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RWE Profit Rises After Gazprom Arbitration Success

RWE First-Half Profit Rises After Gazprom Arbitration Success
A cooling tower emits vapor into the night sky at a nuclear power plant operated by RWE AG, in Emsland, Germany. Photographer: Krisztian Bocsi/Bloomberg

RWE AG, Germany’s second-largest utility, said first-half profit rose 19 percent after arbitration made gas supply contracts with Russia’s OAO Gazprom more favorable.

Recurrent net income, the measure used to calculate the dividend, climbed to 1.99 billion euros ($2.64 billion) from 1.67 billion euros a year earlier, the Essen-based company said today in a statement. That missed the 2.1 billion-euro average estimate of 12 analysts surveyed by Bloomberg. Sales advanced 5.2 percent to 28.5 billion euros.

While conventional power generation profit decreased because of low power prices, “RWE was able to offset these burdens thanks to the positive outcome of the arbitration proceedings with Gazprom,” the company said in the statement. It will take 3,100 megawatts of generation capacity offline in Germany and the Netherlands, it said.

RWE and larger competitor EON SE are cutting costs and selling assets after Chancellor Angela Merkel ordered the permanent halt of all nuclear reactors by 2022 following Japan’s Fukushima disaster. RWE said in March it would sell its Dea oil and gas unit to cut spending. The utility plans to raise as much as 5 billion euros through the sale, a person familiar with the matter said at the time.

The utility confirmed its full-year forecast for recurrent net income of 2.4 billion euros and operating profit of 5.9 billion euros, below last year’s level.

EON yesterday said profit fell 42 percent in the first half after divestments, reduced output and narrower margins on generation from fossil fuels.

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