Uniper Loses on Write-downs
German utility Uniper reported March 12 a net loss of €492mn ($555mn) for full-year 2018, an improvement from 2017's loss of €538mn. It wrote down €681mn on its Datteln-4 and Provence-4 power plants and the gas-storage portfolio in Germany. In addition, the marking to market of commodity derivatives at the balance-sheet date resulted in a negative effect of roughly €300mn.
Adjusted pre-tax earnings were €865mn, down as expected on 2017 owing to portfolio effects. Adjusted funds from operations (FFO) were €756mn, close to the €753mn in 2017, it said. This year it expects adjusted pre-tax earnings to be lower, between €550mn and €850mn and adjusted FFO between €650mn and €950mn.
CFO Christopher Delbruck said that its operating performance was somewhat weaker but Uniper "remained on course in an extremely difficult market environment. The stable performance of adjusted funds from operations again enables us to make our shareholders an attractive dividend proposal. Our balance sheet is on schedule as well: achieving a comfortable investment-grade rating and concluding our refinancing early enabled us to notch up two important successes in 2018.”
Uniper expects its 2019 adjusted EBIT to be between €550mn and €850mn, down thanks to the absence of positive one-off effects and earnings from LNG hedging transactions. However, these effects will be partially offset by higher prices in all European electricity markets and increased output from the company’s hydroelectric power plants in Germany and Sweden.
The forecast for 2019 excludes contractually agreed payments from the suspended British capacity market. If the system were to come into force again during the year, the earnings forecast for 2019 would increase by up to €120mn.
Uniper anticipates 2019 adjusted funds from operations of between €650 and €950 million. Adjusted FFO will mainly reflect the performance of adjusted EBIT, although the absence of positive prior-year effects is largely not cash-effective or not relevant for adjusted FFO. The proposed dividend for the 2019 financial year is €390 million.
Uniper will build 300 MW of gas gas-fired capacity at Irsching facility, expected to enter service in 2022, and is aimed at providing emergency back-up.
Uniper also made progress in the transformation of Scholven. To ensure the facility’s viability for the long term, Uniper will build a combined-heat-and-power plant consisting of two gas turbines and a steam boiler at the existing hard-coal-fired plant. Construction work is expected to begin this year.
In Russia, Uniper will also participate in the modernisation program for conventional power generation capacities in the current financial year. The Russian government has decided to modernise some 40 GW of generation capacity over the next decade.
Uniper’s COO Eckhardt Rummler said the company would reduce its exposure to market prices. For the Scholven projects, the Russian modernisation programme and the new gas-fired power plant in Irsching alone, Uniper will be investing around €500mn over the next few years.