Growth programme at MVV Energie gains great momentum
High investment in renewable energies and energy efficiency - Earnings for past financial year slightly ahead of own forecast
MVV Energie AG (WKN: A0H52F, ISIN: DE000A0H52F5) intends to invest three billion euros by 2020 in expanding renewable energies, energy efficiency, cogeneration, environmentally-friendly district heating and in upkeeping and maintaining its existing plants and grids. Three years after announcing this long-term, sustainable growth programme, the Group has already implemented or issued binding commitments for around Euro 1.9 billion, and thus almost two thirds of the planned investment total. At this year's Annual Results Press Conference in Frankfurt on Tuesday, Dr. Georg Müller, CEO of the publicly listed Mannheim-based energy company, stressed that "we have thus gained great momentum and consistently set course for the conversion of the energy system along ecological lines."
The largest individual investments at the group of companies include the wind farm in Kirchberg, the largest in south-western Germany, where operations began in spring 2012, at around Euro 84 million, the construction of a new waste-fired cogeneration plant in Plymouth/UK, due to go online in 2014, at just under Euro 250 million, and Block 9, currently under construction at the large power plant in Mannheim (GKM), of which in line with the respective level of shareholding around Euro 400 million is allocable to MVV Energie. Comments Dr. Müller: "By making these investments, we are seizing the opportunities arising due to the paradigm shift in the energy industry and maintaining a high pace of investment at our Group."
Just last week, for example, the company announced the acquisition of seven wind farms with a total capacity of 62.9 megawatts in the states of Nordrhein-Westfalen, Rheinland-Pfalz, Hessen, Thüringen and Sachsen-Anhalt from the Spanish energy group Iberdrola, thus virtually doubling its onshore wind power electricity generation capacity. Not only that, MVV Energie has in recent days received the building permit for its second biomethane plant in Kroppenstedt (Sachsen-Anhalt) and will now start construction work on the plant. Germany's highest-capacity district heating storage facility is already being built on the site of the large power plant in Mannheim (GKM). With a total volume of Euro 27 million, this investment will enable MVV Energie not only to further boost the district heating supply in the Rhine/Neckar metropolitan region but also to enhance the power plant¿s flexibility.
Earnings slightly ahead of own forecast
Given the economic and political climate, one in which many energy companies have had to contend with downturns in sales and earnings, MVV Energie is certainly satisfied with its results for the past 2011/12 financial year (1 October 2011 - 30 September 2012). The company thus managed to increase its external sales year-on-year by 8 percent to Euro 3.9 billion. With operating earnings (adjusted EBIT) of Euro 223 million, the Group even slightly exceeded its own forecast of Euro 220 million. Compared with the previous year's figure of Euro 242 million, this represents a reduction of 8 percent and thus consistent with expectations. Comments Dr. Müller: "With our forward-looking strategy, we are on the right course to master the great challenges ahead and to exploit the business opportunities arising on account of the transformation in the energy system."
Pre-tax earnings (adjusted EBT) amounted to Euro 151 million in the 2011/12 financial year, thus Euro 28 million down on the previous year. Net of adjusted taxes on income and minority interests at the Group's shareholdings, the adjusted annual net surplus after minority interests amounted to Euro 80 million. The Group's performance was significantly influenced in the past financial year, as will also be the case in the coming years, by the high volume of investments in its future. These will only generate positive earnings contributions following the launch of operations at the respective plants.
Outlook: Further sales growth, constant earnings
Even though it is difficult to issue reliable, longer-term forecasts in these times of the financial and euro crises and the far-reaching transformation in the German energy system, assuming normal weather conditions the Group expects to be able to further increase its sales in the current 2012/13 financial year over and above the record level reported for the past financial year. Alongside the expansion in the wind power, biomass and biomethane businesses, this growth will chiefly be driven by volume growth resulting from the expansion in district heating at the Group's locations in Germany and the Czech Republic, by nationwide electricity and gas sales, and by electricity and gas portfolio management.
In terms of its earnings performance, given persistently low generation margins and the discontinuation of the existing practice of allocating CO2 emission rights free of charge, MVV Energie aims to achieve consistent adjusted EBIT of around Euro 220 million. Comments Dr. Müller: "We aim to offset negative factors resulting from current energy industry developments with positive earnings contributions from our high-growth businesses and by way of internal optimisationand efficiency enhancement measures."
