Germany’s second largest utility has decided to cut its dividend payment by half from what it paid last year, as the country’s energy transition continues to impact on conventional power generation.

RWE (FWB: RWE) will pay 1 euro ($1.35) on each common and preferred share at the 2014 annual general meeting the company said in a statement. RWE plans to cut the portion of recurrent net income it earmarks for dividends to 40 per cent to 50 per cent in the future, down from a previous target of 50 per cent to 60 per cent, according to Bloomberg.

A dip in electricity demand and the rise of renewable power has significantly narrowed margins at coal and gas-fired power plants in Europe, with RWE announcing just last month that it will shut 3100 MW of capacity in Germany and the Netherlands in response to the current climate.

Operating profit for conventional power generation fell 62 per cent to $934m in the first six months of the year.

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