The chief executive of RWE, Peter Terium, has outlined the reasons for the company’s Q1 profit drop, after operating profit fell by almost a fifth.

RWE’s (FWB: RWE) operating profit fell to EUR1.91bn euros ($2.62bn) in the first three months of the year, the Essen-based company reported on Wednesday, below the EUR1.97bn average forecast in a Reuters poll of analysts.
Germany’s Energiewende has had a well-documented impact on RWE, with the company’s market value being chopped in half in the last four years, and analysts are now saying it could be 2017 before a new corporate strategy starts to revive its fortunes.

“The crisis in the conventional electricity generation business led to further earnings shortfalls in the financial statements for the quarter,” Terium said. “Furthermore, following the major cold spell a year earlier, winter temperatures were unusually high.”

RWE is just one of the German utilities struggling to adapt to a politically driven energy sector overhaul, which has seen renewable energy sources given priority access to power grids over their conventional gas and coal-fired power plants.

This, coupled with weak demand in Europe generally, means the company is trying to re-position itself as an energy service company by helping clients to save energy and expanding in renewables.

But that will take time. Analysts expect RWE’s earnings to fall further over the next two years, according to Thomson Reuters, before showing a slight recovery in 2017.

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