RWE beats forecasts as it cuts costs

 
City A.M. Reporter
RWE, Europe’s fifth-largest utility beat profit forecasts in the first quarter by gaining market share in Germany and cutting costs in the UK.

Operating earnings in the three months through March were €2.8bn (£2.4bn), the Essen-based company said yesterday, compared with the €2.6bn average of 15 estimates from analysts.

Power prices in Germany, Europe’s largest electricity market, are down a quarter from their height in 2008, while RWE has been losing customers in the UK for three years in a row.

However, RWE said it had reduced customer bad debts in the UK during the period and increased power sales to industrial customers in Germany by 13 per cent in the quarter.

RWE reiterated that it expects operating profit to drop 20 per cent and recurrent net income to slump 30 per cent this year.

One of the biggest questions hanging over RWE is the future of its nuclear plants. German chancellor Angela Merkel reversed a decision to extend the life of nuclear plants after the massive earthquake and tsunami of 11 March hit Japanese nuclear stations. “Pending political decisions will reveal whether we will have to face additional burdens in 2011 and if so, to what extent,” the company said in a statement.