RWE records good first quarter and confirms forecast for fiscal 2019
- Earnings grow year on year: adjusted EBITDA of ‘RWE stand-alone’ rises to €510 million, adjusted net income to €273 million
- Dividend outlook for 2019 unchanged: increase to €0.80 planned
We’re satisfied with our performance in the first quarter and confirm our goals for the current year. We want to raise our dividend for 2019 to 80 cents. We’re on schedule in implementing our transaction with E.ON. The preparation of the integration of the renewables business is also making good progress: The ‘new RWE’ is in sight.
RWE got off to a good start to the 2019 financial year. From January to March, ‘RWE stand-alone’ achieved adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of €510 million. This compares to €299 million in the same period last year. Adjusted net income increased as well, reaching €273 million (Q1 2018: €78 million). The good accomplishment relative to the first quarter of last year was primarily driven by an outstanding trading performance.
This is the basis on which the company confirms its forecast for 2019: RWE expects to achieve adjusted EBITDA of between €1.2 billion and €1.5 billion and adjusted net income of between €300 million and €600 million. In view of the positive overall business trend and improving medium-term earnings prospects, the company reaffirms its dividend outlook. It envisages raising the dividend for 2019 from €0.70 to €0.80.
Transaction with E.ON making good headway
Further progress was made in the transaction with E.ON and in preparing the integration of the renewables business under RWE. This included establishing the second management level of the future RWE Renewables, with the nomination of the board occurring as early as January. In April, RWE concluded a new credit agreement with a volume of €5 billion early on, in preparing for the integration of the renewables activities of E.ON and innogy. The line of credit was provided by 27 international banks. Proof of the trust placed in RWE’s business strategy was furnished by the fact that the credit line was significantly oversubscribed.
Once the deal closes, RWE will be the world’s second-largest offshore wind operator, while occupying a top 5 position among all renewable energy producers.
Lignite & Nuclear segment: on a par year on year in operating terms
In the first quarter of 2019, the Lignite & Nuclear segment recorded adjusted EBITDA of €188 million. This was slightly more than the €180 million achieved a year before, despite lower generation volumes from lignite-fired power plants due to the halt to the clearance of Hambach Forest. Higher wholesale prices were the main reason for this result. RWE continues to anticipate achieving adjusted EBITDA of between €300 million and €400 million for the year as a whole.
European Power segment: weaker start to the year
Adjusted EBITDA posted by the European Power segment amounted to a mere €63 million as a result of a decline in generation volumes, a smaller contribution to earnings from commercial optimisation and the suspension of payments from the UK capacity market. The figure recorded in the same period last year was €159 million. RWE anticipates that adjusted EBITDA in this segment will be at the lower end of the forecast range of €250 million to €350 million for 2019.
Supply & Trading segment: outstanding performance
In the first quarter, the Supply & Trading segment achieved adjusted EBITDA of €255 million, marking an outstanding accomplishment as opposed to the slightly negative EBITDA recorded in the same period last year. As trading results can be subject to substantial fluctuations over the course of the year, RWE reaffirms its forecast for 2019 as a whole, which envisages adjusted EBITDA in the range of €100 million to €300 million. The company believes it stands a good chance of closing the year at the upper end of the forecast range.
innogy: dividend payment to be received in the second quarter
In May, RWE has received the dividend from innogy SE, which is still being held as a financial investment. innogy published details on its earnings in its report on the first three months of the year on 14 May.
Net debt develops as expected
Net debt directly attributable to RWE amounted to €4.7 billion as of 30 March 2019 and was therefore about €2.4 billion higher than as of 31 December 2018. This was primarily a result of an advance effect from last year, which is reversing now. Furthermore, the adoption of theIFRS 16 accounting standard and the redemption of a £750 million hybrid bond came to bear.
Additional information on the business figures can be found here:
-Interim statement on the first quarter of 2019
-Key financials for the first quarter of 2019
-Speech held at the press conference call
-Slide-based presentation for the investor and analyst conference call
-Video interview of Markus Krebber, CFO of RWE AG
Note on RWE’s financial reporting
The financial investment innogy stopped being presented as a fully consolidated company in the consolidated financial statements in the middle of 2018. The segment has since been 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, will be classified as ‘discontinued operations’ until their date of sale. The current consolidated financial statements do not include the business of E.ON’s renewables division or the dividend which will be paid to RWE through our future shareholding in E.ON. The minority interests in the Gundremmingen and Emsland nuclear power plants, which RWE will acquire from E.ON, have not been presented, either.
Due to the transaction with E.ON, RWE adjusted its financial reporting for the Group in compliance with International Financial Reporting Standards (IFRS) in the middle of 2018. As a result of this change, the consolidated key figures for the RWE Group are only of limited informational value. The focus rests on the key figures for ‘RWE stand-alone’. They encompass the Lignite & Nuclear, European Power and Supply & Trading divisions plus the innogy dividend. The company is using these key figures to manage its operating activities and determine the dividend for its shareholders.
This press release includes forward-looking statements. These statements reflect management’s current assessments, expectations and assumptions and are based on the information currently available to it. Forward-looking statements provide no assurance that future results and developments will occur and are subject to known and unknown risks and uncertainties. As a result of various factors, actual future results 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.
RWE AG, with its headquarters in Essen, Germany, has three operating divisions: Lignite & Nuclear, European Power based on gas, coal, hydro and biomass, and Supply & Trading. The company plays a major role in power system operations and security of supply across Europe. Its fourth pillar of business is a majority stake in innogy SE, one of the continent’s leading energy companies. In March 2018, RWE announced that it will transfer this equity holding to E.ON as part of an asset swap. In exchange, RWE will receive the renewable energy activities of innogy and E.ON as well as further assets. The transaction is expected to be executed by the end of 2019. This will turn RWE into a leading supplier of renewable energy in Europe, with a total of over 20,000 employees.