EnBW Reports EUR 588 Million Net Loss in 1H 2011 (Germany)

Karlsruhe. In the first six months of 2011 EnBW Energie Baden-Württemberg AG increased its revenue by 5.1% to a total of € 9,409.8 million. In contrast, there was a decline in earnings as expected.

Adjusted earnings before interest and taxes (adjusted EBIT) fell by 24.2% in comparison to the corresponding prior-year period to € 878.1 million.

The operating result of the electricity generation and trading segment decreased by € 243.3 million to € 666.9 million. This decrease reflects the reduction in income as a result of the new nuclear fuel rod tax, the shutdown of two nuclear power plants on account of the three-month suspension of the extension of their working lives and the subsequent change in law as well as the loss of earnings from procuring quantities of electricity that have already been sold on the forward market from the power stations.

Adjusted EBIT likewise declined in the gas segment, here mostly as a result of the sale of GESO in the prior year, but also due to intense competition and comparatively mild weather in the first quarter. The electricity grid and sales segment, by contrast, recorded 6.1% growth in earnings to € 172.3 million. The energy and environmental services segment also recorded a rise in earnings of 19.3% to € 69.9 million.

After eliminating non-recurring effects, adjusted group net profit in terms of the profit shares attributable to the equity holders of EnBW AG increased by 34.1% on the prior-year period, and now comes to € 458.7 million.

At € -606.1 million, non-operating EBIT which reflects extraordinary effects on earnings also showed a negative development. The main reason for this development were expenses of € 559.6 million relating to nuclear power. Due to the shutdown and earlier dismantling of two power plants on account of the withdrawal of the decision to extend their working lives, the decommissioning provision was increased and fuel rods in the reactor were written off. Further non-recurring expenses of € 613.4 million, affecting the investment result in particular, brought about a non-operating group net loss of € -1,047.0 million. The extraordinary negative effects in the investment result are mostly due to impairment losses recognised on equity investments due to changed conditions in the energy industry, of which approximately € 370 million relates to the investment in EWE AG and around € 245 million to the investment in EVN AG.

Since the group’s operating result was not able to compensate for all of the extraordinary burdens, the income statement of the EnBW group overall reports a group net loss of € -588.3 million.

In view of the negative effects on earnings and in order to safeguard the group’s financing power, and thus its ability to invest, in the next few years, EnBW will expand its current FOKUS earnings enhancement programme and increase the volume of divestitures planned over the next few years. In addition, capital measures are under consideration.

Adjusted net debt increased from € 8,139.8 million at the end of 2010 to € 8,677.4 million as of the end of June 2011 despite the repayment of financial liabilities. This is essentially due to the rise in provisions for pensions and those relating to nuclear power of € 935.1 million.

Due to the further anticipated negative effects, EnBW maintains its negative forecast for adjusted EBIT.

 Hans-Peter Villis, CEO of EnBW: “Our forecast that the operating result will fall by up to 25% compared to 2010 is unchanged. We are therefore investigating further measures with the aim of reducing capital expenditures, increasing divestitures and expanding efficiency and cost-saving measures under the “Fokus” programme that has already been launched. Our aim is to preserve our financing and investment flexibility in spite of the difficult conditions in the energy industry.”

EnBW invested a total of € 563.1 million in the first six months of the year. Around half of this amount was spent on growth projects, including the expansion of Iffezheim hydro-electric power station, construction of the new hydro-electric power station in Rheinfelden, construction of the hard coal power station RDK 8 in Karlsruhe, as well as the completion of the offshore wind farm EnBW Baltic 1 and development of our second offshore wind farm EnBW Baltic 2 off the German coast of the Baltic Sea. The other half of the expenditures was attributable to replacement and renewal measures, in particular for power stations and grid infrastructure.

By investing in renewable energies and further optimising its power stations, EnBW is making every effort to maintain its generation position with low CO2 emissions. In this respect, it intends to increase the share of renewable energies in Baden-Württemberg, Germany – mainly wind and hydro-electric power – and also in Turkey to 10 billion kilowatt-hours over the next ten years. In addition, it has plans to further expand its pump storage capacity.

 “EnBW intends in future to place greater emphasis on local energy solutions and partnerships, especially with municipalities and municipal utilities, on a par with large-scale projects. One example of how this can be done is the concept for a “sustainable town” that has been successfully launched as a pilot project with the town of Leutkirch,” says Villis.

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Source: enbw, July 29, 2011