EWE Annual Press Conference: Course Set in 2006 for Future Business
- Research and development activities increased
- Operative earnings (EBIT) up by 62 percent
- Gas Transmission and Trade as well as ICT business sources of growth
- Increased regulatory pressure in the energy business
Oldenburg, April 17, 2007. EWE has expanded considerably its commitment to research and development in the financial year. ”We have to confront the mas-sive changes in the energy market with new concepts,” said Dr Werner Brinker, CEO of EWE AG at the group’s annual press conference in Hanover. The grow-ing demand for energy worldwide, the limited resources and the looming climate change represent immense challenges for the company.
It is imperative to save more energy and to develop new environmentally sus-tainable technologies for energy production. “Together with the Fraunhofer En-ergy Alliance, Munich Technical University and the Bremen Energy Institute, we have developed a strategy that breaks new ground“, according to Brinker. Moreover, in cooperation with the University of Oldenburg, EWE is establishing a research center, which will commence its work this year.
EBIT increased to € 532 million
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In the 2006 financial year* EWE increased its Group sales by 21 percent to € 9 billion. Operative earnings (EBIT) increased by 62 percent to € 532.4 million. In particular, the development in the gas transmission and trade segment is re-flected in this result. The information and telecommunications segment also made an important contribution. Group net profit amounted to € 256.9 million and had, therefore, doubled against the figure for the previous year (€ 128.4 mil-lion).
Operative Earnings in the Energy Sector Fell
In the reporting period sales in the energy sector increased by 16.6 percent from € 3.5 to € 4.1 billion. This is due mainly to the sales prices for natural gas; the reasons for this were the increased primary energy prices, which had a consider-able effect on the cost of acquiring natural gas and which led to price adjust-ments in February and November 2006. Sales of electricity decreased slightly against that of the preceding year to 13.6 billion kWh. Gas sales also went down due to the mild weather to 40.1 billion kWh (excl. VNG). In total operative earn-ings (EBIT) fell by € 12.2 million to € 295.5 million.
A Jump in Operative Earnings in the Gas Transmission and Trade Segment
Sales in this segment amounted to € 4.8 billion in 2006 (2005: € 3.8 billion). The increase resulted mainly from adjusting the sales price to the changes in oil product prices. In addition, foreign business grew: in 2006 VNG supplied 164.2 billion kWh natural gas to customers (2005: 163.1 billion kWh). The extra sales of about 1 billion kWh were achieved mainly through the higher volume sup-plied to Poland.
Operative earnings (EBIT) at € 242.9 million lies considerably above that of the previous year of € 50.2 million. In 2005 the continuously increasing oil prices seriously depressed the profit situation because of the time-displaced adjustment to the sales prices. In 2006, on the other hand, it was possible to partially com-pensate for the increased purchasing prices through optimized gas purchasing and the use of storage volumes being purchased at more favorable prices.
The Information and Telecommunications Segment Continues to Grow
The constant growth in the information technology and telecommunications segment continued in 2006. Sales grew from € 379 million to € 436.6 million in comparison to the previous year. The partial acquisition of the telecommunica-tions provider Teleos in Westphalia contributed to the important growth in sales. The operationally strongest driver of growth was DSL broadband internet ac-cess. The IT area also contributed positively to the development. EBIT in this segment virtually doubled from € 15.8 million to € 30.9 million. The number of employees increased to 2,050 (12/31/2005: 1,751).
Scheduled Dividend of € 60 million
The Board of Management will propose a dividend at last years level of € 60 million to the shareholders in EWE, the towns and districts of the Ems-Weser-Elbe region at the AGM.
Perspective
According to Brinker, more challenges for the EWE Group are looming for 2007. Thus will the pressure on the profitability of the energy business continue to increase; through the considerable burdens arising from the regulation of elec-tricity and gas charges and the increasing predatory competition from cheap suppliers. ”However, EWE sees itself as being well positioned against these competitors with its competitive prices and good customer knowledge,” said the EWE CEO and at the same time pointed out that EWE is one of the cheapest energy suppliers in the Federal Republic of Germany.
Further room for maneuver has been opened up by the expansion of the activities in the areas of electricity generation and natural gas production as well as the most recent involvement in Turkey in a most interesting commercial region.
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A renewed dynamic development is expected for the information and telecom-munications segment, combined with a further expansion.
Currently, EWE expects moderate increases in turnover for 2007 and 2008, with slightly reduced profits.
| Kennzahlen EWE-Konzern | 2006 | 2005 |
| Electricity Sales in million kWh | 13,585 | 13,872 |
| Natural Gas Sales in million kWh | 40,128 | 41,679 |
| Grid Gas Sales in million kWh | 164.2 | 163.1 |
| Grid Gas Sales in million kWh | 9,030.0 | 7,444.4 |
| EBIT in € million | 532.4 | 328.0 |
| Annual net profit in € million | 256.9 | 128.4 |
| Employees | 5,836 | 5,419 |
Participants:
Dr Werner Brinker, CEO and Chairman of the Management Board
Heiko Harms, Networks and IT Director
Michael Wagener, Commercial Director
Cora Zillich, Head of Corporate Communications
Press contact
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