RWE AG posts a 2.76-billion-euro full-year loss for 2013 due to decreasing power prices

RWE AG, which currently is the largest power generator in Germany, posted its first full-year loss since the Federal Republic of Germany was founded 65 years ago due to billion-euro writedowns as a consequence to the decreasing power prices.

The company wrote in its annual report, which was cited by Bloomberg: “The difficult earnings situation in conventional electricity generation in Europe is clearly reflected in RWE AGs financial results for fiscal 2013.” The difficult situation in the segment made both RWE and its competitor EON SE to close plants, do everything possible to reduce costs and dividends, as well as sell some of their assets.

As reported by the Financial Times, the company said in its report: “Declining margins, especially of gas-fired power stations, have already caused us to recognise considerable impairments. Should market conditions continue to deteriorate, we will be at risk of having to perform further writedowns.”

RWE AG announced in its statement that its net loss is estimated to 2.76 billion euros (3.8 billion dollars) on sales of 54.1 billion euros after a profit of 1.31 billion euros. As reported by Bloomberg, Mr. Peter Terium, who is the Chief Executive Officer of RWE AG, said in the annual report of the company: “Our power plants will earn even less in the coming years than we had feared. We had to take this into account.”

The 2012 income of the company was estimated to 1.3 billion euros. The decline is estimated to a loss of 4.49 euros a share. In comparison, the company posted earnings of 2.13 euros per share in 2012. RWE AG said that overall its earnings before interest, taxes, depreciation and amortization fell by 6% and reached 8.8 billion euros, while EBITDA for conventional power generation decreased from 4.4 billion euros in 2012, to 2.4 billion euros in 2013, which is an about 44% decline.

One of the analysts of Kepler Cheuvreux – Ingo Becker commented for Bloomberg: “The fact that RWE over-achieved its efficiency target for 2013 by 250 million euros did, however, not result in higher than expected earnings.”

RWE AG rose by 2.68% in Frankfurt by 12:34 GMT to trade at 29.13 euros, valuing the company at 17.55 billion euros.