German utility company RWE says it's finally in a good position to grow despite shifting energy landscape. File Photo by Stephen Shaver/UPI | License Photo
ESSEN, Germany, Nov. 14 (UPI) -- Despite an exposure to more volatile assets like fossil fuels, German energy company RWE said it was on solid footing for financial progress.
The German energy market is shifting away from conventional energy foundations like coal and natural gas toward wind and solar power. In the largest initial public offering in more than a decade, the German utility split off its green energy unit business into a subsidiary called Innogy, which brought in $2.8 billion in proceeds for RWE.
Nevertheless, lower wholesale prices for conventional energy and the increasing share of renewables put pressure on RWE's bottom line. Earnings before interest, taxes, depreciation and amortization for the first nine months of the year came in at $4.1 billion, a decline of 13 percent.
Markus Kreber, the company's chief financial officer, said in a statement that shedding off Innogy gave RWE the chance to focus more on its core assets.
"In a very challenging environment, we now have a solid basis on which to shape the future of our company," he said in a statement.
The company at the beginning of the year said that, along with crude oil prices, its conventional utility units were in decline, resulting in "unusually weak" net income and a decision to suspend dividends for common shares in order to move through "difficult times."
The company last year said it would create the Innogy subsidiary to manage renewable energy, but according to Fitch Ratings, that added an extra layer of complexity and uncertainty to the company. RWE, however, said its conventional energy operations posted a 7 percent gain and its full-year forecast for 2016 remains on solid ground. At the high end, the company expects full-year EBITDA at $5.9 billion.