- Recurrent net income improves by 21%
- Dividend proposal: Euro 3.15 per share
- More than Euro 30 billion in capital expenditure on property, plant and equipment by 2012
- Strategy 2012: More growth, less CO2
In 2007, the RWE Group once again improved its earnings compared with the previous year: The operating result increased by 15%, with recurrent net income rising by 21%. The Group expects further income growth for 2008. On 21 February 2008, RWE launched a share buy back programme in order to buy RWE shares with a value of up to Euro 2.5 billion. This corresponds to around 5% of share capital.
The RWE Group has set itself ambitious goals for the medium term as well: From now until 2012, it aims to increase the operating result by an average of 5% organic growth per year. The Group intends to increase recurrent net income by an annual 5 to 10% on average through 2012. Also by 2012, RWE aims to more than triple its installed renewable generation capacity. The company sees a potential to reduce CO2 emissions by nearly 40 million tons by 2012, and by an additional 20 million tons by 2015. Another goal is to double gas production by 2012/2013. RWE is currently gearing up to enter new markets: A local company has been established in Turkey, growth is planned in Greece and additional South-Eastern European markets are also on the agenda. In addition, RWE is looking into its options in Russia.
Operating result and EBITDA post double-digit growth
year on year
Despite the significant adverse effects of German network regulation and the unplanned outage of the Biblis nuclear power plant, RWE succeeded in further improving its earnings in 2007. This growth was based on the positive trend in the power generation business and extraordinarily good performance in the trading business. EBITDA rose by 10% to Euro 7.9 billion, and the operating result was up by 15% to Euro 6.5 billion.
Recurrent net income improves by 21%
Recurrent net income, which is net income adjusted to exclude one-off effects, is RWE’s key dividend determinant. In the year under review, it amounted to just under Euro 3 billion, 21% more than in 2006.
Dividend proposal for 2007
On 17 April 2008, the Supervisory and Executive Boards of RWE AG will propose to the Annual General Meeting that a dividend of Euro 3.15 per share be paid for fiscal 2007. This corresponds to a dividend payout ratio of 60% of recurrent net income, which is at the upper end of the targeted 50 to 60% payout ratio. Based on 2007 year-end share prices, the dividend yield is 3.3% for common shares and 3.8% for preferred shares. This places RWE among the companies with a strong dividend on Germany’s DAX stock index.
Revenue net of one-off effects on a par with previous year
The RWE Group generated Euro 42.5 billion in external revenue in fiscal 2007. Adjusted for consolidation and currency effects, revenue was 2% higher than in the previous year.
Cash flow up by 6% net of one-off effects
In 2007, RWE achieved a cash flow from operating activities of Euro 6.1 billion. Adjusted to exclude figures for the UK water company Thames Water divested in the previous year, cash flow from operating activities increased by 6%. Free cash flow – i.e. cash flow from operating activities minus capital expenditure on property, plant and equipment – amounted to some Euro 2 billion, down by 12% year on year. The decisive factor here was again the reduced cash flow from operating activities following the divestment of Thames Water.
Capital expenditure up by 18% in the energy business
In the year under review, RWE invested Euro 4.2 billion. Compared with the previous year, capital expenditure on property, plant and equipment declined by 10%. This decrease is due to the fact that the year-earlier figure still included Thames Water’s capital expenditure. In the energy business, capital expenditure on property, plant and equipment rose by 18% to Euro 3.4 billion. Additional funds were primarily invested in the construction of new power plants.
Workforce increases by just under 3%
As of 31 December 2007, the RWE Group employed 63,439 people, more than half of whom worked in Germany. Compared with the end of 2006, the workforce expanded by 1,714 employees, or 2.8%. In Germany, the number of employees grew by 517. Some 2,918 young people were receiving vocational training at RWE at the end of 2007. As in previous years, the Group provided vocational training well beyond the company’s own requirements.
RWE has set itself some ambitious operational and financial goals: The company predicts that EBITDA and the operating result will at least match last year’s level. The Group anticipates that net income will rise by more than 10%. Recurrent net income, which is adjusted for one-off effects, is likewise expected to post a gain of over 10%. RWE also assumes that Group revenue will rise in 2008.
With annual capital expenditure on property, plant and equipment of Euro 6.5 billion on average, RWE will expand its previous budget by nearly one third. RWE thus aims to invest more than Euro 30 billion in total by 2012 – the Group’s largest investment programme ever. RWE’s ongoing efficiency-enhancement programme, scheduled to run until the end of 2010, is set to contribute about Euro 100 million to the operating result in 2008. The Group’s goal to date has been to incrementally raise the level of the operating result by a total of Euro 600 million per annum by the end of 2010. The company now plans to set an even higher target in the course of 2008.
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 materialize 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.