MVV still firmly on course for climate neutrality
Mannheim energy company MVV combines climate protection with sustainable growth – Annual earnings up 4 percent to Euro 233 million – CEO Dr. Georg Müller calls for new EEG legislation to take effect as of 1 January 2021
The Mannheim-based energy company MVV Energie AG (WKN: A0H52F, ISIN: DE000A0H52F5) once again continued to head consistently for climate neutrality in its 2020 financial year (1 October 2019 – 30 September 2020), a period that was also shaped by the ongoing coronavirus pandemic. “It was a special year for us,” stressed MVV’s CEO, Dr. Georg Müller, at this year’s Annual Results Press Conference in Mannheim on Thursday. “Due to coronavirus, we too face the daily challenge of acting responsibly and with great commitment to protect the health of our customers, business partners and employees while at the same time ensuring a reliable supply of water and energy and further implementing our corporate strategy.” The company increased its annual operating earnings (adjusted EBIT) year-on-year by around 4 percent to Euro 233 million and thus exceeded its own forecast. According to Dr. Müller, this sustainably positive earnings performance showed that “climate neutrality and profitable growth are no contradiction for MVV, but rather enforce each other within our strategy”.
The pandemic had inevitably left its mark on earnings at the Mannheim-based group of companies. Coronavirus-related charges of around Euro 30 million in total were due to a slight decline in energy consumption volumes and delays in several projects, particularly in the project development business. Not only that, earnings were adversely affected by the very mild winter in 2019/20 and the associated reduction in heating energy turnover. “We successfully countered these charges on our earnings,” pointed out MVV’s CEO. In particular, the new plants launching operations during the financial year and very high availability levels at proprietary power plants enabled the company to more than offset the negative effects. Commented Dr. Müller: “We owe that to the positive development shown by the investments made in recent years in renewable energies and the future energy system”. According to Dr. Müller, these also included new green services and business models for which the start-up and development costs had to be borne in the past and which “now mean that we are in position, not least given the increasingly ambitious approach towards climate protection, to provide our customers with solutions enabling them to implement their own energy turnarounds”.
Sales showed a moderate reduction to Euro 3.5 billion, with this being due to the coronavirus crisis, and above all to price factors in energy wholesale and postponements in the project development business. The sustainably positive earnings performance is nevertheless reflected in all of the reporting segments at the group of companies. “If we exclude coronavirus-related effects, we generated year-on-year earnings growth in all segments.” Earnings before taxes (adjusted EBT) improved by Euro 13 million to Euro 181 million. Due to higher minority interests, adjusted annual net income after minority interests showed a slightly less marked rise of Euro 6 million to Euro 104 million. Adjusted earnings per share amounted to Euro 1.57, as against Euro 1.49 in the previous year. Consistent with these developments, the cash flow from operating activities also increased from Euro 238 million to Euro 383 million in the past financial year.
Milestones on the way to climate neutrality make 2020 a “special year”
According to Dr. Müller, the projects successfully completed and new projects initiated in the past financial year mean that many of the climate protection decisions taken in recent years have now come to fruition. In November 2019, the group of companies launched operations with the state-of-the-art gas-fired power plant in Kiel. With its efficiency and flexibility, this plant not only complements renewable energies ideally but has since become the high-performance centrepiece of the secure, economical and climate-friendly supply of heating energy to the state capital of Schleswig-Holstein. MVV reached a further major milestone in the spring by connecting its energy from waste plant at Friesenheimer Insel in the north of Mannheim to its own district heating grid. “This marks the first step as we head towards Green Heat, in which we will gradually be converting the heating supply in Mannheim and the region to climate-neutral generation in the years ahead.”
Not only that, the company could also point to impressive successes in other business fields – from sewage-based phosphorous recycling and organic waste fermentation to new windfarms and solar parks and solutions portfolios for retail and business customers through to new innovative topics, such as smart cities, e-mobility and artificial intelligence. Comments Dr. Müller: “These are all consistently aligned to the challenging sustainability and climate targets we have set ourselves and by which our progress can be transparently measured.”
By 2030, the Mannheim-based group of companies thus aims to reduce its direct energy industry-related CO2 emissions to below 2 million tonnes a year. In the past financial year, MVV cut these emissions by nearly 9 percent to around Euro 2.4 million tonnes currently, and thus by 35 percent in total over the past four years. According to MVV’s CEO, the success of MVV’s decarbonisation efforts is apparent not only in the company’s own climate balance sheet, but also in net CO2 emissions in the entire energy system. Compared with 2016, MVV aims to triple the volume of CO2 savings it makes possible in the entire energy system to one million tonnes a year by 2026. Having taken a major leap forward in the past financial year, MVV can now already report CO2 savings of 794,000 tonnes on this level.
One reason for this progress relates in particular to the further expansion in renewable energies. In the past financial year, MVV increased its proprietary renewables capacities by eight percent to 512 megawatts and even boosted its renewables-based electricity generation volumes by 11 percent to more than 1.2 billion kilowatt hours. Dr. Müller: “Expanding renewable energies for electricity and heating generation is and will remain the key pillar of our corporate strategy.”
EEG Amendment and federal funding for efficient heating networks promote further expansion in renewable energies
In view of the discussions currently surrounding energy and climate policy, MVV’s CEO has called for politicians to enhance the political framework along forward-looking lines and thus promote the successful implementation of the energy and heating turnaround: “This will require all political levels to work hand in hand.” With the Green Deal and its own ambitious targets, the European Union had set a clear course and created powerful new momentum for climate protection and renewable energies on an international level.
