EnBW pre-tax result in the first half year of 2003 impacted by "legacy burdens" in excess of EUR 1 billion

Karlsruhe. The half-year figures have confirmed and defined more closely the potential impact on earnings already presented in the ad-hoc announcement from July 3, 2003.
The result of the first half year of 2003 reflects substantial one-off burdens. In the energy and environmental services segment, the non-recurring effects related to impairment losses and risk provisions, primarily in the thermal disposal area amounting to EUR 283 million, and the discontinuing activities of the Salamander group amounting to EUR 195 million. The result in the core business segment electricity was impacted in particular by write downs of several investments on account of impairment tests (particularly Stadtwerke Düsseldorf AG with EUR 208 million), valuation allowances in the area of capital investments, expenses for personnel-related provisions and one-off selling expenses. These factors mainly stem from problem areas rooted in the past, so-called "legacy burdens" that now have to be reflected in the earnings or external reporting.

Prof. Dr. Utz Claassen, CEO of EnBW comments: "On the one hand, the negative influences on earnings stemming from 'legacy burdens' are largely of a non-recurring nature without a sustained effect on the core operating business, and to a large extent will not effect liquidity; on the other, the entire board of management agrees that in light of the current situation, 'sleeves need to be rolled up even higher' than previously planned."

The non-recurring burden on earnings before taxes in the first half year of 2003 comes to approx. EUR 1.1 billion. As things stand today, a further drain on earnings of nearly EUR 200 million is expected for the second half year. The interim financial statements will be on the agenda of the next meeting of the audit committee of the supervisory board at the end of August. The pre-tax result for the whole of 2003 is estimated at around minus EUR 1 billion.

Adjusted to eliminate one-off burdens on the EBITDA of some EUR 525 million, the half-year figures do, however, at the same time evidence a stable operating result in the core business segments electricity and gas. Adjusted for one-off effects, the EBITDA has risen by around 30 percent. The beginning of the second half year 2003 sees the start of extensive restructuring in the group. The TOP-FIT programme to cut costs and enhance profitability, that is to run until 2006, will also have a positive impact on earnings in the current business year.

"Our efforts must focus above all on closing the short-term 'earnings gap' of 2003 as quickly as possible by significantly improving the operative performance of the group and then, in the medium and long term, on the erection of a building with firm foundations of sustainable value enhancement, an adequate return on capital and highly competitive value added chains for our shareholders, our customers and our workforce", to cite Prof. Dr. Utz Claassen.