RWE posts $5.98bn loss

Massive write-downs on its power plants and European assets have driven a $5.98bn loss announcement for 2016 by RWE.

The company has opted to scrap its dividend once again after last year resorting to that action for the first time in six decades.

Again the impact of the Energiewende continues to have an effect, as acknowledged by RWE chief executive Rolf Martin Schmitz.
RWE building
“The difficult market environment made impairments necessary,” he said in a statement on Wednesday, also pointing to the transfer of EUR6.8bn to a nuclear storage fund as an additional burden.

However, the utility said it expected to be able to pay a dividend of €0.50 per share for 2017 and at least maintain that level in subsequent years.

Energiewende has seen power generated from wind and solar prioritised squeezing conventional power out of the market, leaving many coal and gas-fired power plants struggling to turn a profit.

à‚ RWE and its rival Eon responded to the crisis by splitting themselves in two. Eon hived off its power stations into a new company, Uniper, which listed in Frankfurt in September. RWE placed its green energy and grid businesses into a new subsidiary, Innogy, which floated a month later. However, RWE’s loss shows that prospects continue to look bleak for the sector, despite the restructurings.

In addition the utility is having to bear the cost of the government’s decision to pay €23.6bn towards the final storage of nuclear waste ࢀ” much more than they had provisioned for.

Despite the bottom line the company said that it had reached its operating targets for 2016, posting earnings before interest, tax, depreciation and amortisation of €5.4bn ࢀ” a figure it said was at the upper end of the ranges forecast by the company in March last year. It also said it had reduced net debt by €2.8bn year-on-year to €22.7bn.

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