Karlsruhe. EnBW Energie Baden-Württemberg AG will continue on the road to growth in 2003, although the investments made in 2002 more or less completed the phase of more dynamic growth, said Gerhard Goll, CEO of EnBW, at this year's AGM in Karlsruhe, adding that 2003 will be a year of consolidation. He believes the company will achieve organic growth by attracting new customers, by exploiting synergy effects generated by the consolidation of the acquired companies, and by taking advantage of positive changes in the regulatory situation in the energy market environment. An efficiency improvement programme will be implemented with the aim of increasing the Group EBITDA to around Euro 700 million by the year 2006. As Gerhard Goll will be withdrawing from his office as CEO on April 30, 2003, this will have been the last time he outlined the business figures and goals of EnBW at the AGM. As of May 1, 2003 he will be succeeded as CEO by Prof. Dr. Utz Claassen.
Looking back on the past business year, Goll said that EnBW had made the biggest investments in the history of the company in 2002, with the takeover of Neckarwerke Stuttgart AG (NWS), the acquisition of Zementwerk Lauffen-Elektrizitätswerk Heilbronn AG (ZEAG), the purchase of a majority holding in Kraftwerke Laufenburg AG, and the acquisition of shares in Gasversorgung Süddeutschland GmbH (GVS) together with ENI. He described these investments as important: "The joint holding in Gasversorgung Süddeutschland together with our partner ENI, one of the leading players in the European gas sector, puts EnBW in an excellent position in this key business area. We will continue to expand our activities in this sector, both horizontally and vertically." The aim in the current business year is now to integrate these new companies and to forge links with existing business activities, said Goll. In his speech, Goll did not rule out further acquisitions, but he emphasised that such investments will only made to "round off" the operations of EnBW.
Now that Group has entered a phase of consolidation and integration, the rate of growth of EnBW's business will be less substantial than in past years. The key element of this consolidation strategy is the recently launched TOP FIT programme. The aim of this programme is to increase efficiency in all business areas and divisions by exploiting cost reduction potential and achieving long-term improvement in key cost ratios. The programme will extend far beyond cost reduction, however, and is also geared towards boosting income by adopting a margin-based pricing strategy and promoting growth of the EnBW brand assets, particularly in the case of Yello.
In his speech to shareholders, Goll outlined the figures for fiscal 2002 in detail. Sales revenues increased by a healthy 10.1 percent to Euro 8.66 billion. Group earnings before interest, tax, depreciation and amortisation (EBITDA) were up by Euro 451.4 million on the previous year to Euro 1.48 billion, equivalent to growth of 43.8 percent. Growth in EBIT was slightly lower (Euro 256.5 million to Euro 561.7 million), with EBT rising by Euro 110.5 million to Euro 406.6 million. These figures reflect the increase in depreciation and amortisation as well as higher financing costs. "The financial situation of EnBW is solid, and all the key financial ratios have improved since 2001", said Goll. This is also underlined by the excellent full-year "A" rating issued by the Standard & Poor's and Moody's agencies.
Goll said that business in the first quarter of 2003 had been in line with expectations. However, the changeover to the IAS accounting practices this year will probably result in lower listed profit than in 2002 due to the different balance sheet accounting methods.
The CEO of EnBW expects the continuing development of the German market towards a totally open market will generate positive stimuli for the organic growth of the company. "The plans of the government to set up a regulatory authority for electricity and gas on July 1, 2004 are a necessary and logical step towards putting an end to the failed 'self-regulation' experiment. This will finally signal a change in paradigm, away from the 'Association Agreement' and towards more market-friendly use-of-system regulations", said Goll. He also welcomed the plans of the German antitrust authorities to combat excessively high use-of-system fees. "A system of horizontal subsidies between network operation and sales activities is still practised in many parts of Germany. The antitrust authorities have decided to take measures to end this abuse of the system at the expense of the consumer, and EnBW will support them in these efforts." If the authorities continue to pursue this strategy, this will provide important stimuli for the energy market. With its Yello subsidiary, EnBW is well placed to take advantage of a dynamic market, and this is an area in which it has a major competitive edge over all its rivals.