Oldenburg, Germany. Despite the challenging market environment, the 2019 financial year was successful for EWE and results were within the forecast range. Operating earnings before interest and taxes (OEBIT) – the key indicator for operating activities – totalled EUR 455.9 million, 20.9 per cent higher than the previous year (EUR 377.1 million). In spring 2019, EWE had expected its OEBIT to be 10 to 25 per cent higher year-on-year. Due to one-off effects, consolidated net income of EUR 127.5 million for the period was down on the previous year (EUR 167.3 million). At EUR 5,659.3 million, sales remained stable and on a par with the previous year (EUR 5,617.1 million).
“The 2019 financial year was successful for EWE,” commented Stefan Dohler, CEO of EWE AG, at the company’s fully digital financial statement press conference – its first ever, due to the coronavirus pandemic. “We achieved or exceeded our targets in all material operating business areas.” Dohler highlighted three transactions of strategic significance for the company that were successfully carried out: the sale of the Turkish companies in the first half of the year, the decision to establish a joint venture for fibre-optic expansion with Deutsche Telekom, and the announcement of new strategic growth partner Ardian in December. Together with municipal shareholders and the infrastructure investor Ardian, EWE will be driving forward growth in the strategic fields of renewable energies, telecommunications, networks, energy services and mobility. “EWE is pursuing consistency in our business segments so we can develop the defined growth areas beyond the boundaries of various Group companies in the best way possible,” the CEO explained. This will also be reflected in a new business area structure starting with the first half-year report in 2020.
Coronavirus: Risk provisioning and economic impacts
“As an operator of critical infrastructure, we have taken clear and in some cases wide-ranging decisions to protect our employees and customers and to secure the supply of energy, telecommunications and water,” commented Dohler on how the EWE Group is handling the coronavirus pandemic. The majority of employees were sent to work from home early on; the workforces for electricity, gas and telecommunications network control centres are separated at various locations; EWE shops are closed and all events cancelled; and customer appointments have been reduced to emergency responses and to the safeguarding of the supply. The EWE AG central crisis team and the crisis teams of the individual EWE companies have been constantly evaluating the threat level and gradually adapting the necessary measures since the end of February. A phased plan has been developed for a return to a “new normal” based on the pace set by political guidance. The first step involved renovation measures to ensure hygiene and social distancing regulations were followed so that the first EWE shops could be reopened today. “We are currently focussing on making sure our customers can rely on us in this situation, which is characterised by countless uncertainties. This is also part of our corporate responsibility to the region,” explained Dohler.
Regarding the economic impacts, Dohler stated: “EWE has a solid financial foundation, but we are now clearly aware of the massive impact of the restrictions on economic life caused by the coronavirus. We are reporting declines in sales due to the restricted contact with our customers; our retail business is suffering because some of our key customers’ production facilities have shut down or been severely dialled back, and the volumes purchased for these customers on the energy markets can only be resold at a loss at the moment.” EWE has therefore taken the precaution of keeping liquid funds in the company to secure economic performance should the crisis go on longer. “We are facing enormous challenges and are trying to prepare for them as best we can, by taking measures to stabilise our business,” said Dohler. This does not mean the targeted course of growth is at a standstill; however, the company will not realistically be able to advance at the speed it had originally planned. With investment of approximately EUR 700 million per year, EWE intends to contribute to a rapid economic recovery in the region. “But for now, the most important thing is that we all stay healthy – our customers, our employees and our company,” stated Dohler.
Our commitment to sustainability and climate protection
At EWE we consider it our duty to promote and develop sustainable solutions and green technologies and to ensure that people are supplied with energy, mobility and means of communication. “For this reason, we have been actively shaping the energy supply system of the future for many years and making our contribution towards achieving climate targets,” stated Dohler. The principle of sustainability has long been important to EWE. “We know that long-term economic success is only possible if we achieve our ecological and social targets,” the CEO explained. The effects of the coronavirus pandemic pose a great challenge to society – economically, ecologically, socially and politically. “Those looking to reactivate the economy who think sustainability, green innovation, environmental and climate protection are not affordable are simply wrong,” stated Dohler. Quite the contrary: “We cannot ease up on climate protection now; we must not recklessly abandon our goals. This pandemic demonstrates how vulnerable our globalised world is if we do not act consistently and sustainably. Climate protection goes hand in hand with innovation and is therefore a great opportunity for our society – and in particular our region, with its excellent starting conditions.”
