Close Customer Links and Growth through Partnerships as the Model of Success for the Future

Karlsruhe. In 2002 EnBW Energie Baden-Württemberg AG is also relying on its partnership concept to secure its competitiveness and viability for the future. This was emphasised by Gerhard Goll, Chairman of the Board of EnBW, at the 2002 General Shareholders Meeting on Tuesday in Karlsruhe. “Partnership is one of the key factors in expanding market share. Going it alone in the energy business is a thing of the past.”

EnBW has already been successful with its partnership concept over the last few years. This can also be seen from the performance figures of last year. It was possible to successfully combine the twin objectives of growth and consolidation. The end of year figures for the group bore out the corporate strategy. Targets were even significantly surpassed in some sectors. The EnBW group did not just grow through acquisitions but also by winning new customers and opening up new markets. “Close links to customers and growth in partnerships – this is the model of success for EnBW and we will continue to pursue this policy systematically in the future “, explained Goll.

So last year EnBW deliberately opted for a strategic partnership with EDF. Since February 2001 the largest electricity supplier in Europe has had a total stake of 34.5 % in EnBW. The strength of the partnership with EDF is that on the one hand EnBW is responsible on its own and as a group for its management functions and on the other hand is ready to take over certain responsibilities for the entire EDF group. According to the experience gained during the first year EnBW can describe the co-operation with EDF as exceptionally successful as it has been mutually beneficial to the two partners. Some of EnBW’s successes would not have been possible without EDF. The partnership with EDF will be further developed strategically. The development of the co-operation will provide even more stability and reliability as well as further strengthening the competitiveness of EnBW in the European market.

According to Gerhard Goll the most important event in 2001 was the development of the partnership with NWS Neckarwerke Stuttgart AG. NWS is a good example of the network set up by EnBW within Baden-Württemberg and is growing all the time. NWS has an important gas business and an even more important water business but is also the leading electricity company in the densely populated central Neckar region.

The 29.9% stake in Stadtwerke Düsseldorf AG and the setting up of the joint subsidiary ENRW GmbH are also in line with EnBW’s strategic direction to give priority to co-operative partnerships. The agreed partnership concept expressly provides for a further strengthening and development of Stadtwerke Düsseldorf as an independent company. The joint subsidiary company will in the future take over the support and servicing of corporate clients and in addition develop new products and services for the energy market.

Not content with this, EnBW has managed to gain a foothold in the attractive Spanish growth market by taking a stake in the fourth largest Spanish company, Hidrocantábrico. Together with the other shareholders, EDP and Cajastur/Caser, EnBW will take over the management of Hidrocantábrico. Goll emphasised that he was happy with the new ownership team of Hidrocantábrico.
Goll referred to the involvement of EnBW in Switzerland. The exchange of a 24.5% stake in Watt AG with a 100 % stake in Lonza Energie was proceeding according to plan. With the new name EnAlpin AG it would become the Swiss branch. In this way EnBW would be the only foreign concern with a 100% subsidiary in Switzerland active in both the generation sector and the transport and distribution sectors. The take-over also gives EnBW the chance to expand its involvement in hydroelectric power and to gain a foothold in the Swiss energy market which is in the process of opening up.

Goll emphasised that the various partnerships and stakes in other companies had the common aim to win more and more new customers permanently through convincing performance and fair prices. EnBW will continue with this successful strategy. In this connection special note should be taken this year of the expansion of the energy network in the gas sector. The already contractually agreed partnership with the Italian ENI offers EnBW the chance to take a strong position in the gas market with its tough conditions. EnBW needs “operational core businesses” in order to develop its gas business. Therefore high-performance and experienced partners such as ENI are important. Goll said that he was optimistic about the prospects of EnBW taking over the majority at Gasversorgung Süddeutschland GmbH (GVS) together with ENI. In EnBW’s overall gas concept, an important role has been given to GVS in the development of the German gas market. “GVS should become the nucleus of joint gas business operations by EnBW and ENI in Germany”, said Goll.

Despite a difficult overall economic situation, the economic situation of EnBW is very promising. Goll referred to strong growth in turnover and earnings. The turnover of the EnBW group without electricity tax increased by 34.9% to 7.9 billion euros. The annual surplus for the group rose by 51.5 % to 272 million euros. The result for normal business activity improved by 22.8% to 306.5 million euros. In this way EnBW was able to successfully continue growing in the fourth year of the liberalised energy market.

EnBW also showed growth in its core business of electricity in all customer areas. Total electricity turnover after deduction of the electricity tax increased by a billion euros or by 25.6% to 5.23 billion euros. Gas turnover more than doubled from 316 to 689 million euros as the result of the full consolidation of NWS. In total the energy turnover of the EnBW group grew by 1.5 billion euros or by 32.8% from 4.6 to six billion euros.

Goll found it especially encouraging that internationally reputable rating agencies had given EnBW excellent ratings. The rating agency Standard & Poor‘s had rated EnBW with a long-term A+. The respected rating agency Moody’s rated EnBW AG with a long-term A2. Both rating agencies were therefore impressed with EnBW’s strong position in the energy market with a “stable outlook” for the future development of the concern. Goll explained that in the future EnBW would also strive to maintain the excellent classifications of the rating agencies.