German utility RWE AG (RWEOY.PK) said that it will be virtually impossible to maintain the current earnings level after 2013, citing difficult outlook for conventional electricity generation.
The company still expects its 2013 EBITDA to be in the order of 9 billion euros, which would fall slightly short of the figure for 2012. The company said that the difference is likely to be somewhat greater in the case of its operating result. However, recurrent net income will be largely unchanged.
In March 2013, the company said it expected 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. The company had 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 today said it is still planning to pay out dividends representing 50 to 60 per cent of its recurrent net income.
At the Annual General Meeting, Peter Terium, Chairman of the Executive Board, said that the company's investments in renewables are increasingly paying off, even if it has taken longer than first planned. At the same time, the company's grid and sales activities will ensure the basis for a respectable level of earnings.
Peter Terium noted that prices for one megawatt hour of base load electricity for 2014 and 2015 delivery contracts are currently quoting at about 39 euros. However, the price was about 12 euros higher than this per megawatt hour a year ago.
Terium said that the company had originally budgeted for up to 7 billion euros by the end of 2013. However, the company no longer considers this realistic. In the process of implementing this programme it has become clear that it cannot obtain an appropriate price for some of the activities that it is seeking to sell.
Peter Terium stated that after investing 16 billion euros in the past three years, the company's investment this year and in the next two years will total about 13 billion euros. From 2015, the company's investments will range between 3 billion euros and 4 billion euros a year.
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