14. May 2010 | MVV

MVV Energie remains on course

Mannheim-based energy company feels effects of slight economic recovery following weak market situation at end of last year - Forecast confirmed for overall year: sales and earnings to match previous year's level

Following the weak market situation at the end of last year, since January 2010 the Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) has seen a slight recovery in the economy, one whose positive effects have been noticeable in particular in the company's electricity business with industrial customers. Between January and March 2010, the 2nd quarter of its current 2009/10 financial year, the company achieved year-on-year growth both in external sales and in adjusted operating earnings (adjusted EBIT), thus also helping to reduce the downturns in the 1st quarter of 2009/10 (October to December 2009). At the presentation of the financial report for the 1st half of 2009/10 (1 October 2009 - 31 March 2010) in Mannheim on Friday, company CEO Dr. Georg Müller could report year-on-year sales growth of 3 percent from Euro 1.79 billion to Euro 1.84 billion and adjusted EBIT of Euro 209 million, and thus slightly lower than in the previous year (Euro 212 million). "The turnover growth achieved in our nationwide electricity and gas sales with industrial and commercial customers enabled us to make up for much of the decline in earnings between October and December", commented Dr. Müller. "However, I still see talk of any widespread recovery in economic demand as premature. Energy requirements at industrial customers with production downturns can only be expected to increase again once the economy shows a sustainable recovery."

According to the CEO, the year-on-year sales growth of Euro 55 million in the 1st half of the year was mainly attributable to the electricity and value-added services segments. Strong growth in electricity sales was driven by volume growth in the electricity trading business and nationwide electricity sales with industrial and commercial customers and secondary distributors. The value-added services segment benefited above all from sales contributions from companies consolidated for the first time.

The decline in adjusted EBIT by Euro 7 million reported for the 1st quarter of 2009/10 could be reduced to Euro 3 million by the end of March due to the pleasing year-on-year performance in the 2nd quarter of 2009/10. This improvement in the 2nd quarter of 2009/10 was chiefly due to the electricity segment. This way, the decline reported for the 1st quarter of 2009/10 on account of the economic crisis could be compensated for by the positive impact of portfolio management and special items resulting from the reversal of provisions, as well as by the absence of the negative items posted in the previous year.

Annual target confirmed

Even though the economic climate still involves numerous uncertainties, MVV Energie has confirmed its expectation for the 2009/10 financial year as a whole that it will more or less match the previous year's sales of around Euro 3.2 billion and adjusted EBIT of Euro 239 million. "That is an ambitious target, given the record sales in the past financial year and the cuts, double-digit in some cases, introduced in gas and district heating prices during the past financial year," added Dr. Müller. Given the company's market position and the measures already taken to strengthen the operations of the MVV Energie Group, the CEO nevertheless sees this target as being achievable.

The company has based its targets on the assumptions that there will be no further intensification in the economic and financial crisis, no dramatic changes in commodity and energy prices, no regulatory or government intervention, and no abnormal weather conditions. In view of the ongoing process of far-reaching structural change in the energy industry, with increased cost and competitive pressure, incentive regulation, falling energy demand, new technological developments and changes in the political framework, MVV Energie's key guiding principles are those of profitability and sustainability.

In the medium to long term, the company will continue to exploit the growth potential offered by climate protection targets. MVV Energie sees renewable energies and cogeneration as its key future markets. Here, it will be focusing on wind power and biomass in its generation of both electricity and heating energy. A further major focus of investment is environmentally-friendly district heating, which the Group is expanding at all of its locations. At the same time, the company intends to consistently maintain and profitably expand its successful sales with innovative products, especially in its nationwide industrial customer business.

"We see the long-term trend towards the 'ecologisation' of the energy industry as being irreversible," stated Dr. Müller. The company CEO believes that, with the new alignment provided by its MVV 2020 corporate strategy, MVV Energie has acted early to make extensive preparations for this development. "We intend to be one of Germany's leading energy companies in 2020 as well". Over this period, the company intends to raise the share of its proprietary electricity generation attributable to renewable energies from 18 percent currently to 30 percent.

Note: the complete financial report for the 1st half of the 2009/10 financial year 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 1 October 2009 to 31 March 2010
    
Euro million2009/102008/09% change
    
Sales excluding electricity and natural gas taxes 1 8431 788+ 3
Adjusted EBITDA1278284- 2
Adjusted EBITA1209212- 1
Adjusted EBIT1209212- 1
Adjusted EBT1166171- 3
Adjusted net surplus for period1112115- 3
Adjusted net surplus for period after minority interests1,2104115- 10
Adjusted earnings per share1,2 in Euro1.571.75- 10
Cash flow before working capital and taxes2822830
Cash flow before working capital and taxes per share in Euro4.284.300
Free cash flow- 29- 185+ 84
Adjusted total assets as of 31.3.2010/30.9.2009 13 7193 566+ 4
Adjusted equity as of 31.3.2009/30.9.200911 2471 208+ 3
Adjusted equity ratio as of 31.3.2009/30.9.2009133.5 %33.9 %- 1
Investments9084+ 7
Number of employees as of 31.3.2010/31.3.20096 0065 838+ 3

 

 

1 excluding non-operative IAS 39 valuation items/fair values of financial derivatives
2 change in reporting in previous year due to amended minority interests calculation methodology