MVV: Robust in unsettled times
Broad business portfolio enables Mannheim energy company MVV to remain stable even in difficult market climate – Adjusted EBIT of Euro 298 million from operations in 2022 financial year – CEO Dr. Georg Müller: "We will channel all our energies in future as well into our #climatepositive course, as this will take us to a sustainable energy system."
The Mannheim-based energy company MVV Energie AG (WKN: A0H52F, ISIN: DE000A0H52F5) has posted stable key figures for its 2022 financial year (1 October 2021 – 30 September 2022), underling its robust position even in a difficult market climate. “Our consistent strategic focus on a #climatepositive future and complementary business models made us resilient in these unsettled times”, commented MVV’s CEO, Dr. Georg Müller, at this year’s Annual Results Press Conference, held at the Alte Börse in Frankfurt am Main on Wednesday.
In his introductory words on the political framework, MVV’s CEO began by stressing that: “Given the timescale and resources available, the immediate measures taken by the Federal Government to stabilise markets and ease the strain on consumers and industry have the right focuses.” In the longer term, however, the course towards a modern and forward-looking energy supply remained just as crucial as ever if Germany was to lend more weight to climate protection and meet its international obligations. “Lawmakers have to do what is required in the short term without losing sight of long-term necessities”, remarked Dr. Müller.
MVV will implement the relief in the form of measures aimed at slowing the rise in electricity, gas and heat prices on schedule in line with the expected final decisions. MVV’s CEO nevertheless admonished lawmakers: “The government is relying on us to perform what is actually a sovereign task. That cannot be a permanent solution.” With regard to plans to siphon off of revenues, he believed that it was understandable from a budget perspective for electricity generators to be involved in easing the strain on consumers and industry given the high level of energy prices. “Having said that, every move to siphon off revenues is an intervention in market rules. This cannot be done retrospectively and must have an end date”, stated the company’s CEO. He nevertheless voiced his confidence that the final legislative texts would still witness changes with regard to the aforementioned points.
Robust key figures despite difficult market climate
In these unsettled times, MVV’s had documented its robustness in its key financial figures, underlined Dr. Müller. The energy company’s adjusted sales grew year-on-year by 2 percent to Euro 4.2 billion in the 2022 financial year. The sales performance was influenced above all by the rise in wholesale prices and higher electricity trading volumes.
As expected at the beginning of the 2022 financial year, MVV managed to increase its operating earnings despite these challenging conditions. Its adjusted EBIT from operations amounted to Euro 298 million in the 2022 financial year, 8 percent higher than in the previous year (Euro 275 million). To avoid distortion in comparisons with previous years, this key earnings figure does not include one-off items generated by MVV in the year under report in the form of disposal gains of Euro 55 million. Positive earnings contributions came in particular from directly marketing renewable energies in energy trading, the pleasing performance of non-recyclable materials and biomass power plants and the company’s proprietary green generation portfolio.
MVV’s adjusted annual net income after minority interests improved by Euro 26 million to Euro 176 million. Adjusted earnings per share rose by 17 percent to Euro 2.67 (previous year: Euro 2.28). The CEO pointed out that MVV’s balance sheet had grown significantly due to hedge transactions requiring recognition under IFRS 9. He explained that this was solely due to market prices as of the balance sheet date and did not allow any conclusions to be drawn about MVV’s operating business. With the reduction in prices now already apparent, these items would decrease again, also without any impact on MVV’s actual business.
In view of the company’s earnings performance in the 2022 financial year, the Executive and Supervisory Boards are proposing a dividend of Euro 1.05 per share, and thus at the previous year’s level. The MVV share will thus offer a dividend yield of 3.6 percent and represents a solid investment with a good return for MVV’s shareholders.
Given volatile market conditions and macroeconomic developments, MVV is remaining cautious in terms of its forecast for the 2023 financial year. Overall, the company is nevertheless confident that it will be able to maintain its operating earnings, i.e. excluding one-off items such as disposal gains, at least at the level achieved in the past financial year.
World leader in climate protection
MVV received a further boost for its #climatepositive course with its net zero certification by the Science Based Targets Initiative (SBTi). In November 2022, this association of prestigious international NGOs officially confirmed that, with its measures, MVV can in fact reduce its CO2 emissions to net zero by 2040 at the latest and thus actually meet its climate targets. Comments Dr. Georg Müller: “We are the first German energy company, and one of only three worldwide, to be certified as net zero compatible by the SBTi. This makes us a world leader in climate protection.” However, MVV’s CEO stressed that net zero was only an interim step, as MVV’s future would be #climatepositive from 2040 at the latest.
The company pressed consistently ahead with its ambitious energy transition activities again in the 2022 financial year and invested Euro 335 million in sustainable growth and its existing business. “This represents the highest volume of investment in the past six years”, underlined the CEO and added: “Our investments are helping to continually promote the energy transition at MVV while also increasing supply reliability.”
The CEO views MVV’s #climatepositive course and its Mannheim Model, with the three aspects of heat transition, electricity transition and green customer solutions, not only as the “internal guiding principle for the whole of the MVV Group but at the same time as an external factor differentiating the company from its competitors”.
