Development of the results in 2009 overall robust / Economic crisis affects sales, revenue and consolidated profit

Karlsruhe. EnBW Energie Baden-Württemberg AG was able to achieve an overall robust result in the financial year 2009, which in part was characterized considerably by the general economic crisis. For example, electricity sales by EnBW fell as a result of the reduction in production among the industrial customers, due to the economic situation, by a total of 8.3 percent to 119.7 billion kilowatt hours. Gas sales in the reporting year also remained below the previous year's figure at 65.8 billion kilowatt hours compared to the previous year's 69.8 billion kilowatt hours (-5.7 percent). After gas sales increased slightly in the first quarter of 2009 due to the cold winter, the level of sales could not be maintained over the remainder of the year. The reasons for this were also the effects of the overall economic development and higher temperatures toward the end of 2009. The intensification of the competition in the gas segment and, connected with this, a noticeably increasing diversification of gas purchases by large customers also contributed to this.

As a result of the reduction in sales, revenue also fell in the reporting year by a total of 4.5 percent to Euro 15,564.2 million. Revenue developed negatively in both business segments Electricity and Gas. By contrast, EnBW was able to increase revenues in the Energy and Environmental Services segment by 5.0 percent. With a proportion of 79.6 percent, the Electricity segment remains the most important business segment of EnBW in terms of revenue, followed by the Gas segment with a proportion of 15.8 percent of revenue and Energy and Environmental Services with 4.6 percent.

Positive counter measures lead to constant adjusted EBIT

However, EnBW was able to counter against this fall in sales and revenue, mainly caused by the economic situation, successfully on the results side. Consequently, it achieved an operating profit before income taxes, financial and investment results (adjusted EBIT) of Euro 1,793.9 million, and thus was able to validate its result in the previous year.

The respective adjusted EBIT did not develop uniformly within the individual segments. The generation margin was improved in the Electricity segment, for example, through forward contracts concluded in previous years, through income from derivatives and through higher income from the provision of regulating energy, resulting in an increase in the adjusted EBIT by a total of 5.1 percent. Charges, for example from the remarketing of electricity to industrial and distribution customers that was not sold due to the economic situation, from the infeed of wind energy, increased costs for system losses, higher costs for the network connection for offshore wind farms and from higher German Renewable Energy Act purchasing costs in sales, were offset. In the Gas segment, the adjusted EBIT fell by 21.1 percent, inter alia due to the fall in sales. Adjusted EBIT in the Energy and Environmental Services segment decreased by 13.9 percent.

The neutral EBIT improved significantly at a group level from -325.7 million Euros to 95.4 million Euros. In the reporting year, higher profits from the release of provisions were able to overcompensate for debts from the depreciation of inventories and other short-term intangible assets or adjustments in the power field at a sum of 116.5 million. This depreciation was undertaken as a preventative measure after knowledge was gained in the reporting year that contractual agreements may not be fulfilled. At present, all aspects connected with these contracts are being checked.

"The economic crisis resulted in additional charges on the operating results of Euro 166 million. The fact that we were able to achieve results similar to last year's, however, is the consequence of the operating strengths of EnBW, and also shows that as a company we have been able to take counter measures successfully, wherever possible. As a result of the considerable improvement in our generation margin in particular, we were able to compensate for the negative developments and achieve an overall satisfactory annual result," explains Hans-Peter Villis, Chairman of the Board of Management of EnBW.

The adjusted consolidated profit, based on the capital gains of the shareholders of EnBW AG, fell compared to the previous year by Euro 219.7 million to Euro 879.1 million. The reasons for this were, above all, an only slightly increased investment result of Euro 221.2 million (+1.8 percent compared to the previous year) and a financial result that was Euro 285.8 million worse, resulting from higher interest expenditure due to the capital expenditure programme of EnBW and lower results from the sale and valuation of securities.

Capital expenditure at record level of Euro 4,374.1 million

With Euro 4,374.1 million, the total capital expenditure by EnBW reached a record level and was Euro 2,969.9 million higher than in the previous year. Euro 3,064.7 million of this total was for financial investments. The main positions here were the purchase of the 26 percent stake in EWE Aktiengesellschaft, the purchase of shares in the Lippendorf and Bexbach power stations, the joint venture with Borusan Holding and the associated construction of a wind farm in Turkey and the purchase of onshore wind farms in Germany.

Euro 1,309.4 million of the total capital expenditure was made on intangible assets and property, plant and equipment. Of this, Euro 1,006.4 million was spent in the Electricity segment. Significant projects here include the construction of the anthracite power station RDK 8 in Karlsruhe, the new construction of the hydroelectric power station Rheinfelden, offshore wind farms and restructuring measures and capacity expansions in the high-voltage networks. The focus of the activities in the Gas segment was on the continuing construction of the Etzel gas reservoir. The focus of the capital expenditure in the Energy and Environmental Services segment was the construction of an alternative fuel power station in Eisenhüttenstadt.

Disinvestments in 2009 totalled Euro 204.4 million, and were due, inter alia, to the sale of the Gegenbauer holding.

Generation portfolio optimized

Hans-Peter Villis, Chairman of the Board of Management of EnBW: "The capital expenditure will pay for itself. Our power station capacities purchased in 2009 are an important component on the path to optimizing our generation mix and to closing our generation shortfalls. This is strategically important for EnBW and we are continuing on this path in 2010 on the basis of our solid financial and asset situation. That the rating agencies have confidence in our strategy and have confirmed our A rating is particularly pleasing."

"At the start of 2010, EnBW again increased its power station output, so that within a few months we were able to increase our available power station capacity in Germany by around 2000 megawatts. Renewable energies, which we will expand successively over the coming years, are also important to us here. For example, wind power has a permanent place in the EnBW energy mix alongside traditional hydropower. In 2009, we were able to increase our wind power capacity significantly in the onshore sector and in the next few weeks we will increase this further from 28 megawatts to 133 megawatts. The next step is expected to follow this year, with the commissioning of the first commercial offshore wind farm in the German Baltic Sea," explains Dr. Hans-Josef Zimmer, EnBW's Chief Technical Officer.

Solid financial and asset situation forms the basis of further growth

For 2010 to 2012, EnBW is planning capital expenditure totalling Euro 7.9 billion. Of this amount, Euro 1.5 billion is planned for the further expansion of conventional generation and the same amount of Euro 1.5 billion for expanding renewable energies. Euro 1.6 billion is planned for expanding the midstream gas business and for other growth projects in Germany, and 1.0 billion is estimated for abroad. The Energy Services division and the contracting business should be strengthened with Euro 0.4 billion, while Euro 2.0 billion is planned for investments in maintaining and optimizing the existing business.

In 2009, cash flow from operating activities increased by 60.3 percent compared to the previous year to Euro 2,443.4 million. This is due to the assets and debts from operations falling by 212.7 million in the reporting year. This change mainly results from hedging payments for forward transactions, which in 2008 led to a charge on the cash flow from operating activities.

Net debt increased to Euro 9,172.0 million as a result of the implementation of the capital expenditure programme. At the end of 2009, the equity ratio was 18.5 percent, representing an increase of 1.4 percentage points compared to the corresponding value for the previous year.

As part of the growth investments, EnBW has also increased its workforce. At the end of 2009, EnBW employed a total of 21,124 people (excluding apprentices), which is 623 people or 3.0 percent more than at the end of 2008. 70.6 percent of these employees work in Baden-Württemberg, 25.3 percent in the rest of the country and 4.1 percent are employed abroad.