RWE Posts €170mn 2015 Loss as Generators Struggle
European utility giant RWE March 8 posted a €170mn net loss for 2015 as European gas and power suppliers continue to struggle in tough market conditions. The company had recorded a €1.704bn net profit the previous year.
RWE said that there were successes in its renewables division and "better than expected progress" from its ongoing efficiency drive, but lower power prices led to €2.1bn impairments on the value of its German and UK power plants. The company also had to write down deferred tax assets of €0.9bn.
The company plans to "comprehensively restructure" its UK business, RWE-Npower. Recent media reports have speculated that one fifth of the workforce could lose their jobs, affecting around 2,500 people.
RWE CEO Peter Terium said: "Last year we had to deal with a number of difficulties, ranging from discussions on energy policy to problems in our UK supply business and the further decline in prices for wholesale power trading.... This has meant making a number of tough decisions."
Gas and power sales
Revenues of €48.599bn were steady, increasing just 0.3% from the previous year. RWE sold 296.7bn kWh of gas, up 5.5% from the previous year. It sold 262.1bn kWh of power, up 1.5%. The company's power generation volume of 213.0bn kWh rose 2.3%.
Gas sales benefited from the fact that the first half of 2015 was colder than the first half of 2014. In power there were some new industrial clients, but sales to German distributors fell. The increased generation partly came from commercial start-up of the 1,554 MW Eemshaven coal plant in the Netherlands in the middle of the year.
The sale of upstream oil and gas division RWE Dea, to the Letter One group, helped RWE cut its net debt by almost one fifth to €25.1bn. RWE said that its efficiency programme saved €1.6bn by the end of 2015, beating the original target by €100mn.
It will take new steps to make savings, focusing on conventional power generation and the UK supply business, aiming for €2.5bn savings on the operating result from 2018.
The company is suspending its dividend for common shares for 2015. Terium said that "in view of the serious crisis in conventional power generation, we need to take further radical measures."
RWE expects to record adjusted net income between €0.5bn to €0.7bn for 2016, the company said. It said power generation would continue to face challenges.
A strategic restructuring of the group is "on schedule." This will see a new subsidiary that groups renewables, grids and retail operations in Germany and internationally start operating from April 2016.