Oldenburg. EWE was able to close the 2020 financial year successfully and within the forecast expectations thanks to its timely and sustained response to the coronavirus pandemic. Sales remained on a par with the 2019 level of EUR 5,642.6 million (previous year: EUR 5,659.3 million). Operating earnings before interest and taxes (OEBIT) – the key indicator for operating activities – totalled EUR 442.0 million, only 3.0 per cent down on the earnings of the previous year (EUR 455.9 million). Due to one-off effects, consolidated net income for the period more than doubled to EUR 293.9 million year-on-year (previous year: EUR 127.5 million). Capital expenditure was up 11.8 per cent on the previous year, increasing from EUR 587.4 million to EUR 656.7 million.
Stefan Dohler, Chief Executive Officer of EWE AG: “The 2020 financial year was a successful one for EWE. We were able to meet or exceed our targets in all major operating segments despite the pandemic. We focused squarely on protecting our employees, our customers and our company in this pandemic, and were successful in doing so. We are well positioned for the future, and at the same time we can pay a high dividend to our shareholders. The people in northwest Germany have been able, and continue to be able, to rely on us and our services.”
Stefan Dohler continued: “2020 was a year of new partnerships and a year of new beginnings. We brought our strategic partner Ardian on board in February. Our joint venture Glasfaser Nordwest started expanding the fibre-optic network in 14 cities and municipalities last year as part of the strategy to digitalise the northwest. EWE has set itself the ambitious goal of achieving climate neutrality by 2035. To ensure a climate-neutral energy supply for future generations as well, we have established the company Alterric together with the Aloys Wobben Foundation. With the erection and operation of onshore wind turbines, Alterric will become Germany’s largest producer of eco-power in this sector. Eco-power will also become the standard for our customers beginning next year; we are restructuring our services so that more than 85 per cent of our residential and commercial customers will obtain electricity from renewable sources.”
Coronavirus measures successful / Capital expenditure supports the region
While the coronavirus pandemic had a major impact on the Group’s activities and offers over the past year, swift and systematic action prevented far-reaching consequences. “Nearly 5,000 colleagues have been working from home for over a year now. Our IT infrastructure enabled us to react quickly from the beginning, and has since provided a solid foundation for day-to-day business during these exceptional times. We also closed our 52 shops early on and will reopen them when incidence rates allow. We know how important an on-site presence is for our customers,” reports Stefan Dohler. EWE was able to minimise the economic impact of the pandemic by taking various measures. While demand fell in some areas, it rose significantly in business areas such as telecommunications. The positive message for the northwest: EWE was able to significantly increase its capital expenditure despite the pandemic, thereby making a significant contribution to the region’s economic stability. “Though the pandemic is restricting our energy distribution and sales, which has a negative impact on our results, we are experiencing high demand for our high-bandwidth internet products. Despite the pandemic, we succeeded in increasing capital expenditure by 11.8 percent from EUR 587.4 million to EUR 656.7 million. This directly benefits the northwest and is part of the significant added value that EWE generates for the region every year,” says Stefan Dohler.
In 2020, the Conoscope company determined that EWE’s business activities create total value added of more than EUR 2.4 billion annually in the Ems/Weser/Elbe region alone.
Digital participation – focus on schools and commercial areas
Last year, EWE played a significant role in driving digitalisation efforts in the northwest. The company was also very active during the past year in both commercial and subsidised work to expand the fibre-optic network. The Glasfaser Nordwest joint venture has been responsible for the commercial expansion work since the beginning of 2020. EWE is still expanding the areas commissioned in advance without financial assistance. EWE was awarded eight subsidies last year to promote the expansion of fibre-optic networks in very rural areas and will pursue expansion work there over the coming years. In its first year of existence, the Glasfaser Nordwest joint venture already began expanding fibre-optic networks in 14 cities and municipalities. “With the Glasfaser Nordwest joint venture, we will provide 1.5 million households and business locations with a connection to the fibre-optic network. This allows us to make a substantial contribution to the digitalisation drive in the northwest,” explains Stefan Dohler. “But it also goes without saying that we cannot expand everywhere at the same time. Not enough construction companies are available. Since there is a lack of excavators and especially excavator operators, we are prioritising our expansion activities. Connecting schools to the fibre-optic network is high on our list. For schools, we offer comprehensive digitalisation packages ranging from fibre-optic network connections to wireless lighting and network security.”
