13. December 2016 | MVV

MVV Energie reports on positive 2016 financial year

New plants and investments lead to sales and earnings growth at Mannheim energy company – Annual sales of Euro 4.1 billion and operating earnings of Euro 213 million – Slight sales and earnings growth expected for current 2017 financial year

With a powerful investment programme, Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) acted six years ago to align its corporate strategy towards expanding renewable energies and boosting energy efficiency with combined heat and power (CHP) generation and environmentally-friendly district heating. In the past 2016 financial year, the company reaped the benefits of these measures. "It was a year which saw us launch operations at new plants and consolidate our new shareholding in Juwi AG, a world leader for renewable energies project development", remarked MVV CEO Dr. Georg Müller at the company's annual results press conference for the 2016 financial year (1 October 2015 – 30 September 2016) on Tuesday in Frankfurt. "By acting early to set our course, we have reversed the trend and left the previous dip in earnings behind us – and that despite the ongoing tough climate in the energy industry, with a further reduction in wholesale market electricity prices and lower generation margins."

MVV Energie increased its operating earnings for 2016 by 22 percent from Euro 175 million to Euro 213 million. Sales for the past financial year, which grew from Euro 3.4 billion to Euro 4.1 billion, were 19 percent up on the previous year's figure. "Those are satisfactory results for our group of companies. They underline our claim to be a pioneer when it comes to implementing the energy turnaround and our objective of generating profitable growth", emphasised Dr. Müller. "Our ongoing cost savings and efficiency enhancements across all areas of our Group also made a crucial contribution to these results."

Dr. Müller referred to the new energy from waste plant in Plymouth/UK as the most important of the new plants. With total costs of around Euro 250 million, this was the largest single investment in the company's history. Alongside this, the past year also witnessed the official launch of operations at a biomass power plant at Ridham Dock to the south-east of London, new windfarms in Freudenberg (Baden-Württemberg) and Hain (Upper Franconia) and a biomethane plant in Barby (Saxony-Anhalt). At the same time, Juwi had developed into a valuable component of the MVV Energie Group and, together with the new group company Windwärts Energie, had completed the Group's business model along the entire renewable energies value chain by including the key forward-looking field of project development. According to Dr. Müller, "pooling the different competencies at Juwi, Windwärts and MVV Energie, which complement each other ideally, is the key to our joint success".

Shaping the new energy system along social and ecological lines
The sales and earnings contributions at the new power plants and shareholdings are included in the "Generation and Infrastructure" reporting segment, where sales accordingly rose from Euro 454 million to Euro 1.11 billion in 2016, while adjusted EBIT increased from Euro 133 million to Euro 161 million. In its "Sales and Services" segment, MVV Energie boosted its sales by 4 percent to more than Euro 2.2 billion. This growth was driven by success with customers in its nationwide sales business and higher direct marketing volumes.

Here in particular, however, the great intensity of competition led to lower margins and a decline in earnings in the Sales and Services segment by Euro 13 million to Euro 29 million. "We did not charge on these factors to our customers", stressed MVV’s CEO and pointed to the Mannheim energy company's electricity prices, which would be remaining unchanged for the fourth consecutive year in 2017. "What’s more, we will be reducing our gas prices – after three stable years – by an average of 7.5 percent at the turn of the year. This summer, we already cut our district heating prices for the second year in succession." MVV Energie was therefore helping not only to make the energy supply more renewable, flexible and efficient, but also to ensure that it remained secure and affordable. "Only this way can we structure the transition to the new energy system along social and ecological lines."

Growth in all key earnings figures
Consistent with its sales and adjusted EBIT, the group of companies also posted growth in all other key earnings figures for 2016. Net of the adjusted financial result, earnings before taxes (adjusted EBT) grew by 7 to Euro 139 million. Profit, i.e. adjusted annual net income after minority interests, rose year-on-year by Euro 20 million to Euro 95 million. That corresponds to adjusted earnings per share of Euro 1.45, as against Euro 1.14 in the previous year. The workforce also grew in line with the new shareholdings and plants. With 6,174 employees, at the end of September 2016 the group of companies had almost 900 more employees than twelve months earlier.

