MVV Energie consistently implementing its strategy
Satisfactory results for past financial year with slight sales growth and unchanged operating earnings - Investments in renewable energies, energy efficiency and cogeneration - Awarded preferred bidder status for energy from waste plant in Plymouth in south-west England
MVV Energie AG, the Mannheim-based energy company, met its targets in the past 2009/10 financial year (1 October 2009 - 30 September 2010), with sales increasing by 6 percent to Euro 3.4 billion and operating earnings matching the previous year's figure of Euro 239 million. Dr. Georg Müller, CEO of MVV Energie, was suitably satisfied at this year's Annual Results Press Conference held in Frankfurt on Wednesday. "Our consolidated financial statements reveal our Group's economic potential. We have exploited the profound changes in the energy sector over the past two years to boost our own earnings strength and financial resources on a consistently high level. Climate protection requirements and the need to make efficient use of limited energy resources mean that we are heading for a new energy age, one in which we aim to achieve further profitable growth enabling us to remain one of Germany's leading energy companies in 2020 and beyond."
The CEO was particularly positive in his assessment of the earnings contributions from the Group's most important segments, namely electricity, district heating, gas and environmental energy, which were more or less on a par with each other. In conjunction with its close customer links in local and regional markets and the high degree of integration within the Group, this balanced business portfolio meant that MVV Energie was considerably less vulnerable to macroeconomic fluctuations compared with other companies in the sector. Said Dr. Müller: "Our main focus is therefore on current and future developments in prices on commodity, energy and waste markets, as well as on the requirements of state regulation."
The record sales of Euro 3.4 billion reported for the past 2009/10 financial year were mainly driven by substantial volume growth in the electricity trading business and nationwide electricity and gas sales with industrial, commercial and secondary distribution customers. These enabled the Group to more than offset the decline in sales due to sharp cuts in district heating and gas prices, as well as the price-related reduction in sales in the environmental energy segment. The Group posted adjusted operating earnings (adjusted EBIT) of Euro 239 million. Due to higher taxes on income, the adjusted annual net surplus after minority interests showed a slight reduction of 3 percent to Euro 95 million. Adjusted earnings per share decreased correspondingly from Euro 1.48 to Euro 1.44.
MVV Energie could report highly positive developments in its net asset and financial position in the past financial year. The Group reduced its liabilities and also significantly improved its free cash flow year-on-year from Euro 20 million to Euro 154 million. With a solid equity ratio of 35.7 percent, MVV Energie has, according to its CEO, a "good basis for maintaining our balanced range of financing for our investments in sustainable growth".
Increasing electricity and gas turnover
The 2009/10 results are characterised by strong growth in electricity and gas turnover. Electricity turnover rose year-on-year by 23 percent to a new record figure of 23.0 billion kilowatt hours, while electricity sales grew by 14 percent compared with the previous year, thus exceeding the Euro 2 billion mark for the first time. Adjusted EBIT in the electricity segment improved by Euro 19 million to Euro 54 million.
Driven mainly by weather conditions, turnover in the district heating segment grew by 6 percent to 5.3 billion kilowatt hours, while sales rose by 4 percent to Euro 307 million. Adjusted EBIT in the district heating segment improved by Euro 12 million to Euro 48 million.
Gas turnover was boosted year-on-year by 8 percent to 11.3 billion kilowatt hours. Most of this volume growth was attributable to industrial, commercial and secondary distribution customers, and thus to the Group's nationwide gas sales activities. The fact that sales in the gas segment nevertheless fell by 12 percent to Euro 429 million and adjusted EBIT by Euro 8 million to Euro 58 million in the same period is due to the high double-digit price cuts introduced in 2009. Prices are currently even lower than in the 2007/08 financial year.
At Euro 307 million, sales in the value-added services segment virtually matched the previous year's figure. Due to impairment losses recognised for property, plant and equipment, adjusted EBIT dropped by Euro 14 million to Euro 4 million. The impairment losses were due above all to a deterioration in market conditions and reduced earnings expectations at the subsidiaries Biomassen-Heizkraftwerk Altenstadt GmbH and Waldenergie Bayern GmbH. At the same time, the energyrelated services subgroup was reorganised in strategic, organisational and personnel terms in the past year to focus its activities more closely on promising markets.
The environmental energy segment boosted the volume of waste delivered in the past year by a further 4 percent to almost 1.6 million tonnes. Falling waste disposal revenues and lower electricity and steam revenues nevertheless led sales to fall by Euro 7 million to Euro 187 million. Due mainly to this factor, adjusted EBIT in the environmental energy segment also dropped year-on-year by Euro 9 million to Euro 62 million.
