EnBW maintains stable earnings development in first half of 2020 despite corona crisis

Karlsruhe. EnBW continues to successfully weather the effects of the corona crisis and has been able to maintain last year’s positive earnings trend through the first half of 2020. Notably due to strong growth in renewable energies and the acquisitions of Valeco and Plusnet, which were not included in the consolidated financial statements a year ago, the corona pandemic has not significantly affected the company’s operating result in the first six months of this year.

With a workforce of 23,685 (+5.3%), EnBW generated revenue of some €9.73 billion and an operating result (adjusted EBITDA) of some €1.59 billion, an increase of 24.3% on the same period a year earlier (€1.28 billion). This substantial increase in earnings is mainly due to the positive performance of the Renewable Energies segment. Although parts of the operating business are still expected to be affected by the corona pandemic, the earnings guidance for the full year 2020 currently remains unaltered. Adjusted EBITDA for the 2020 financial year is expected to be in a range between €2.75 billion and €2.9 billion, which is 13% to 19% percent above the previous year.

During the corona pandemic, the company has seen itself confirmed in its strategic focus on the further expansion of renewables. Just at the beginning of this year, EnBW brought two large offshore wind farms into operation that have now positively impacted earnings performance in the first half year. CFO Thomas Kusterer: “Our EnBW Hohe See and Albatros offshore wind farms have doubled the earnings contribution from renewable energy sources. The operating businesses show positive performance across the board – and that at a time when the outbreak of the corona pandemic confronted us with major challenges, to which we as a company responded with targeted action at a very early stage. This shows the stability of our business portfolio after years of systematic transformation. However, corona will still not leave us completely unaffected.”

Despite the anticipated impacts of the corona pandemic on parts of the operating business going forward, this year’s earnings targets are still expected to be met, at least at the lower end of the guidance range: “We are keeping a very close watch on further developments. For this year, we are focusing efforts on maintaining our stable trajectory despite the corona crisis,” Kusterer emphasised.

Net profit attributable to the shareholders of EnBW AG went down from €286.2 million in the previous year’s period to €184.2 million in the period under review. Earnings per share consequently amounted to €0.68, compared with €1.06 a year earlier. The fall in Group net profit is primarily due to the lower financial result. This has been affected by marking the securities portfolio to market at the reporting date.

Performance by segment

In the Sales segment, adjusted EBITDA rose to €136 million in the first half of 2020, an increase of 10% on the previous year’s period. Telecommunications company Plusnet has contributed to earnings here from the beginning of the third quarter of 2019. Accordingly, the expectation for the full year 2020 remains unaltered with earnings between €325 million and €400 million.

Adjusted EBITDA in the Grids segment was €745 million (up 1%) in the first half of 2020, almost identical to the previous year’s period. This earnings performance partly relates to higher electricity and gas transmission grid revenue, notably due to necessary increased investment in grid security and reliability. Conversely, grid revenue in gas distribution grids was down due to weather conditions. The guidance for the operating result in the current financial year therefore stays at between €1.3 billion and €1.4 billion.

The Renewable Energies segment continued to develop very positively. Adjusted EBITDA there rose substantially to €426 million in the first six months of 2020. This is double the previous year’s EBITDA, meaning 100% growth. The marked increase in earnings is largely due to the two offshore wind farms EnBW Hohe See and EnBW Albatros coming into operation. The French wind and solar power company Valeco and better wind conditions at offshore and onshore wind farms also contributed to the positive earnings performance. With earnings guidance held stable, earnings between €825 million and €925 million are expected for the Renewable Energies segment.

Adjusted EBITDA in the Generation and Trading segment was €395 million in the first six months, marking growth of some 39%. Electricity from EnBW power stations was able to be sold at higher wholesale market prices than in the same period of the previous year. Earnings contributions from trading activities also had a positive effect due to increased volatility on wholesale markets. This has more than compensated for the effect – which will further increase over the course of the year – of the loss of the earnings contribution from the Philippsburg 2 nuclear power plant. The expectation for full-year segmental earnings therefore remains unchanged at between €425 million and €500 million.

The EnBW Group’s total investment, at around €802 million, was about 48% down on the first six months of the previous year (€1,546 million). This mainly relates to the acquisition of the French company Valeco and that of Plusnet GmbH in the first half of 2019. 76% of total gross investment related to growth projects, primarily in the Grids and Renewable Energies segments. Capital expenditure in the first half of 2020 focused among other things on completion of the Hohe See and Albatros offshore wind farms and on grid expansion and replacement expenditure in the distribution grid.