MVV Energie sets new record: Annual sales top Euro 4 billion for first time
Investments at Mannheim-based energy company also at new record level of almost Euro 400 million - Renewable energies and energy efficiency remain key focuses - Earnings held back by low electricity generation margin
For the first time in its history, the Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) topped the Euro 4 billion mark in terms of its annual sales in the past 2012/13 financial year (1 October 2012 - 30 September 2013), thus exceeding the previous year's figure by a further 4 percent. This was announced at this year's Annual Results Press Conference held in Frankfurt am Main on Thursday. According to Group CEO, Dr. Georg Müller, this "shows that we are on the right strategic track and that our operating business is performing". Furthermore, the Group's adjusted net surplus after minority interests, i.e. earnings after interest, taxes and minority interests, grew by 6 percent from Euro 80 million to Euro 85 million in the past financial year.
By contrast, the ongoing decline shown by electricity generation margins in recent years has placed a burden on the entire energy industry, and thus also on MVV Energie. Comments Dr. Müller: "Current market developments have also left their mark on our business." As already predicted in the financial reports published during the year, adjusted operating earnings (adjusted EBIT) thus decreased year-on-year by just under 6 percent to Euro 210 million in the 2012/13 financial year.
"This development comes as no surprise", added MVV Energie's CEO. "The dip in earnings will remain with us in the current 2013/14 financial year as well." The company marketed its proprietary electricity volumes in tranches over several years. This meant that volumes were now being fully marketed at the lower prices and spreads. For the current financial year, the company therefore expects to generate adjusted EBIT of between Euro 170 million and Euro 185 million accompanied by further slight sales growth. At the same time, the Executive Board expects to see operating earnings growth once again in the following year, i.e. in the 2014/15 financial year.
This optimistic outlook for 2014/15 onwards is attributable to the investment programme consistently implemented by the Mannheim energy group in the past three years. Overall, MVV Energie will be investing Euro 3 billion by 2020 in renewable energies, energy efficiency, combined heat and power generation, generating energy from waste, expanding environmentally-friendly district heating at all locations and modernising and maintaining its grids and plants. Of this programme, investments have already been made or corresponding decisions taken for more than Euro 2 billion. MVV Energie invested Euro 392 million in the past financial year alone, thus setting a new company record in this area as well.
"We are already reaping initial benefits from these investments", stressed MVV's CEO. This was cushioning the adverse impact of economically difficult market conditions. Having said this, the company’s growth investments would only fully contribute to earnings following a certain delay. "A new power plant, such as the energy from waste plant in Plymouth and the biomass power plant in Ridham Dock, only contributes earnings once regular operations have been launched." Alongside these two power plant projects currently in construction in the UK, MVV Energie can also point to the doubling in its onshore wind power capacities from 73 megawatts to 144 megawatts in the past financial year and to the construction of two proprietary biomethane plants. One key investment focus in the district heating and combined heat and power generation business involved the district heating storage facility where operations are gradually being launched on the site of the large power plant in Mannheim (GKM). The new Block 9 - one of Europe's most modern and efficient coal power plant blocks - is also currently being built at the same location.
Coalition agreement points in right direction
With its investment programme, the company is underlining what Dr. Müller terms its "longstanding unreserved commitment" to the energy supply conversion, in which renewable energies are set to assume the leading role. Now it was a question of providing the new energy system with a sustainable structure, one capable of ensuring an environmentally-friendly, reliable and affordable energy supply in future as well.
The coalition agreement signed by the CDU/CSU and SPD thus pointed in the right direction and laid important foundations for the future energy supply. Given its broad-based majority in the Federal Parliament and Federal Council, a grand coalition had the historic opportunity, and obligation, to press ahead with the system conversion. It should have the courage to introduce reforms and focus on expanding renewable energies, climate protection and energy efficiency. The Mannheim-based energy company is therefore calling for a gradual, far-reaching reform in the Renewable Energies Act (EEG), one that should be implemented with a due sense of proportion. It is also calling for combined heat and generation to be strengthened and in the longer term for a non-technology-specific, competitive capacity market for conventional power plants, which remain an indispensable factor in terms of supply reliability.
Sales rise, earnings held back
MVV Energie posted its strongest growth in the past 2012/13 financial year in its Generation and Infrastructure reporting segment, where sales rose by 10 percent. This growth was driven above all by the successful expansion in renewable energies, especially onshore wind power and biomethane, and by the grid business. The increase in sales in Trading and Portfolio Management was due in particular to higher gas trading volumes resulting from portfolio management. In Sales and Services, the largest reporting segment in terms of sales, the company successfully boosted its sales by 9 percent, and that despite tougher competition. This growth was also driven by the company's success in directly marketing renewable energies via the market premium model. MVV Energie is now the German market leader when it comes to directly marketing photovoltaics volumes.
The development in operating earnings was shaped by opposing factors. The impact of persistently low generation margins and the burdens due to CO2 rights no longer being allocated free of charge led operating earnings in the Trading and Portfolio Management reporting segment to reduce by Euro 19 million. Earnings in the Generation and Infrastructure reporting segment, which grew from Euro 8 million to Euro 149 million, also reflect the successful expansion in renewable energies.
These annual results allow the company to uphold its continuity-based dividend policy. Consistent with the proposal submitted by the Executive Board, the Supervisory Board will thus be recommending an unchanged dividend of Euro 0.90 cents per share for approval by the Annual General Meeting due to be held in Mannheim on March 14, 2014.
|Key figures of the MVV Energie Group (IFRS)|
1 October 2012 - 30 September 2013
|Euro million||2012/13||2011/12||% change|
|Sales and earnings|
|Sales excluding energy taxes||4 044||3 895||+ 4|
|Adjusted EBITDA1||377||399||- 6|
|Adjusted EBIT1||210||223||- 6|
|Adjusted EBT1||144||151||- 5|
|Adjusted annual net surplus 1||102||98||+ 4|
|Adjusted annual net surplus after minority interests1||85||80||+ 6|
|Adjusted earnings per share 1 (Euro)||1.29||1.21||+ 7|
|Cash flow from operating activities||371||285||+ 30|
|Cash flow from operating activities per share (Euro)||5.63||4.33||+ 30|
|Adjusted total assets (at 30.9.)2||4 037||3 854||+ 5|
|Adjusted equity (at 30.9.)2,3||1 383||1 390||- 1|
|Adjusted equity ratio (at 30.9.)2,3||34.3%||36.1%||- 5|
|Net financial debt||1 111||1 028||+ 8|
|Value Spread||1.0%||0.4%||>+ 100|
|Capital employed3||2 506||2 486||+ 1|
|Total Investments3||392||294||+ 38|
|of which growth investments3||301||191||+ 58|
|of which investments in existing business3||91||103||- 12|
|Number of employees (at 30.9.)||5 459||5 541||- 1|
|1||excluding non-operating IAS 39 derivative measurement items, excluding restructuring expenses and including interest income from finance leases|
|2||excluding non-operating IAS 39 derivative measurement items|
|3||previous year's figures adjusted|