(Bloomberg) -- RWE AG’s profit fell 24 percent as Germany’s shift away from nuclear and coal-fired plants is taking its toll on the utility’s financial performance.
- Stand-alone adjusted earnings before interest, tax, depreciation and amortization for the 9 months through September slumped to 1.3 billion euros ($1.47 billion) from 1.7 billion euros in the prior year. The German utility still expects full-year EBITDA of 1.4 billion euros to 1.7 billion euros and stuck to its dividend forecast of 70 cents per share.
Key Insights
- The company’s exposure to a rapid coal phaseout in Germany has been a central concern for investors, with a commission about to issue a report on how the nation intends to get back on track for its climate reduction targets. To prepare for the future, RWE said teams working on the preparation of integration of rival EON’s renewable business into the group are making good progress.
- Germany, Europe’s biggest power market, will shut down its last atomic plants in 2022 and lower power generation also pressured earnings after the December 2017 closure of the Gundremmingen B nuclear power plant.
- The company gave no further detail on disruption to its Hambach lignite mine due to protests from environmentalists, although is likely to field questions on the topic in Wednesday’s analyst and press calls. The company has previously said disruption to mining in Hambach would cost 100-200 million euros annually.
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- The company said its asset swap with EON is proceeding according to plan, with RWE, EON and Innogy working hard to get the deal through European Commission by the summer of 2019. Under the asset swap deal with EON, RWE will become focused on power generation whereas EON will operate a consumer-facing business. The deal faces probes from German regulators and European Commission competition officials.
- For a link to the earnings statement, click here
Market Reaction
- Shares have gained 9.6 percent this year. That compares with an 11 percent drop for Germany’s blue-chip DAX index and a 0.7 percent slide for the STOXX 600 Utilities Index.
To contact the reporter on this story: William Wilkes in Frankfurt at wwilkes1@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Lars Paulsson, Andrew Reierson
©2018 Bloomberg L.P.
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