German utility RWE AG (RWEOY) Thursday said it would be virtually impossible to maintain its earnings level after 2013, amid the difficult outlook for conventional electricity generation.
On the occasion of the company's annual general meeting RWE chairman Peter Terium said prices for one megawatt hour of base load electricity for 2014 and 2015 delivery contracts are currently quoting at about 39 euros. A year ago, the price was 12 euros higher.
He said the firm's extensive investments in renewables are increasingly paying off, even if it has taken longer than planned.
The utility backed its outlook of 2013 EBITDA in the order of 9 billion euros, slightly short of the figure for 2012.
While the difference is likely to be greater in the case of operating result, recurrent net income is expected to be largely unchanged, the firm said.
Noting that by 2050, the proportion of electricity generated by renewables is meant to reach 80 percent, RWE said it is helping to restructure the energy system.
Terium said the share of the company's electricity generation capacity represented by renewables increased to 8 percent. ''Renewables have thus overtaken nuclear energy, and our gas-fired power stations now represent the largest share of our generation capacity, at 30%,'' he said.
RWE's net debt has grown from 18 billion euros since 2008 to 33 billion euros today while cash flow has remained largely the same since 2009. According to the company, one reason is that the power station investments in particular are not currently producing the expected yields. Another driver of the debt situation was provisions for pensions.
''RWE's net debt is therefore three-and-a-half times as high as our EBITDA. We are therefore failing to keep to our self-imposed target of a maximum leverage factor of 3, but we will continue to stick to this goal,'' Terium said.
Considering the debt burden, the firm will scale back investments. After investing 16 billion euros in the past three years, RWE's investment this year and in the next two years will be around 13 billion euros. From 2015, the firm's investments will range between 3 billion euros and 4 billion euros a year.
RWE Innogy will invest 1 billion euros in 2013, followed by another 500 million euros in each of the next two years. The focus will be on new wind farms, on land and at sea.
The company plans to invest about 1.9 billion euros in expansion, maintenance and servicing between 2013 and 2015.
The company is looking at options to disposing of its shares in RWE Dea, which needs billions to continue its strong growth.
The stock is currently losing 1.04 percent at 28.93 euros.
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