Essen,
14
August
2018
|
07:00
Europe/Amsterdam

RWE AG

RWE continues positive performance – robust first half of 2018

  • Financial reporting structure adjusted due to transaction with E.ON
  • Focus on key figures for managing RWE’s operating activities including innogy dividend (‘RWE stand-alone’)
  • Adjusted EBITDA for ‘RWE stand-alone’ totals €1.1 billion; adjusted net income of €683 million
  • Transaction progressing well: innogy, RWE and E.ON agree fair integration process
Dr Rolf Martin Schmitz, CEO RWE AG
We achieved our operating goals in the first half of 2018 and are therefore right on track for the full year. The transaction with E.ON is making good progress. As one of Europe’s leading electricity producers, we will have an even broader and stronger portfolio of assets. The ‘new’ RWE stands for an energy transition with security of supply.
Dr Rolf Martin Schmitz, CEO RWE AG

RWE continues its positive business performance in the first half of 2018. Operations are developing as planned. The financial outlook and target for the dividend have been confirmed.

Due to the transaction with E.ON, RWE has adjusted its financial reporting for the Group in compliance with International Financial Reporting Standards (IFRS). As a result of this change, the consolidated figures for the RWE Group are only of limited informational value. Therefore, the focus rests on the key figures for ‘RWE stand-alone’ from now on. They encompass the Lignite & Nuclear, European Power and Supply & Trading divisions plus the innogy dividend. The company is using these key figures to steer its operating activities and determine the dividend for its shareholders.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of €1.1 billion (first half of 2017: €1.4 billion) was achieved for ‘RWE stand-alone’ from January to June. Adjusted net income amounted to €683 million compared to €883 million in the first six months of 2017. RWE expects adjusted EBITDA of between €1.4 billion and €1.7 billion and adjusted net income of between €500 million and €800 million for the full year.

Transaction with E.ON makes further progress

At the beginning of May, E.ON, RWE and innogy, the companies’ respective group works councils and the trade unions ver.di and IGBCE agreed on a declaration of collective wage bargaining principles. In the middle of July, the companies agreed on fair integration processes. A first closing is expected to occur in the middle of 2019, once the relevant authorities have issued the necessary antitrust approvals. After this, E.ON will become innogy’s majority shareholder. E.ON’s and innogy’s renewable energy businesses will subsequently be transferred to RWE in addition to E.ON’s minority interest in the Gundremmingen and Emsland nuclear power stations. The same will apply to innogy’s gas storage business and the stake in Austria-based utility Kelag. A total of nearly €40 billion in assets will change ownership. This will transform RWE into the second-largest offshore wind operator and the No. 3 in renewable energy in Europe. Thanks to its diverse generation portfolio, RWE will stand for an energy transition with security of supply.

Lignite & Nuclear: decline in earnings as expected

In the first six months of 2018, adjusted EBITDA in the Lignite & Nuclear segment declined to €167 million (first half of 2017: €401 million). This was primarily due to the year-on-year drop in realised wholesale electricity prices. In addition, electricity generation volumes were down, in part owing to the shutdown of unit B of the Gundremmingen nuclear power station at the end of 2017 and scheduled maintenance outages. Cost-reducing measures had a counteracting effect. RWE continues to anticipate that this segment will achieved adjusted EBITDA of between €350 million and €450 million for the year as a whole.

European Power: operationally on a par year on year

Adjusted EBITDA in the European Power segment totalled €196 million (first half of 2017: €222 million). Disregarding the special items such as capital gains on property sales, which improved earnings in 2017, adjusted EBITDA matched the level achieved in the same period last year. The margins of gas and hard coal-fired power stations were slightly lower year on year. This was offset by the payments received for participating in the UK capacity market and the ongoing efficiency-enhancement programme. RWE still expects this segment to post adjusted EBITDA of between €300 million and €400 million for the full year.

Supply & Trading: very good performance in the second quarter of 2018

The Supply & Trading segment picked up the pace considerably towards the mid-year point. After six months, adjusted EBITDA amounted to €101 million (first half of 2017: €131 million).

Energy trading performance improved significantly compared to 2017, but the gas business failed to match the very high level of earnings recorded in the first half of last year. RWE continues to anticipate that this segment will achieve adjusted EBITDA of between €100 million and €300 million for the year as a whole.

innogy: dividend payment on a par with last year

In the second quarter, RWE received a dividend of €683 million from innogy. This matched last year’s amount. On 10 August, innogy published details on its earnings as part of its reporting for the first half of the year.

Net debt lower than at the end of 2017As of 30 June 2018, net debt directly attributable to RWE totalled €3.7 billion, about €800 million down on the level as of 31 December 2017.

Dividend increase for fiscal 2018 still planned

As business developed as planned and the medium-term earnings prospects are improving, RWE CFO Markus Krebber confirmed the outlook for the dividend: “Thanks to our robust operating performance and solid financing policy, we still plan to raise the ordinary dividend for fiscal 2018 by 40 %, from €0.50 to €0.70.”

Rapid expansion of renewables and grids decisive to the future role of coal

The Commission for Growth, Structural Change and Employment is discussing the future role of coal. RWE will reduce its carbon dioxide emissions from coal-based electricity production by up to 50 % by 2030 compared to 2015 and has presented a specific roadmap for this. The speed of the coal phase-out in Germany will depend on the rapid expansion of renewable energy and grids, because every kilowatt hour of renewable electricity will replace a kilowatt hour of conventional electricity in the future. Therefore, the symbolic determination of an end date hardly does justice to the complexity of the task. Moreover, further market intervention leading to increasing electricity prices must not curtail the competitiveness of German industry and in addition the consequences for the employees must be kept in mind. The Commission has the chance to place the transformation of the energy system on a realistic foundation, while establishing reliable framework conditions for companies.

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Additional information on business figures can be found here:

  • Interim statement on the first half of 2018

  • Key figures for H1 2018

  • Speech delivered at the half-year press conference

  • Presentation for the investor and analyst conference calls

  • Video interview with Markus Krebber, Chief Financial Officer of RWE AG

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Note on changed financial reporting

From now on, the financial investment innogy will no longer be presented as a fully consolidated company in the consolidated financial statements. The segment is now called ‘ innogy – continuing operations’. It only includes those parts of the company that are due to remain within the RWE Group over the long term. This applies to the renewables business, gas storage and the stake in Austria-based Kelag. The other parts of innogy, which will be transferred to E.ON, are classified as ‘discontinued operations’ until their date of sale. The current financial statements do not include E.ON’s renewable assets or the dividend which will be paid to RWE through E.ON’s future shareholding. The minority interests in the Gundremmingen and Emsland nuclear power plants, which RWE will acquire from E.ON, have not been presented either.

Forward-looking statements

This press release contains forward-looking statements. The statements reflect management’s current assessments, expectations and assumptions and are based on the information currently available to management. Forward-looking statements provide no assurance that future events or developments will occur and are subject to known and unknown risks and uncertainties. As a result of various factors, actual future events and developments may differ materially from the expectations and assumptions expressed herein. In particular, these factors include changes in the general economic environment and the competitive situation. Above and beyond this, developments on the financial markets, fluctuations in exchange rates, changes to national and international law, especially with regard to tax regulations, and other factors can influence the future results and performance of the Company. Neither the Company nor any of its associated companies undertake to update the statements contained in this press release.

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