The transformation of RWE is continuing at a fast pace. During the first six months of 2021, the company invested €1.8 billion gross in new wind farms and solar plants as well as battery projects. That’s twice as much as in the same period last year. RWE currently has projects amounting to 3.9 gigawatts (GW) under construction, which will be commissioned by the end of 2022. Thus, the portfolio will grow from 9.3 GW today to more than 13 GW by the end of 2022. In addition, RWE has started construction on the 1.4-GW offshore wind farm Sofia off the British coast, which is scheduled for completion in the fourth quarter of 2026.
Financially, the first half of 2021 was also very good. On the back of an exceptionally high earnings contribution by Supply & Trading, RWE has significantly increased its outlook for fiscal 2021.
Leading in the development of new solutions
RWE is forging ahead with state-of-the-art technologies like floating offshore, floating solar and storage. As one of the key players in setting up the hydrogen economy, RWE is working with partners on more than 30 projects along the value chain.
Another important element in the transformation of RWE is the rigorous phaseout of coal. The company’s last two hard coal-fired power stations in Germany have been decommissioned. For lignite, the first wave of decommissioning is in progress: At the end of the year, three more units in the Rhenish region will be taken off the grid. As a consequence of the phaseout of coal, RWE will have to cut over 3,000 jobs by the end of 2022 alone. This will be done in a socially responsible way and in close consultation with the social partners.
Extraordinarily strong result in Supply & Trading offsets weather effects
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of RWE Group in the first half of 2021 was on the previous year’s level, at €1,751 million (1st half of 2020: €1,833 million). The same applies to adjusted EBIT, at €1,042 million (1st half of 2020: €1,113 million). Adjusted net income was up year-on-year, at €870 million (1st half of 2020: €816 million).
For fiscal 2021, RWE now expects to achieve adjusted EBITDA of between €3.0 billion and €3.4 billion at Group level, which is €350 million higher than forecast in March 2021. In the core business, adjusted EBITDA is expected to be between €2.15 billion and €2.55 billion. The range for adjusted EBIT was raised to €1.5 billion to €1.9 billion. RWE now expects its adjusted net income to be between €1.05 billion and €1.4 billion, an increase of €300 million. The dividend statement is confirmed: For the current financial year, the company still aims to increase the dividend to €0.90 per share.
In its core business with the Offshore Wind, Onshore Wind/Solar, Hydro/Biomass/Gas and Supply & Trading segments, RWE achieved adjusted EBITDA of €1,206 million in the first six months of 2021. The figure for the same period last year was €1,523 million.
Offshore Wind: Adjusted EBITDA in the Offshore Wind segment was €459 million for the first half of the year, compared to €585 million for the same period in the previous year. This was because wind volumes were much lower in Northern and Central Europe than the very high level witnessed a year before. For the current year, RWE expects adjusted EBITDA of between €1,050 million and €1,250 million for this segment.
Onshore Wind/Solar: In the first six months of 2021, the Onshore Wind/Solar segment recorded adjusted EBITDA of minus €42 million, compared to €299 million in the same period in 2020. The extreme cold snap in Texas led to an earnings shortfall of around €400 million. Additional burdens resulted from below-average wind conditions at onshore wind farm locations in Northern and Central Europe.
Book gains from the sale of RWE’s shares in three US onshore wind farms and earnings contributions from new plants had a positive effect. For the current year, RWE expects adjusted EBITDA of between €50 million and €250 million for this segment.
Hydro/Biomass/Gas: With adjusted EBITDA of €297 million, business in the Hydro/Biomass/Gas segment was below the previous year’s level of €324 million. The wood pellet production business in the US, which was sold in mid-2020, stopped contributing to earnings. In addition, earnings from electricity produced using biomass in the Netherlands fluctuate during the year. However, RWE expects to achieve higher income from biomass usage for the year as a whole. Adjusted EBITDA for this segment should lie in a range between €500 million and €600 million.
Supply & Trading: The Supply & Trading business once again recorded an outstanding performance. Adjusted EBITDA reached €525 million, exceeding the already high level of €322 million achieved last year. For this segment, therefore, RWE has raised its outlook and now expects adjusted EBITDA to be significantly above €350 million for 2021 as a whole.
Non-core business result in line with expectations
Adjusted EBITDA in the Coal/Nuclear segment was €545 million, compared to €310 million for the same period in the previous year. For electricity from lignite and nuclear power, RWE realised higher wholesale margins than in 2020. For the year as a whole, it continues to expect adjusted EBITDA of between €800 million and €900 million for this segment.
Comfortable financial situation
The Group’s net debt decreased to €903 million (31 December 2020: €4,432 million). This was due mainly to a very good adjusted operating cash flow and timing effects from hedging activities as well as a decline in pension provisions resulting from higher discount rates.
Michael Müller, CFO of RWE AG, comments: “We posted a better business performance than we expected at the start of the year, which is very gratifying. Our financial situation remains good, and it enables us to maintain our high pace of investment. We will present our plans for beyond 2022 at our Capital Market Day on 15 November 2021.”
“The transformation of RWE is progressing swiftly. In the first half of the year we invested €1.8 billion gross in renewables, which was twice as much as in the first six months of 2020. And we are continuing full speed ahead. This year we will commission new wind farms and solar plants as well as storage systems with 1.8 gigawatts, with a further 2.1 gigawatts to follow next year. This will take us to our target of more than 13 gigawatts by the end of 2022. Financially, we are also doing well. We have therefore significantly raised our 2021 earnings forecast. ”