Making the heat generation portfolio green
MVV made further progress with expanding green heat again in the 2022 financial year and expanded its corresponding generation capacity by 9 percent to 861 megawatts. The key focus was above all on green heat activities in Mannheim and the region, where MVV intends to convert the district heat supply to 100 percent green energy sources by 2030. One further milestone on the way to green heat is the first river heat pump, for which MVV began construction work together with the Grosskraftwerk Mannheim power plant in spring 2022. Once operations are launched in 2023, this will generate district heat for around 3,500 households and save up to 10,000 tonnes of CO2 a year. Moreover, MVV is converting its biomass power plant to use waste heat from 2024. Various other options are available: deep geothermal energy, further biomethane plants, electrode boilers, using additional industrial waste heat potential and, especially for the Kiel location, converting gas motors to hydrogen.
MVV is also adapting its grids to the new energy world. Here, the company is further expanding its district heat grids at all locations to enable the potential offered by green heat to be used as widely as possible on the ground.
Accelerating the expansion of renewable energies
To create an even more effective unit for expanding renewable energies, in the 2022 financial year MVV merged its Windwärts and Juwi subsidiaries to form Juwi GmbH. Moreover, MVV completed its takeover of Avantag, thus boosting its range of photovoltaics systems in the B2B business.
By 2026, MVV intends to increase its renewable energies electricity generation capacity to more than 800 megawatts. In the 2022 financial year, this stood at 614 megawatts, 50 megawatts higher than in the previous year. In the year under report, MVV took over several photovoltaics parks and one windfarm into its portfolio. It also developed high-capacity wind and solar projects for third parties. In Egypt, for example, Juwi launched operations with the world’s largest solar hybrid project in the mining sector, right on time for the COP27 Global Climate Conference in Sharm El Sheikh. This project will reduce CO2 emissions by around 60,000 tonnes a year.
In future, we will also increasingly offer long-term supply contracts for green electricity, known as power purchase agreements (PPAs). One example here is Germany’s first and to date only wind and storage project that Juwi has implemented in the Uckermark region of Brandenburg. MVV’s trading subsidiary MVV Trading is marketing the green electricity generated there via PPAs.
Heading for the future on a consistently #climatepositive course
In parallel, MVV continually reviews its portfolio of investments to assess their strategic fit and their contribution to its decarbonisation targets. On this basis, MVV decided to sell its Czech subgroup and recently completed the sale to the infrastructure investor Cube Infrastructure Managers.
In conclusion, MVV’s CEO stressed: “We have to keep developing our business model further. Even in unsettled times, we have to take all steps needed to make our overall MVV Group even more resilient, more robust and more effective. That is why #climatepositive will remain our course in future as well. It will take us to a sustainable energy system.”
The complete Annual Report 2022 is available on the internet at www.mvv.de/investors.
MVV in Figures
|Financial key figures||FY 2022||FY 2021||% change|
|Sales and earnings|
|Adjusted sales excluding energy taxes (Euro million)||4,199||4,131||+ 2|
|Adjusted EBITDA1 (Euro million)||564||482||+ 17|
|Adjusted EBITDA excluding disposal gains||509||479||+ 6|
|Adjusted EBIT1 (Euro million)||353||278||+ 27|
|Adjusted EBIT excluding disposal gains||298||275||+ 8|
|Adjusted annual net income 1 (Euro million)||249||177||+ 41|
|Adjusted annual net income after minority interests 1 (Euro million)||176||150||+ 17|
|Adjusted total assets at 30 September 2 (Euro million)||6,888||5,815||+ 18|
|Adjusted total assets excluding margins at 30 September 2, 3 (Euro million)||5,434||4,994||+ 9|
|Adjusted equity at 30 September 2 (Euro million)||1,863||1,662||+ 12|
|Adjusted equity ratio at 30 September 2 (%)||28.6||28.6||- 5|
|Adjusted equity ratio excluding margins at 30 September 2, 3 (%)||34.3||33.3||+ 3|
|Net financial debt at 30 September (Euro million)||32||628||- 95|
|Net financial debt excluding margins at 30 September 3 (Euro million)||1,449||1,450||0|
|Cash flow and investments|
|Cash flow from operating activities (Euro million)||952||1,203||- 21|
|Cash flow from operating activities excluding margins3 (Euro million)||357||360||- 1|
|Investments (Euro million)||335||306||- 9|
|ROCE (%)||16.2||10.2||+ 59|
|ROCE excluding disposal gains (%)||13.7||10.1||+36|
|ROCE excluding margins 3 (%)||10.7||8.9||+ 20|
|ROCE excluding disposal gains and excluding margins (%)||9.0||8.8||+ 2|
|WACC (%)||6.6||5.9||+ 12|
|Value Spread (%)||9.6||4.3||>+ 100|
|Value Spread excluding disposal gains (%)||7.1||4.2||+ 69|
|Value Spread excluding margins3 (%)||4.1||3.0||+ 37|
|Value Spread excluding disposal gains and excluding margins (%)||2.4||2.9||- 17|
|Capital Employed (Mio Euro)||2,178||2,715||- 20|
|Capital Employed excluding margins3 (Euro million)||3,298||3,115||+ 6|
|Dividend per share4 (Euro)||1.05||1.05||0|
|Adjusted earnings per share1 (Euro)||2.67||2.28||+ 17|
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 Excluding non-operating measurement items for financial derivatives
3 Excluding collateral deposited at MVV for counterparty default risks (margins)
4 Subject to approval by Annual General Meeting on 10 March 2023