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EnBW CEO Mastiaux: “We will achieve our targets for 2020 and are already setting the course for the long-term future today”

Progress in restructuring efforts despite a difficult 2016 / Turning point in terms of earnings in 2017 as an ambitious goal / New fields of growth identified in the area of critical infrastructure
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Karlsruhe. Despite a very difficult year 2016, EnBW was able to make further progress in its restructuring efforts. EnBW CEO Frank Mastiaux drew this positive interim conclusion at half way stage of the EnBW 2020 strategy during today's Annual General Meeting in front of around 2,000 shareholders: “We were confronted with extreme financial burdens in 2016 due to very low electricity prices and the heavy burden of one-off extraordinary items in the area of nuclear power. Despite these great challenges, we remain on course with our restructuring efforts. We have set ourselves the goal of at least stopping the fall in earnings in the current year – with the ambition of reaching the turning point in terms of earnings in 2017. And we are confident of achieving our restructuring and earnings targets for 2020. Therefore, we are already setting the course for the further development of the company after 2020.”

Restructuring of the portfolio on course

EnBW’s success in restructuring the portfolio can be seen most clearly in the expansion of wind energy: Following on from two wind farms in the Baltic Sea “EnBW Baltic 1” and “EnBW Baltic 2”, we progressed our third major project in the offshore sector – the “Hohe See” wind farm in the North Sea. Two other major wind projects “He Dreiht ”and “Albatros” have been succesfully initiated. Mastiaux: “We were successful against extremely strong competition in the middle of April and had our bid accepted for the 900 megawatt wind farm 'He Dreiht' in the North Sea. It is one of the world's first offshore wind farms that doesn't require funding and thus represents a milestone in the expansion of German offshore wind energy. At its meeting yesterday, the Supervisory Board of EnBW also made the final construction and investment decision for 'Albatros'.” “Albatros” (112 megawatts) will now be constructed together with the already approved offshore wind farm “Hohe See” (497 megawatts). The progress with the expansion of onshore wind power is also very encouraging. “We had a capacity of 336 megawatts in operation by the end of 2016 and have gained approval for the construction of a further 205 megawatts this year. On average, we will place more than one turbine per week into operation in 2017”, continued Mastiaux. These activities mean that EnBW has now become one of the top three developers and operators of onshore wind farms in Germany.

Another important part of the restructuring of EnBW is the optimisation of conventional generation and the dismantling of the nuclear power plants. All five nuclear power plants operated by EnBW are already at different stages of the dismantling process and uneconomical conventional generation is also being gradually reduced. A total of 1,617 megawatts of conventional generation capacity has been transferred to reserve power plant operation or registered for decommissioning since 2014, while a further 880 megawatts of coal-fired power plants have been sold.

In the Sales segment, our competitiveness has been improved further over the last two years and our market position strenghtened through a new generation of products. This includes, for example, the successful launch of EnBW solar+, a combination of photovoltaic panels and battery storage system linked via smart IT for private household, and the large-scale installation of a charging infrastructure for electromobility. EnBW will be able to provide quick and convenient charging at 119 locations from the Ruhr region to the Swiss border by the end of the year.

Investment of almost half a billion euros has been made in the distribution grid to integrate further decentralised power generation into the supply system, whilst the security of supply has been improved using intelligent technology. In addition, customers can now easily order online a connection to their home or a transformer.

Earnings in 2016 impacted by the KFK decision despite strong operational results

“All our activities are focused on delivering our EnBW 2020 strategy”, emphasised Mastiaux. “Resolute implementation of the strategy and good operating performance have had a strong positive impact on our financial results. Yet the difficult market conditions and above all the implementation of the financing of the phase-out of nuclear power have unfortunately taken their toll on our financial figures.” Although EnBW was able to achieve an operating result of 1.94 billion euros as planned in the 2016 financial year, the implementation of the legislative package for reorganising responsibility for nuclear waste management resulted, however, in a Group net loss attributable to the shareholders of EnBW AG of 1.8 billion euros.

In order to nevertheless make further investments and thus ensure the growth of the company despite difficult market conditions, EnBW will continue to operate with a high level of financial discipline. Therefore, sustainable savings of 1.4 billion euros will be achieved through efficiency measures up to 2020. Furthermore, the Board of Management, wider leadership and the general workforce have also agreed to forgo around 6.3 percent of their salaries over the coming years. At the same time, no dividends will be distributed for the 2016 financial year.

The “Energiewende” is entering a new phase – this we are expanding the strategy for the post 2020 period

Frank Mastiaux: “It is our belief that the Energiewende is now entering a new phase that will bring with it further radical changes. We believe there will be other drivers of the Energiewende than the energy policy and regulatory ones primarily seen up to now – namely market forces, leapfrogging technology and new and strong competitors. Customers with high expectations and new digital business models will challenge market players. The ‘Energiewende Part 2’ will pose totally new challenges for market participants.” Electrification and digitization will increasingly shape industrial development and change the behaviour of customers. As a result, energy and infrastructure issues will converge, as can already be clearly seen today via the example of electromobility.

New business opportunities in the area of critical infrastructure

Against this backdrop, renewable energies, transmission networks and distribution grids will remain key areas of focus for the future energy system beyond 2020 and thus also for the business of EnBW. At the same time, infrastructure aspects will become increasingly important. EnBW will be resolutely engaged in this area in the future – even beyond the energy sector. In the next ten years alone, the infrastructure market will grow by around 50 percent to an investment volume of 150 billion euros in Germany – both within the energy system and also in adjacent sectors. EnBW has core expertise in the efficient set up, professional management and safe operation of complex infrastructure systems. “We will identify those areas of the infrastructure market in which we can utilise our core industrial expertise”, said Mastiaux. “With our know-how in the construction and operation of critical infrastructure, we will play a role in this growth market. And we are already laying the foundations for achieving this goal.”

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EnBW Energie Baden-Württemberg AG
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76131 Karlsruhe
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