- Double-digit growth for RWE Power and RWE Dea
- Trading business positive in organic terms, but below last year’s high results
- Customer losses in electricity business halted
The RWE Group’s earnings prospects for 2008 remain positive. The figures for the first half of the year do not yet fully reflect this. Based on the favourable overall organic earnings perspective, RWE confirms its forecast of increasing recurrent net income for the fiscal year by more than 10 percent. The company has managed to stop customer losses in its German electricity supply business.
Group revenue up by 13 percent in the first six months
In the first half of 2008, the RWE Group generated external revenue of Euro 24.7 billion. This represents an increase of 13 percent compared with the same period last year. Adjusted for consolidation and currency effects, this constitutes a rise of 16 percent.
Operating result down 8 percent year on year
The operating result fell by 8 percent to Euro 3.9 billion in the first half of the year, particularly due to the fact that energy trading did not match last year’s record results. RWE Power’s operating result for the first six months of 2008 was up by 15percent to Euro 1.8 billion. Last year, the outage of the Biblis nuclear power plant placed a considerable burden on earnings. RWE Dea was able to increase its earnings by 12 percent year on year to Euro 325 million, despite a sharp rise in exploration costs. In organic terms, RWE Supply & Trading continues to chart a successful course. Compared with 2007, however, a much larger share of the trading activities will not show up as earnings until the latter half of the fiscal year. RWE Energy’s operating result was 5 percent below the same period last year due to a renewed cut in grid fees by the German Federal Network Agency. For the fiscal year as a whole the company expects single-digit growth, mainly through further reductions in costs and efficiency enhancements. Adjusted for currency effects, RWE npower’s operating result for the first half of 2008 was down 3 percent year on year. This can be attributed mainly to lower margins in the end-customer business. Recurrent net income for the RWE Group, i.e. net income adjusted to exclude special effects, fell by 4 percent compared with the same period last year, to Euro 2.1 billion.
Customer losses halted
RWE has managed to stem the flow of customer losses in its German electricity business. In the second quarter, residential customers gained nearly matched those lost. The Group aims to achieve net customer gains in the second half of 2008. RWE is now offering fixed-price gas products for delivery starting in September. The first batch of offers is already sold out, after some 75,000 customers signed up within a period of just four weeks. RWE has just launched the second round of offers and expects to attract more than 100,000 customers in total for the fixed-price gas product by autumn.
Efficiency enhancement programme: target doubled to Euro 1.2 billion
RWE had originally aimed to incrementally raise the level of the operating result by a total of Euro 600 million per annum by the end of 2010 through measures to reduce costs and increase revenue. The Group has now doubled this target to Euro 1.2 billion by 2012. The basis for setting the bar higher was a comprehensive analysis of key business processes. In the current fiscal year, the Group plans to make a Euro 100 million contribution to earnings through this efficiency programme.
Investments up 52 percent year on year
In the first half of 2008, RWE invested Euro 2.3 billion. This represents an increase of 52 percent over the prior-year level, which still included American Water. Capital expenditure on property, plant and equipment rose by 5percent to Euro 1.6 billion year on year; net of American Water this increase in investment amounts to 27 percent. Around 45 percent of this capital expenditure is attributable to RWE Power. The most significant projects in Germany are the lignite-fired power plant in Neurath, the combined-cycle gas turbine plant in Lingen and the twin-unit hard coal power station in Hamm. In the United Kingdom, the largest project is currently the construction of the gas-fired power plant in Staythorpe.
Workforce increases by almost 3 percent
As of 30 June 2008, the RWE Group employed 65,151 people, 60 percent of whom worked in Germany. Compared with 31 December 2007, the number of employees thus rose by 1,712, or 2.7 percent. In addition, RWE offers training to around 3,000 young people annually, including some 900 who recently took up vocational training programmes.
RWE’s operating result is still expected to at least match the level achieved in 2007. RWE confirms its forecast for 2008 of a rise in recurrent net income, the key dividend determinant, by over 10 percent.
RWE plans to substantially step up investments in research and development. More than Euro 100 million per annum have been earmarked for this purpose for 2008 and subsequent years. Over two thirds of the research budget is to be devoted to projects aiming at efficiency improvements and emissions reductions in power generation.
Please direct enquiries to:
Dr Juergen Frech
Head of Group Press Relations
T: +49 201 12-15095
M: +49 162 2561433
Group Press Relations
T: +49 201 12-15247
M: +49 173 2904149
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.