EnBW sees slight improvement in revenue and earnings

Karlsruhe. The incipient overall economic recovery and the related increase in energy demand seen so far in 2010 generally had a positive impact on the results for the first six months of the year of EnBW Energie Baden-Württemberg AG. For example, EnBW’s unit sales of electricity increased by 28.5% on the comparable prior-year figure to 74.4 billion kilowatt-hours. This development was characterised by unit sales of electricity in the trading function rising significantly to 39.5 billion kilowatt-hours, an increase of 85%. This leap in sales is due, among other things, to the generation capacities EnBW acquired at the beginning of the year. Over the last few months, EnBW had acquired from E.ON stakes in and electricity procurement rights from Rostock, Lippendorf, Bexbach and Buschhaus power stations as part of a swap of electricity capacities in Germany and had purchased onshore wind farms in Germany.

EnBW’s unit sales of gas fell by 12.2% to 32.5 billion kilowatt-hours after the sale of GESO Beteiligungs- und Beratungs-AG and on account of the intense competition on the gas market. The positive development of unit sales in the electricity sector boosted group revenue in the first half of 2010 to € 8,951.4 million. This corresponds to an increase on the comparable prior-year period of 9.5%.

EnBW’s earnings in the first half of 2010 were essentially characterised by extraordinary effects such as the disposal of GESO Beteiligungs- und Beratungs-AG and EnBW’s claim for compensation for the premature termination of a long-term electricity supply agreement. After eliminating these special effects, adjusted EBIT generated in the first six months of this year came to € 1,158.6 million.

Adjusted EBIT in the electricity generation and trading segment dropped by 1.2% to € 910.2 million. One of the reasons for this drop was GKN 1 nuclear power plant operating at reduced capacity. The additional expenses seen a year ago due to having to resell quantities of electricity that remained unsold on account of the economic situation were not incurred again in the first half of 2010. This had a positive impact on the results of operations in the electricity generation and trading segment. EnBW saw an improvement in its adjusted EBIT in the electricity grid and sales segment. After the € 59.8 million seen in the first half of 2009, EnBW now generated € 162.4 million in the first six months of the current fiscal year 2010. This is attributable to higher network user charges on account of higher revenue caps being approved, increased quantities of electricity being transmitted and lower expenses being incurred for energy needed to cover grid losses. On account of fiercer competition, adjusted EBIT in the gas segment came to € 106.1 million, a decline of 6.4% on the comparable prior-year period. In the energy and environmental services segment, adjusted EBIT rose by 23.4% to € 58.6 million.

In the reporting period, adjusted group net profit in terms of the profit shares attributable to the equity holders of EnBW increased by 9.3% on the prior-year period, and now comes to € 696.5 million. Group net profit, which also includes extraordinary effects, increased to € 899.0 million. The divestiture of GESO Beteiligungs- und Beratungs-AG and its subsidiaries played a major role in this respect.

Hans-Peter Villis, CEO of EnBW: “On the whole, developments in the first half of the year were rather mixed. After the economically challenging year 2009, our operating result developed positively and slightly exceeded expectations in the first half of 2010. On the other hand, energy policy gave rise to potentially considerable risks for the future. The tax proposed by the federal government on fuel rods in nuclear power plants from 1 January 2011 would cost EnBW somewhere between around € 500 million and € 700 million a year based on the information currently available. This could lead to a situation where viable operation of nuclear facilities might be jeopardised. However, we are currently working on the assumption that a basis acceptable to the energy industry as a whole will be found within the framework of a comprehensive energy concept and an adequate extension of the working lives of nuclear power plants. We consider a one-sided financial burden imposed on the operators of nuclear facilities without a considerable extension of their working lives to be questionable.”

EnBW invested a total of € 932.6 million in the first half of 2010. Significant investment projects include the construction of Rheinfelden hydro-electric power station, the construction of and preparatory work for offshore wind farms off the German cost of the North Sea and the Baltic Sea, the construction of RDK 8 hard coal power station in Karlsruhe, the ongoing investments in modernisation and expansion of EnBW’s grids and the construction of a substitute fuel power plant in Eisenhüttenstadt. As part of its growth strategy, EnBW intends to make sustainable net investments of € 5.1 billion by 2012, primarily in Germany.