EWE reports solid half-year earnings and announces its future strategic focus

Oldenburg, Germany, 22.8.2012. After two negative financial years, the Oldenburg-based EWE Group reported a positive result for the first half of the year. The Group has achieved a consolidated EBIT of €309.6 million (previous year: €-61.4 million). Consolidated net income for the period comes to €167.7 million (previous year: €-185.9 million). This means that the company is within the range forecast for this year. At the same time, the company announced its intention to pursue its course further with a strategic focus.

“We have taken the first steps to stabilise results,” said Dr. Werner Brinker. The company reaffirms its forecast for 2012 (positive EBIT in the triple-digit million range). “In order to able to secure this in the long term, we need to continue on the path we have laid out before us,” Dr. Brinker added. He went on to highlight the ongoing reorganising of the company as well as internal projects to improve efficiency and optimise processes. In a similar vein, CFO Dr. Heiko Sanders, described the situation as “satisfactory” but not enough to be prepared for future challenges in the energy market. “We must work with increased vigour in the face of ever tougher competition,” the Chief Financial Officer said.

Consequently, the company has worked hard on determining a strategic approach to the future in recent months, according to Dr. Brinker. The aim is to give the company an even clearer focus in the future. To achieve this, the company will use its regional roots and existing areas of expertise, such as the construction and operation of networks or in the area of renewable energies.

In this way, one significant area of focus will clearly be on generating electricity in the onshore wind area. The conditions surrounding offshore generation at this precise moment are more precarious, explained Dr. Brinker. In contrast, it is increasingly likely that the company will deepen its commitment to onshore wind power. In addition, EWE intends to focus more on ways to involve communities and citizens in wind farms in the future. The expertise EWE has acquired in the offshore business will be marketed as a service by a subsidiary.

In the area of sales, EWE will adopt an even more systematic approach to marketing telecommunications and energy products from a single source. “It is our intention to go down this route as we believe that the two markets will merge even further,” said Dr. Brinker. He also stated that, in his view, the biggest challenge facing the sales business is to become more efficient. “In this area, together with swb and EWE TEL we see cost cutting potential,” he said. Yet, EWE will continue to stand for innovative products and services. “This does not mean, however, that we always have to be at the forefront of every innovation,” added Dr. Brinker.

In view of the demands of the German energy turnaround, EWE sees challenges in the network business, notably related to electricity grids. As a result, the focus of operations should henceforth be on this business area. “The development of renewable energies weighs particularly heavily on the distribution network. Not only is significant capital expenditure required, but also a considerable amount of knowledge, which we can provide from our extensive experience acquired over decades,” highlighted Dr. Brinker.

Referring to the published half-year results, Dr. Sanders spoke of the stabilising effect of the measures that had been implemented in the preceding months. This can be clearly seen despite the considerable changes currently shaping the markets.

EWE Energy business area
Sales in the Energy business area rose by 13.8 per cent to €3.2 billion in a year-on-year comparison. This was due to increased network sales, stemming primarily from the area of renewable energies.
EBIT came to €237.1 million, which was up €33.5 million on last year’s result.

swb business area
Sales in the first half of the year increased by 2.8 per cent to €631.3 million. This is mainly attributable to a rise in revenue from the sale of gas and heat.
The EBIT of the swb business area improved significantly compared with the same period a year ago, coming in at €59.9 million (previous year: €-44.6 million). The considerable increase is for the most part attributable to the fact that the 2011 result was negatively affected by the devaluation of the shareholding in the Bielefeld municipal utilities.

New Markets and ICT business area
EWE registered a positive development in foreign business. The company boosted the number of customers it has in both Poland and Turkey by around 10 per cent. This means that EWE now has around 700,000 gas customers in Turkey alone. At the same time, the subsidiary Bursagaz will pay out its first dividend in 2012.
Sales in the New Markets and ICT business area were at the level of the same period a year ago at €544.6 million. Increases in sales in the business units Turkey, IT and Poland were offset by declines in sales in telecommunications.
The EBIT of the business area improved significantly compared with the same period a year ago, coming in at €6.0 million (previous year: €-168.2 million).

Key figures for the EWE Group

* Decrease due to desinvestment