Skip to main content

UPDATE 2-RWE gas trading improves, sees boost from Gazprom deal

Reduced losses at its gas trading business helped RWE to post a smaller-than-expected fall in quarterly earnings and Germany's No.2 utility predicted "significant" benefits from a new deal with main supplier Gazprom by mid-year.

The group, Europe's biggest polluter thanks to its extensive use of lignite, or brown coal, said quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) fell 3 percent to 3.04 billion euros ($3.95 billion), hit by sluggish energy prices and falling margins in power generation.

That was just ahead of analysts' average forecast of 3.02 billion euros, and RWE confirmed its expectation for EBITDA of about 9 billion euros this year.

 

Gas contracts have been a major problem for European utilities which are being squeezed as they buy gas under long-term deals concluded with companies such as Gazprom and Statoil when prices were firmer, while having to sell it to customers at lower prices.

Following the renegotiation of some gas contracts, RWE's Supply & Trading unit narrowed its operating loss to 47 million euros in the first quarter, compared with 220 million last year.

The group confirmed it still expects to strike a deal with Gazprom by mid-year, which Chief Financial Officer Bernhard Guenther said would result in a "significant" financial effect for the group.

"We forecast a 300 million euros compensation payment," said RBC Capital Markets analyst John Musk.

RWE declined to put a figure on the expected benefit.

Along with its peers E.ON and EnBW, RWE is suffering from falling wholesale power prices in Europe, its core market, due to weaker appetite for energy on the recession-hit continent and energy savings measures.

The International Energy Agency (IEA) expects primary energy demand in the European Union to decline by 2 percent in the 2010-2015 period, compared with a 10 percent rise globally.

Prices have also come under pressure from the massive expansion of renewable energy in Germany, as energy from solar and wind sources takes priority in being fed into the electricity grid, reducing the hours gas plants can run and hurting the profitability of conventional power plants.

To streamline their businesses, German utilities have been shedding non-core assets worth billions of euros. This includes RWE's oil and gas exploration and production unit DEA , which it said was not expected to be sold this year.

_0">

RWE has felt relatively little impact from Germany's decision to completely pull out of nuclear power by 2022, as only 13.5 percent of its power comes from the source. That compares with more than a fifth at its main peer E.ON.

RWE's exposure to profitable lignite, or brown coal, has boosted its earnings vis-a-vis E.ON. RWE gets more than a third of its power from the highly polluting material, compared with E.ON's 6 percent.

Guenther said RWE emitted 2.7 percent less CO2 in the first quarter, partly due to the closure of old brown coal generation units at the end of 2012. But he declined to forecast CO2 output for full 2013.

At 1030 GMT, RWE's shares were little changed at 27.525 euros.

($1 = 0.7705 euros) (Editing by Harro ten Wolde and Stephen Coates; Editing by Mark Potter)

_5">

Popular posts from this blog

Study Abroad USA, College of Charleston, Popular Courses, Alumni

Thinking for Study Abroad USA. School of Charleston, the wonderful grounds is situated in the actual middle of a verifiable city - Charleston. Get snatched up by the wonderful and customary engineering, beautiful pathways, or look at the advanced steel and glass building which houses the School of Business. The grounds additionally gives students simple admittance to a few major tech organizations like Amazon's CreateSpace, Google, TwitPic, and so on. The school offers students nearby as well as off-grounds convenience going from completely outfitted home lobbies to memorable homes. It is prepared to offer different types of assistance and facilities like clubs, associations, sporting exercises, support administrations, etc. To put it plainly, the school grounds is rising with energy and there will never be a dull second for students at the College of Charleston. Concentrate on Abroad USA is improving and remunerating for your future. The energetic grounds likewise houses various

Best MBA Online Colleges in the USA

“Opportunities never open, instead we create them for us”. Beginning with this amazing saying, let’s unbox today’s knowledge. Love Business and marketing? Want to make a high-paid career in business administration? Well, if yes, then mate, we have got you something amazing to do!   We all imagine an effortless future with a cozy house and a laptop. Well, well! You can make this happen. Today, with this guide, we will be exploring some of the top-notch online MBA universities and institutes in the USA. Let’s get started! Why learn Online MBA from the USA? Access to More Options This online era has given a second chance to children who want to reflect on their careers while managing their hectic schedules. In this, the internet has played a very crucial in rejuvenating schools, institutes, and colleges to give the best education to students across the globe. Graduating with Less Debt Regular classes from high reputed institutes often charge heavy tuition fees. However onl

Sickening moment maskless 'Karen' COUGHS in the face of grocery store customer, then claims she doesn't have to wear a mask because she 'isn't sick'

A woman was captured on camera following a customer through a supermarket as she coughs on her after claiming she does not need a mask because she is not sick.  Video of the incident, which has garnered hundreds of thousands of views on Twitter alone, allegedly took place in a Su per Saver in Lincoln, Nebraska according to Twitter user @davenewworld_2. In it, an unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of the customer recording her. Scroll down for video An unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of a woman recording her A woman was captured on camera following a customer as she coughs on her in a supermarket without a mask on claiming she does not need one because she is not sick @chaiteabugz #karen #covid #karens #karensgonewild #karensalert #masks we were just wearing a mask at the store. ¿ o