Uniper writes a loss of 40 billion euros

Dusseldorf The energy company Uniper, which is about to be nationalized, expects a loss of around 40 billion euros. The Düsseldorf-based company announced this on Thursday morning when it presented its quarterly figures. This loss includes expected losses in the future as a result of the Russian gas supply freeze.

The loss of Uniper is so gigantic that an equivalent case can hardly be found in German company history. In 2002 only Deutsche Telekom was in a similar situation with a loss of almost 25 billion euros. At that time, the reason was primarily value adjustments that the Bonn-based group had to make on mobile phone licenses and company acquisitions.

At Uniper, the loss announced on Thursday includes around ten billion euros in costs that the group has already incurred for the procurement of replacement gas. In addition, 31 billion euros in losses are likely to be incurred in the future. The main reason is that Russia is still not supplying any gas to Germany.

The loss is so high that it accounts for more than half of Uniper’s share capital. The Düsseldorf-based company had already announced last week that the loss would be “in the tens of billions”.

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This ensured that the company had to convene an extraordinary general meeting under Section 92 of the German Stock Corporation Act. This could possibly take place in addition to the annual general meeting planned for the state takeover.

The high loss reflects the problem created by the Russian war of aggression against Ukraine. For years, the group has received cheap gas from Russia and sold it on to German companies and public utilities at a higher price. Uniper obtained more than half of its gas from Russia, making itself dependent on the Kremlin.

Some of the contracts with German customers still run for several years, and Uniper must continue to supply them with gas. But the group itself no longer receives supplies from Russia. He therefore has to buy gas on the market at extremely high prices and sell it to his customers at a lower price – a loss-making business every day.

>> Read also: An additional 40 billion euros – the rescue of Uniper is becoming more and more expensive

At times, Uniper recorded losses of more than 100 million euros per day. But gas prices on the stock exchange have recently fallen significantly. On Thursday, the TTF price for monthly contracts was around 125 euros per megawatt hour. In August it had risen to up to 350 euros. In short-term trading, prices have even fallen to pre-war levels at times.

Uniper benefits from the lower prices: There are currently almost no new daily losses, as Uniper CFO Tiina Tuomela announced in a call with analysts on Thursday morning. However, if gas prices rise, the losses will increase again.

Billion challenge for the state

The problem of dealing with these losses will in future lie with the German state. He has agreed to take over the crisis group. At the end of December, the existing shareholders are to vote on this at an unscheduled general meeting. Analyst Ingo Becker from Bank Kepler Cheuvreux says: “The losses at Uniper are to be expected as costs for the German state.”

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The federal government will have to fill a large financial gap at Uniper in the coming years. In the past few months, she has already created 18 billion euros in credit options for the group via the state bank KfW, of which Uniper had already drawn down 14 billion by the end of October.

Uniper is systemically important for the German gas supply. The company supplies gas to hundreds of energy suppliers, who in turn sell it to German households. In order to finally save the Düsseldorf-based company, Berlin had agreed in September to subscribe to an eight billion euro capital increase at Uniper.

The federal government would buy its Uniper shares from the previous majority shareholder, the Finnish state-owned company Fortum, at the nominal value for a total of almost 500 million euros. The federal government would get a 99 percent stake in the company.

Billions more planned

But now at the latest it is clear that the state has to spend even more money than provided for in the original Uniper rescue package. Bank JP Morgan analyst Vincent Ayral wrote in a report Thursday morning: “We believe that a 36 billion capital increase – rather than an 8 billion capital increase – may be necessary.”

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An insider told the Handelsblatt some time ago: “In total, this could result in additional costs of ten to 40 billion euros.” This corresponds exactly to the anticipated loss that Uniper has now presented.

Uniper only officially announces that the details of additional support measures are currently being finalized between the federal government and Uniper. CFO Tuomela spoke of a “tailor-made instrument” that was being developed.

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The exact amount of the necessary aid depends on how the gas price develops on the market. The new help concept for Uniper should therefore contain large buffers. As a first step, the government could invest up to 15 billion euros more in the company for the current year alone.

Problems in other business areas too

In the first nine months of this year, things went badly for Uniper in business areas other than gas trading. For example in the European power plants for electricity generation. Adjusted earnings before taxes (EBIT) fell from 271 million euros in the same period of the previous year to minus 93 million euros. According to the company, this is only due to a temporary valuation effect.

>> Read here: Uniper with a loss of billions – two extraordinary general meetings possible

According to the figures, Uniper’s business in Russia developed well. Thanks to an additional power plant that was put into operation and currency effects, EBIT rose from 168 to 331 million euros.

But it is unclear whether this deal is still worth anything to Uniper. After all, no money can be got out of the country at the moment due to European sanctions against Russia – and Uniper’s attempts to sell the Russian business have apparently come to nothing so far.

More: The first social partner model is launched – Uniper enables company pensions with a pure contribution commitment

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