Energy turnaround needs heating turnaround to succeed
As well as expanding renewable energies, MVV Energie will also be building in future on efficient combined heat and power (CHP) generation and environmentally-friendly district heating - At Euro 175 million, annual earnings 3 percent up on previous year - Earnings set to rise by 15 percent in the current year - MVV Energie CEO Dr. Georg Müller: "We have overcome the dip in earnings."
The Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) will be basing its generation strategy in future as well not only on a further expansion in renewable energies but also on efficient combined heat and power generation (CHP) in conjunction with environmentally-friendly district heating. This was underlined by Group CEO Dr. Georg Müller at this year's Annual Results Press Conference in Frankfurt on Thursday. "Without a turnaround in heating energy, the overall energy turnaround will not succeed", he added. To boost this efficient technology, he therefore spoke out in favour of a rapid enactment of the new CHP Generation Act (KWKG).
The draft legislation was approved by the Federal Parliament at the beginning of December and is now on the agenda for the meeting of the Federal Council on 18 December. The legislation is intended to take effect on 1 January 2016. Dr. Müller welcomed the fact that politicians had thus recognised the need to build on CHP in future as well. The raising in the subsidy cap would also help secure existing plants and offer incentives for new investments. "As an important link between the electricity and heating energy markets, CHP and district heating also have a key role to play in any efficient future energy supply system."
MVV Energie has overcome its dip in earnings
By consistently implementing its strategy, with its sustainable focus on the energy system of the future, the Mannheim-based energy company managed to increase its operating earnings (adjusted EBIT) by 3 percent to Euro 175 million in the past 2014/15 financial year (1 October 2014 - 30 September 2015). "We slightly exceeded the previous year's earnings, and thus our own forecast. Not only that, as previously announced we have also overcome the dip in earnings", stressed MVV’s CEO. In the previous financial year, MVV Energie had posted adjusted EBIT of Euro 170 million. Adds Dr. Müller: "That is a good result given ongoing difficult conditions on the energy market in the past financial year, with a further decline in wholesale electricity prices and even lower generation margins."
Alongside slightly cooler overall weather conditions, the reasons for this positive earnings performance referred to by Dr. Müller related above all to higher earnings contributions from the growth investments made in recent years in expanding renewable energies and boosting energy efficiency, as well as to the successful efforts made to cut the company's own costs. "On the one hand, we are and will remain in savings mode when it comes to cost management. On the other hand, we are consistently making targeted investments in our future."
With sales of Euro 3.4 billion, the Mannheim-based group also met its own sales forecast. As expected, the development in electricity market prices left its mark on the group of companies in this respect. Due in particular to related structural market effects in the trading business, with a marked fall in electricity and gas trading volumes, sales decreased by 8 percent in the past financial year.
Earnings before taxes (adjusted EBT) amounted to Euro 132 million and thus rose by 4 percent compared with the previous year. At Euro 75 million, adjusted annual net income after minority interests was around Euro 11 million lower than in the previous year. This resulted in adjusted earnings per share of Euro 1.14, as against Euro 1.30 in the previous year.
Record investments in sustainable growth
The company set a new record with total investments of Euro 470 million in the past financial year, up from Euro 310 million in the previous year. Alongside renewable energies, where the company acquired shareholdings in the project developers Juwi and Windwärts and built two new biomethane plants in Saxony-Anhalt, key focuses of investment related above all to boosting CHP generation, with the launch of operations at Block 9 at the large power plant in Mannheim (Grosskraftwerk Mannheim - GKM) in the summer and the two new power plants in the UK. According to the CEO, the energy from waste plant in Plymouth and the biomass power plant at Ridham Dock to the south-east of London showed that MVV Energie has exported its own competence and longstanding experience in these fields to the UK and thus laid a strong foundation in these promising markets.
With its adjusted equity ratio of 33.8 percent and its solid financing structure, MVV Energie also plans to maintain a high pace of investment in future. At the Annual Results Press Conference, Dr. Müller affirmed that the Group would be investing a further Euro 3 billion in the years ahead. "We will thus be seizing the opportunities offered by the transformation in the energy system in future as well." Investments would focus in particular on the further expansion in renewable energies, which the company sees as harbouring sustainable growth potential. That was particularly true of wind power in Germany and of freestanding photovoltaics systems in the international business. With its Juwi and Windwärts shareholdings, the Group also sees itself as being well-positioned as a project developer in these markets. Adds Dr. Müller: "The key to our joint success involves pooling the different competencies that nevertheless complement each other ideally at Juwi, Windwärts and MVV Energie. Juwi and Windwärts are a perfect match for our strategy and their project development expertise will complete our value chain".
