Essen, 10 March 2015This pressinformation is more than two years old

Earnings targets for 2014 achieved

  • Efficiency improvements implemented sooner than expected
  • Budget surplus achieved one year ahead of schedule
  • Shift in focus towards growth opportunities
  • Power station margins continue to erode
  • Lower result expected for 2015

The RWE Group has achieved its earnings targets for 2014. The fast progress made with the efficiency-enhancement programme contributed to an increase in earnings. The figure achieved at the end of the fiscal year was EUR 1.4 billion, EUR 400 million of which was realised in 2014. That is EUR 250 million more than expected. Other positive factors were high revenues from the sale of electricity networks and a very good performance in energy trading. This was not sufficient, however, to offset the decline in earnings from conventional electricity generation, in particular.

Persistently low prices on the wholesale electricity market and the unusually mild weather affected RWE AG's business performance in 2014. The operating result fell as expected to EUR 4.0 billion, a drop of 25% year on year. Conversely, EBITDA was significantly better than planned, at EUR 7.1 billion. The Group’s external revenue declined from EUR 52.4 to EUR 48.5 billion.

RWE achieved its goal of financing capital expenditure and dividend payments entirely from cash flows from operating activities during fiscal 2014 – a year earlier than planned. Overall, it actually achieved a surplus of EUR 1.1 billion. Net debt remained in the same range as in the previous year, at EUR 31.0 billion. "We are achieving our goals faster and better than expected," says Peter Terium, CEO of RWE AG. "The crisis in conventional power generation continues. In spite of this, we will focus once more on growth opportunities in the future, but without losing sight of the need for strict financial discipline."

On 23 April 2015, the Supervisory and Executive Boards of RWE AG will propose to the Annual General Meeting that a dividend of EUR 1 per share be paid for fiscal 2014. This represents around 48% of recurrent net income. In future, the dividend policy will be put on a broader footing and the current practice of linking it to a target payout ratio will come to an end. From fiscal 2015, in addition to the actual earnings situation, cash flows from operating activities, debt levels and any potential opportunities for growth investments will be considered when setting the dividend.

Generation and sales of electricity and gas

Electricity generation fell by 5% to 208.3 billion kilowatt hours (kWh) in 2014. This was mainly attributable to unplanned overhauls of lignite power stations and the closure of the Didcot A hard coal-fired power station in the UK in 2013. The decommissioning of the UK biomass power station at Tilbury, which also took place in 2013, also contributed to a decline in electricity generated from renewables.

Electricity sales volumes decreased by 5% to 258.3 billion kWh, reflecting a decline in generation volumes. Weather conditions caused a 12% drop in gas sales, to 281.3 billion kWh. The much milder weather compared to the previous year had a significant impact, especially on the residential and commercial customer sectors.

Conventional Power Generation Division

The operating result from conventional power generation declined substantially, as expected, dropping by 29% to EUR 979 million. A major contributing factor was the fall in German wholesale electricity prices, which was offset to only a very limited extent by lower fuel prices. RWE also recognised impairment losses of EUR 0.6 billion on power stations in Germany and the UK. Successful efforts to continue improving efficiency in the Conventional Power Generation Division helped counter this trend.

Supply/Distribution Networks Germany Division

The operating result for the division combining the German supply and distribution networks business improved by 15% to €1.9 billion, despite weather-induced earnings shortfalls. One reason for this is the high level of returns achieved by RWE from the sale of networks. In addition, efficiency improved in both supply and distribution network activities.

Supply Netherlands/Belgium Division

The result for this division, at EUR 146 million, was still well below the previous year’s figure, which was characterised by positive one-off effects from the release of provisions. The mild weather and competition-induced declines in margins also weighed on the gas supply business. This division brought in additional revenue by successfully marketing new electricity supply products.

Supply UK Division

At EUR 227 million, the operating result for this division was 22% below the previous year’s figure (net of currency effects, the decline was as much as 26%). The UK supply business had to cope with a number of burdens, such as the costs for restructuring measures needed in its customer service business, which were higher than expected. The mild weather also had an effect on the result of the UK supply business. In addition, there was a substantial increase in expenditure on network fees. Increased revenues from higher residential tariffs and extensive measures to improve efficiency only partially offset these burdens.

Central Eastern and South Eastern Europe Division

As expected, the operating result for this division decreased significantly, falling by 33% to EUR 690 million, mainly because of the loss of the earnings contribution from the Czech long-distance gas network operator that was sold in 2013. Net of this effect and the impact of currency translation, the result for this division was down 17% year on year. This is attributable mainly to gas operations in the Czech Republic, which were constrained by a weather-induced decline in sales and greatly reduced storage margins.

Renewables Division

The operating result for this division decreased by 8% to EUR 186 million. A key contributing factor was the impairment we recognised on facilities such as the new 46-MW biomass power station at Markinch, in Scotland. The drastic reduction in green energy subsidies in Spain and the transfer of German biomass activities to Supply/Distribution Networks Germany as of 1 January 2014 contributed to this decline in earnings. In contrast, a positive effect came from one-off earnings from compensation payments for third-party delays in completing the Nordsee Ost wind farm. The expansion of wind power capacity also positively influenced the result, and the burdens from impairment losses in 2013 did not recur.

Trading/Gas Midstream Division

As expected, the result for RWE Supply & Trading fell well below the figure for the previous year when we benefitted from compensation payments awarded in an arbitration court decision. Overall, this division achieved an operating result of EUR 274 million. The performance of the energy trading business was very good and much improved compared to 2013.

Cash Flow

Cash flows from operating activities amounted to some EUR 5.6 billion, an increase of 16% year on year, although this includes one-off effects. Free cash flow, at EUR 2.3 billion, was well above the previous year’s figure of €960 million. This figure is calculated from cash flows from operating activities, minus capital expenditure on property, plant and equipment and intangible assets.

Capital expenditure

Capital expenditure was down 14% to EUR 3.4 billion. About one-third of the capital expenditure was allocated to the completion of new-build power station projects in the Conventional Power Generation Division. Other focal points were the expansion of renewables, particularly new onshore and offshore wind farms, and modernising network infrastructure.


As of 31 December 2014, RWE employed 59,784 people (converted to full-time positions), a decline of 8% year on year. Key contributing factors here were measures to improve efficiency, especially in the UK supply business and conventional power generation. In addition, sales and acquisitions of companies took a net 5,112 people off the Group’s payroll.

Despite its difficult earnings situation, the RWE Group continues to provide vocational training well in excess of its own staffing needs. Some 2,473 young people were receiving vocational training at RWE at the end of 2014.


RWE wants to achieve its goal of a lasting efficiency improvement of EUR 1.5 billion during 2015, two years earlier than originally forecast. The efficiency target is being raised by a further EUR 500 million to make a total of EUR 2 billion to be achieved from 2017.

For 2015, RWE expects a further decline in earnings, despite its continuing efficiency improvements and the effects of its growth measures. From today’s perspective, RWE will achieve EBITDA of between EUR 6.1 and €6.4 billion and an operating result of between EUR 3.6 and EUR 3.9 billion, with recurrent net income likely to be in the range of EUR 1.1 to EUR 1.3 billion.

Forward-looking statements

This 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 RWE has made based on information available to the company 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, RWE cannot assume responsibility for the accuracy of these statements.

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