In Germany, MVV expects the forthcoming amendment to the Renewable Energies Act (EEG) to result in significant improvements in the conditions for generating electricity from wind, sunshine and biomass. This would assist the country in meeting its national target of 65 percent electricity from renewable energies by 2030. It was therefore all the more important that the new EEG legislation should actually take effect as of 1 January 2021 rather than being further delayed. It was clear that further adjustments would be needed and these would have to be tackled after the federal elections.
“The heating aspect of the energy turnaround is at least as important as the electricity aspect”, believes Dr. Müller. The new subsidy instrument currently being developed by the Federal Government – ‘Federal Funding for Efficient Heating Networks’ (BEW) – was certainly a good start, but the incentives required to transform heating networks were still significantly underfinanced. He therefore spoke out urgently in favour of suitable subsequent improvements.
Stable outlook and higher dividend
Looking to the current 2021 financial year, the CEO expressed his confidence that MVV would be able at least to match the previous year’s figures both for its sales and for its operating earnings. Commented Dr. Müller: “We are well positioned in terms of our structures and have robust business models that balance and complement each other within the overall portfolio.” The company would benefit from this stable foundation, also given the ongoing high level of economic and social uncertainty due to the coronavirus pandemic.
In view of the annual earnings growth, the Supervisory and Executive Boards propose to raise the dividend by Euro 0.05 to Euro 0.95 per share, corresponding to a dividend yield of around 3.7 percent. The decision will be taken by the Annual General Meeting to be held on 12 March 2021.
Ongoing high pace of investment
According to MVV’s CEO, the foundation for future growth is provided by the long-term investment programme at the group of companies. Dr. Müller: “That is why we are maintaining a high pace of investment.” In the past 2020 financial year, MVV invested a total of Euro 322 million and thus around Euro 12 million more than in the previous year. “From a current perspective, and provided the coronavirus pandemic does not prevent us from doing so, we will increase our volume of investments in 2021 while retaining the same strategic investment focuses.”
The company already made a start in recent weeks – by taking over a new windfarm in the Hoch-taunus region, with successes in its renewable energies project development business both in Germany and abroad, the forthcoming launch of operations at the new energy from waste plant in Dundee/Scotland, the opening of MainDC, the new high-performance data centre in Offenbach, the connection of the power plant in Leuna to the district heating grid in the neighbouring city of Merseburg and the start of construction work on a new organic waste fermentation plan in Bernburg/Saale in Saxony-Anhalt. Resumes Dr. Müller: “This shows we are and will remain firmly on course.”
The complete Annual Report 2020 is available on the internet at www.mvv.de/investors . Here, you will also find our new MVV Magazine 2020, in which we show how, with our inno-vative and forward-looking products and services, we are shaping the energy system of the future together with our customers.
MVV in Figures
|FY 2020||FY 2019||% change|
|Financial key figures|
|Sales excluding energy taxes1 (Euro million)||3,515||3,756||- 6|
|Adjusted EBITDA2 (Euro million)||449||409||+ 10|
|Adjusted EBIT2 (Euro million)||233||225||+ 4|
|Adjusted annual net income2 (Euro million)||128||115||+ 11|
|Adjusted annual net income after minority interests2 (Euro million)||104||98||+ 6|
|Adjusted earnings per share2 (Euro)||1.57||1.49||+ 5|
|Dividend proposal/dividend per share (Euro)||0.95||0.90||+ 6|
|Cash flow from operating activities (Euro million)||383||238||+ 61|
|Cash flow from operating activities per share (Euro)||5.81||3.60||+ 61|
|Adjusted total assets at 30 September3 (Euro million)||4,582||4,472||+ 2|
|Adjusted equity at 30 September3 (Euro million)||1,571||1,544||+ 2|
|Adjusted equity ratio at 30 September3 (%)||34.3||34.5||- 1|
|Net financial debt at 30 September (Euro million)||1,374||1,345||+ 2|
|ROCE (%)||7.7||7.9||- 3|
|WACC (%)||6.0||6.3||- 5|
|Value Spread (%)||1.7||1.6||+ 6|
|Capital employed (Euro million)||3,018||2,847||+ 6|
|Investments (Euro million)||322||310||+ 4|
|Non-financial key figures|
|Direct CO2 emissions (Scope 1) including companies recognised at equity (tonnes 000s)||3,315||3,582||- 7|
|Indirect CO2 emissions (Scopes 2 and 3) (tonnes 000s)||5,267||6,354||- 17|
|Net CO2 savings (tonnes 000s)||794||486||+ 63|
|Renewable energies electricity generation capacities1 (MW)||512||474||+ 8|
|Share of renewable energies in proprietary electricity generation (%)||46||63||- 27|
|Renewable energies electricity generation volumes (kWh million)||1,220||1,103||+ 11|
|Concluded development of new renewable energies plants (MWe)||262||460||- 43|
|Operations management for renewable energies plants (MWe)||3,729||3,534||+ 6|
|Number of employees at 30 September||6,260||6,113||+ 2|
|Number of trainees at 30 September||341||330||+ 3|
1 Previous year’s figure adjusted
2 Excluding non-operating measurement item for financial derivatives and structural adjustment for part-time early retirement and including interest income from finance leases
3 Excluding non-operating measurement item for financial derivatives