2020 remains a special year for MVV
Mannheim energy company MVV posts strong half-year earnings – MVV CEO Dr. Müller: “We have the right strategy and are making progress in implementing it” – Coronavirus pandemic also set to leave its mark on the energy industry – Forecast slightly reduced
2020 will be a special year for the Mannheim-based energy company MVV (ISIN: DE000A0H52F5; WKN: A0H52F). That is what the company’s CEO, Dr. Georg Müller, announced at the beginning of the year. The results which he presented in Mannheim on Wednesday for the first six months of the 2020 financial year (1 October 2019 – 31 March 2020) show just how right he was. On the one hand, many of the projects initiated by the company in recent years came to fruition in the first half of the year, enabling MVV to present strong half-year results. Comments Dr. Müller: “We have the right strategy and are making progress in implementing it.” On the other hand, the coronavirus pandemic confronts MVV as well with new additional challenges. “In the further course of the year, the pandemic will leave its mark on the energy industry as well and will also influence MVV’s sales and earnings performance”.
According to the CEO, the coronavirus pandemic had hardly any impact on MVV’s results for the first six months of the financial year. In this period, the company increased its operating earnings (adjusted EBIT) year-on-year by 20 percent to Euro 193 million. Sales for the same period rose by one percent to slightly above Euro 2.0 billion. Key reasons for the earnings growth referred to by Dr. Müller included the successful launch of operations with the new gas-powered CHP plant in Kiel, which made its first positive earnings contributions this financial year, and higher levels of plant availability in the environmental energy business.
MVV also successfully completed work on connecting its energy from waste plant in Mannheim to its regional district heating grid, meaning that it has also reached its first major milestone as it heads for “green heat” and decarbonising district heating. The company is currently implementing a comparable concept at its energy from waste plant in Leuna (Saxony-Anhalt), which will in future feed heating energy into the district heating grid of the neighbouring city of Merseburg.
Further increase in renewable electricity generation
Another area where MVV made progress in recent months is in expanding its proprietary electricity generation from renewable energies. Shortly before the end of 2019, the company took over the windfarm developed by its Juwi subsidiary in Freisen (Saarland). Not only that, a windfarm built in Hesse by Windwärts, the MVV Group’s second project developer, is about to launch operations as a windfarm at Energieversorgung Offenbach. As wind conditions were also better than average in the past six months, MVV increased its renewable electricity generation year-on-year by 18 percent to 734 million kilowatt hours, enough to meet the energy needs of more than 400,000 average 3-person households.
These successes enabled MVV to more than make up for the adverse effects seen in the first half of the financial year due to the very mild winter and correspondingly lower heating energy and gas turnover, as well as to start-up costs incurred for developing innovative products and services and establishing new business activities. In parallel with sales and earnings, the group of companies also increased its adjusted EBITDA from Euro 253 million to Euro 289 million (+ 14 percent), its adjusted net income for the period after minority interests from Euro 78 million to Euro 95 million and thus its adjusted earnings per share from Euro 1.19 to Euro 1.45 (+ 22 percent each). This positive performance is also reflected in the size of the Group’s workforce, where the companywide total number of employees rose year-on-year by more than 200 to 6,155.
Coronavirus impacts on further business performance
“Since March, we have faced additional challenges”, stressed Dr. Müller with regard to the second half of the current financial year. At present, further developments and the impact of the coronavirus pandemic could not yet be definitively assessed or above all quantified. MVV accords the utmost priority to protecting the health of its employees, customers and partners. At the same time, it is committed to the infrastructure task of safeguarding the energy and water supply to society and business.
Given the pleasing business performance to date and despite potential coronavirus-related effects, from an operating perspective the company currently expects its sales and adjusted EBIT for the 2020 financial year to approximately match the previous year’s figures. Before the pandemic broke out, the company still expected to achieve slight growth in both these key figures. In the 2019 financial year, MVV generated sales of Euro 3.7 billion and operating earnings of Euro 225 million. At the same time, even though the forecast has been reduced only slightly, the coronavirus pandemic means that the risk corridor has widened.
For MVV, the ultimate scale of pandemic-related effects will depend, among other factors, on the duration and scope of restrictions and on the pace of economic recovery. The company expects to see a reduction in energy consumption by its business and commercial customers in particular. Not only that, the pandemic may delay implementation of wind, solar and other construction projects.
Ongoing high volume of investment in energy turnaround and climate protection
According to the CEO, the present developments in no way affect MVV’s core objective and perspective of successfully implementing the energy turnaround and achieving climate neutrality as a company by 2050 at the latest. The company is consistently maintaining the course it has taken with a high pace of investment. Between October 2019 and March 2020, MVV invested around Euro 180 million. Its key focuses of investment are still renewable energies, boosting energy efficiency and innovative products and services for private, commercial and industrial customers. From a current perspective, the full-year investments are set to approximately match the high level of more than Euro 300 million seen in the previous year.
Coronavirus should not be used as an excuse for energy policy
At the same time, MVV’s CEO appealed to politicians to ensure that the pandemic does not take away any of the urgency attached to climate protection. “Coronavirus should not be used as an excuse if agreement cannot be reached on the necessary contents.” Items currently on the agenda in this respect on the one hand include legislation for the coal exit. This had to create a sustainable framework for exiting from coal by achieving a climate policy-driven balance for decommissioning brown coal and hard coal plants. Due account should also be taken of the future heating energy supply, boosting efficient combined heat and power generation and green heat options. The new CO2 targets in the European green deal also called for accelerated investment in green heat.
On the other hand, it was about further expanding and integrating renewable energies. Practical rules for the minimum distance between wind turbines and settlements, which needed to be determined in approval processes based on local circumstances, were just as important as abolishing the cap on new solar power capacity, a measure which was absolutely necessary and needed to be implemented immediately if possible. “Speeding things up is the only way for us to reach our climate policy targets”, commented Dr. Müller. “That is why the question as to whether we should expand wind and solar power is simply not up for debate.”
MVV’s CEO also spoke out in favour of making a climate-friendly energy system a key focus of any economic recovery programmes planned to overcome the economic impact of the coronavirus pandemic. Added Dr. Müller: “Investing in a long-term ecological energy infrastructure will promote value creation in Germany in the short term, secure forward-looking jobs and is also sustainable”.
The complete quarterly statement is available online at www.mvv.de/investors.