RWE Boosts Earnings in Second Quarter

Europe's third-largest utility company, RWE, doubled its profits in the second quarter because of gains from asset sales and an increase in power prices in Germany and the United Kingdom. Net profit for the January-June period was €1.36 billion ($1.66 billion), compared with €621 million in the first half of last year, said RWE, which supplies gas, electricity, water and waste disposal services. Part of the reason for RWE's good performance came from income that appeared when it unloaded its shares in unrelated companies, including Heidelberger Druckmaschinen and Hochtief. RWE chief executive Harry Roels is divesting the company of investments not related to its core businesses of energy and water. The company is faced with a fundamental shift in its business model because of a German policy to close all nuclear power plants by 2020. Substitute sources are a priority now, and that includes modernized plants run on traditional fossil fuels such as coal and natural gas. RWE is already the world's largest operator of power plants fed by brown coal, or lignite. But many of these power plants must be modernized to become efficient, and the bill for those upgrades could total some €3 billion over the next few years.