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RWE releases outlook for 2014
- Earnings shortfalls in conventional electricity generation
- Further efficiency enhancements of €1 bn. planned
- Forecast for 2013 confirmed
Despite a still difficult market environment, the operating result of RWE AG for the first three quarters of 2013 was more-or-less stable, at €4.6 billion. EBITDA was also largely unchanged compared to 2012, at €6.7 billion. Recurrent net income, at €1.9 billion, showed a slight increase. Revenue rose slightly, by 4% to €39.9 billion. Here, the Group primarily benefited from increased gas sales due to weather conditions. The outlook for the year as a whole remains unchanged: RWE is expected to achieve all of the forecast figures published in March for EBITDA, operating result and recurrent net income.
However, this stable development compared to the previous year is solely due to the one-off effect of the successful revision of the gas supply contract with Gazprom. The Group's reduced earnings power, primarily in conventional electricity generation, will lead to a marked decline in the result for 2014. In response to this situation, the Group will introduce further efficiency-enhancement measures to follow on from the current programme that will run to the end of 2014. "We have identified additional measures to be implemented over the next four years, representing a gross volume of €1 billion," says Peter Terium, CEO of RWE AG. "Allowing for general cost increases, an earnings potential of at least €500 million is expected to come from these efficiency measures, which should be realised in full and in a sustainable manner from 2017 onwards."
Electricity and gas sales in first three quarters of 2013
In the first nine months of the year, RWE sold 200 billion kilowatt hours (kWh) of electricity to external customers, 4% less than in the same period last year. This is mainly attributable to RWE Supply & Trading, which in 2013 no longer held electricity auctions for industrial customers, as was previously required on the basis of a commitment made to the German Federal Cartel Office.
Gas sales increased by 16% to 236.7 billion kWh. A contributing factor here was the increased demand for heating among residential and commercial customers because of the weather conditions, and also increased acquisitions among distributors and industrial and corporate customers.
Investments lower than in previous year's period
At the end of the new-build power plant programme, capital expenditure on property, plant and equipment in the first three quarters of 2013 amounted to €2.9 billion, that is about €0.5 billion less than in the same period last year. RWE's investments totalled €3 billion.
Free cash flow, i.e. cash flow from operating activities less capital expenditure on property, plant and equipment, at €2.1 billion, was considerably higher than the comparative value for 2012. This, along with the sale of assets, helped to reduce the Group's debt. At the end of September 2013, the Group's net debt came to €30.8 billion, €2.2 billion down on the figure at year-end 2012.
The Group's headcount has decreased by 4% since the end of 2012. The total number of employees at RWE was 67,267 as at 30 September 2013.
Outlook for 2013 and 2014
The forecast for 2013 remains unchanged. EBITDA is expected to be in the order of €9 billion, operating result about €5.9 billion and recurrent net income around €2.4 billion.
From today's perspective, in 2014 the company expects to achieve an EBITDA between €7.6 and 8.1 billion, an operating result between €4.5 and 4.9 billion and recurrent net income between €1.3 and 1.5 billion.
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