RWE posts good performance in fiscal 2017 and plans higher dividend for 2018
Adjusted EBITDA up 7%, adjusted net income up roughly 60% in 2017
Net debt falls by €2.5 billion, equity ratio rises to 17%
RWE plans a dividend of €1.50, including a special dividend of €1, for 2017, with the 2018 ordinary dividend to rise to €0.70
In 2017, our goal was to strategically reposition RWE and consolidate its finances. We were successful in both of these undertakings. We are in good shape again, with a solid financing structure, lower debt and a higher equity ratio. In operational terms, our trading business did well in 2017, along with our power generation activities. All of this forms a good basis for the future, as we move forward with a sharp focus on our core business: ensuring security of supply.
Fiscal 2017 was a good year for RWE, thanks to better-than-expected results in the European Power division, a robust earnings contribution from Energy Trading and good progress with the ongoing efficiency-enhancement programme. Consequently, the company’s key earnings figures were better than last year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) amounted to €5.8 billion, up from €5.4 billion in 2016. At €1.9 billion, net income was substantially higher than last year, when a net loss of €5.7 billion was reported due to impairments. Adjusted net income came in at €1.2 billion, well higher than last year’s result of €0.8 billion.
For 2018, RWE projects adjusted EBITDA in a range of €4.9 billion to €5.2 billion, and adjusted net income between €700 million and €1.0 billion. This represents a modest decline, but comes as no surprise since 2018 will merely reflect the full impact of the very low levels of electricity prices seen in past years. As Dr. Rolf Martin Schmitz, CEO of RWE AG, explained: “We’re prepared for this. We planned to cut our cost base by €300 million annually between 2016 and 2019 and we have already achieved more than half of this. Furthermore, we can observe a slight improvement in wholesale electricity prices. On the whole, we are optimistic about our future prospects.”
For fiscal 2017, the Executive and Supervisory Boards of RWE AG will propose to the Annual General Meeting on 26 April the payment of a dividend of €1.50 for common and preferred shares. This includes a special dividend of €1.00. For 2018, the goal is to increase the ordinary dividend to €0.70.
Security of supply remains the key focus in 2018
RWE continues to focus on its core business, security of supply, with operational excellence and strict cost discipline as the basis for the company’s success going forward. In particular, the portfolio of gas-fired power plants will be further developed. One specific area of focus in this field will be the cooperation with industrial customers. In terms of generation capacity, gas is already RWE’s main source of energy, with a share of around 40%, making the company one of the leading competitors in Europe. Additional growth is targeted in energy trading, in particular in the LNG business. In the interests of promoting new solutions to ensure security of supply over the long term, the company has a pipeline of around 50 larger and smaller projects which are being pursued independently or with partners. They range from new storage facilities for electricity and the expansion of customer services to the use of biomass fuels from agricultural waste products.
Overview of segment results
In Lignite & Nuclear, adjusted EBITDA declined as expected, falling to €671 million (previous year: €1,079 million), due to lower realised wholesale electricity prices compared to the previous year. This decline was partially offset by the fact that we no longer had to pay a nuclear fuel tax and the ongoing efficiency-enhancement programme.
The adjusted EBITDA of the European Power division amounted to €463 million (previous year: €377 million). At the start of 2017 we were still expecting a decline in this division. The increase of around 23% resulted from the above-average earnings of the commercial optimisation of our power plant fleet, improvements in efficiency and an extraordinary book gain on the sale of our former power plant site Littlebrook.
The adjusted EBITDA of the Supply & Trading division rose to €271 million (previous year:-€139 million), a strong rebound compared to 2016 and well above the expected average level of around €200 million.
Our financial investment, innogy, recorded an increase of 3% in its adjusted EBITDA. Details on its earnings were published on 12 March.
As of 31 December 2017, the net debt of the RWE Group amounted to €20.2 billion, down€2.5 billion on the figure recorded by the end of 2016. This was mainly due to the good earnings development, the refund of the nuclear fuel tax and lower pension obligations.
‘RWE stand-alone’ indicators
In addition to its fully consolidated financial reporting, since 2017 RWE has also publishes additional indicators for ‘RWE stand-alone’. This covers the core business areas Lignite & Nuclear, European Power and Supply & Trading, along with the innogy dividend. These earnings indicators show the origin of the available free cash flows of funds, which form the basis for the dividend. The adjusted EBITDA of ‘RWE stand-alone’ amounted to €2.1 billion (previous year: €1.9 billion), with adjusted net income of €973 million (previous year: -€20 million). Net debt directly attributable to RWE declined by €2.3 billion to €4.5 billion as of 31 December 2017.
As Dr. Markus Krebber, Chief Financial Officer of RWE AG emphasised, “The positive development of the ‘new RWE’ share price and the stabilisation of our rating confirm investors’ confidence in our strategic and financial course.”
More information on fiscal 2017 can be found here:
Speech at the Balance Sheet Press Conference
2017 Annual Report
Financial statements of RWE AG 2017
This press release contains forward-looking statements. The statements reflect the current assessments, expectations and assumptions of the management and are based on the information available to the management at the current time. 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 in this publication. 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.
About RWE AG
With its two operating business areas of conventional electricity generation and energy trading, RWE AG, headquartered in Essen, is indispensable for the functioning of the energy system and security of supply in Europe. RWE’s third main pillar is its majority stake in innogy SE, one of the leading energy companies in Continental Europe. With its three divisions, Renewables, Grid & Infrastructure and Retail, innogy is addressing the needs of the modern energy world. In total, almost 60,000 employees of the RWE Group are active at all levels of the energy value chain.