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RWE said it would suspend its dividend for 2016 and said net income would be negative after taking a €4.3bn impairment to deal with new rules on disposing of nuclear waste and the ongoing slump in wholesale electricity prices.

In a trading update, the German utility said it had achieved its earnings goals for 2016, reduced its net debt considerably and had an operating result at the upper end of forecasts.

But it warned that 2016 earnings would be curtailed significantly through impairments of €4.3bn, proposing a suspension of dividend payments on its ordinary shares and a payout of €0.13 cents on preferred shares.

The utility company also proposed a dividend of €0.50 for 2017.

Dr. Rolf Martin Schmitz, chief executive of RWE, said in a statement:

“The difficult market environment made impairments necessary. In addition, the nuclear energy fund imposed a substantial one-off burden on us.”

“Nevertheless, we look to the future with optimism. Our operating performance and innogy’s successful IPO make us financially robust and enable us to continue to reduce debt. This makes us confident and gives our shareholders a clear outlook for the dividend for 2017 and subsequent years.”

New German legislation announced at the end of 2016 on the disposal of nuclear waste requires utilities to pay provisions for radioactive waste storage as well as a risk premium into a state fund. RWE said it planned to pay its €6.8bn fee as soon as July. Markus Krebber, chief financial officer, said the new regulations were “sensible, but require a great financial effort from RWE”.

Along with other utilities, RWE has struggled with a fall in the cost of wholesale electricity prices amid a growth in alternative energy sources under Angela Merkel’s government’s push for German to rely more on renewables.

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