Germany's RWE says mission accomplished

The energy company said it's now in good shape following years of a German transition toward renewables.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  March 13, 2018 at 7:05 AM
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March 13 (UPI) -- German energy company RWE said that, a day after dividing up its renewable energy segment, a tighter focus meant mission accomplished for 2017.

"In 2017, our goal was to strategically reposition RWE and consolidate its finances," CEO Rolf Martin Schmitz said in a statement. "We were successful in both of these undertakings."

The company's financial report came one day after an agreement with German utility company E.ON to split up RWE's renewable energy segment, Innogy. E.ON took control over the green energy division, but left the door open for broader cooperation with RWE.

In a joint statement on the agreement, E.ON said it's now in a position to capitalize in the transition toward renewables in the German energy sector. RWE, meanwhile, becomes the leading electricity producer, drawing from its deep bench of low-carbon solutions.

The arrangement on Innogy, which involved complex maneuvering in share swaps and segment control, comes years after German Chancellor Angela Merkel moved the German economy away from nuclear and fossil fuels following the Fukushima nuclear disaster in Japan in 2011. Both companies have struggled during the transition.

"We are in good shape again, with a solid financing structure, lower debt and a higher equity ratio," RWE's CEO said.

RWE reported its net income, at $2.3 billion, was "substantially higher" than last year, when it reported a net loss of $7 billion. Earnings before interest, tax, depreciation and amortization, a metric used to gauge earning potential, was $7.1 billion, up from $6.6 billion in 2016.

The company said it expected EBITDA for 2018 to be in the range of $6 billion to $6.4 billion, a decline that Schmitz said wasn't a surprise due to lower electricity prices. Cost cutting of $370 million annually through 2019 could offset the burden, he said.

On Tuesday, E.ON said it too posted positive results for full-year 2017, with net income coming in at the upper end of its forecast range.

"We put the burdens of the past behind us faster than originally anticipated, significantly strengthened our balance sheet, and can now enter the transaction with RWE from a position of strength," E.ON CEO Johannes Teyssen said in a separate statement.

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