Dusseldorf The ongoing price turbulence on the raw materials market is forcing the MDax group Uniper to raise billions. The company is expanding the financial security of its energy business by up to 11.8 billion euros, as announced on Tuesday evening in a mandatory announcement. The share lost more than two percent by Wednesday afternoon.
Like other energy groups, Uniper has agreed to buy electricity and gas in some cases years in advance with the dealers. This means that the company is less dependent on short-term market prices. This so-called hedging serves to protect against strong price fluctuations, as can currently be observed.
But commodity traders require security payments, also known as margins, in advance. Buyers like Uniper must therefore transfer a certain proportion of the raw material value to the dealer before the transaction. If raw material prices rise, so does the amount that has to be transferred. The money is not “lost”: if prices fall, the corresponding sums are returned. But the buyer must have the security amount.
For a company like Uniper, the payments still have to be made because it has a wide range of financing options. The company now uses three different sources for security: On the one hand, the company has drawn down all credit facilities of its 16 house banks of over 1.8 billion euros. Then it used a “significant part” of a credit line agreement with the parent company Fortum totaling eight billion euros. According to a company spokesman, both happened at the end of last year.
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As a third component, Uniper has now agreed a loan option of up to two billion euros with the state-owned KfW bank. The company signed the contract on Tuesday and shortly thereafter announced all events in a mandatory notification.
“Such sums can quickly become too big for smaller players”
Thanks to the broad range of financing options, Uniper is in a comparatively comfortable situation. A spokesman said with regard to the two billion loan option in state money: “We are confident that we will not need this credit facility.” It is just a matter of getting another lender more security.
The majority of shareholders met this decision badly on Wednesday, and the share was under pressure. But analysts are more relaxed about the process. “Margin payments are part of the trading and hedging business,” says analyst Ingo Becker from the investment bank Kepler Chevreux. “Only now, due to the extremely high prices on the energy market, the margin sums are significantly higher.”
Becker sees the fact that Uniper has obtained a large part of the necessary liquidity for these large sums through the parent company as a rather good sign. Smaller companies may not have such backing. “Such sums can quickly become too big for smaller players,” he says.
Other energy companies could very soon actually be dependent on government support. The industry association BDEW at least on Wednesday also called for protection from KfW for other suppliers.
The federal government should ensure that energy suppliers can, under certain conditions, temporarily fall back on interest-free, purpose-built loans from the Kreditanstalt für Wiederaufbau, said the chairman of the BDEW management board, Kerstin Andreae, on Wednesday of the “Rheinische Post”.
Accordingly, the energy price rally for electricity and gas in recent weeks has caused an uproar in the entire industry. “Margin payments will now be a big topic across Europe,” says Guido Hoymann, Head of Equity Research at Bankhaus Metzler. “This probably affects almost all suppliers who still offer electricity from conventional sources.”
In Germany, other energy companies are already feeling the effects of the situation, but the largest see themselves well positioned. On request, EnBW announced: “As an integrated supplier with a comprehensive presence along the entire value chain from power generation to end customer business and network operator, EnBW is much more broadly positioned than other market participants, has stable cash flows and can better manage risks in the overall portfolio.” EnBW has been following always a forward-looking procurement and management strategy as well as forward-looking liquidity management in order to be prepared for phases of high volatility.
RWE makes a similar statement, although the company has committed itself to switching to renewable energies. “Strong price fluctuations naturally lead to a temporarily large need for liquidity. We have taken precautions for this through our credit lines and other financing instruments, ”the group declared on Wednesday.
After all, the RWE Supply & Trading division trades in electricity, gas and raw materials. According to Guido Hoymann, however, RWE itself is likely to receive margin payments on a large scale. The company stocked up on large quantities of CO2 certificates at an early stage, the value of which has recently risen sharply.
At the end of the day, however, Uniper is still benefiting from the high energy prices. The mandatory announcement on Tuesday evening states: “As commodity prices rise, so does the value of Uniper’s underlying assets in the gas and electricity portfolio.”
Guido Hoymann from Bankhaus Metzler says: “Uniper has long-term supply contracts with Gazprom, for example. One can assume that Uniper will still get gas relatively cheaply as a result. ”The company can currently sell the electricity that the group produces in this way at high prices – and thus make more profit.
Uniper had presented good figures in November. Adjusted earnings before interest and taxes (EBIT) climbed by over 50 percent to 614 million euros in the first nine months, and in November the company also reaffirmed the forecasts it had raised in October.
More: Electricity and gas prices are rising drastically: Why consumers now have to react quickly.