RWE to scale back its asset sell-off plans

 
City A.M. Reporter
RWE, Germany’s second-biggest utility, plans to sell fewer assets after finding another €1bn (£834m) of cost cuts and raising its capital as it positions itself for a future without nuclear power in its home market.

The company, which owns British utility NPower, reported a 45 per cent drop in 2011 net profit yesterday.

It now plans to sell assets worth up to €7bn by the end of 2013, less than the previously targeted €11bn.

“The future looks much brighter than it did six months ago,” incoming chief executive Peter Terium said, adding he expects operating profit to remain flat this year and next as new power plant capacity and cost-cuts offset the impact of asset disposals.

Terium, who takes over as chief executive in July, is expected to lead a swift transformation of RWE to prepare for a phasing out of nuclear power in Germany by 2022, following Japan’s Fukushima disaster last year.

Shares of RWE rose to their highest level since early August in morning trading, rising 2.1 per cent before falling back to close down 0.1 per cent.

RWE, which has already sold €1.5bn worth of assets, now plans to keep its DEA oil and gas exploration unit, which accounted for almost 10 per cent of 2011 operating profit, but would sell stakes in some of its projects.

RWE’s earnings before interest, tax, depreciation and amortisation slipped 17.5 per cent to €8.4bn, hit by a drop in profits from power generation caused by the nuclear exit and a widening loss at its energy trading unit.

Its NPower unit reported a 34 per cent rise in operating profits to €357m (£313m), but it said gains in energy sales were hampered by costs related to energy saving programmes.