“Despite the sudden fall in commodity prices as a result of the [Covid-19] crisis, our trading activities posted an extremely satisfactory result,” RWE CEO Markus Krebber said, noting a “strong trading performance” and a “good result for gas and LNG”.
Putting on a brave face, he pointed at RWE’s “robust business model” which helped the overall group achieve “significant gains across all key earnings figures even in these challenging times.” RWE Group achieved €1.3 billion in adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) in the first quarter of 2020, an increase of about 19% compared with €1.1 billion for last year’s corresponding period. Adjusted net income totalled €603 million.
Net debt rose by €1.7 billion to €8.7 billion largely due to timing effects of hedging transaction. Payments for collateral owing to the drop in commodity prices also resulted in “substantial cash outflows,” RWE said. Looking ahead, the Essen-based utility confirmed its 2020 outlook with adjusted EBITDA expected between €1.2 billion and €1.5 billion.
Higher generation earnings
Optimised power plant dispatch helped RWE achieve a strong gain in its Gas/Biomass/Hydro segment despite a volatile market environment.
The reinstating of the UK capacity market, where payments were suspended due to a review by European institutions, swept some €42 million in capacity payment into RWE’s coffers in the same quarter. The company hopes to achieve up to €650 million in earnings in its generation segment for the full year.
Strong spending in wind and solar
The Essen-based utility, formerly known for its focus on coal-fired power generation, is reinventing itself and aspires to become one of the world's leading renewable power providers and become carbon neutral by 2040.
Venturing into green energy, RWE committed to invest €5 billion in some 4GW of new wind and solar power capacity to grow the portfolio to over 13 gigawatts (GW) by 2022. Construction of the Triton Knoll offshore wind farm in the UK has been underway since January, and FID for the German North Sea project Kaskasi was reached in April.
Much wind and sunshine in the first quarter as well as the commissioning of new capacity made adjusted EBITDA in this segment jump 20% to €209 million in the first quarter. RWE expects to reap earnings of €500 million to €600 million for this segment in the year underway.
Resolute coal exit
To achieve its goal of being carbon neutral by 2040, RWE stressed it is “resolutely and responsibly phasing out electricity generation from coal.”
In the UK, it already shut down its last coal fired plant and the first closure of a coal power block in Germany is scheduled for December. After months of debate and lobbying, the parliamentary procedure regarding Germany's coal exit is now meant to be completed before the summer.