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RWE FY12 Profit Falls, Backs Weak Outlook; Plans To Sell Stake In RWE Dea Unit

German utility RWE AG (RWEOY.PK) reported Tuesday a decline in fiscal 2012 net profit, while recurrent income was almost flat. EBITDA, a key earnings metric, increased on the absence of last year's exceptional burdens due to phasing out of nuclear energy in Germany, as well as higher revenues. However, sales volume was down from the prior year.

Further, RWE's Board proposed an unchanged dividend of 2 euros per share, and backed its fiscal 2013 profit forecast, which is lower than previous year.

RWE said it is considering disposing off of all of its shares in RWE Dea AG, as its Executive Board decided to withdraw from the exploration and production of crude oil and natural gas. The company noted that the planned disposal would be in line with its strategic repositioning, and would also take considerable pressure off future capital expenditure. The company will announce further important developments in due course.

In the year 2012, the company's earnings before interest, tax, depreciation and amortization or EBITDA grew 10 percent to 9.31 billion euros, and operating result improved 10.4 percent to 6.42 billion euros - both higher than its forecast.

Chief Executive Officer Peter Terium noted that the company also benefited from strong earnings contributions from its efficiency program and successful trading activities.

Meanwhile, the company's shareholders' share in net income fell 27.7 percent to 1.31 billion euros and earnings per share plunged 36.4 percent to 2.13 euros.

Recurrent net income edged down 0.9 percent to 2.46 billion euros, while recurrent net income per share fell 13 percent to 4 euros.

Revenues, however, increased 3 percent to 53.23 billion euros from 51.69 billion euros last year.

In the year, RWE's electricity generation rose 10 percent to 227.1 billion kilowatt hours or kWh, benefited by the new twin-unit lignite-fired power station in Germany, and higher electricity generation from hard coal, among others.

The Netherlands and UK saw an improvement in the capacity utilisation of hard coal-fired power stations, while capacity utilisation at gas-fired power stations in the Netherlands in general is weak. The company's electricity generation from renewables increased 41 percent.

Meanwhile, the external electricity sales volume fell 5.7 percent to 277.8 billion kWh and external gas supply dropped 4.8 percent to 306.8 billion kWh, despite cooler weather conditions. The decline was mainly due to competition-induced customer losses and negative economic effects.

Looking ahead, RWE confirmed its fiscal 2013 forecast, expecting an operating result in the order of 5.9 billion euros. EBITDA would be around 9 billion euros, and recurrent net income at approximately 2.4 billion euros.

The company expects that the gas price review with Gazprom, and a substantial earnings contribution from efficiency enhancement measures will help mitigate earnings shortfalls in conventional generation.

RWE expects its operating result to decline significantly After 2013, in view of the structural changes in the European energy market and their effects on the company's earnings prospects.

On Frankfurt's Xetra, RWE shares closed Monday's trading at 28.68 euros, up 0.04 euros or 0.14 percent.

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by RTT Staff Writer

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