15. December 2011 | MVV

MVV Energie calls for joint effort to achieve energy turnaround

Politicians, business and society as a whole will have to pull together on the way towards a new energy age - Sales growth and consistent operating earnings in past financial year - Investment programme set to influence earnings performance in coming years

Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) has called on politicians, business and society as a whole to pull together and establish verifiable milestones in implementing the energy turnaround in Germany. At this year's Annual Results Press Conference in Frankfurt on Thursday, Dr. Georg Müller, CEO of the publicly listed group of companies, stressed that "we will only be able to master the challenges presented by expanding renewable energies, enhancing energy efficiency and securing a reliable, environmentally-friendly supply of energy at competitive prices if all players pull together and if the route towards our energy future is accompanied by ongoing, transparent monitoring¿. Planning reliability and quick decisions would be required en route to the new energy age. "Our energy system has to become more renewable, more decentralised and more flexible. Renewable energies will gradually take over the leading role. Dr. Müller added that it was also important not to lose sight of market design and competitive factors along the way.

In a tough economic and political climate, one in which many energy companies faced downturns in their sales and earnings, MVV Energie managed to maintain its ground very well in the past 2010/11 financial year (1 October 2010 - 30 September 2011). Defying the overall trend, the company boosted its external sales by 7 percent to Euro 3.59 billion, thus exceeding its own sales forecast. At Euro 242 million, adjusted operating earnings (adjusted EBIT) virtually matched the previous year's figure (Euro 243 million). Comments Dr. Müller: "This stable earnings position is a particular success, one that clearly documents our Group¿s high performance capacity."

Increasing sales with industrial and commercial customers

According to the CEO, the company's positive performance was chiefly due to its well-balanced business portfolio. With industrial and commercial customers, the MVV Energie Group managed to increase its turnover with gas by 19 percent, with electricity by 2 percent and with heating energy by 3 percent in the past twelve months. In the environmental energy business as well, the volume of combustible waste delivered increased by 4 percent.

This growth enabled the Group to offset the year-on-year decline in gas and district heating sales due to notably milder weather conditions. Degree day figures for the 2010/11 financial year were around 7 percent down on the equivalent figures for the 2009/10 financial year.

These pleasing results enable the Executive and Supervisory Boards to propose an unaltered dividend of Euro 0.90 per share for the past 2010/11 financial year for approval by the Annual General Meeting due to be held at the Rosengarten Congress Center in Mannheim on 16 March 2012. This corresponds to an unchanged distribution total of Euro 59.3 million.

Energy turnaround confirms course taken

Looking ahead to the coming years, Dr. Müller expects the energy turnaround to trigger a fundamental systematic change in the energy industry in technological, economic and regulatory terms. "The future of the German energy market is to be found in energy generation that is more environmentally friendly and more highly decentralised."

MVV Energie already charted the right course before Fukushima. The energy turnaround has now confirmed the course already taken. Comments Dr. Müller: "We aim to offer our customers a reliable, environmentally-friendly energy supply in future as well, while also helping them to put energy to more efficient use." To this end, the Group has introduced an ambitious investment programme in which it intends to invest a total of Euro 3 billion by 2020 in renewable energies and energy efficiency, as well as in modernising its existing plants and grids. Here, MVV Energie is focusing on onshore wind power, biomass and biogas, as well as on generating energy from waste.

These investments in further growth already gained momentum in the past year. All in all, the Group invested Euro 247 million in the 2010/11 financial year. These investments also enabled MVV Energie to further raise the share of proprietary electricity generation attributable to renewable energies and environmentally-friendly cogeneration. Currently, 20 percent of internally generated electricity volumes come from regenerative energy sources, and a further 28 percent from cogeneration. Adds Dr. Müller: "We thus already generate almost half of our electricity using environmentally-friendly and efficient methods, compared with a national average of just 31 percent."

