Eat The energy group RWE closes the crisis year 2022 with an operating profit of 6.3 billion euros. A record result that is twice as high as in the previous year. This was mainly due to the core business, to which RWE includes all areas except coal and nuclear energy.
“In addition to capacity expansion in renewable energies, the short-term use of power plants and higher margins in energy trading were the main factors here,” explained CFO Michael Müller on Tuesday morning. Due to weak wind conditions, the gas-fired power plants were also used more towards the end of the year.
RWE intends to continue investing heavily in its green core business. 50 billion euros are to flow here by 2030. In addition, the renewable capacities are to be expanded from the current 25 to 50 gigawatts, the group said on Tuesday. By 2030, profits in this area are expected to double to up to five billion euros compared to the current financial year.
RWE had already significantly increased investments to 4.4 billion euros last year. 3.6 billion euros of this went exclusively to the business with wind and solar systems. “We want to invest significantly more in 2023,” affirmed CFO Müller.
The Group is increasingly aligning its business internationally. RWE intends to invest just 15 of the 50 billion euros in Germany, i.e. around 30 percent. Today, the German business accounts for at least 41 percent, measured in terms of installed capacity. Since the beginning of the year, RWE has already completed three major acquisitions – all of them abroad.
Coal and nuclear energy, on the other hand, made a significantly lower profit last year than before: After 900 million euros in 2021, these power plants only brought in a profit of 750 million euros. This was primarily due to power plant closures.
In addition, RWE sold a large part of its electricity production from coal and nuclear power long before the energy crisis – and was therefore unable to keep up with the surge in demand in this area. The figures and outlook were still well received on the markets, and the energy company’s shares were among the winners in the Dax around noon in a friendly stock market environment with a plus of more than two percent.
RWE boss Markus Krebber emphasized on Tuesday that the company’s focus is already on the green transformation. “We do not want to operate the coal-fired power plants any longer than necessary and we will also hand over the LNG infrastructure to state-owned companies in the foreseeable future,” assured the manager with a view to the supply of liquefied natural gas.
RWE has “no economic interest” in LNG infrastructure
Last year, the company chartered two floating terminals for LNG on behalf of the federal government. RWE also has a stake in the LNG terminal in Brunsbüttel and is currently exploring two other terminals off the Baltic Sea island of Rügen on behalf of the German government.
Environmentalists criticize that Germany is building significantly more capacity for liquefied natural gas than it needs at all. In 2023 there will still be a supply gap of around 28 billion cubic meters, which will have to be closed by German LNG terminals. By 2030, the gap will narrow to 13 billion cubic meters due to falling gas demand, the Federal Ministry of Economics calculates.
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“Always having overcapacity is absolutely right when it comes to infrastructure,” says Krebber, commenting on the criticism. You also have that with electricity and gas: “How much buffer you want to build is up to the federal government.” Krebber emphasizes that RWE itself has no economic interest in the LNG infrastructure.
This is also shown by the fields in which RWE recently made acquisitions. On the one hand there is the cleantech division of the US solar company Con Edison, which is being taken over for 6.8 billion dollars. With the deal, the Essen-based energy company has almost doubled its portfolio of wind, solar and battery storage systems in North America and has an installed capacity of eight gigawatts (GW).
The profit of the group with coal and nuclear power decreases.
(Photo: imago images/Hans Blossey)
This will make RWE number two in the USA among operators of solar systems and number four overall for renewable energies, said Krebber. The purchase of Con Edison is the largest transaction since the spin-off of Innogy in 2018. The Essen-based group is receiving financing support from the Qatari sovereign wealth fund QIA.
Green growth co-funded by natural gas trading
A second important acquisition is the purchase of the solar developer JBM Solar in Great Britain. Until now, RWE had concentrated more on expanding wind power in England, but the acquisition also makes the group relevant for solar energy. In Poland, RWE secured the photovoltaic developer Alpha Solar at the end of last year.
This has significantly strengthened its position in the renewables sector in all three core markets, explained CEO Krebber: “When it comes to wind, we have a particular focus on the USA, where the onshore plants are significantly larger. But also in the UK and Poland, growth will now accelerate significantly thanks to our acquisitions.” He did not rule out further smaller acquisitions in the coming months.
All of this contributes to the new strategy of the multi-billion group: “Growing Green”, green growth. But a little gray area should help: trading in natural gas should play a major role in the transition.
In the current year, the company therefore wants to build on its record result. “We cover the financial requirements for our investments through our operating business,” confirms CFO Müller. Then the adjusted Ebitda at group level should be between 5.8 and 6.4 billion euros. Shareholders are to receive a dividend of 90 cents per share and a distribution of one euro per share for the current year.
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