Energie Baden-Wuerttemberg AG wrote down about 1.2 billion euros ($1.6 billion) on its power plants as Germany’s third-largest electricity supplier doesn’t expect wholesale prices to recover.
Provisions for anticipated losses on power-purchase agreements will be increased by about 300 million euros, the Karlsruhe, Germany-based utility said today in a statement. The extraordinary charges won’t affect adjusted earnings before interest, taxes, depreciation and amortization, which EnBW sees sliding as much as 5 percent. Neither will they affect cash, nor dividend.
“An improvement of the market situation is not to be expected in the medium term,” the company known as EnBW said in the statement. “The electricity price level will continue to be low over the next few years, which will significantly lower the potential future earnings from EnBW’s generation capacity, specifically from coal-fired power stations.”
EnBW is a victim of German plans to expand wind and solar power and shut atomic plants. A surge in renewable energy, which gets preferential access to the grid and accounts for 24 percent of generation, has curbed electricity prices already weakened by recession in European economies. EnBW, which had relied on nuclear reactors for more than half its output, lost two of its four plants in a first wave of shutdowns.
Larger competitor RWE AG announced impairments of 4.7 billion euros for 2013.