Germany's second-largest utility has reported a rounding-error profit in the face of falling energy prices. Growing debt and government charges weigh on its prospects.
Germany's second-largest power producer RWE reported more disappointing figures Monday, despite a restructuring that saw it earn money from the sale of part of its renewables division.
Net profit in the third quarter was a puny 11 million euros ($11.8 million), the company said, blaming "a very challenging environment" amid falling power prices. Income for the first three quarters plunged 58 percent to 227 million euros. But it said it expected to achieve full-year targets.
"In view of the difficult conditions, above all in conventional electricity generation, we recorded respectable earnings in the first three quarters," RWE's new CFO Markus Krebber said.
EBITDA was down year-on-year 13 percent to 3.8 billion euros and operating profit fell 20 percent to 2.1 billion.
The company had already logged a big drop in profit in the previous quarter, which it blamed on poor energy-trading results. RWE was already in panic mode, having slashed jobs at its British unit and suspended dividend payments earlier in the year.
The company continued to struggle with debt, owing creditors 27.4 billion euros. Its net borrowing grew by 2 billion euros since the year began, which it blamed on lower interest rates that forced it to top up pension funds.
RWE said it expected debt to fall in the fourth quarter thanks to income from the sale of part of its alternative-energy subsidiary Innogy. Last month, the company made its market debut in Europe's biggest IPO in years, with RWE retaining a 76.8-percent stake. It said Monday it had no plans to reduce its stake.
The move came in response to a charge resulting from Chancellor Angela Merkel's decision to close all nuclear power plants by 2022. Electrical utilities have until then to pay 23.6 billion euros into a fund to cove the costs of nuclear decommissioning and spent fuel storage.
RWE has the second-largest share, and must come up with 6.8 billion euros. Krebber said the utility planned to pay the fee as quickly as possible.
But utilities have little room to increase prices, as Germany's electricity is already among the most expensive in the world. Consumers will come under further pressure next year due to a government charge to promote renewables that is set to increase the price to just under 7 eurocents per kilowatt hour, four power transmission network operators said Monday.