The CEO of RWE, Mr Peter Terium provided a blunt analysis of the difficulties his company is facing in 2014 at its AGM at the Grugahalle in Essen, Germany on Wednesday morning.
Terium told the audience, “There is no point in beating around the bush. The situation is very serious. There is a high debt burden in our balance sheet, because we have invested billions of dollars in new gas – and coal-fired power plants.”
The event was overshadowed by a large contingent of environmentalists outside the venue, and while the RWE (FWB: RWE) chief acknowledged his company had to ‘focus on a new normality’ he had a message for protesters too.
“Even if the environmental organizations outside the Grugahalle see it differently, fossil fuel power plants despite the expansion of wind, solar and biomass energy remain indispensable.”
Mr Terium added that for the period after 2014 he expected results to be largely stabilized, albeit at a lower level than in previous years. RWE suffered a bottom line loss of €2.8bn in 2013 and the dividend has been halved to just a euro. Terium said that further shrinking results could be expected for 2014.
There was some positivity to his speech as he predicted that after this year, the dramatic developments of recent years could not continue.
He also used the speech to outline some areas of focus the company intends to embark on.
“In future, we’ll concentrate mainly on land-based wind turbines. We are investing in Germany, the UK, the Netherlands and Poland.”
The company is also re-positioning to drive a smarter grid. “To make the grid fit for the future our ‘Smart Country’ project will be driving the development of smart grids forward in rural areas.”
“I want to show you that we are doing more than just talking about the future of energy. We are shaping it. We will drive innovations forward and turn them into economic success. We will check out and use opportunities for growth in our existing areas of business.”
The transformation of the business will see RWE continue to face up to harsh realities.
“Like other energy providers, we have already announced that we will mothball loss-making power stations. Our plants are state-of-the-art. But even so, our conventional power stations fall well short of earning the money that they need… From 2015, we want to limit what we pay out on investments and dividends to what we earn from our operating activities… We are also making good progress in reducing our debts: in 2013 we achieved a reduction of more than €2bn.”
Terium concluded his speech with a call to arms for the company’s personnel to take on the challenges that continue to present.
“The demand for creativity and a spirit of initiative is stronger than ever; in all divisions of the company.”
More on this week’s PEi Newscast
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