EnBW reiterates outlook for small drop in 2012 core earnings

Fri Nov 9, 2012 5:22am EST

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* 9-month adj EBITDA 1.93 bln eur, down 2 pct

* Sticks to 2012 outlook, sees 5 pct drop in adj EBITDA

By Christoph Steitz

FRANKFURT, Nov 9 (Reuters) - EnBW, Germany's third-biggest utility, repeated its outlook for a 5 percent fall in core earnings this year due to low power prices and the phase-out of two nuclear plants, after posting a slight decline for the nine months.

It reiterated its August outlook for adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to fall about 5 percent from last year's 2.45 billion euros ($3.1 billion). Before August, it had expected a 10 to 15 percent drop.

"Falling prices on the wholesale markets continue to present a burden on earnings," EnBW's Chief Financial Officer Thomas Kusterer said on Friday.

Weak demand for electricity because of Europe's economic crisis has reduced revenue and utilisation of capacity at its power plants and has curbed the company's trading activities.

The German year-ahead power delivery contract, the benchmark in wholesale trading, currently is at its lowest in two years at around 47 euros a megawatt hour, down more than 11 percent year-to-date.

EnBW has been dealt a massive blow, along with its larger rivals E.ON and RWE, by Germany's decision last year to end all nuclear power generation by 2022 and immediately shut 40 percent, including two of the company's reactors.

Operators who lost nuclear plants in the enforced shutdown have had to buy in extra power to meet delivery obligations.

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EnBW's nine-month adjusted earnings before interest, tax, depreciation and amortisation (EBITDA)- the industry's benchmark figure - came in at 1.93 billion euros, down 2 percent from the same period last year.

EnBW is 46.75 percent-owned by the German state of Baden-Wuerttemberg, with another 46.75 percent owned by nine of the state's municipalities. The market free-float is just 0.37 percent, which means few analysts track it.

At 0855 GMT, EnBW's thinly-traded shares were down 1.8 percent, while RWE's shares fell 0.7 percent. Shares in E.ON, Germany's largest utility, were down 0.9 percent, while the Stoxx Europe 600 utilities index was down 0.4 percent.

High debt and the need for investments in new areas, such as renewables, have forced Germany's utilities to launch large asset sales worth a combined 23.5 billion euros.

EnBW plans to invest 4.1 billion euros in the 2012-2014 period to expand its business in areas such as renewable energy and to maintain its portfolio and has said it will sell at least 1.5 billion euros worth of assets. ($1 = 0.7857 euros) (Additional reporting by Vera Eckert; editing by Jane Baird)

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