The high level of investment in recent years has also impacted on the size of the Group's workforce. Having taken over around 70 employees at Windwärts GmbH and built up operating teams in the UK, the MVV Energie Group had a total of 5,308 employees at the end of the financial year on 30 September 2015, and thus 142 more than one year earlier.
At the same time, the Group is strengthening its alignment towards new business models by developing innovative products and services in the field of decentralised energy management for industrial, retail, housing, commercial and private customers. Comments Dr. Müller: "We are consistently developing from supplier to service provider and are focusing on our customers even more closely." As good examples of this process, he referred to BEEGY, a cross-sector joint venture founded almost a year ago, and the "Electricity Bank" innovation project, which is testing the energy industry-related interaction of decentralised renewable electricity generation and district storage facilities in the Mannheim district of Rheinau.
Positive outlook - annual earnings rise by 15 percent
The Mannheim-based energy company intends to maintain its positive earnings performance in the current 2015/16 financial year. Explains Dr. Müller: "From an operating perspective, we expect to increase our adjusted EBIT by around 15 percent." Key growth drivers here include the first full-year of operations at the new plants in the UK and initial earnings from renewable energies project development, and thus from the new shareholdings in Juwi and Windwärts. These improvements should also enable the company to more than offset the charges on earnings expected from persistently low generation margins and the contraction in grid operation earnings on account of incentive regulation.
MVV Energie also expects its sales to show substantial growth to more than Euro 4 billion in the current year, as against Euro 3.4 billion in the past year. Sales stand to benefit in particular from full consolidation of the Juwi AG shareholding, which is due to take place in the current financial year.
"By overcoming our dip in earnings, we will show that we acted very early to set the right course for our company", added Dr. Müller. "Only this way can we shape our move towards the new energy system along social and ecological lines". The energy supply was becoming more renewable, flexible and efficient. "We also want it to remain reliable and affordable". It was therefore a good sign that MVV Energie would be keeping its electricity and gas prices for private customers stable in 2016 for the third consecutive year already.
Continuity is also the hallmark of the company's dividend policy. The Executive and Supervisory Boards will thus be recommending an unchanged dividend of 90 cents per share for approval by the Annual General Meeting to be held in Mannheim on 4 March 2016.
The complete financial report ist available at
|Key figures of the MVV Energie Group|
|Euro million||2014/15||2013/14||% change|
|Sales and earnings|
|Sales excluding energy taxes1||3 422||3 717||- 8|
|Adjusted EBITDA1,2||336||330||+ 2|
|Adjusted EBIT1,2||175||170||+ 3|
|Adjusted EBT1,2||132||127||+ 4|
|Adjusted annual net income 1,2||92||93||- 1|
|Adjusted annual net income after minority interests1,2||75||86||- 13|
|Adjusted earnings per share 1,2 (Euro)||1.14||1.30||- 12|
|Cash flow from operating activities1||254||407||- 38|
|Cash flow from operating activities per share1 (Euro)||3.86||6.18||- 38|
|Adjusted total assets (at 30 September)1,3||4 073||3 915||+ 4|
|Adjusted equity (at 30 September)1,3||1 376||1 396||- 1|
|Adjusted equity ratio (at 30 September)1,3||33.8%||35.7%||- 5|
|Net financial debt1||1 341||1 063||+ 26|
|Capital employed1||2 660||2 527||+ 5|
|Total Investments1||470||310||+ 52|
|of which growth investments1||336||207||+ 62|
|of which investments in existing business1||134||103||+ 30|
|Number of employees (at 30 September)1||5 308||5 166||+3|
|1||previous year's figures adjusted|
|2||excluding non-operating measurement items for financial derivatives, excluding structural adjustment for part-time early retirement and including interest income in connection with finance leases|
|3||excluding non-operating items for financial derivatives|