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27.04.2016 - EWE AG

EWE stabilises operating business in 2015

First annual report based on new business area structure

  • Operating EBIT of €428.1 million at level of previous year
  • Impairments reduce result for the period
  • Sales fall to €7.82 billion

Oldenburg, Germany, 27 April 2016. EWE stabilised its operating business in the 2015 financial year and has, in part due to effective efficiency measures, generated operating earnings before interest and taxes (OEBIT) consistent with that of the previous year. The regional energy and telecommunications service provider generated €428.1 million (previous year: €427.5 million), which was in line with its forecast. The consolidated net income of €-9.4 million (previous year: €146.3 million) was mainly depressed by impairments in the field of conventional generation and provisions for restructuring. Sales fell slightly to €7.82 billion (previous year: €8.13 billion), mainly as a result of falling electricity sales and declining electricity exchange prices.

“We performed well, thanks to our huge efforts in a period of great upheaval in the energy sector, and recorded a stable operating result,” says Matthias Brückmann, Chief Executive Officer of EWE AG, “and we did so despite having to contend with a negative result from our equity investment in VNG last year.” The stabilisation was achieved in part by consistent efficiency measures, the first almost-full operating year of the RIFFGAT offshore wind farm and a slightly positive weather effect compared with the previous year, leading to higher network transport volumes and natural gas sales. Nonetheless, non-recurring items resulted in EWE closing out the 2015 financial year with a loss. Among other things, EWE had to accept impairments on its conventional swb power plant fleet, on district heating concessions and, due to the weak industry environment, also on goodwill. Provisions were also recognised for the current restructuring of the Group, part of which also involved downsizing the workforce. Higher income taxes were also incurred compared to the previous year.

The average number of employees in the Group fell year on year by 299 to 8,855 employees (previous year: 9,154). The main reason for this drop was the sale of investments in the IT business area at the end of the 2014 financial year.

New business area structure
EWE has used a new business area structure for the first time to report on the 2015 financial year. As a result, the swb Group’s business activities have also been combined in a new business area, as have EWE’s foreign operations. The “Renewables, Network and Gas Storage” and “Sales, Services and Trading” business areas have also been reorganised under this format. The new business area structure thereby reflects the new management and control functions of the new Board of Management.

Renewables, Network and Gas Storage business area
In the asset-intensive and heavily technology-based Renewables, Network and Gas Storage business area, sales external to the Group rose to €1,951.8 million (previous year: €1,823.2 million). The business area increased its operating EBIT slightly on the previous year to €314.4 million (previous year: €312.1 million), thereby making the biggest contribution to the Group’s operating result. Although the operating result of the gas storage business was down on the previous year, this was offset by, among other things, the first full operating year of the RIFFGAT offshore wind farm and by what was at least a slight weather-related rise in the volume of natural gas transported in comparison with the previous year. The growth in capital expenditure of around €69 million to €293.1 million (previous year: €224.2 million) was primarily due to the new natural gas caverns in Jemgum being filled for the first time and an interest-rate-related increase in recultivation provisions in the gas storage business. Other reasons for the increase include the acquisition of a small telecommunications network and higher capital expenditure on IT.

Sales, Services and Trading business area
The Sales, Services and Trading business area now also includes the Group’s BTC group. This underlines the objective of integrating the energy and telecommunications business more and more closely using information technologies. Sales external to the Group fell by almost €273 million to €4,053.4 million (previous year: €4,326.3 million) as a result of a volume-related decline in electricity revenue in the area of sales and a drop in electricity trading revenue. Nevertheless, this business area continues to generate by far the most revenue. Its operating EBIT improved to €80.4 million from the highly depressed earnings in the previous year (previous year: €18.7 million). The increase can be attributed to a range of different factors. There was an increase in the result from the sale of electricity and telecommunications and, with a lower devaluation of gas reserves due to the reporting date, an improvement in the result from energy trading, too. Capital expenditure came to €80.6 million in the reporting year (previous year: €71.0 million), whereby a large share of the additional capital expenditure was for the Bitstream Access Programme.

Overseas business area
EWE’s overseas business in Turkey and Poland in the 2015 financial year generated sales external to the Group of €759.4 million (previous year: €773.0 million). The business area’s operating EBIT was significantly increased by around 38 per cent to €25.3 million (previous year: €18.4 million), however. This net profit was primarily the result of cheaper gas procurement conditions. Capital expenditure rose to €30.5 million in total (previous year: €26.0 million), mainly due to the network expansions in the Turkish regions of Iznik and Develi.

swb business area
In the 2015 financial year, the swb Group had to withstand a drop in sales of more than €156 million to €1,052.1 million (previous year: €1,208.3 million), a drop that was largely due to reduced electricity revenue from conventional power plants. The operating EBIT, on the other hand, was increased to €90.3 million from a comparatively low previous year’s net income (€40.2 million) as a result of major customer contracts in the generation business and improved results from the sale of natural gas and drinking water. The swb Group’s capital expenditure climbed by around €6 million to €90.2 million compared with the previous year (€83.8 million). This rise was mainly due to an interest-rate-related increase in recultivation provisions for the demolition of the power plant blocks at the Hafen power plant site.

Outlook for 2016
For the 2016 financial year, EWE expects the market situation to remain challenging, especially in the field of conventional generation, and also expects competition in the sale of energy and telecommunications to remain lively. Nevertheless, there are signs that new business activities are already starting to make solid earnings contributions. Provided that negative weather effects and other unpredictable developments do not materialise, EWE expects an operating result that is at least at the level of 2015 for the current financial year.

Key figures for the EWE Group

Segments 2015 2014 Veränderung in %
Group
Sales €7,819.3 million
€8,134.2 million
-3.9
Operating EBIT €428.1 million
€427.5 million +0.1
Result for the period
€-9.4 million €146.3 million -106.4
Capital expenditure
€715.3 million €739.2 million -3.2
Average number of employees
8,855 9,154 -3.3
 
Renewables, Netword and Gas Storage
Sales €1,951.8 million €1,823.2 million +7.1
Operating EBIT €314.4 million €312.1 million +0.7
Capital expenditure
€293.1 million €224.2 million +30.7
Average number of employees
2,042 2,000 +2.1
 
Sales, Services and Trading
Sales €4,053.4 million €4,326.3 million -6.3
Operating EBIT €80.4 million €18.7 million +329.9
Capital expenditure
€80.6 million €71.0 million +13.5
Average number of employees
3,188 3,534 -9.8
 
Overseas
Sales €759.4 million €773.0 million
-1.8
Operating EBIT €25.3 million €18.4 million +37.5
Capital expenditure
€30.5 million €26.0 million +17.3
Average number of employees
832 818 +1.7
 
swb
Sales €1,052.1 million €1,208.3 million -12.9
Operating EBIT €90.3 million €40.2 million +124.6
Capital expenditure
€90.2 million €83.8 million +7.6
Average number of employees
2,166 2,181 -0.7

Note: Please note that the performance figures at Group level listed in the table above are not derived directly from the performance figures of the operating business areas, but also incorporate effects from the Group’s corporate centre and consolidation.