Germany: RWE’s EBITDA Reaches EUR 5 Bln

RWE improved its earnings performance in the first half of 2012 compared to the same period in the previous year. While revenue remained almost constant at 27.1 billion Euro, the operating result increased by 9 percent to 3.6 billion Euro and EBITDA also rose by 9 percent to 5 billion Euro.

However, the first half of 2011 was marked by the one-off effects incurred as a result of political decisions over nuclear energy. Electricity sales fell by 8 percent in the first half of 2012, primarily due to the deconsolidation of Amprion, while gas sales declined by 11 percent. A much-improved energy trading performance and an agreement with gas supplier Statoil both had a positive impact. Payments for Statoil-supplied gas is now in line with the prevailing market conditions, reducing the current burdens and future risks for RWE. Recurrent net income – the key determinant of the RWE dividend – remained almost stable at 1.7 billion Euro.

 “The present framework conditions are anything but favourable”, said Peter Terium, CEO of RWE. “Mounting state intervention in the energy sector, shrinking power plant margins and fierce competition in electricity and gas supply are all challenges we are facing.”

This is why RWE introduced a package of measures in August last year, aimed at strengthening its financial power. The capital measures of that package, which included an increase in capital and a 2 billion Euro hybrid bond programme, have already been concluded. The reduction in investment expenditure over the next few years – to 4 billion Euro or no more than 5 billion Euro per year – has been initiated. The divestment programme is underway: RWE has already reduced its share in Saarland-based utility VSE and reached an agreement with the Berlin Senate for it to acquire RWE’s 24.95 percent share in Berlinwasser.

New “RWE 2015” programme

RWE is intensifying these and has set up a new programme named “RWE 2015”, which aims to improve earnings by €1 billion per year by the end of 2014. Specific projects have been set up in the operating companies, laying the foundation to achieve the majority of the desired savings. The target now is to realise further improvement in earnings via Group-wide standardisation and pooling of interface functions. As part of that process, RWE is also investigating the option of relocating or outsourcing certain functions. Beyond the measures already announced in 2011, this new programme will affect about 2,400 positions across the Group. Peter Terium: “These HR measures are essential to maintaining the market competitiveness of RWE, but we will be implementing them in a planned and transparent manner in full consultation with employee representatives.”

European electricity generation under one umbrella

RWE intends to address the fundamental changes in the European electricity generating market by forming a pan-European generating company. The coal- and gas-fired power plants of RWE Power are to be integrated into this company. The new company would manage all conventional power plants of RWE Power, RWE npower and Essent in future. This new structure will allow the Group to respond more quickly to the rapid pace of change within the electricity market. RWE intends to set up the generating company as a Societas Europaea (SE) based in Germany. It is scheduled to start operating at the beginning of 2013.

Outlook

With near-constant external revenue, RWE envisages a stable earnings contribution for the year as a whole, despite the planned divestments. EBITDA and the operating result are expected to be comparable to that of the previous year (8.5 billion EURO and 5.8 billion EURO respectively). The Group also expects to be able to maintain the level of recurrent net income achieved in 2011 (2.5 billion EURO).

This press release does not constitute an offer to sell securities, or a solicitation of an offer to buy securities, in the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The securities of RWE Aktiengesellschaft described herein have not been and will not be registered under the Securities Act, or the laws of any State, and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable State laws. RWE Aktiengesellschaft does not intend to register any portion of the offering in the United States or conduct a public offering of securities in the United States.

[mappress]

Offshore WIND staff, August 14, 2012; Image: rwe