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UPDATE 1-EnBW's profit hurt by low wholesale power prices
November 12, 2013 / 11:22 AM / in 4 years

UPDATE 1-EnBW's profit hurt by low wholesale power prices

* Nine-month adjusted EBITDA down 2.5 pct at 1.816 billion euros

* Full-year forecast unchanged for 5-10 percent fall in adjusted EBITDA

* Sees deal with ENI on joint venture in foreseeable future

* Thinly traded shares down 4.3 percent (Adds comments by CFO, asset sales, share price reaction)

By Christoph Steitz

FRANKFURT, Nov 12 (Reuters) - Underlying profits at EnBW Energie Baden Wuerttemberg AG, Germany’s third-biggest utility, have been hit by lower wholesale power prices and weak demand for energy due to the euro zone’s economic downturn.

The company reported on Tuesday a 2.5 percent fall in its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to 1.816 billion euros ($2.43 billion) in the first nine months of the year and said it still expected a 5-10 percent fall for the full year.

“Power prices continue to be under pressure and that’ll be a burden for EnBW’s earnings,” Chief Financial Officer Thomas Kusterer told reporters on a results conference call.

Utilities in Germany, including RWE and E.ON and Vattenfall have been hit hard by falling wholesale power prices, which are reducing margins for coal and gas-fired plants, and supply competition from rival renewable energy sources, most notably solar and wind.

In addition utilities have to buy CO2 allowances under the European emissions trading scheme to account for plant emissions, putting further pressure on margins.

The structural crisis has forced EnBW to launch a restructuring programme, dubbed “EnBW 2020”, which includes measures to raise the share of renewables in its energy supply mix and increase its asset sale programme to 2.7 billion euros.

The group is also in talks to buy Italian group ENI’s 50 percent stake in their German gas grid joint venture Terranets BW and Kusterer said he was confident a solution would be found in the “foreseeable future”.

Meanwhile Kusterer said EnBW was still talking to parties interested in its 15.1-percent stake in local utility MVV .

Apart from MVV, EnBW is also looking to sell its 32.5-percent stake in EVN AG.

Shares in EnBW were down 4.3 percent at 28.75 euros by 1119 GMT. The shares are thinly traded, with a free float of less than half a percent. 46.75 percent of the stock is owned by the German state of Baden-Wuerttemberg and another 46.75 percent is held by nine of the German state’s municipalities. ($1=0.7459 euros) (Editing by Greg Mahlich)

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