German utility RWE 2009 net income up nearly 40 percent to $4.9 billion

RWE 2009 net income up nearly 40 pct

FRANKFURT — German utility RWE AG said Thursday its 2009 net income improved by nearly 40 percent as newly acquired Dutch energy company Essent made its first contribution to earnings.

RWE, based in Essen, said it earned euro3.6 billion ($4.88 billion) in 2009 compared with euro2.6 billion in 2008. Full fourth quarter figures were not immediately available.

The company said, however, that group revenue fell 2.5 percent for the year to euro48 billion from euro49 billion in 2008 as energy demand fell in all markets.

Operating profit improved 4 percent to euro7.1 billion from euro6.8 billion in 2008, which the company said was ahead of its own guidance.

Essent, which has been consolidated since the fourth quarter, recorded euro1.4 billion in revenue and euro141 million to operating profit for the year. RWE announced early last year that it would buy Essent NV, in a deal valued near euro9.5 billion. The unit is largely focused on the Dutch and Belgian markets.

RWE said the slow economic recovery will have a limited positive effect on the company, as industrial energy use will not see a large increase in demand this year.

However, with the inclusion of Essent, the Netherlands’ largest power provider by customers, the company said operating profit and net income should increase by about 5 percent annually. The company had previously forecast a range between 5 and 10 percent.

RWE said it would therefore propose to lower its dividend more than 22 percent to euro3.50 from euro4.50 in 2008.

The news sent RWE shares about 2 percent lower to euro62.20 in Frankfurt morning trading.

Still, RWE said it planned to invest an average of euro7 billion per year through the end of 2013, especially for organic growth, a reduction of carbon dioxide emissions, and other projects.

“We expect that it will take several years for the European economy to return to the level seen in 2008,” Juergen Grossmann, the company’s chief executive, said in the report.

“Companies can only invest, create jobs and pay dividends if they have a firm grip on their core business. RWE has withstood the crisis and has even achieved slightly more than promised. We remain on course for growth. Energy supply is all about having a long-term business model. We think in terms of decades, not years,” Grossmann said.

The company said as a result of the downturn, demand for energy declined in all markets.

Overall electricity sales declined by 11 percent to 283 billion kilowatt hours, while in Germany sales increased 7 percent as the company acquired new customers. Total generated and procured electricity for the year totaled 300 billion kilowatt hours.

RWE said gas sales were slightly above last year’s levels at 332 billion kilowatt hours, thanks to the inclusion of Essent. The company said without Essent’s contribution, overall gas sales would have been 7 percent below 2008 levels.

In other markets, RWE said U.K. energy revenue and earnings fell for the year, while central and eastern Europe reported essentially stable revenue and an increase in earnings. Declining sales in the Czech Republic and Hungary were offset by efficiencies there and better sales in Poland, for example.

On the Net:

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