- Further steps taken to strengthen capital base
- Results decline as expected
- Outlook for 2011 confirmed
RWE is resolutely implementing the package of measures announced in August this year. In early September, the sale of a 74.9percent stake in German transmission system operator Amprion was completed. The issue of a hybrid bond in Switzerland was a further step taken to boost the financial strength of the company. Renegotiations of RWE’s loss-making, oil-indexed gas procurement agreements are also looking promising, as the first long-term contracts have been indexed to more favourable prices for RWE or terminated prematurely by mutual consent. Meanwhile, two German tax courts have expressed serious doubt regarding the legality of the nuclear fuel tax. Tax payments already made by RWE have been reimbursed.
Fundamentally, however, the first three quarters of 2011 were marked by the accelerated phase-out of nuclear energy, lower electricity margins and heavy burdens in the company’s gas midstream business. “The coming years will also be difficult for us, but I am confident that we will quickly get through the trough ahead of us”, emphasised Dr. Juergen Grossmann, CEO of RWE AG.
Although revenue remained on a similar level, EBITDA declined by 21percent to EUR 6.2 billion in the first three quarters of the year, and the operating result fell by 30 percent to EUR 4.3 billion. Recurrent net income – the key determinant of the dividend – fell by 44 percent (EUR 1.8 billion).
Stable electricity sales volume, gas sales down due to weather conditions
In the first three quarters of 2011, the RWE Group supplied external customers with 224 billion kilowatt hours (kWh) of electricity, which was almost as much as in the same period last year. Gas sales declined by 17percent to 227.9 billion kWh, as mild weather reduced demand for residential heating.
Headcount and capital expenditure on property, plant and equipment grow
At the height of the biggest investment programme in the history of the Group, capital expenditure on property, plant and equipment totalled EUR 4.4 billion in the first three quarters of 2011, or around EUR 400 million more than in the same period last year. The high level of capital expenditure is also the reason for the decline in free cash flow from EUR 405 to EUR 134 million.
Since the end of 2010, some 1,622 new employees joined RWE, including 1,151 from regional utility NVV, headquartered in Mönchengladbach, which was fully consolidated for the first time. The employees of Amprion (816) and Thyssengas (289) are no longer included in the RWE headcount.
Outlook for 2011 confirmed
RWE confirms the updated 2011 earnings forecast it made in August. EBITDA will be about 20percent below last year’s level, the operating result about 25percent and recurrent net income about 35percent. Financial burdens arising from the energy policy decisions of the German government are the main reason for the decline in these results.
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.