* FY net loss 2.76 bln eur vs 1.31 bln profit in 2012
* New business areas won't fill power plant void
* Company takes nearly 5 billion euros writedown
* To ask for permission to raise capital by up to 20 pct
* Keeps 2014 outlook, sees op result of 4.5-4.9 bln eur
(Recasts, adds CEO comments, context on sector)
By Christoph Steitz
ESSEN, Germany, March 4 Germany's biggest power
producer RWE AG said forays into new business areas
would not be enough to fill a hole left by the demise of
conventional power plants, offering little hope that the group
can regain its former earnings potential.
The company on Tuesday posted a net loss of 2.76 billion
euros ($3.80 billion), its first in more than six decades, after
a surge in solar and wind capacity undercut the profitability of
its power plants and triggered nearly 5 billion euros in
Many of Europe's big power producers have been slow to
respond to a fast-growing renewable sector and have also been
hit by weak energy demand and record-low wholesale power prices.
The rise of solar and wind energy, which are given priority
access to German power grids, has hurt RWE's coal- and gas-fired
plants, some of them state-of-the-art, and has eroded much of
their former earnings power.
"I grant we have made mistakes. We were late entering into
the renewables market - possibly too late," RWE Chief Executive
Peter Terium told journalists on Tuesday.
Terium pledged the group would increase efforts in new
energy efficiency and renewable power to drag it out of a sector
crisis that has destroyed more than 70 percent of its share
value since 2008.
But he warned that these new initiatives, which include
helping clients save energy through apps and software as well as
expanding in retail power supply, would not offset a decline in
plunging power plant earnings.
Terium said he expected earnings contribution of about 500
million euros from services and decentralised energy by the end
of the decade.
In 2013 alone, profits from traditional power generation
fell by 1.9 billion euros but still accounted for 24 percent of
the group's total. Renewables, in contrast, accounted for just 3
Last week, a 15 billion euro writedown dragged French peer
GDF Suez deep into the red and the company warned that
the crisis in the European utilities sector would last for a
RWE's Terium said he expected earnings at its power plants
to fall even further in the coming years, adding that 20-30
percent of the company's power stations could not currently
cover their operating costs.
He added that the group may decide to close or mothball
further plants in 2014, after having announced such plans for
more than 5,000 MW, or nearly 10 percent of its total capacity.
Burdened by 30.1 billion euros of debt, RWE is looking for
several ways to raise cash, including asking shareholders for
provisional approval for a share issue of up to 20 percent of
its existing share capital, or as much as 3.5 billion at RWE's
current share price.
The group is also selling its oil and gas exploration unit
DEA, which it still expects to complete this year.
"This is a realistic goal. But it depends on the price
offered to us," Terium said.
Initial bids for the unit came in between 3.5 billion euros
and 5 billion, sources have said.
RWE also confirmed its outlook for the current year, still
expecting an operating profit of between 4.5 and 4.9 billion
euros, down from 5.881 billion euros last year.
RWE shares traded up 1.1 percent at 29.04 euros by 1217 GMT.
($1 = 0.7260 euros)
(Editing by David Holmes and Mike Collett-White)