• Natural Gas News

    Uniper expects stable year after H1 profits drop

Summary

The German utility will regain in the second half what it lost in the first on the carbon market.

by: William Powell

Posted in:

Complimentary, Natural Gas & LNG News, Europe, Carbon, Gas to Power, Corporate, Financials

Uniper expects stable year after H1 profits drop

German utility Uniper reported August 11 a substantial year-on-year drop in first-half earnings but it said the overall result for 2021 would be similar to the previous year. That is despite the large gains, absent this year, from its global  gas trading gains in 2020.

Adjusted pre-tax earnings (Ebit) were €580mn ($680mn), down from €691mn. The main reason for the decline was a price- and volume-driven increase in provisions for carbon allowances but these provisions are mirrored by carbon hedging transactions that will be unwound in the fourth quarter of 2021. This effect therefore will not adversely impact adjusted Ebit for the year as a whole. First-half adjusted net income of €485mn was about €42mn below last year. 

It is not changing its outlook for the year, which it adjusted upward after the first quarter. For the 2021 financial year the company expects adjusted Ebit of €800mn-€1.05bn and adjusted net income of €650mn-€850mn. These compare with €998mn and €774mn respectively.

Earnings at the European generation segment improved year on year with he commissioning of Datteln 4 coal-fired power plant in late May 2020 and the return to commercial operations of its Irsching 4 and 5 gas-fired generating units in the fourth quarter of 2020. Higher income from the UK capacity market also had a positive impact on earnings.

Although its internatioal gas trading margins were back to normal, its commodities portfolio benefited from unusual weather conditions in North America and from business activities in Asia.

The decline at the Russian power generation segment resulted mainly from currency-translation effects. The expiration of long-term capacity payments for two generating units at Shaturskaya und Yaivinskaya power stations was offset by the recommissioning of Beryozovskaya's unit 3 in May 2021.

Uniper CFO Tiina Tuomela said that with the credit rating upgraded to BBB and the outlook upgraded to "stable" in July, the company would be better able to implement its strategy. But further improvement of the rating would mean "investments in sustainable business models and consistent implementation of our decarbonisation strategy."

Uniper CEO Klaus-Dieter Maubach said that its successful bids for closing coal-plant in Germany – capacity totalling 2 GW is to leave the market – and its accelerated exit from UK coal would help in this regard. But it would also add clean capacity. "For the energy transition to succeed, the hydrogen economy needs to ramp up quickly. All low- and zero-carbon forms of hydrogen should play an equal role in this process. In addition, the renewables expansion must be accelerated," he said.