnings forecast raised

The RWE Group continued its successful business performance in the second quarter of 2007. In the first half of the year, RWE’s operating result improved by 18%. Germany’s largest power producer thus has a solid financial basis for driving forward its major capital expenditure programme. New power plants will be built at Ensdorf, Hamm and Lingen (Germany), and Eemshaven (the Netherlands). Tens of thousands of people will find jobs with RWE and in the supplying industries during the construction phase. In the UK, the Group will invest in two new gas-fired power plants and five new wind farms.

Revenue slightly down on previous year

In the first half of the year, the RWE Group generated external revenue of EUR 22.6 billion. This corresponds to a 2% decrease compared to the same period last year. Adjusted for consolidation and currency effects, Group revenue remained stable.

EBITDA, operating result and net income post double-digit growth year on year

RWE improved EBITDA by 15% to EUR 5.2 billion. The operating result rose by 18% to EUR 4.4 billion. The main drivers of this growth were extraordinarily good trading performance and the positive trend in the power generation business. This was due to higher-priced supply contracts for 2007 concluded in previous years. German grid regulation had an adverse effect. Partly as a result of one-off effects, net income was up 58% year on year, amounting to EUR 2.6 billion. In addition to the operating performance, this increase was also due to improvements in the non-operating and the financial results. Recurrent net income, i.e. net income adjusted for one-off effects, rose by 16% to EUR 2.2 billion.

Workforce up 2% net of one-off effects

As at 30 June 2007, the RWE Group employed 70,060 staff, 55% of whom worked in Germany. Compared with year-end 2006 and net of one-off effects, the workforce increased by 1,526 employees or 2.2%, with 557 additional staff in Germany. RWE Power made the single-largest contribution. In the UK, RWE npower recorded substantial growth in the number of staff. Excluding the planned sale of American Water, the RWE Group intends to increase its workforce by 3,000 employees by year-end, compared with the level at the end of 2006.

Capital expenditure on property, plant and equipment in the electricity and gas business up 30% year on year

In total, RWE invested EUR 1.5 billion in the first half of 2007 alone. RWE increased capital expenditure on property, plant and equipment in the electricity and gas business by as much as 30%. The Group plans to further increase capital expenditure on property, plant and equipment in the remainder of the current year. Excluding the water division, the Group expects that capital expenditure on property, plant and equipment will be in the order of EUR 4 billion in 2007. This would equate to an increase of around 40% year on year. The Group's German power plant business is set to experience the largest growth. The key project is the construction of a
2,100-MW twin-unit lignite-fired power plant with optimised plant technology in Neurath. Furthermore, RWE Power is in the process of building an 875-MW combined cycle gas turbine power plant (CCGT) in Lingen. The new power plants at Ensdorf, Hamm and Eemshaven, in the Netherlands, will be among the world’s most modern and efficient hard-coal-fired power plants. RWE Energy devoted the majority of its capital expenditure to enhancement and maintenance of grid infrastructure.

RWE Dea focused primarily on investing in gas production in Egypt and Libya. With the intention of boosting organic growth, RWE Dea plans to double its gas and oil production by 2013. At RWE npower, preparations began on the planned CCGT power plants in Staythorpe and Pembroke. Another priority was the environmental upgrade of the Aberthaw power plant.

Efficiency-enhancement programme launched

For the period 2007 until the end of 2010, the RWE Group has launched an efficiency-enhancement programme. Planned measures to reduce costs and improve revenue are designed to progressively increase the annual operating result by a total of EUR 600 million. This year, RWE intends to add some EUR 100 million to the operating result with the new programme. The key focus is on improving the efficiency of the regulated electricity and gas networks in Germany as well as the technical availability of RWE's power plant portfolio.

Outlook for 2007

The following forecasts for the year as a whole are based on the assumption that the RWE Group will be able to sell the majority of American Water by year-end. In the annual financial statements for 2007, American Water would then be recorded as "Discontinued operations".

Without American Water, Group revenue for 2007 is currently expected to be slightly up on the prior-year level. RWE now expects improved earnings compared with the forecast published in February. An increase in EBITDA in the order of 5 to 10% is anticipated. The Group forecasts an increase of 10 to 15% (previously around 10%) in its operating result but continues to expect a significant decline in net income, since one-off effects such as the sale of Thames Water impacted last year’s figure. In contrast, recurrent net income - the basis for calculating the dividend - is expected to increase further as a result of the positive trend in operating performance. An increase of at least 15% is now forecast (previously around 10%).

Forward-looking statements
This press release contains forward-looking statements regarding the future development of the RWE Group and its companies as well as economic and political developments. These statements are assessments that we have made based on information available to us at the time this document was prepared. In the event that the underlying assumptions do not materialise or additional risks arise, actual performance can deviate from the performance expected at present. Therefore, we cannot assume responsibility for the accuracy of these statements.

Additional information as Download:
Key Figures at a glance
Speech: Mr. Roels / Dr. Pohlig
Charts: Mr. Roels / Dr. Pohlig
Report First Half 2007 (PDF 740KB)
IR Release: RWE: Group operating result improves by 18% in first half of the year (PDF; 69 KB)

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RWE Aktiengesellschaft
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T +49 (0) 201-5179-3112
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