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RWE, the German utility, said earnings would rise this year on the back of an improved performance at its trading arm and its green energy subsidiary Innogy.

The company forecast that adjusted earnings before interest, taxes, depreciation and amortisation would be between €5.4bn and €5.7bn in 2017, up from €5.4bn in 2016, despite a continuing decline in its conventional power business.

RWE also confirmed the preliminary numbers for 2016 it released on February 22, which showed it had made a €5.7bn net loss for 2016 – the largest in its 119-year history – due to huge impairments on its German power plants. It also announced then it was scrapping its dividend for the second consecutive year.

RWE, like other German utilities, has been battered by Germany’s green energy revolution or Energiewende, which has seen the country move away from nuclear and fossil fuels towards renewables. Energy from wind and solar has squeezed the conventional power that RWE produces out of the market, while electricity prices are now so low that many coal and gas plants struggle to turn a profit.

RWE has responded by splitting itself into two, placing its green energy and grid businesses into a new subsidiary, Innogy, which floated last October. Innogy on Monday announced that it would pay a dividend of €1.60 a share, a boon for RWE, which still owns a 76.8 per cent stake in the company and is now set for a payout of around €683m.

Rolf Martin Schmitz, RWE chief executive, said: “We have done our homework. The task at hand is now to continue to build RWE on this solid foundation.”

He said the security of energy supply was emerging as a critical element of the Energiewende. “We are adapting our strategy to this, evolving from an electricity producer into a provider of secured capacity,” he said.

RWE said the Innogy IPO had put the company back on a “solid financial basis” and it will still have enough liquidity even after fully paying its €6.8bn contribution to a special fund being created this year by the German government to cover the cost of disposing and storing Germany’s nuclear waste. It said its net debt had declined by €2.8bn to €22.7bn.

RWE also declined to comment on a report by Bloomberg yesterday that Engie, the former French gas monopoly, was eyeing a bid for Innogy. It said only that it could “in principle sell Innogy shares and thereby reduce its stake to 51 per cent”.

Copyright The Financial Times Limited 2017. All rights reserved.
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