RWE off to a good start in 2018 – dividend outlook of €0.70 confirmed
- Operating performance in line with expectations
- Adjusted EBITDA of €1.9 billion and adjusted net income of €517 million both on par with earlier forecasts
- Transaction between RWE and E.ON proceeding as planned
The main events for RWE are the execution of the transaction with E.ON and political discussions about the future outlook for energy policy in Germany. At the same time, we are on track with our operating business: the year started well and we can confirm our outlook for the full year and the targeted dividend for 2018.
RWE has posted a good performance for early 2018 and still expects that it will achieve its operational goals for the year as a whole. For the period from January to March, the RWE Group recorded adjusted EBITDA (adjusted earnings before interest, tax and depreciation and amortisation) of €1.9 billion, compared to €2.1 billion in the same prior-year period. Adjusted net income amounted to €517 million versus €689 million in Q1 2017.
As anticipated, the results in conventional power generation declined, due to lower margins and wholesale prices compared to last year. In 2018, RWE achieved an average price of €28 per megawatt hour for generation from lignite and nuclear power, down from €31 per megawatt hour in 2017. From today’s perspective, this means that we have reached the trough.
Thanks to the improving medium-term outlook, RWE confirms its plan to increase the ordinary dividend for fiscal 2018 to €0.70.
Lignite & Nuclear: falling volumes and lower margins
In the first three months of 2018, the adjusted EBITDA of the Lignite & Nuclear Division fell to €180 million (previous year: €213 million), mainly due to lower wholesale prices of electricity compared to the previous year. Another factor was the shut-down of Unit B at the Gundremmingen nuclear power plant as of 31 December 2017. The two 300-MW lignite-fired units at Frimmersdorf, which were transferred to stand-by operation, are also no longer available for regular electricity generation. Measures to improve efficiency had a positive effect on the results.
European Power: operating results comparable to last year
Adjusted EBITDA amounted to €159 million (previous year: €167 million). In 2018, there was no effect from one-off items which had improved the results in 2017, such as capital gains from sales of properties. Margins for gas and hard coal-fired power stations were also somewhat lower than in the previous year. However, the payments for participation in the UK capacity market had a positive impact. The ongoing efficiency-enhancement programme also reinforces profitability.
Supply & Trading: weak result for the first quarter
With adjusted EBITDA of –€24 million, the performance of the Supply & Trading Division was weaker, compared to the €146 million earned in the very strong first quarter last year. These kinds of fluctuations are not unusual in this volatile business. RWE still expects to achieve a result between €100 million and €300 million for 2018.
innogy: small decline compared to previous year
Our financial investment innogy SE recorded a 2% decline in adjusted EBITDA compared to 2017. While the contributions of Renewables and Grid & Infrastructure improved, a decline in earnings was registered in the Retail Division. innogy released details on its earnings situation in its Q1 report published on 14 May.
Modest rise in net debt compared to 2017
As of 30 March 2018, the net debt of the RWE Group amounted to €20.9 billion, reflecting an increase of €0.7 billion compared to the end of 2017. Higher pension provisions were the main reason for this.
Figures for ‘RWE stand-alone’: no change to the outlook
Along with the fully-consolidated figures from financial reporting, since 2017 RWE has also published additional indicators for ‘RWE stand-alone’. This covers the core divisions Lignite & Nuclear, European Power and Supply & Trading, plus the innogy dividend.
For ‘RWE stand-alone’, adjusted EBITDA reached €299 million (previous year: €514 million) and adjusted net income was €78 million (€203 million). This figure does not yet include the innogy dividend of €683 million for 2017. As of 30 March 2018, net debt directly allocable to RWE amounted to €3.5 billion and thus fell significantly, dropping by €1 billion compared to 31 December 2017, mainly as a result of improved cash flow. In contrast to our forecast in March, RWE now believes that net debt for ‘RWE stand-alone’ will be moderately lower than last year.
For adjusted EBITDA, a range of €1.4 billion to €1.7 billion was forecast for ‘RWE stand-alone’ in 2018 (previous year: €2.1 billion), and a range of €0.5 billion to €0.8 billion was projected for adjusted net income (previous year: €1.0 billion). No changes were made to this outlook.
Transaction with E.ON progressing as planned
In mid-March, RWE and E.ON agreed on a comprehensive exchange of assets. With this transaction, RWE will focus on electricity generation and trading in the future. RWE will become No. 3 in renewables in Europe. The transaction with E.ON is moving along on schedule. On 27 April, E.ON submitted the voluntary public offer to minority shareholders of innogy SE. The formally required reasoned statement by the Executive Board and Supervisory Board of innogy SE was published last week. The process of obtaining the necessary anti-trust approvals has commenced as planned, with preliminary discussions with the competent authorities.
Additional information on RWE’s business performance can be found here:
Interim statement on the first quarter of 2018
Key data for Q1 2018
Press Conference speech
Presentation for investors and analyst conference call
Video interview with Markus Krebber, Chief Financial Officer of RWE AG
This press release contains forward-looking statements. These statements reflect the current views, expectations and assumptions of the management, and are based on information currently available to the management. Forward-looking statements do not guarantee the occurrence of future results and developments and are subject to known and unknown risks and uncertainties. Therefore, actual future results and developments may deviate materially from the expectations and assumptions expressed in this document due to various factors. These factors primarily include changes in the general economic and competitive environment. Furthermore, developments on financial markets and changes in currency exchange rates as well as changes in national and international laws, in particular in respect of fiscal regulation, and other factors influence the company’s future results and developments. Neither the company nor any of its affiliates undertakes to update the statements contained in this notification.