RWE looks to the future with optimism after its successful reorganisation
Tuesday, Mar 14, 2017
- Operating earnings for 2016 at upper end of forecast range; net debt reduced, improved earnings expected in current fiscal year
- Net income curtailed by extraordinary charges of -€5.7 billion; equity ratio on par with year-earlier level
- €0.50 dividend envisaged for fiscal 2017; payment shall be floor for subsequent years
- Strategic continued development in areas linked to core business: security of supply
Dr. Rolf Martin Schmitz, of CEO RWE AG: “RWE is back on track. We made major progress in reorganising the business last year, which has enabled us to return to reliable planning while giving us room to manoeuvre when taking entrepreneurial action. The security and reliability of energy supply are becoming increasingly important to the success of the energy transition. We are adapting our strategy to this, evolving from an electricity producer into a provider of secured capacity. In doing so, we will make sure our current business remains powerful, continue to develop RWE in areas linked to its core business and work on solutions today for the security of the energy system of tomorrow."
RWE starts fiscal 2017 with a positive outlook. The company forecasts a range of €5.4 billion to €5.7 billion for adjusted EBITDA; in 2016 this figure stood at €5.4 billion. Adjusted net income of between €1.0 billion and €1.3 billion is anticipated after €0.8 billion last year. Earnings from conventional power generation will be significantly lower than last year, owing to the continuous decline in margins. However, earnings achieved by RWE Supply & Trading GmbH and innogy SE should record a significant and slight improvement over 2016, respectively.
"We have done our homework. The task at hand now is to continue to build RWE on this solid foundation. Our business model centres on security of supply,” emphasises Rolf Martin Schmitz, CEO of RWE AG.
RWE has defined three goals to this end: RWE will continue to optimise the efficiency and flexibility of its power plant portfolio. The company will resolutely implement its lignite roadmap for reducing carbon emissions.
RWE intends to leverage potential in areas linked to its core business. For this purpose, the
portfolio of flexible assets will be developed further. Moreover, the company will position itself in strategic, operating and organisational terms in order to be able to anticipate and react to
important developments on the market. RWE also aims to grow organically in the energy trading business. RWE's trading team was and continues to be the pacemaker for the liquid, functioning energy market, both in Europe and elsewhere. Drawing on this experience and expertise, the company wants to be part of the strong growth of the Asian energy markets.
Ultimately, RWE will be a driver of new solutions ensuring security of supply. Therefore, the
company intends to participate in the development of storage and spur innovation in this area.2016 financials: RWE re-establishes solid financial Basis
The successful IPO of innogy has put RWE back on a solid financial basis. Consequently, the equity ratio has remained almost stable, despite substantial impairments and the charges taken as a result of the reorganisation of nuclear waste disposal responsibilities in Germany. The company will have sufficient liquidity even after fully paying its contribution of €6.8 billion to the nuclear energy fund with effect from 1 July of this year. Consolidated net debt dropped by €2.8 billion to €22.7 billion. Excluding the financial investment in innogy, RWE's debt decreased to €6.9 billion. This is contrasted by shares in innogy held as assets with a current market value of over €14 billion. RWE's credit rating by all agencies remains of investment grade status.
Business developed partly better in operating terms than expected. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) amounted to €5.4 billion, adjusted EBIT (earnings before interest and taxes) totalled €3.1 billion, and adjusted net income amounted to €0.8 billion. Although earnings deteriorated compared to 2015 as expected, the figures are clearly at the upper end of the target ranges that were forecast by the company in March 2016.
The divisions displayed disparate development: in conventional electricity generation, the rapid implementation of efficiency-enhancing measures led to a positive operating result which was better than expected. Earnings in the trading business were negative.
These figures include the numbers posted by the fully consolidated RWE subsidiary innogy SE.
The net loss of €5.7 billion primarily resulted from the €4.3 billion impairment of the power plant portfolio and the charges caused by the contribution to the nuclear energy fund which was increased by the 35% risk premium of €1.8 billion, with the negative effects of the fair valuation of derivatives of €0.8 billion also coming to bear. RWE had published the preliminary results of fiscal 2016 on 22 February 2017.
The Executive Board and the Supervisory Board of RWE AG will propose to the Annual General Meeting on 27 April 2017 that the dividend for holders of common shares be suspended for fiscal 2016. The dividend proposed for holders of preferred shares is €0.13 per share, which corresponds to the preferred share of profits stipulated by the Articles of Incorporation. "Through the successful reorganisation and enormous cost savings, we have set the stage for returning to paying a dividend reliably in the next and subsequent years”, declares CFO Markus Krebber.
The Executive Board of RWE envisages a dividend of €0.50 for both common and preferred shares for fiscal 2017. This is the company's intended minimum dividend for the years hereafter. In this context, RWE is orienting itself towards operating cash flows that are freely available on a sustainable level.
For more information, please visit: www.rwe.com