RWE Writes Down $4.5 Billion as Power-Plant Earnings Drop
About 2.9 billion euros of the amount is attributable to the “continued deterioration” of earnings from fossil-fueled power stations, the Essen-based company said today in an e-mailed statement. Renewable-energy plants contributed to the remainder of the impairments, it said.
“Throughout Europe, gas- and hard-coal-fired power stations in particular are under substantial economic pressure,” Chief Executive Officer Peter Terium said. RWE is cutting costs at its plants to weather the slowdown, he said.
RWE and larger German competitor EON SE (EOAN) have seen profit margins squeezed by plunging power prices. Wholesale prices in Europe’s biggest economy have dropped by about a third since 2010 amid record wind and solar output and the weakest demand in four years. RWE wrote down 900 million euros in the third quarter of 2013 and vowed to close unprofitable output capacity.
“I had expected a slightly lower figure” for the latest impairments, Erkan Aycicek, an analyst at Landesbank Baden-Wuerttemberg, said today by telephone. “I assume RWE’s assets in the Netherlands are affected.”
The utility owns several coal, gas and biomass plants in the Netherlands, including the 1,245-megawatt Amer station.
RWE dropped as much as 2.1 percent to 26.485 euros in Frankfurt trading, a two-week low. The stock was at 26.885 euros as of 11:33 a.m. local time.
The company is due to report 2013 earnings on March 4. While the impairments will lower net income, they won’t affect earnings before interest, tax, depreciation and amorization, RWE said in the statement. They also won’t have an impact on operating results, recurrent net income or cash, it said.
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