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    Uniper Reports Stable Earnings in 2019: Update


The German utility cited improved performance at its hydro and nuclear stations and in Russia, as well as the resumption of the UK capacity market.

by: Joseph Murphy

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Natural Gas & LNG News, Europe, Premium, Corporate, Financials, News By Country, Germany

Uniper Reports Stable Earnings in 2019: Update

(Adds statement from Fortum at end)

German energy group Uniper has reported stable core earnings for 2019, thanks to improved performance at its hydro and nuclear stations as well as its business in Russia, and the resumption of the UK capacity market.

The company's adjusted pre-tax earnings (Ebit) came to €863mn ($980mn) last year, compared with €865mn in 2018, according to results published on March 10. It reported a net income of €644mn, versus a €442mn loss a year earlier.

Uniper pointed to higher power prices and output at its hydro and nuclear power stations as a bright spot last year. In Russia, it also increased uptime at the Berezovskaya power plant, taking advantage of higher day-ahead market prices.

The company also attributed the growth in its earnings to the revival of the UK capacity market, which pays utilities for making capacity available regardless of whether it is used. The European Commission permitted the UK to continue using the system in October after conducting an investigation into whether it breached EU state aid rules. Funds withheld pending the outcome of the probe were then distributed to Uniper and others.

On the back of this development, Uniper in November revised its full-year projection for Ebit to €750-950mn, up from €550-850mn previously. It also reaffirmed plans to pay €390mn in dividends for 2019.

In its core markets, Uniper said electricity prices were significantly lower, however, owing to warmer weather and relatively low gas prices. This resulted in lower uptime at its coal-fired plants. Overall sales turnover was 28.3% lower yr/yr. Electricity sales volumes were down 13.3% at 612.9bn kWh, although gas volumes were stable at 2.179 trillion kWh.

Green age dawns

CEO Andreas Schierenbeck took the opportunity of the results' release to announce Uniper's plan to make its generation operations climate neutral by 2035. Uniper can be part of the solution to the challenge of reducing carbon emissions while also meeting rising global energy demand over the coming decades, he said.

"Our transition to a climate-friendlier company is well under way. We’ve set our strategic course to substantially accelerate decarbonisation. Uniper will play a leading role in a climate-friendly power and gas supply and help its customers decarbonise," he said in a statement. "And because the transition to a zero-emission future also requires the necessary financial resources, we’ll invest more in new, attractive business areas."

Uniper plans to invest over €1.2bn between now and 2022 in projects that accelerate the transition to a lower-carbon world, the CEO said, and all its future investments will be made based on not only their business sense but also their contribution to the decarbonisation goal. The company plans to exit coal-fired power as part of a push to reduce emissions from its European generation activities from 22mn mt/yr today to net zero by 2035.

"Because gas plays a pivotal role in decarbonisation as well as energy security, it will be a key focus of Uniper’s future strategy," Schierenbeck said. "Uniper plans to further expand its broadly diversified gas business and progressively decarbonise it as well."

However, the company aims to gradually replace conventional gas with green gas or green hydrogen in both energy generation and trading, he added.

Finnish utility Fortum, which expects to take control of Uniper in the coming weeks, said March 10 that it "will carefully analyse Uniper’s updated strategy and results and will comment [on] them within a few days."