Partnership with the Aloys Wobben Foundation arranged for onshore wind energy
In order to drive the expansion of onshore wind energy, EWE is aiming to bundle its activities with those of Aurich-based wind turbine manufacturer ENERCON. The goal is to significantly and sustainably increase the share of renewable energies across sectors. Representatives of EWE and the Aloys Wobben Foundation, sole shareholders of ENERCON, have signed a corresponding agreement. The joint venture will manage the existing wind parks (2,500 MW) and project pipelines (almost 2,300 MW) contributed by each of the two partners. The intention is to jointly generate domestic and international growth, as well as to exploit the resulting opportunities in the energy industry. “Combining the joint potential and experience to the benefit of a climate-friendly future of energy for the people of the region is a natural and sensible step,” says Dohler. Furthermore, the planned partnership – after the establishment of Glasfaser Nordwest with Deutsche Telekom in January 2020 – is in harmony with the strategy to implement major infrastructure projects with strong partners whenever possible.
Development of key indicators in the 2019 financial year
Commenting on the development of the company’s OEBIT in the year under review, Wolfgang Mücher, CFO of EWE AG, remarked, “Results in the Renewables, Network and Gas Storage business areas, along with swb, were within the forecast range. We were able to exceed the forecast range in the Sales, Services and Trading business area due to the increased operating results in Telecommunications, Energy Trading and IT and one-off effects such as one-time payments in the telecommunications field, as well as reversals of provisions and accrual accounting in energy sales. Our Polish companies in the Overseas business area were not able to reach their targets due not only to the generally challenging energy framework in Poland but also to the creation of an impending loss provision in the electricity segment.
With regard to consolidated net income for the period, which covers the operating business and non-operating effects as well as net interest income and taxes, Mücher said, “The derivative result from hedging transactions had a material impact on the decrease in the consolidated net income compared with the previous year.”
With regard to sales, Mücher remarked, “The Group sales generated in the 2019 financial year were on a par with the previous year, as was the cost of materials. The materials usage ratio improved marginally from 69.1 per cent to 68.3 per cent. Personnel expenses increased in the financial year due to pay scale increases and the addition of 323 people to the workforce. On average the Group employed 8,831 people over the year.”
EWE invested a total of EUR 587.4 million in the year under review (2018: EUR 529.7 million). “85 per cent of this related to investments in property, plant and equipment,” stated Mücher.
The separate financial statements of EWE AG prepared according to the German Commercial Code (HGB) show a net profit of EUR 485.2 million for the 2019 financial year (2018: EUR 257.7 million). “This positive result was mainly due to income from financial investments, which was up a considerable EUR 265.8 million against the previous year,” explained Mücher. “Reversals of depreciation, amortisation and impairment at swb AG and the balance of income from profit transfer agreements and expenses from loss transfers all had a significant impact. The disposal of the shareholding in EWE Turkey Holding A.Ş. had a positive effect on the results from financial investments. Write-downs on financial investments also led to significantly lower earnings in the previous year.”
Dividend proposal
Due to the success of the past financial year, the Board of Management and Supervisory Board originally proposed a total dividend payout of EUR 146 million. This proposal is also included in the annual report. Due to the events set in motion by the coronavirus pandemic, the effects of which on the company cannot yet be reliably determined, a dividend payout of EUR 98 million has been proposed instead. This has been decided with the shareholders of EWE AG, who are thus making a contribution towards securing liquidity.
Outlook for 2020
Taking into consideration the specific developments expected within the industry, the political and regulatory environment and the continuing intense competition in the energy market, EWE originally expected its operating EBIT in the current financial year to come in between -15 to +5 per cent compared to 2019. This forecast is included in the annual report, which was published prior to the coronavirus pandemic. The pandemic’s effects on the company and the general economy since then have made a reliable forecast impossible at the current time.
Publication
EWE will publish its report for the first half of the year on 27 August 2020.
2019 a successful financial year for EWE
Operating result improved by more than 20 per cent
Contact
Christian Bartsch
Deputy Group Director Corporate News Center, Press Officer