On this basis, continuity remains the hallmark of the company’s dividend policy. The Executive and Supervisory Boards will be recommending a dividend of 90 cents per share, and thus unchanged on the previous year, for approval by the Annual General Meeting due to be held in Mannheim on 10 March 2017.

Positive outlook for 2017
The results for 2016 show that the company met its targets, which it had itself raised in the course of the year, for sales and adjusted EBIT. "Our consistent strategic focus on the energy system of the future is bearing sustainable fruit", stressed MVV’s CEO. MVV Energie now aims to uphold this positive performance in the years ahead. "Although we will not be able to launch operations at new plants and integrate new shareholdings on the same scale every year", the company nevertheless expects to see slight sales and operating earnings growth in the 2017 financial year.

Ongoing high level of investment
MVV Energie will be maintaining a high pace of investment in future as well. Having invested Euro 236 million in the past year, the Group intends to invest around Euro 200 million in its strategic focuses in 2017. Overall, a total of Euro 3 billion is to be invested in the years ahead in the Group's growth and in modernising and maintaining its plants and grids. Comments Dr. Müller: "We are drawing on our great expertise and longstanding experience combined with a consistent customer focus in order to further expand our competitive position and develop new business models in cross-sector partnerships as well."

One of the largest individual projects is the construction of a new gas motor combined heat and power plant in Kiel. Located at Kieler Förde, this will launch operations in autumn 2018 and produce electricity and heat using combined heat and power generation for the state capital of Schleswig-Holstein. At a cost of around Euro 290 million, this power plant will set new standards across Europe in terms of flexibility, efficiency and ecological sustainability. By connecting a heating energy storage facility and working with an electrode boiler, the plant will also exploit the potential of power-to-heat for the associated district heating grid and thus reach a primary energy efficiency rate of more than 90 percent.
"With its innovative and sophisticated concept, this is without doubt the power plant for the energy turnaround" highlighted Dr. Müller at the annual results press conference. This further underlined the significance of CHP generation for the successful implementation of the energy turnaround. "It guarantees maximum efficiency and environmental friendliness." He therefore spoke out in favour of extending the new CHP Act (KWKG) to 2030 and retaining the proven mechanisms of the coal-switch bonus and the support for heating energy grids. At the same time, efficient power-to-heat technology should be boosted overall by removing existing obstacles and exempting it from duties and levies.

The complete financial report ist available at

www.mvv-investor.de


 

 

Key figures of the MVV Energie Group
from 1 October 2015 to 30 September 2016
    
Euro millionFY 2016FY 2015% change
    
Sales and earnings   
Sales excluding energy taxes4,0663,422+ 19
Adjusted EBITDA1425336+ 26
Adjusted EBIT1213175+ 22
Adjusted EBT1139132+ 5
Adjusted annual net income 19892+ 7
Adjusted annual net income after minority interests19575+ 27
Adjusted earnings per share 1 (Euro)1.451.14+ 27
Cash Flow   
Cash flow from operating activities2274255+ 7
Cash flow from operating activities per share (Euro)4.163.86+ 8
Capital structure   
Adjusted total assets (at 30 September)34,4014,073+ 8
Adjusted equity (at 30 September)31,4521,376+ 6
Adjusted equity ratio (at 30 September)333.0%33.8%- 2
Net financial debt1,2831,341- 4
Value indicators   
ROCE7.6%6.6%+ 15
WACC6,4%6,4%0
Value Spread1.2%0.2%>+100
Capital employed2,8062,660+ 5
Investments   
Total Investments236470- 50
of which growth investments121336- 64
of which investments in existing business115134- 13
Employees   
Number of employees (at 30 September)6,1745,308+ 16

 

 

1 Excluding non-operating measurement items for financial derivatives, excluding structural adjustment for part-time early retirement and including interest income from finance leases
2 Previous year's figure adjusted
3 Excluding non-operating measurement items for financial derivatives