15 May 2002 – Most of the growth reported by German multi-utility RWE in its first quarter figures came from its electricity business the company said today.
RWE’s operating result was up 11 per cent up year-on-year with the first three months showing a profit of €1.3bn. RWE said that the figures demonstrated that its multi-utility strategy is paying off but that concentrating on core businesses enables it to generate stable growth in income even in times of economic instability.
RWE’s core businesses increased their operating result by 18 per cent. The Electricity Business Area (+50 per cent) generated most of this growth. It was primarily due to the unusually low year-earlier figure, cost reductions, and the company’s focused return-oriented sales policy.
Water (+5 per cent) and Environmental Services (+12 per cent) also improved results. Thyssengas’ first-time consolidation only partially offset the negative effects of lower gas and oil prices on results generated by the Gas Business Area (-10 per cent).
Earnings before interest, taxes, depreciation and amortization (EBITDA) advanced almost 10 per cent to €1.8bn. Net profit advanced about 9 per cent to €693m. The non-operating result was up (€297n) due to sales proceeds. RWE’s financial result (-€569m) was slightly down partially because the Group had more net debt.
Consolidated external net sales totalled €14.7bn -5 per cent up on the comparable year-earlier figure. Two-thirds of the Group’s revenue was generated by core businesses, which boosted sales by 25 per cent. The rise is partially due to first-time consolidations mainly relating to
– SSM Coal and envia in the Electricity Business Area (+Euro 517 million) and
– Thyssengas in the Gas Business Area (+€390m).
Excluding all one-off effects, sales were up 1 per cent. Electricity posted a substantial rise in sales due to an increase in business volumes, while RWE Gas and RWE DEA Downstream suffered a decline in sales owing to prices.
RWE’s capital expenditure totalled €1.53bn in the first three months. This roughly corresponds to a mere third of the amount spent in the corresponding period a year earlier. The marked decline is primarily due to the Water Business Area’s lower capital expenditure on financial assets.
Counteractive effects were felt from RWE DEA’s acquisition of UK-based Highland Energy in the Gas Business Area and RWE Plus’ acquisition of a majority stake in VSE AG, a power utility located in the Saarland, in the Electricity Business Area. All in all, capital expenditure on financial assets decreased by more than three-fourths of the previous year’s level to €676m. Capital expenditure on fixed assets dropped by 26 per cent to €853m. A significant amount of funds were invested in the upstream sector to buy shares in licenses in Egypt in the prior year.
As of March 31, 2002, the RWE Group employed 123 771 people. The workforce was thus essentially unchanged from its December 31, 2001 level. Net of consolidation effects, the Group’s labour force shrank by 1167 people, or approximately 1 per cent.
RWE’s €2.6bn cost-cutting programme, which runs until 2004, continues to be on schedule. The company aims to achieve €59m in cost reductions for fiscal 2002 as a whole. Some €150m in cost savings were secured in the first quarter alone.
RWE anticipates posting further substantial growth in its core businesses in the 2002 financial year. Management expects consolidated sales to climb by at least 10 per cent. The operating result is expected to improve even further despite the unfavourable development of our non-core operations. The main drivers will be the upward trend in the German power business as well as consolidation effects stemming from the first-time inclusion of our Czech gas activities and the UK-based electric and gas utility Innogy in our accounts.
RWE’s core businesses’ operating result is expected to post significant growth even without taking these two first-time consolidations into consideration. Non-core businesses (Heidelberger Druckmaschinen, a 50 per cent stake in the Shell & Dea Oil joint venture and HOCHTIEF) are expected to see their respective earnings situation decline significantly.
Here you find a summary of the results of the first quarter: https://rwe.com/en/press/tabellen/popup_intern_quartalsbericht_2002_e.jsp