RWE : confirms forecast and forges ahead on transformation with high levels of capital expenditure

RWE is forging ahead with its transformation and is investing billions of euros in the expansion of its renewable energy portfolio. The company is currently building wind power and solar plants as well as battery storage systems with an installed capacity of 3.7 gigawatts (GW). More than 20 of these plants, accounting for a total installed capacity of about 2 GW, will start commercial operation as the year progresses.

In the first quarter, RWE achieved adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortisation) of €883 million, compared to €1,324 million in the same period in 2020. The decline in earnings can be attributed to the extraordinary burdens incurred due to the worst cold snap in a century in Texas and the fact that wind volumes in Northern and Central Europe were well below the above-average high levels experienced in the previous year. By contrast, the Supply & Trading business performed very well once again. Adjusted EBIT reached €548 million, compared to €967 million in the same quarter of the previous year; adjusted net income was €340 million, in the first 3 months of 2020, this figure was €614 million.

Earnings forecast and dividend statement confirmed

The forecast for the current financial year remains unchanged. For fiscal 2021, RWE expects to achieve adjusted EBITDA of between €2.65 billion and €3.05 billion at Group level; in its core business, adjusted EBITDA should amount to between €1.8 billion and €2.2 billion. The forecast for adjusted EBIT is between €1.15 billion and €1.55 billion, and for adjusted net income the target is between €0.75 billion and €1.1 billion. The dividend statement is confirmed: For the current financial year, the Executive Board of RWE AG is aiming to increase the dividend to €0.90 per share.

Weather effects impact on earnings of Offshore and Onshore Wind/Solar

In its core business with the Offshore Wind, Onshore Wind/Solar, Hydro/Biomass/Gas and Supply & Trading segments, RWE achieved adjusted EBITDA of €555 million in the first 3 months of 2021. The figure for the same quarter last year was €1,042 million.

Offshore Wind: Adjusted EBITDA in the Offshore Wind segment was €297 million for the first quarter, compared to €431 million for the same period in the previous year. A key factor here were wind volumes in Northern and Central Europe, which were well below the above average high levels of the previous year. For the current year, RWE expects adjusted EBITDA of between €1,050 million and €1,250 million for this segment.

Onshore Wind/Solar: In the first 3 months of 2021, the Onshore Wind/Solar segment recorded an adjusted EBITDA of -€119 million. In the previous year's quarter, adjusted EBITDA amounted to €221 million. The main drivers here were the losses caused by extreme weather events in Texas, which totalled about €400 million. Additional burdens resulted from below-average wind conditions at onshore wind farm locations in Northern and Central Europe. The capital gain from the sale of shares in 3 US onshore wind farms had an opposing effect. For the current year, RWE expects adjusted EBITDA of between €50 million and €250 million for this segment.

Hydro/Biomass/Gas: With adjusted EBITDA of €213 million, business in the Hydro/Biomass/Gas segment reached the previous year's level, which amounted to €217 million. The wood pellet production activities in the US that were sold in mid-2020 no longer contributed to earnings. Slightly higher payments received on the British capacity market, however, had a positive impact. For the current year, RWE expects adjusted EBITDA for this segment of between €500 million and €600 million.

Supply & Trading: The Supply & Trading business once again recorded a very strong performance. Adjusted EBITDA reached €189 million, exceeding the already very high prior-year level of €170 million. For fiscal 2021, RWE expects adjusted EBITDA of between €150 million and €350 million in this segment.

Solid result outside of core business

Adjusted EBITDA in the Coal/Nuclear segment was €328 million, compared to €282 million for the same period in the previous year. Higher wholesale prices were achieved for electricity from lignite and nuclear power plants compared to 2020. For the year as a whole, RWE continues to expect adjusted EBITDA of between €800 million and €900 million for this segment.

Capital expenditure almost doubled compared to Q1 2020

RWE invested €1,037 million in the first 3 months of 2021, almost double the figure for the same period in the previous year. By far the greatest share of this amount, €963 million, was invested in new wind power and solar plants as well as battery storage. RWE will maintain this pace and invest much more during the current financial year than in 2020. More than 90% of RWE's capital expenditure meets the taxonomy criteria for environmentally sustainable investments proposed by the EU Commission.

Financial situation further improved

RWE's financial situation improved once again. Net debt was down to €2.8 billion. This was due mainly to temporary effects from hedging transactions and a decline in provisions for pensions as a result of an increase in discount rates. The equity ratio increased once again, to 31.1% (as at 31 March 2021); as at the end of 2020, this figure was 28.7%.