Investments in future continue

Building on its solid financial foundation - the Group has an adjusted equity ratio of 39.5 percent - MVV Energie aims to consistently maintain its growth course in the coming years as well. Increased investment volumes of around Euro 700 million are budgeted for the 2011/12 and 2012/13 financial years. The most important single measures already resolved are the investment of Euro 250 million in the energy from waste plant planned in Plymouth in the south of the UK and the investment of Euro 84 million in Kirchberg Wind Farm in the Hunsrück region. Remarks Dr. Müller: "This way, we aim to exploit the economic opportunities presented by the energy turnaround to generate further profitable growth."

At the same time, the company aims to consistently expand its nationwide electricity and gas sales activities within the framework of a forward-looking sales strategy. The Electricity/Gas Energy Fund, in conjunction with green electricity and biogas, will continue to play a particularly important role on this successful course. Outlook influenced by high volume of investment Even though the unstable underlying framework and continuing volatility on energy markets make it difficult to issue any reliable forecast, assuming normal weather conditions the Group expects to generate slight year-on-year sales growth in a single-digit percentage range in the current 2011/12 financial year. This growth will mainly be driven by nationwide electricity and gas sales, the expansion of district heating at the Group¿s German and Czech locations and the wind power business.

The Mannheim-based energy company sees the so-called clean dark spread, waste prices, weather conditions and developments in the regulatory and competitive framework as the key factors affecting its earnings. With its well-balanced business portfolio, MVV Energie expects to be better placed than many other energy companies to absorb the effects of energy policy changes in the coming years as well. Adds Dr. Müller: "Having said this, the sharp rise in fuel costs, the full auctioning of CO2 emission rights due to begin in 2013 and the regulatory framework will leave their mark on our earnings as well."

Not only that, earnings will also be significantly affected in coming years by the high volume of investments in the future, as these will only generate positive EBIT contributions following the respective launch of operations. In view of this, together with the impact of the current downtime at the joint power plant in Kiel (GKK), the company does not expect to be able to match the high earnings of Euro 242 million posted for the past 2010/11 financial year in the coming year as well. Comments Dr. Müller: "We are confident that we will manage to offset part of these charges on earnings with positive contributions from our high-growth business fields and cost savings driven by internal optimisation and efficiency enhancement measures. Overall, we nevertheless expect our adjusted EBIT for the 2011/12 financial year to fall slightly short of the previous year¿s figure."

Note: the complete financial report can be found on the internet in the download section of our investor relations site at

www.mvv-investor.de

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Key Figures of the MVV Energie Group (IFRS)
    
Euro million2010/112009/10% change
    
Sales excluding electricity and natural gas taxes 3 5903 359+ 7
Adjusted EBITDA1394406- 3
Adjusted EBITA1242247- 2
Adjusted EBIT22422430
Adjusted EBT2,3179165+ 8
Adjusted annual net surplus2,3125105+ 19
Adjusted annual net surplus after minority interests2,310895+ 14
Adjusted earnings per share2,3 in Euro1.631.44+ 13
Cash flow before working capital and taxes405440- 8
Cash flow before working capital and taxes per share in Euro6.156.68- 8
Free cash flow163154+ 6
Adjusted total assets (at 30.9.) 43 4893 457+ 1
Adjusted equity (at 30.9.)41 3781 233+ 12
Adjusted equity ratio (at 30.9.)439.5%35.7%+ 11
Capital employed52 6472 688- 2
ROCE69.2 %9.1 %+ 1
WACC8.5 %8.5 %0
Value Spread70.7 %0.6 %+ 17
Investments247240+ 3
Employees (at 30.9.)5 9236 068- 2

 

 

1 excluding non-operating IAS 39 derivative measurement items and including interest income from finance leases (previous year's figure adjusted)
2 excluding non-operating IAS 39 derivative measurement items and restructuring expenses and including interest income from finance leases (previous year's figure adjusted
3 impact of expiry of Kiel put option
4 excluding non-operating IAS 39 derivative measure items
5 adjusted equity plus financial debt plus provisions for pensions and similar obligations (calculated as annual average, previous year's figure adjusted)
6 return on capital employed (adjusted EBIT as percentage of capital employed, previous year's figure adjusted)
7 previous year's figure adjusted