* Says has renegotiated more contracts
* Q1 EBITDA 3.1 bln eur vs 3.11 bln Rtrs poll
* Q1 sales 15.6 bln eur vs 15.78 bln Rtrs poll
* Shares down 1.1 percent
(Adds details, background, shares)
By Christoph Steitz and Vera Eckert
FRANKFURT, May 10 RWE, Germany's No.2
utility, said it has further reduced its exposure to previously
agreed high import prices and is on target to be free from
crippling gas losses after 2012 at the latest.
The company said it was conducting price reviews with its
gas suppliers and had already received compensatory payments for
some contracts, the last one of which was in April.
"More contracts have been renegotiated to be based on
wholesale gas prices," Chief Executive Juergen Grossmann said as
the company published first-quarter results in line with
Like other European sector peers caught out by high
oil-indexed gas import prices on the one hand and low local
distribution prices on the other, RWE is, however, still
struggling in talks with suppliers like Russia and Norway to
claw back some of its huge outlays.
"Our earnings would improve considerably if we obtained
further positive results from our price reviews, albeit probably
only after 2012 for the biggest parts," the company added.
RWE already receives 58 percent of its gas via cheaper
European trading hubs and own production, and is working to
disconnect more of the remaining import contracts from oil,
slides for the first-quarter earnings report showed.
The company reported in line first-quarter profits, as gas
losses and falling margins in generation were offset by higher
profits at its oil and gas exploration unit.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) reached 3.1 billion euros ($4.01 billion) in the first
quarter, down 9 percent compared with the year-earlier figure.
That was in line with the 3.11 billion euro average analyst
forecast in a Reuters poll. Recurrent net profit reached 1.3
billion euros, also in line with the 1.33 billion average
The company's trading and gas midstream business recorded an
operating loss of 220 million euros in the first quarter,
pointing to the gas contracts that force the company to buy gas
at higher prices than it can charge customers.
RWE warned investors in March to expect 2012 losses on gas
trading to significantly exceed last year's 800 million euro
Russian supplier Gazprom is in talks with many
counterparties about discounts, including RWE, and recently
awarded Italy's Eni better terms.
In a similar vein, RWE rival E.ON said on
Wednesday its talks with Gazprom were paving the way towards a
return to profitability in gas in the medium term.
RWE's oil and gas exploration unit DEA, in turn, achieved an
operating profit of 241 million euros in the first quarter, up
37 percent, as higher oil prices came to play.
Its power generation business saw operating profit losses of
12 percent due to the loss of a nuclear power reactor at Biblis
and some higher fuel costs.
(Editing by Mike Nesbit)