Consistent dividend, cautiously positive outlook
The company's pleasing overall results allow the Executive and Supervisory Boards to propose an unchanged dividend of Euro 0.90 per share for the past 2009/10 financial year for approval by the Annual General Meeting due to be held at the Rosengarten Congress Center in Mannheim on 18 March 2011. This corresponds to an unchanged distribution total of Euro 59.3 million.
MVV Energie is cautiously optimistic with regard to the coming years. Energy markets are currently undergoing a process of profound structural change. Their future development is surrounded by ongoing uncertainties. Even after the adoption of the Federal Government's Energy Concept, key aspects of the future energy industry framework are still undecided or subject to review. According to the CEO of MVV Energie, the Energy Concept includes positive aspects, such as the approaches adopted towards renewable energies and energy-related services, but does not accord sufficient priority to environmentally-friendly district heating and cogeneration. He is therefore calling for a 2025 District Heating Pact to take adequate account of the expansion of these key resource-saving technologies.
The company expects the underlying framework to remain unstable in the current 2010/11 financial year, a factor that makes it more difficult to issue forecasts. In terms of its sales and earnings, MVV Energie expects to match the high previous year's figures once again and to benefit already from initial positive effects from the "Once Together" group project now resolved by the company.
Strategy reflected in investments
The past financial year also saw a successful start to the consistent implementation of the "MVV 2020" corporate strategy, with its key focuses on growth investments in expanding renewable energies, environmentally-friendly district heating, cogeneration, energy-related services, and in the further development of the nationwide industrial and commercial customer sales business.
MVV Energie thus intends to raise the share of proprietary electricity generation using renewable energies from an already above-average level of 19 percent currently to 30 percent by 2020. With its successful entry into the wind energy market by acquiring a wind farm in Plauerhagen (Mecklenburg-Vorpommern) in summer 2010, the company has already taken a major initial step in this growth market.
As one of Germany's largest district heating providers, MVV Energie made further massive investments in this environmentally-friendly technology in the past year, with measures affecting all of its locations. The new district heating pipeline from Mannheim to Speyer began operations in October 2010, Stadtwerke Ingolstadt is working together with Petroplus Refinery and AUDI on Bavaria's largest district heating project, and Energieversorgung Offenbach is extending its grids in Heusenstamm and Dietzenbach. Construction work is progressing on schedule on the new Block 9 at the large power plant in Mannheim (GKM), in which MVV Energie holds a 28 percent stake. This project is intended to secure the district heating supply in the Rhine/Neckar metropolitan region by working with cogeneration. Alongside this, in the past summer the Group's Czech subgroup also modernised and extended its heating energy and electricity generation capacities.
In its energy-related services business as well, the company documented its proven competence and leading market position by launching operations on its contracting project at AHG-Klinikum Hardberg, a hospital in Breuberg (Hessen).
New environmental energy project in the UK
Dr. Müller reported a particular success in the environmental energy business. In the past few days, the Group's subsidiary MVV Umwelt GmbH, already one of Germany¿s largest environmental energy companies with five energy from waste plants and a total capacity of 1.6 million tonnes a year, was awarded preferred bidder status in a pan-European tender for a new waste-powered heating energy plant in Plymouth. The contract governing the construction and operation of the plant in this port in south-western England is to be finally negotiated with the regional authorities and signed by the end of March. From 2014, this plant should then use around 245,000 tonnes of household, commercial and industrial waste a year to generate electricity and heating energy. The power plant has a net electricity output of around 22 megawatts and will supply up to 23 megawatts of heating energy. The heating energy is to be used to supply the adjacent navy base operated by the British Ministry of Defence. The project involves a total investment of around Euro 250 million. Comments Dr. Müller: "This project latches seamlessly onto our strategic focuses. Here, we can contribute to the attractive British market our existing expertise in working with state-of-the-art cogeneration technology and our extensive experience in putting waste to ecologically sensible use, as well as in planning, building and operating power plants."
|Key figures of the MVV Energie Group (IFRS)|
|Euro million||2009/10||2008/09||% change|
|Sales excluding electricity and natural gas taxes||3 359||3 161||+ 6|
|Adjusted EBITDA1||402||385||+ 4|
|Adjusted EBITA1||243||239||+ 2|
|Adjusted annual net surplus2||105||112||- 6|
|Adjusted annual net surplus after minority interests2||95||98||- 3|
|Earnings per share in Euro2||1.44||1.48||- 3|
|Free cash flow||154||20||+ 670|
|Adjusted total assets (as of 30.9.)1||3 457||3 566||- 3|
|Adjusted equity1||1 233||1 208||+ 2|
|Number of employees (as of 30.9.)||6 068||6 053||0|
|1||excluding non-operating IAS 39 measurement in connection with energy trading derivatives|
|2||excluding non-operating IAS 39 measurement in connection with energy trading derivatives and one-off restructuring expenses at MVV Energiedienstleistungen GmbH subgroup in previous year|