RWE returned on profit in 2014
RWE returned on profit in 2014 and began a new round of spending cuts to counteract the contraction of the return of its coal-fired power plants last year. Furthermore, the German electricity producer warned of the possibility of further decline in the profitability of conventional power this year. The pessimistic forecast of RWE underlines the […]
RWE returned on profit in 2014 and began a new round of spending cuts to counteract the contraction of the return of its coal-fired power plants last year. Furthermore, the German electricity producer warned of the possibility of further decline in the profitability of conventional power this year. The pessimistic forecast of RWE underlines the long struggle of the largest energy groups in Germany face increasing production of solar and wind energy, which is subsidized by the government. Authorities are trying to reduce carbon dioxide emissions, which has led to a glut in the market, combined with weak demand for energy in much of the rest of Europe. As a result, the wholesale prices took down.
“The crisis in conventional electricity production will continue to have a significant impact on the revenues of RWE … So we probably will not be able to keep its operating result of the level recorded in 2014”, said CEO Peter Terium.
Following the reorganization RWE announced on Tuesday that it has achieved a net profit of 1.7 billion EUR compared to the net loss of 2.8 billion EUR in 2013, when the company wrote off part of the production capacity of coal. The Essen-based group, however, maintained its dividend of 1 EUR per share after series of cuts in previous years. The earnings before interest, taxes, depreciation and amortization, however, fell by 10% to 7.13 billion EUR despite the reduction of costs. The mild winter across much of the continent has contributed to a decline of 7.5% in revenue to 48.5 billion EUR. RWE also announced that it has received a boost from favorable interest rates over the previous year, as it was forced to pay compensation in cases with Russian giant Gazprom.
The German group expects further reduction in revenue this year, predicting a decline in earnings before interest, taxes, depreciation and amortization by 14% to a value in the range from 6.1 to 6.4 billion EUR. The company said it would cut costs by another 500 million. Euros over the next few months as part of program performance, which started in 2012. The company said that already aim to cut costs by 2 billion EUR till 2017. The estimates are that net debt in 2015 will decline in the level of 31 billion EUR due to proceeds from the sale of 5.1 billion EUR of oil and gas field of Dea LetterOne – investment fund led by Russian billionaire Mikhail Fridman.