Sales growth in all business segments
The MVV Energie Group managed to generate sales growth in all of its segments in the 2011/12 financial year. The largest share, accounting for growth of Euro 176 million, was attributable to the expansion in trading and portfolio management, particularly in the fields of electricity and gas. The Sales and Services segment posted further substantial growth of Euro 66 million. With sales of Euro 2.2 billion, this segment still makes the largest contribution to the Group's overall sales. In a competitive climate, the Group achieved further strong growth in its nationwide electricity and gas sales. In the Generation and Infrastructure segment, which includes the capital-intensive business fields of generation, environmental energy and grids, sales rose by Euro 27 million. One of the key drivers of this 8 percent growth was the expansion in electricity generation using wind power. Sales in the environmental energy business, by contrast, declined slightly due to reduced electricity prices and lower waste volumes on account of inspection and conversion measures.
The reduction in adjusted EBIT by Euro 19 million to Euro 223 million was due above all to a number of negative one-off factors in the course of the 2011/12 financial year. Turbine damage at the joint power plant in Kiel (GKK), for example, impacted negatively on earnings to the tune of Euro 10 million. Several months of downtime at this power plant led to higher procurement costs for the missing electricity volumes, while the necessary district heating volumes had to be generated at substitute power plants. This situation was exacerbated by mild weather conditions during the past winter, with lower turnover and sales in the district heating and gas businesses, as well as by impairment losses of Euro 10 million in the energy-related services business field due to a reassessment of the market risks and market potential of the MVV Energiedienstleistungen subgroup.
These satisfactory overall earnings figures allow the Executive and Supervisory Boards to propose an unchanged dividend of Euro 0.90 per share for the past 2011/12 financial year for approval by the Annual General meeting to be held at the Rosengarten Congress Center in Mannheim on 8 March 2013. This would result in an unchanged distribution total of Euro 59.3 million.
Rethinking energy ¿ Robust overall concept required for new energy system
According to MVV Energie's CEO, renewable energies will "gradually assume the leading role in the new energy system". In parallel to this, Dr. Müller believes that flexible conventional generation and reserve power plants, particularly those based on energy-efficient cogeneration, will still be required for many years to come so as to balance out fluctuating wind and solar power generation volumes. By ensuring a "new approach to energy", politicians have to create a reliable framework offering planning reliability and incentives to invest. Says Dr. Müller: "We need an overall concept and high-quality project management to ensure that the energy system conversion is structured along targeted, sustainable lines."
|Key figures of the MVV Energie Group (IFRS) |
1 October 2011 to 30 September 2012
|Euro million||2011/12||2010/11||% change|
|External sales excluding electricity and natural gas taxes 1||3 895||3 600||+ 8|
|Adjusted EBITDA1, 2||399||404||- 1|
|Adjusted EBITA2||223||242||- 8|
|Adjusted EBIT3||223||242||- 8|
|Adjusted EBT3||151||179||- 16|
|Adjusted annual net surplus 3||98||125||- 22|
|Adjusted annual net surplus after minority interests3||80||108||- 26|
|Adjusted earnings per share 3 in Euro||1.21||1.63||- 26|
|Cash flow before working capital and taxes 1||418||415||+ 1|
|Cash flow before working capital and taxes per share 1 in Euro||6.35||6.29||+ 1|
|Free cash flow||23||163||- 86|
|Adjusted total assets (at 30.9.)1, 4||3 854||3 658||+ 5|
|Adjusted equity (at 30.9.)4||1 396||1 378||+ 1|
|Adjusted equity ratio (at 30.9.)1, 4||36.2%||37.7%||- 4|
|Capital empoyed5||2 485||2 489||- 0|
|Value spread||0.4%||1.2%||- 67|
|Number of employees (at 30.9.)||5 541||5 923||- 6|
|1||previous year's figure adjusted|
|2||excluding non-operating IAS 39 derivative measurement items, before restructuring expenses in previous year and including interest income from finance leases|
|3||excluding non-operating IAS 39 derivative measurement items, excluding restructuring expenses in previous year and including interest income from finance leases|
|4||excluding non-operating IAS 39 derivative measurement items|
|5||adjusted equity plus financial debt plus provisions for pensions and similar obligations less cash and cash equivalents (calculated as annual average; previous year's figure adjusted)|
|6||return on capital employed (adjusted EBIT as percentage of capital employed)|