May 14 (Bloomberg) -- RWE AG, Germany’s largest power producer, said first-quarter profit fell 36 percent after a mild winter cut demand for electricity and prices dropped.
Recurrent net income, used to calculate the dividend, slid to 838 million euros ($1.15 billion) from 1.3 billion euros a year earlier, the Essen, Germany-based company said today in a statement. That missed the 873.4 million-euro average of nine estimates compiled by Bloomberg. It was the fourth straight quarterly miss, Bloomberg Industries said. Sales declined 8.6 percent to 14.7 billion euros.
RWE cut its annual recurrent net income target to 1.2 to 1.4 billion euros, from 1.3 to 1.5 billion euros, after agreeing the sale of its Dea gas and oil unit to L1 Energy for about 5.1 billion euros. That’s a confirmation of the outlook on a like-for-like basis, RWE said in a presentation to investors.
“I assume that the dividend for this year will remain at 1 euro,” said Ingo Becker, an analyst at Kepler Cheuvreux. “In case of further asset disposals, that is doubtful.”
RWE fell 2.2 percent, the most in almost a month, to close at 27.02 euros in Frankfurt, paring the year’s gain to 1.6 percent. It was the biggest decline in the benchmark DAX index.
“The first quarter reflected the difficult environment in the energy sector,” Chief Executive Officer Peter Terium said in the statement. “We passed a major milestone en route to selling RWE Dea with the signing of the sale agreement.” The utility expects to close the deal toward the end of the year, Chief Financial Officer Bernhard Guenther said today on a call.
RWE and larger competitor EON SE have been reducing capital spending and selling assets to cut costs as German Chancellor Angela Merkel’s shift toward renewables and away from nuclear led to a surge in wind and solar generation and lower prices. Slow European economic growth had already weakened demand.
EON yesterday reported a 13 percent decline in profit in the first quarter of the year.
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