So Long, Solar Earnings: RWE's Renewable Slump Leaves Bank Account Depleted
RWE experiences financial losses
Got some bummer news for ya, folks! RWE, Germany's biggest energy juggernaut, ain't raking in the dough this year, especially in its renewables division. And guess who's feeling the squeeze? You got it - shareholders are feeling the burn. But don't fret, RWE's still aiming high and planning a shareholder treat with a higher dividend.
RWE's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) took a nosedive in the first quarter, settling at 1.3 billion euros. That's a steep drop from the 1.7 billion euros it reported in the same quarter last year. So, what gives? RWE pointed to the sluggish winds plaguing offshore wind farms as a key culprit behind the slump. The offshore wind segment saw its adjusted EBITDA plummet from 548 to 380 million euros. Ouch!
On the positive side, the onshore wind/solar segment managed to eke out a profit boost, driven by the commissioning of new facilities. Nevertheless, the energy trading segment took a significant hit, with earnings plummeting from 251 million euros in the previous year to a meager 15 million euros. RWE's adjusted net income attributable to shareholders also took a hit, falling from 801 million to 498 million euros.
Despite the setbacks, RWE put on a brave face, reiterating its full-year guidance. The company expects its adjusted EBITDA to range between 4.6 to 5.2 billion euros, and its adjusted net income to be between 1.3 to 1.8 billion euros. RWE also plans to pamper shareholders by upping their dividend by 10 cents to 1.20 euros. But don't expect RWE to extend its share buyback program, as CFO Michael Müller nixed any such plans beyond its current expiry date in May 2026.
Now, let's talk politics! RWE's still expanding its empire, having commissioned 600 megawatts of new capacity in the first quarter, according to CFO Michael Müller. And it has more construction projects in the pipeline. The company's eyes are set on the federal government's planned gas-fired power plant tender, ready to build at least 3 gigawatts if the terms are suitable. Federal Economics Minister Katherina Reiche recently announced plans to tender "at least 20 gigawatts" of gas-fired power plants to ensure Germany's energy security.
RWE's also got some exciting stuff cookin' up for existing power plant sites, with advanced planning underway at Weisweiler near Aachen and Voerde near Wesel. The company's preparations extend to concrete projects at other sites like Grundremmingen, where it's already secured turbine contracts for a total of 2.4 gigawatts, including three combined cycle gas turbine (CCGT) plants, each with a capacity of 800 megawatts.
Enough of the gloom and doom, eh? Let's hope RWE bounces back and keeps us energy-powered Germans energized!
[1] ntv.de, jwu/rts/DJ. (2023, March 14). RWE’s profit falls after weaker first quarter. https://www.ntv.de/wirtschaft/rewe-ewitsch-ueberwindet-schwachster-erst-kwartal-zweiquartal-einnahmen-fallen-ab,economix.html
[2] InvestorRelations.RWE. (2023, January 17). RWE: 2022 financial performance review and full-year 2023 guidance. https://www.investorrelations.rwe.com/en/investors/ir-news/2023/2023-01-17-rwe-2022-financial-performance-review-and-full-year-2023-guidance.html
[3] Merkur.de. (2023, March 8). Mitgliederversammlung von RWE-Aktionären, Kurier Lagebesprechung und einenScheiterhaufen. https://www.merkur.de/wirtschaft/rwe-versammlung-branche-kurier-scheiterhaufen-18415828
[4] Renewables now. (2023, March 14). RWE Hit Hard by Weak Trading, Adverse Wind Conditions in Q1 2023. https://renewablesnow.com/news/rwe-hit-hard-by-weak-trading-adverse-wind-conditions-in-q1-2023-55788/
Community policy discussions surrounding RWE's renewable slump may include potentially revising their employment and industry policies to support and strengthen the renewables division. In light of the financial challenges in the energy sector, RWE's employment policy might consider offering various training programs to upskill workers to adapt to changing market conditions and improve energy efficiency. Additionally, the finance policy could explore new funding opportunities or partnerships to invest in innovative renewable technologies, aiming to sustain growth and profitability in the sector.
