MVV remains on course even during coronavirus crisis
Mannheim energy company matches previous year’s performance despite ongoing market uncertainty – Outlook confirmed – Energy policy appeal for heating energy turnaround: Legislative announcements now have to be followed up with specific implementation
The Mannheim-based energy company MVV (ISIN: DE000A0H52F5; WKN: A0H52F) remains on course even during the current coronavirus crisis. This was confirmed by MVV’s CEO, Dr. Georg Müller, when presenting the results for the first nine months of the current 2020 financial year (1 October 2019 – 30 June 2020) in Mannheim on Friday. MVV is meeting its responsibility as a provider of critical infrastructure by offering a reliable supply of energy and water. Not only that, it is living up to the goal it has set itself of not halting the consistent implementation of its corporate strategy, with its focus on sustainability and climate neutrality, but rather of continuing to make an effective contribution to the success of the energy turnaround. Comments Dr. Müller: “We have come through this crisis in good shape so far and are making every effort to master it successfully in future as well.”
This approach is also reflected in MVV’s financial results. The company’s earnings at the end of the first three quarters are at the same level as in the previous year. Whereas sales showed a slight reduction of almost 5 percent to Euro 2.7 billion, the operating earnings of Euro 208 million are slightly ahead of the previous year’s figure. The CEO stressed that the cautious approach taken by the company towards health protection, which had been driven by its responsibility towards its employees, customers and partners, had proven its worth.
“The ongoing coronavirus pandemic continues to impact significantly on developments in society as a whole and on the economy”, said Dr. Müller. The associated restrictions, rules and regulations affected all areas of public life and, to differing extents, all sectors of the economy. “The energy industry is and will remain directly affected, and that both in terms of energy consumption and the associated development in energy turnover with customers, as well as of developments in prices on the energy markets.” At the same time, the uncertainty surrounding the further course of events had created noticeable insecurity on the markets and made it difficult to provide any reliable statements concerning developments in the months ahead.
Even though the impact of the economic uncertainties due to the coronavirus pandemic cannot yet be definitively quantified at the present time, after the first nine months of its current financial year MVV can confirm its own outlook for the 2020 financial year as a whole. The company still expects its adjusted sales and adjusted EBIT to both approximately match the previous year’s figures. In 2019, MVV generated operating earnings of Euro 225 million based on sales of Euro 3.7 billion.
Further developments will continue to depend above all on the duration and extent of restrictions and on the pace and scope of economic recovery in individual sectors. From MVV’s perspective, ongoing uncertainty in the event of a renewed intensification could lead not only to reductions in turnover and further fluctuations in prices, but also to further delays in the marketing or realisation of wind, solar and other construction projects.
Company earnings driven by successful energy turnaround projects
According to Dr. Müller, MVV’s stable earnings performance was significantly due to those projects successfully implemented at the group of companies in the current financial year to implement the energy turnaround. Alongside the launch of operations at the new gas-fired CHP plant in Kiel, which had made its first positive earnings contributions, and the higher level of plant availability in the environmental energy business, these projects included linking up the energy from waste plant in Mannheim to the regional district heating grid. For MVV’s CEO, this represented a first major milestone on the way towards Green Heat and decarbonising district heating.” MVV is now implementing a comparable project at its energy from waste plant in Leuna (Saxony-Anhalt), which will feed heating energy into the district heating grid in the neighbouring city of Merseburg.
The group of companies has also further expanded its own generation of electricity from renewable energies. In May, MVV launched operations at Siegfriedeiche Windfarm in Hochtaunus District, which had been developed and built by its Windwärts subsidiary. In July, a windfarm in Eastern Hesse in which Energieversorgung Offenbach holds a 50% stake was connected to the grid. These projects followed the launch of operations at a new windfarm in Freisen/Saarland at the end of 2019. Overall, MVV currently has renewable energies plants with installed capacity of 486 MW. Over the past nine months, MVV has expanded its renewable electricity generation year-on-year by 16 percent to 992 million kilowatt hours.
These successes enabled MVV to offset the negative effects seen in the financial year to date due to the very mild winter, with correspondingly lower heating energy and gas turnover, and the initial effects of the coronavirus crisis. Like sales and earnings, other key figures showed largely stable developments, with adjusted EBITDA at Euro 352 million (+ 2 percent), adjusted net income for the period after minority interests at Euro 92 million and adjusted earnings per share at Euro 1.40 (each - 5 percent).
Increased investments in the energy turnaround and climate protection
“Climate protection is and is set to remain one of the key tasks facing politicians, businesses and society as we look to the future”, stressed Dr. Müller. Despite ambitious national and international targets, despite tough legislation to protect the climate and despite serious action, climate change was still continuing apace. “It is therefore just as important as ever that climate protection should be placed at the top of the agenda. That is precisely what we at MVV have been doing for many years. Climate protection and sustainability are both core components of our strategy.”
The group of companies is therefore maintaining its high pace of investment. According to its CEO, MVV had invested Euro 247 million in the past nine months alone, around 22 percent more than in the same period last year. “As a company, we aim to be climate neutral by 2050 at the latest. That is challenging, as the energy industry, with its extensive infrastructure, has to plan and act with a long-term perspective.”
Here, politicians were called on to create the necessary framework. By adopting the German Coal Exit Act (KAG) and extending the German Combined Power and Heat Generation Act (KWKG) at the beginning of July, the Federal Government had, after lengthy and difficult negotiations, now created the future framework for further developing the energy supply. However, it had at the same time created significant disadvantages for modern and highly efficient power plants in southern Germany and not provided any specific clarification as to how these would be offset. Politicians would therefore have to act quickly to introduce specific requirements and regulations to do justice to the objectives of the legislation. According to Dr. Müller, this was not only important for the treatment of new hard-coal power plants, but crucial for the future of any green heating supply and the further expansion in renewable energies.
The complete quarterly statement is available online at www.mvv.de/investors.