Northwest becoming a pioneer region for climate neutrality
In December 2020, the EWE Group announced that it intended to achieve climate neutrality by 2035. Last year, the company already succeeded in reducing the specific CO2 emissions of its electricity production by 54 per cent, to 267 grammes per kilowatt hour (2019: 497 grammes per kilowatt hour). Withdrawal from coal-based electricity generation by 2023 and the further expansion of energy production by wind power from Alterric (the new joint venture established with the Aloys Wobben Foundation) will continue to significantly reduce this amount in the coming years. “Alterric is a new company with a lot of experience in developing, erecting and managing wind farms. We have 2300 MW of rotating wind turbines and an additional 9,400 MW in the project development pipeline: shareholders are making it clear that they want us to develop Alterric into one of the largest generators of eco-power in Germany and France. We are connecting corporate action with our responsibility for future generations. But we also need the right framework conditions. The northwest can become a pioneer region for climate neutrality and the energy revolution. It is crucial that environmentally friendly wind energy production not be slowed down,” explains Stefan Dohler. The Group also needs much more wind power capacity for its hydrogen activities, which EWE further expanded last year, and which are an essential component of the energy revolution. There are plans to build more wind turbines, but the process for obtaining permission is lengthy and complicated. The EWE Go subsidiary has teamed up with McDonald's to equip additional McDrive locations with charging points for electric mobility. In the contract signed last year, it was agreed that up to 1,000 McDonald’s restaurants will be equipped with rapid charging points in the coming years. These also operate on eco-power and enable climate-friendly mobility.
Eco-power becomes the standard
Eco-power will already become the standard for private and business customers at the beginning of next year, and EWE will ensure the basic supply. This means that more than 85 per cent of all EWE electricity customers will be supplied with eco-power. Moreover, starting in 2022, the currently available eco-power products will be gradually expanded to include regional eco-power. EWE will continue to include a product known as grey electricity, so that customers will continue to have freedom of choice. “Since we are aware of our responsibility towards the climate, eco-power is becoming standard at EWE. There is no alternative to switching to renewable electricity. We are pressing ahead and will make this change as cost-neutral as possible for our customers. We will also gradually augment our home products that already have eco-power with regional electricity from the North Sea and from regional wind farms,” Stefan Dohler reports.
Development of key indicators in the 2020 financial year
Commenting on the development of the company’s OEBIT, Wolfgang Mücher, CFO of EWE AG says, “The coronavirus pandemic had a negative impact on sales, as did the mild weather in the first quarter of 2020. Factors that had a positive effect included the high demand for telecommunication products, the optimisation of gas flexibilities, high wind yields, and the commercialisation of free capacities in the natural gas storage facilities.”
“The high consolidated net income for the period is mainly due to one-off effects such as the measurement of energy needs on the reporting date,” says Wolfgang Mücher. The consolidated net income for the period covers the operating business and non-operating effects as well as net interest income and taxes.
With regard to sales, Mücher remarked, “Group sales in 2020 were at the level of the previous year despite the coronavirus. The effects of the mild weather and a coronavirus-related decline in prices were offset by greater demand in the telecommunications sector, among other things.” Personnel expenses rose in the past financial year due to pay scale increases and one-off payments. An average of 9,141 employees (2019: 8,831 employees) were employed by the Group in the 2020 financial year.
The separate financial statements of EWE AG in accordance with the German Commercial Code (HGB) for the 2020 financial year amount to EUR 239.9 million
(2019: EUR 485.2 million). The Board of Management therefore proposes a dividend of EUR 186.9 million (2019: EUR 146 million).
“The Board of Management is proposing a dividend of EUR 186.9 million to the shareholders of EWE AG, which is again higher than in the previous year. This demonstrates that the EWE Group is making a contribution to the economic development of the northwest and the financial situation of the municipal shareholders,” says Wolfgang Mücher.
Outlook for 2021
Taking into consideration the effects of the coronavirus, the specific developments likely in the industry, the political and regulatory environment and the continuing intense competition in the energy market, EWE expects the operating EBIT for the Group as a whole to be in a range of between -15 and +5 per cent in the current financial year compared to 2020. An increase in earnings is expected in the onshore wind energy segment in particular.
EWE will publish its report for the first half of the year on 27 August 2021.