Mild winter holds back earnings at MVV Energie
Operating earnings at Mannheim company down 16 percent due to fall in heating energy and gas turnover and lower wind power yields - Delays at new power plant in Plymouth/UK - Full-year earnings forecast now more ambitious
This year's mild winter may be good news for private households, but it has certainly left its mark on German energy suppliers. The unusually mild winter weather in recent months also placed a damper on results at the Mannheim energy company MVV Energie. Weather-related turnover losses, most notably in the heating energy and gas businesses, and lower yields from proprietary wind turbines due to lower wind volumes led to a significant year-on-year reduction in sales and earnings. As announced by MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) upon publication of its interim report for the 1st quarter of the current 2014/15 financial year (1 October – 31 December 2014) in Mannheim on Thursday, sales for the period from October to December 2014 totalled Euro 941 million, thus falling around 10 percent short of the previous year’s figure. Operating earnings (adjusted EBIT) for the same period fell by Euro 12 million to Euro 64 million.
According to company CEO Dr. Georg Müller, in its capacity as "Energiser of the Future" the Mannheim Group "remains unreservedly committed to the energy supply conversion, with a strategic alignment that combines renewable and conventional energies under one roof, an extensive investment programme that is consistently building on renewable energies and en-ergy efficiency and with the development of new business models."
MVV Energie is maintaining its own high pace of investment. In the first three months of the current financial year alone, the Group invested Euro 191 million, more than twice the volume of investment in the same period in the previous year (Euro 82 million). This is also reflected in an increase in the Group's workforce, which grew year-on-year by 102 employees to its current total of 5,207 employees.
Key investment focuses included the partnership with Juwi AG and the takeover of Windwärts Energie GmbH, which have extended the Group’s value chain for renewable energies project development and expanded its operations management competencies. When it comes to developing new business models for smart, decentralised energy management, MVV Energie is charting new territory with its cross-sector joint venture BEEGY GmbH.
Earnings hit by mild winter
Weather conditions in the 1st quarter of the current financial year led to a reduction of around 9 percent in heating energy turnover in the relevant "Sales and Services" reporting segment compared with the already very mild equivalent period of October to December 2013. Gas turnover at the overall Group fell by 12 percent. At the same time, like-for-like electricity generation at our wind turbines dropped by 16 percent. These factors are reflected in a corresponding reduction in our sales and key earnings figures. Earnings after interest, taxes and minority interests (adjusted net income for the period after minority interests) thus decreased by 20 percent to Euro 32 million.
Earnings forecast "more ambitious"
The ongoing losses of turnover due to weather conditions this winter will also adversely affect earnings for the current financial year. What’s more, due to construction delays at the waste-fired combined heat and power plant in Plymouth in the UK, the company now expects operations to begin later than scheduled. As a result, operations at this plant are expected to generate lower sales and only minor earnings contributions in the current financial year. Upon publication of its annual report in December of last year, the company issued a full-year operating earnings forecast of between Euro 180 million and Euro 195 million for the 2014/15 financial year. Comments Dr. Müller: "This target is now more ambitious".
Focus on combined heat and power (CHP) generation
The CEO of MVV Energie honoured last summer’s amendment to the German Renewable Energies Act (EEG) as a "first major and correct step towards transforming our energy system". This would now have to be followed by further steps to press ahead with converting the energy supply without losing sight of the key objectives of supply reliability, economic viability and environmental protection. Comments Dr. Müller: "Renewable energies have assumed the leading role in our energy system, but we will nevertheless be unable to do without conventional energies for the foreseeable future." As well as a forward-looking structure for the electricity market design, he therefore called in particular for a targeted amendment to the German Combined Heat and Power Generation Act (KWKG). "Combined heat and power generation is the most efficient form of heating energy supply in built-up areas. Not only that, it ideally complements renewable energies, as heating energy is required above all in winter and at times when solar and wind power generation volumes are low."
|Key figures of the MVV Energie Group|
1 October 2014 - 31 December 2014
|Euro million||1 Oct 2014 to 31 Dec 2014||1 Dec 2013 to 31 Dec 2013||% change|
|Sales and earnings|
|Sales excluding energy taxes1||941||1 051||- 10|
|Adjusted EBITDA1,2||102||115||- 11|
|Adjusted EBIT1,2||64||76||- 16|
|Adjusted EBT1,2||54||63||- 14|
|Adjusted net income for period1,2||38||45||- 16|
|Adjusted net income for period after minority interests1,2||32||40||- 20|
|Adjusted earnings per share 1,2 (Euro)||0.48||0.61||- 21|
|Cash flow from operating activities1||9||- 15||-|
|Cash flow from operating activities per share1 (Euro)||0.14||- 0.22||-|
|Adjusted total assets (at 31 Dec 2014 / 30 Sep 2014)1,3||3 937||3 915||+ 1|
|Adjusted equity (at 31 Dec 2014 / 30 Sep 2014)1,3||1 428||1 396||+ 2|
|Adjusted equity ratio (at 31 Dec 2014 / 30 Sep 2014)1,3||36.3%||35.7%||+ 2|
|Net financial debt (at 31 Dec 2014 / 30 Sep 2014)1||1 245||1 063||+ 17|
|Total Investments1||191||82||>+ 100|
|of which growth investments1||157||66||>+ 100|
|of which investments in existing business1||34||16||>+ 100|
|Number of employees (at 31 Dec 2014 / 31 Dec 2013)1||5 207||5 105||+ 2|
|1||previous year's figures adjusted|
|2||excluding non-operating items for financial derivatives, excluding structural adjustments for part-time early retirement and including interest income from finance leases|
|3||excluding non-operating measurement items for financial derivatives|