- Full-year forecast: recurrent net income to rise by at least 15%
- Workforce grows by almost 3%
RWE announces a positive performance for the first nine months of 2007. The Group improved its operating result by 20%, and net income rose by 35% compared to 2006. According to the Group’s forecast, the operating result for fiscal 2007 will rise by 10 to 15% compared with last year’s level.
Net of one-off effects, revenue on a par with previous year
The RWE Group generated external revenue of €31.5 billion in the first three quarters of the year. Compared to 2006, this represents a decrease of 2%. Adjusted for consolidation and currency effects, the Group’s revenue remained stable.
EBITDA, operating result and net income post double-digit growth year on year
EBITDA rose by 17% to just under €7 billion in the first three quarters of 2007. The operating result increased by 20% to
€5.8 billion. Extraordinarily good performance in the trading business and a positive trend in the power generation business were the main drivers of the Group’s earnings improvement despite the adverse effects of German network regulation and the outage of the Biblis nuclear power plant. At €2.8 billion, the RWE Group’s net income was up 35% year on year. A substantial improvement in the financial result contributed to this growth.
Cash flow only slightly below prior year despite deconsolidation
In the first three quarters of 2007, RWE generated €4.8 billion in cash flow from operating activities. This was only 2% below the prior-year figure, despite the deconsolidation of
Thames Water. Free cash flow – or cash flow from operating activities minus capital expenditure on property, plant and equipment – rose by 11% to €2.4 billion.
Efficiency-enhancement programme underway as planned
The Group’s efficiency-enhancement programme is running according to plan. Measures to reduce costs and increase revenue are designed to progressively improve the annual operating result by a total of €600 million by the end of 2010. This year, RWE intends to add some €100 million to the operating result with the new programme.
Capital expenditure on property, plant and equipment in the energy business up 24%
In the first three quarters of 2007, the RWE Group invested
€2.5 billion. Capital expenditure on property, plant and equipment decreased by 12% to €2.4 billion. This decline is largely attributable to the deconsolidation of Thames Water, as the prior-year figure included investments made by the British water company. In its other divisions, the RWE Group increased capital expenditure on property, plant and equipment by a total of 24%.
The most significant single project is the construction of the 2,100-MW twin-unit lignite-fired power plant in Neurath. RWE is also building an 875-MW combined-cycle gas turbine power plant in Lingen and has begun preparatory work for additional power plants that are to be built in Germany and the Netherlands. Furthermore, considerable capital expenditure has been made on German opencast lignite mines. RWE Dea invested more heavily in gas production in Egypt and Libya. RWE npower focussed on the construction of a new 1,650-MW combined-cycle gas turbine plant in Staythorpe and a 90-MW wind farm off the coast of Wales. At the Aberthaw power station, retrofitting of a flue gas desulphurisation unit continued and new steam turbines are being installed. RWE Energy devoted the majority of its capital expenditure to enhancement and maintenance of grid infrastructure.
Workforce up by just under 3%
As at 30 September 2007, the RWE Group employed 70,300 staff, 55% of whom worked in Germany. Compared with 31 December 2006, the workforce increased by 1,766 employees or 2.6%. RWE Power created the most new positions within the Group. RWE npower recorded substantial growth in the number of staff employed in the areas of sales and customer service.
So far, the outlook for 2007 was based on the assumption that RWE would sell at least the majority of American Water by the end of this year. The Group no longer expects that this will happen. American Water will thus be stated as a fully consolidated company in the consolidated financial statements, and not as a “discontinued operation”, as originally assumed.
On this basis, the Group anticipates external revenue for 2007 to be slightly higher than the level achieved last year. RWE continues to forecast an increase of 10 to 15% in its operating result. For the year as a whole, the company expects to be able to exceed the EBITDA figure by 5 to 10%, but anticipates a sharp decline in net income. Last year’s figure benefited from the book gain on the sale of Thames Water. In contrast, recurrent net income, i.e. net income adjusted for one-off effects, – the dividend’s key determinant – will continue to rise substantially. An increase of at least 15% is currently forecast.
RWE has decided to set up a new company for the purpose of pooling the Group’s activities related to renewables. The new company will commence operations on 1 February 2008 and report directly to RWE AG. In taking this initiative, RWE is underlining the significance of this business area. The investment budget for renewables will be increased substantially, with the majority of capital expenditure being devoted to wind power projects.
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.