Uniper Hit by UK Capacity Market, Lower Gas Sales
German utility Uniper posted May 7 adjusted earnings before interest and tax (Ebit) of €185mn ($204mn) for Q1, just over half the €350mn it recorded in Q1 2018.
Operating earnings in the first quarter of 2019 were hit by higher priced carbon emissions allowances; the loss of income from the suspended UK capacity market; and lower earnings at the gas and LNG business. Mild winter temperatures reduced demand, resulting in higher inventory at storage facilities and lower prices at Europe’s trading points. There was also lower output from unit 2 at Ringhals nuclear power station in Sweden, in which Uniper owns a minority stake; and production interruptions in France caused by strikes.
In Russia, by contrast, the company benefited from higher day-ahead prices and output at the Surgutskaya power station and at units 1 and 2 of Beryozovskaya power station. Operating earnings in the reporting period were adversely affected by negative currency-translation effects.
The Global Commodities segment’s operating earnings decreased year on year, primarily because of slightly lower earnings from optimisation activities in the gas business. Other negative factors included temporarily narrower margins and a lack of earnings on hedging in the LNG business. For the remainder of the year, Uniper expects to benefit more from optimisation activities in the gas business. It anticipates positive effects in its LNG business as well, such as when income is recorded under physical supply contracts.
Uniper recorded net income of €791mn, up from €130mn in Q1 2018, a rise that is mainly attributable to positive effects resulting from the marking to market of commodity derivatives at the balance-sheet date. Uniper uses derivatives to shield its power and gas business from price fluctuations.
CFO Christopher Delbruck said that taken all in all, the relevant key performance indicators were in line with expectations and “we remain confident that we’ll achieve our targets for full-year 2019.” Uniper continues to expect its adjusted full-year Ebit to be between €550mn and €850mn.
For the second half of the year, Uniper will have a different CEO and CFO, Andreas Schierenbeck and Sascha Bibert respectively, who take the reins June 1.