Dusseldorf The energy group Uniper only wants to pay out the minimum dividend of 7 cents per share for 2021 – despite an expected adjusted net profit of between 850 million and 1.05 billion euros. The Düsseldorf provider announced this in a message on Monday. In 2020, the dividend was still EUR 1.37, and it has never been lower than 55 cents in any other year since the company was founded.
For observers, this is evidence of the growing power of Uniper’s Finnish parent company Fortum. “The dividend decision shows: Fortum has the reins in his hands,” says analyst Ingo Becker from the financial services provider Kepler Cheuvreux. This means that a complete takeover of Uniper by Fortum is even clearer than before – and with it the end of the independent German company. Guido Hoymann from Bankhaus Metzler says: “I believe that the Uniper brand will disappear in the event of a takeover.”
The Finnish state-owned company Fortum took over the majority of Uniper in March 2020 after bitter resistance and now holds around 76 percent of the Düsseldorf-based company.
The commitment linked to the takeover to waive a domination and profit and loss transfer agreement by the end of 2021 has now expired. Fortum could buy up the remaining shares at any time and take over Uniper completely.
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Renewable energies mainly abroad
This raises the question of what will remain of Uniper in Germany in the long term. The company was spun off from the Eon group in 2016 as “Resterampe” for the fossil power plants. According to its own statements, Uniper intends to invest in environmentally friendly energy businesses in the future.
Uniper has set itself the goal of becoming CO2-neutral in its European power generation by 2035. By 2025, the company wants to build up 1.5 to 2 gigawatts of wind and solar energy capacity. This output corresponds to about two nuclear power plants.
According to a Uniper spokesman, this is also a reason for the low dividend payout this year. “We want to invest in growth,” he says. “Renewable energies and hydrogen will make up the bear’s share of our growth strategy.”
However, not much can be seen of the announced renewable energies. Uniper and Fortum have only announced one project so far, last December: Two wind farms with a capacity of 380 megawatts are to be built in Finland by 2024.
In the business environment, it is said that a large part of the planned wind and solar projects are likely to be built outside of Germany. There are doubts that Uniper can assert itself in the future market with renewable energies in this country. Analyst Ingo Becker says: “In the renewable energy business, Uniper is not on par with its European competitors. Uniper’s opportunities to invest in the area are limited.”
Long road to the hydrogen business
In the second “future area”, the hydrogen business, Uniper presented news on Monday: Uniper and the steel group Salzgitter want to cooperate in order to use green hydrogen to produce climate-friendly steel.
But the conversion of German industry to hydrogen has been progressing slowly so far. And as long as there are no fixed hydrogen buyers, large-scale hydrogen production is not worthwhile for companies.
So it will probably be a while before the hydrogen business pays off in any significant way for Uniper. So far, Uniper has mainly operated gas and coal-fired power plants and large gas storage facilities.
Analysts therefore believe that the most important future opportunities for Uniper will remain in the gas sector for quite some time. Guido Hoymann from Bankhaus Metzler says: “Uniper has experience with gas.” The EU taxonomy, according to which gas should in future carry a green label, which makes financing easier for Uniper, also speaks for a focus on this business area.
Uniper also trades in energy. A turbulent business area in recent months: when energy prices in Europe reached record levels around the turn of the year, Uniper had to take out large loans.
High liquidity requirements due to record energy costs
The reason: As a seller of electricity, the company has to deposit so-called margins with its customers if they have agreed to purchase electricity with Uniper in advance. These are security payments that compensate for the difference between the agreed purchase price and the current market price of the electricity.
The seller gets the security payments back the moment he delivers the agreed amount of electricity. But until then he must have the necessary sums at his disposal. In the event of extreme price increases, the margins are also particularly high. In order to be able to pay them in case of doubt, Uniper had secured almost 12 billion euros from Fortum and various banks – with a market value of around 14 billion euros.
>> Read here: Why Uniper had to invest billions to protect itself against price jumps
According to Uniper, this process is another reason for the low payout to shareholders this year. A company spokesman says: “The low dividend is a precautionary measure based on the experience with the strongly fluctuating electricity and gas prices in the past year.” Uniper has partially exhausted the credit options. “It cannot be ruled out that such a scenario will repeat itself in the future.”
However, Becker believes that Fortum is behind the low dividend. “Fortum may have already decided last year that there will be no dividend from Uniper. Although this was not explicitly communicated, it resulted implicitly from the fact that there was no statement on a dividend throughout the year,” he says. The fact that there is now a small dividend is only due to the minimum legal requirements in the case of Uniper.
Low dividend in the interests of Fortum
According to industry insiders, the dispute over the dividend a year ago was one of the reasons for the change at the top of Uniper. At that time, CEO Andreas Schierenbeck and CFO Sascha Bibert had to go. Klaus-Dieter Maubach took over as CEO, and Tiina Tuomela became the new CFO. That should ease tensions between Uniper and Fortum.
From Fortum’s point of view, according to Becker, it is logical to pay a small dividend. “Because a dividend also goes to outside minority shareholders.” After all, Fortum, as the largest shareholder, receives 76 percent of the distributed dividend itself, but the rest goes to the owners of the remaining shares.
It is questionable whether the complete takeover is imminent. According to analysts, the current conflict with Russia, from which Uniper imports gas on a large scale, argues against this. In addition, the Uniper share price is currently very high, which would make buying out the minority shareholders expensive for Fortum.
According to several people in the corporate environment, the complete takeover is only a matter of time.
More: Ex-Uniper boss switches to Hamburg hydrogen company