Low power prices, weak demand hurt MVV Energie's Q1 earnings

Fri Feb 14, 2014 3:04am EST

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* Q1 adj EBIT reaches 78 mln eur, down 11 pct

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FRANKFURT Feb 14 (Reuters) - German utility MVV Energie reported an 11 percent drop in first-quarter core profits on Friday, blaming weak demand due to mild temperatures and low wholesale power prices.

MVV's adjusted earnings before interest and tax (EBIT) fell to 78 million euros ($107 million) in the October-December period, while sales remained flat at 1.1 billion euros.

Ultra-low wholesale power prices, mainly caused by the rampant expansion of subsidised renewable power that is displacing output from gas and coal-fired plants, have thrown Germany's utilities into crisis, forcing them to close or mothball thousands of megawatts (MW) of capacity.

"The margin from generating electricity has fallen consistently in recent years. Electricity volumes are now marketed in full at this low level," Chief Executive Georg Mueller said in a statement on Friday.

In addition, mild temperatures led to lower district heating and gas turnover, the group said, adding that this was partly offset by renewable electricity sales.

MVV said last year it would invest 3 billion euros in areas such as renewables and energy efficiency by 2020.

MVV, with just 12.2 percent of its shares in free float, is 50.1 percent owned by the city of Mannheim. German peers EnBW and RheinEnergie own 15.1 percent and 16.3 percent respectively, while GDF Suez of France holds 6.3 percent. ($1=0.7317 euros) (Reporting by Christoph Steitz; Editing by Greg Mahlich)

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