Oldenburg. In spite of the coronavirus crisis, energy and telecommunications service provider EWE managed to maintain stable business activities in the first half of 2020 and increase its earnings over the previous year. By adopting systematic and effective countermeasures, EWE was able to offset the losses caused by the coronavirus crisis and the effects of the mild winter. This result was essentially achieved by means of temporary effects such as the optimisation of gas flexibilities.
Group sales fell by 3.9 per cent to EUR 2,833.4 million as of 30 June 2020 (2019: EUR 2,949.2 million). Operating EBIT – the key indicator for operating activities – rose by 3.7 per cent to EUR 281.9 million in the same period (EUR 271.8 million). The Group’s result for the period was up 18 per cent on the previous year, increasing from EUR 115.1 million to EUR 135.9 million. The average number of employees in the EWE Group was 9,107 in the first half of 2020, compared with 8,831 at the end of 2019.In particular, increased onshore and offshore wind income, the optimisation of gas flexibilities in the trading segment and the telecommunications business had a positive impact on the operating result. The mild weather, especially in the first three months of the year, reduced earnings. The coronavirus crisis is having a negative effect on the electricity business, among other areas, and is resulting in losses from selling off volumes, particularly in sales.
EWE’s CFO, Wolfgang Mücher, explains: “So far, we have been able to overcome the coronavirus crisis by quickly identifying and responding to issues, and we have even increased our earnings as a result of one-off effects. However, these effects will be offset over the year as a whole. Furthermore, there is still uncertainty about overall economic performance in the second half of the year. If the situation with the coronavirus crisis deteriorates, with corresponding effects on our customers, we will have very limited scope to take additional countermeasures. Looking to the end of the year, it is therefore unlikely that we will be able to compensate in full for the reduction in earnings. In addition, we anticipate that the coronavirus crisis will continue to have an economic impact in the coming years due to the permanent presence or temporary tightening of measures to prevent infection. At the same time, we believe that changing needs will create opportunities for the EWE Group – for our telecommunications business or for mobility services, for example.”
Systematic focus on sustainable development
Even against the backdrop of an overall economic downturn as a result of the coronavirus crisis, EWE continues to prioritise climate-friendly company growth and a significant expansion of renewable energies. In addition to the planned joint venture with the Aloys Wobben Foundation, this includes a systematic further decrease in CO2 emissions. “We continue to prioritise the expansion of renewable energies and at present we are making systematic preparations to discontinue our use of coal in Bremen. We have already seen a sharp increase in electricity income from wind energy in the first six months compared with the previous year,” says EWE’s CEO Stefan Dohler. “The negotiations and discussions on the planned joint venture with the Aloys Wobben Foundation are right on schedule. The jointly operated wind farms and additional development potential would enable us to vastly increase our climate-friendly energy generation.” As well as expanding its environmentally friendly production, EWE is developing concrete measures this year as part of a multi-stage process to reduce CO2 emissions sustainably across all areas.
“We don’t just want to produce climate-neutral energy but also want to cut our own emissions across all areas,” explains Dohler, adding that “the coronavirus crisis is also having positive side effects and has shown us that we can take new approaches and that it is also possible to work together remotely. As a result, we are examining all of our processes and policies – from business trip guidelines and office workstations to vehicle procurement and the purchasing of office supplies – in terms of their climate neutrality. It is a long and arduous journey, but it is the only way to become a genuinely sustainable company.”
New Group structure
As announced by EWE in the previous year, a new system for managing the Group’s business areas was established in 2020. This year’s half-year report contains a new Group structure that reflects this system. This structure takes account of changes in the focus of business activities and provides the organisational basis for offering the EWE Group’s customers interconnected products and services and first-class customer service in an increasingly complex world. Within this structure, reporting is based on the business areas Renewable Energies, Infrastructure, Market, swb Group, Other and the Group’s corporate centre.
Renewable Energies business area
The Renewable Energies business area recorded sales of EUR 76.8 million in the reporting period, which was an increase of 12.8 per cent on the first half of 2019 (EUR 68.1 million). The rise in sales was mainly due to the newly acquired onshore wind farm as well as higher wind income in the existing portfolio. Operating EBIT went up from EUR 35.3 million in the previous year to EUR 48.9 million.
Infrastructure business area
In the Infrastructure business area, sales increased by 2.5 per cent to EUR 342.2 million (H1 2019: EUR 333.7 million). The rise in sales was primarily due to higher upstream network costs in the distribution networks which were passed on to our customers. Operating EBIT went up from EUR 168.7 million in the previous year to EUR 171.1 million. The increase resulted from a rise in earnings due to the remarketing of the natural gas storage facilities and from higher energy gross margins for electricity and gas in the distribution networks.
Market business area
In the Market business area, EWE recorded a decline in external sales of 6.1 per cent to EUR 1,768.1 million (H1 2019: EUR 1,882.2 million). These sales, which are largely generated in the electricity business, decreased primarily as a result of COVID-19. Operating EBIT was EUR 66.5 million (H1 2019: EUR 65.8 million). This includes amounts from the optimisation of gas flexibilities in the trading area during the year.
In the telecommunications area, EWE continued to acquire new customers and to market more connections with high bandwidths.
swb Group business area
In the swb business area, external sales came to EUR 555.7 million in the reporting period, which was 2.9 per cent lower than in the previous year (H1 2019: EUR 572.3 million). Operating EBIT was EUR 18.4 million (H1 2019: EUR 41.9 million). The year-on-year decline was primarily due to increased high-voltage volumes as well as weather- and price-related decreases in the gas and heating segment.
Other business area
This area comprises the IT consultancy business of the BTC group, EWE’s business activities in Poland and its innovation activities. Sales of EUR 88.4 million were only slightly down on the previous year (EUR 91.8 million). Operating EBIT fell from EUR 7.4 million in the previous year to EUR 2.1 million. The main reason for this was the lack of high-margin sales from BTC’s service and project activities.
Group corporate centre
The Group corporate centre only generates minor sales. Operating EBIT of EUR -25.1 million (previous year: EUR -47.3 million) was due to the holding function of EWE AG and other shareholdings assigned to it.
The half-year report is available at www.ewe.com:
https://www.ewe.com/de/investor-relations
