RWE, the German multi-utility group yesterday attributed a turnaround in its electricity division to improved results for the year. A 1bn Euro ($1.18bn) cost cutting exercise had also contributed to the 35 per cent rise in operating profits.
The preliminary results to 30 June 2000 reflected for the first time, consolidation of Thames Water and German utility VEW.
The group reported a strong fourth quarter for energy operations, which showed a rise for the first time after seven consecutive quarters. It said the improvement was achieved by consistently continuing the cost-cutting scheme and by a pricing policy with a strict focus on profitability when concluding new contracts.
The impact of deregulation in the German electricity market has been an increase in competition and as a consequence prices have been driven down by as much as 50 per cent. More recently, prices have stabilized, enabling RWE to offset substantially various negative factors, such as tail effects from last year’s electricity price cuts, costs arising from the implementation of new Energy Acts and higher fuel costs from power generation.
After taking into account the effect of consolidations, profits were up five per cent and revenue grew 11 per cent.
More than 80 per cent of the 1bn Euro cost saving made in the last six months were made in the energy division. The group plans a further 1.55bn Euro cost saving over the next three years.
RWE, which has over 300 000 employees worldwide has embarked on a high profile advertising campaign aimed at raising the profile of the company as an imaginative provider of consumer services.