RWE Said to Plan 3,400 Job Cuts at Its Generation Unit

RWE AG, the biggest producer of electricity in Germany, plans to cut 3,400 of about 18,000 jobs at its Generation SE unit by 2018 as margins for its conventional power plants dwindle, said a person briefed on the matter.

About 2,300 positions will be eliminated in Germany, while 900 people will lose their jobs in the U.K. and 200 in the Netherlands, said the person, who asked not to be identified before the plan is made public. Annett Urbaczka, a spokeswoman at Essen-based RWE, confirmed that staff at the Generation SE unit will be reduced, while declining to provide a number.

Weak European electricity demand and increased output of alternative energy is squeezing margins at traditional gas and coal-fired plants. RWE said in August it will shut 3,100 megawatts of capacity in Germany and the Netherlands, about 7 percent of its total in northern Europe, after operating profit from conventional power generation fell 62 percent in the first six months of the year.

RWE’s supervisory board agreed on the job reductions when it met to discuss future strategy in Warsaw this past week, the person said. The company two days ago said it will cut dividend payments in half next year as it contends with a government-imposed shift to renewable energy in Germany.

The Generation unit’s NEO cost savings program will be increased to more than the previously announced 500 million euros ($676 million), the person said, declining to elaborate.

RWE doesn’t plan to sell new shares, the person said.