MVV confirms growth course
Operating earnings rise 4 percent to Euro 212 million in first six months of current 2017 financial year - CEO Dr. Georg Müller: "These figures confirm the financial success of our pioneering role in the energy turnaround."
Mannheim-based energy company MVV Energie (ISIN: DE000A0H52F5; WKN: A0H52F) upheld its positive earnings performance in the first half of the current 2017 financial year (1 October 2016 - 31 March 2017). As announced by the company when presenting its financial report in Mannheim on Friday, operating earnings (adjusted EBIT) rose year-on-year from Euro 204 million to Euro 212 million. Sales for the same period grew 6 percent to Euro 2.2 billion.
According to company CEO Dr. Georg Müller, this sales and earnings growth was driven on the one hand by the full consolidation of Juwi AG and recovery in electricity generation, waste and biomass prices and on the other hand by cool winter weather conditions, success in the nationwide sales business, particularly in directly marketing renewables and high availability levels at proprietary plants in Germany and the UK. Comments Dr. Müller: "MVV’s operating performance reflects the financial success of our strategic alignment. These figures further document our role as a pioneer of the energy turnaround."
Based on these first-half earnings, the company has also confirmed the full-year forecast for its 2017 financial year. MVV is confident that it will achieve slight growth in both sales (2016: Euro 4.1 billion) and adjusted EBIT (2016: Euro 213 million).
At the half-way point of its current financial year, MVV Energie can also report growth in its pre-tax earnings, in this case by Euro 16 million to Euro 187 million. Profit, i.e. adjusted net income for the period after minority interests, rose year-on-year by Euro 10 million to Euro 113 million. That corresponds to adjusted earnings per share of Euro 1.71, up from Euro 1.57 in the previous year.
New corporate design underpins forward-looking claim
Based on its own figures, MVV will be channelling around Euro 250 million into further expanding renewable energies and boosting energy efficiency, as well as into modernising and maintaining its proprietary plants and grids in the 2017 financial year. The Group will thus be maintaining a persistently high pace of investment. Consistent with this approach, in the first half the Group already invested Euro 88 million in growth (Euro 25 million) and its existing business (Euro 63 million). Key focuses here included the construction of the new gas-powered CHP plant in Kiel and the measures taken at all of the Group’s locations to expand and increase the density of district heating grids.
MVV further expanded its renewable energies position in the first six months of the current financial year. Despite lower wind volumes, proprietary electricity generation volumes from renewables rose by 14 million kilowatt hours to 620 million kilowatt hours, equivalent to the average private electricity consumption of more than a million people. In its direct marketing business for electricity from renewables, MVV has expanded its nationwide portfolio to 7,100 megawatts and thus reinforced its position as Germany’s leading direct marketer.
The Juwi subsidiary also reached a major milestone in January 2017, exceeding the 2,000 megawatt mark for installed onshore wind capacities. Together, the windfarms Juwi has built over the past 20 years now theoretically supply more than a million households.
MVV has underlined its forward-looking and competitive claim to be a key shaper of the energy turnaround with its new corporate design unveiled just a few days ago. Comments CEO Dr. Müller: "Our strategy, corporate culture and brand form a powerful unity. We inspire with energy." MVV combines experience, expertise, high performance and great innovation. With its innovative products and services, it acts as a competent and experienced partner enabling its customers to actively help shape the energy turnaround.
Positive business performance
In terms of individual reporting segments, MVV expects "Generation and Infrastructure" to slightly increase its operating earnings in the current financial year. This positive development will be driven above all by the waste and biomass business, high power plant availability levels and earnings contributions from expanded proprietary renewable generation capacities. Overall, the full consolidation of Juwi, which has taken effect in this segment, has led to higher volatility compared with the previous year, as delays can always arise in project development activities which regularly have terms of several years. As expected, in the 2017 financial year MVV will be unable to match the previous year’s exceptionally high earnings in its renewable energies project development business, a factor already reflected in lower first-half earnings.
In its "Trading and Portfolio Management" reporting segment, MVV increased its sales by Euro 71 million to Euro 478 million between October and March, a development due in particular to higher direct marketing trading volumes. Benefiting from the development in wholesale prices for power plant marketing, operating earnings in this segment rose by Euro 15 million. At Euro 1 million, however, earnings here remain low.
Given the business performance to date, which also benefited from cooler overall winter weather conditions compared with the previous year, MVV's expectations for its "Sales and Services" reporting segment have improved. Heating energy and gas turnover here increased by 6 percent and 3 percent respectively in the period from October to March. The company now expects adjusted EBIT, which already increased by Euro 9 million to Euro 55 million in the first half, to show slight full-year growth in the 2017 financial year. Due to the ongoing high intensity of competition and positive one-off items in the previous year, MVV had previously expected to see a reduction in earnings in this segment.
Political changes still key
According to MVV's CEO, the relevant energy policy instruments have to be developed further in the coming years if the energy system conversion is to be advanced. In terms of expanding renewables, Dr. Müller spoke out in favour of retaining technology-specific tenders. When it came to direct competition, wind turbines and photovoltaics system still had very different characteristics in terms of their cost structures and project development.
Dr. Müller is also critical of the abolition of avoided grid fees for controllable plants and the associated intervention in existing plants proposed by the Federal Government in connection with the amendments to the grid fee system. By contrast, MVV's CEO is positive in his overall assessment of the draft legislation to promote tenant electricity published by the Federal Ministry for Economic Affairs in March. Intended to enable tenants to participate in the energy turnaround, the new requirement, which would be also be factored into neighbourhood development concepts, offers an opportunity to further boost the tenant electricity business with photovoltaics systems.
|Key figures of the MVV Energie Group|
1 October 2016 - 31 March 2017
|Euro million||1 Oct 2016 to 31 Mar 2017||1 Oct 2015 to 31 Mar 2016||% change|
|Sales and earnings|
|Sales excluding energy taxes||2,165||2,043||+ 6|
|Adjusted EBITDA1||300||290||+ 3|
|Adjusted EBIT1||212||204||+ 4|
|Adjusted EBT1||187||171||+ 9|
|Adjusted net income for period1||131||121||+ 8|
|Adjusted net income for period after minority interests1||113||103||+ 10|
|Adjusted earnings per share 1 (Euro)||1.71||1.57||+ 9|
|Cash flow from operating activities2||217||19||--|
|Cash flow from operating activities per share2 in Euro||3.29||0.29||--|
|Adjusted total assets (at 31 March 2017 / 30 Sep 2016)3||4,426||4,401||+ 1|
|Adjusted equity (at 31 March 2017 / 30 Sep 2016)3||1,517||1,452||+ 4|
|Adjusted equity ratio (at 31 March 2017 / 30 Sep 2016)3||34.3%||33.0%||+ 4|
|Net financial debt (at 31 March 2017 / 30 Sep 2016)||1,226||1,283||- 4|
|Total Investments||88||118||- 25|
|of which growth investments||25||75||- 67|
|of which investments in existing business||63||43||+ 47|
|Number of employees (at 31 March 2017 / 31 March 2016)||6,031||6,125||- 2|
|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|