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May 23, 2017

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Germany's No. 2 power firm cuts forecasts as Q1 profits fall

FRANKFURT--RWE, Germany's second-biggest power supplier, cut its full-year forecasts on Wednesday after it said profits took a tumble in the first three months.

RWE said in a statement that its net profit fell 35.5 percent to 838 million euros (US$1.2 billion) in the period from January to March.

Underlying or operating profit was down 18.4 percent at 1.91 billion euros and revenues declined by 8.6 percent to 14.663 billion euros.

"As expected, the extremely mild winter and ongoing crisis in conventional electricity generation resulted in earnings shortfalls in the first quarter of 2014," said chief executive Peter Terium.

However, "even though the first quarter reflected the difficult environment in the energy sector, I can take positive stock nevertheless," Terium said.

"We passed a major milestone en route to selling RWE Dea. We are also pleased to have brought the price revision relating to our gas purchasing agreement with Gazprom to a successful conclusion," he said.

In March, RWE revealed that it plans to sell Dea, which specializes in oil and gas exploration and production, to a Luxembourg-based fund called LetterOne, which is controlled by Russia's AlfaGroup.

AlfaGroup belongs to billionaire entrepreneur Mikhail Fridman.

RWE expects to complete the 5.1-billion-euro deal by the end of the year.

The transaction is a key part of RWE's strategy for reducing debt and freeing up investment for the energy transition currently underway in Europe.

But the sale will weigh on full-year earnings, CEO Terium said.

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