The Essen, Germany-based utility dropped by as much as 4.3 percent, the most since Aug. 14, and traded down 2.4 percent at 24.46 euros by 10:02 a.m. in Frankfurt. More than three-quarters of the three-month daily average shares had already been traded.
The payout ratio will probably be cut from 50 percent to 60 percent of recurrent net income by as soon as the 2013 dividend, Handelsblatt said today without giving the new level. Citigroup Inc. analysts, who downgraded RWE to sell from neutral, also said they expect a dividend cut from next year.
RWE spokeswoman Annett Urbaczka declined to comment.
“We do not view the shares as supported by fundamentals,” Sofia Savvantidou and Andrew Simms said in a Citigroup note, citing oversupply in Germany, putting pressure on power prices, and energy policy discussions that may only go ahead next year. A 2013 dividend cut “would be taken poorly by the market.”
The probability of raising more capital will expand “exponentially” after the summer of 2014, they said.
RWE’s 2013 earnings guidance, confirmed Aug. 14, is for a 2.4 billion-euro ($3.2 billion) recurrent net income, after a first-half figure of 1.99 billion euros. RWE, which paid 2 euros a share for last year, has 575.7 million shares outstanding.
A cut in the ratio “would be very unwelcome by municipal shareholders,” Chris Rogers, a Bloomberg Industries analyst, said from London. “The amount of cash you save by lowering the ratio by 10 points doesn’t necessarily move the needle.”
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