11. December 2014 | MVV

"Others talk about the energy turnaround. We are making it happen."

MVV Energie wants a uniform energy market that sensibly combines renewable and conventional energies - Fall in wholesale market electricity prices and mild weather lead to reduction in annual earnings - Positive outlook

The Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5) is calling for a uniform energy market system, one that combines renewable and conventional energies in a way that makes both economic and ecological sense. This was underlined by Group CEO Dr. Georg Müller at this year's Annual Results Press Conference in Frankfurt on Thursday. As the "energiser of the future", MVV Energie would continue to assume the role of a pioneer and key mover when it came to sustainably transforming the energy supply. "Others talk about the energy turnaround. We are making it happen."

With the shareholding it is seeking to acquire in juwi AG (Wörrstadt) and its acquisition of Windwärts Energie GmbH (Hanover), in its renewable energies business the Mannheim company has met a key objective of its MVV 2020 strategic alignment initiated in 2009. "This strong partnership represents a milestone in the German energy industry", commented Dr. Müller. Renewable energies had long assumed the leading role in the German electricity market. In view of this, the group of companies is continuing to invest heavily in expanding renewable energies. The Group currently has renewable energies capacities of 344 megawatts, and thus 9 percent more the one year earlier. Of this total, 174 megawatts alone involves onshore wind power. The volumes of electricity generated from renewable energies in the past financial year thus grew by 16 percent to 872 million kilowatt hours, equivalent to the average annual consumption of nearly 250,000 three-person households. In purely arithmetic terms, the Group thus already generates more electricity from renewable energies than is consumed by MVV's private customers.

Highly efficient conventional power plants will nevertheless still be needed in future to offset fluctuations in electricity feed-in volumes from wind and solar power. Here, MVV Energie is working above all to further boost combined heat and power (CHP) generation. CHP is also used at the large power plant in Mannheim (Grosskraftwerk Mannheim - GKM), in which MVV Energie holds a 28 percent stake and where Block 9, one of Europe’s most up-to-date and effi-cient hard coal plants, is due to commence operations next spring.

MVV's CEO therefore underlined his call for reform to the German Combined Heat and Power Generation Act (KWKG) as an indispensable component of the energy policy framework. "Without any legislative amendment, the target set by the Federal Government of achieving a 25 percent share of electricity from CHP, a target of key importance for climate protection reasons as well, will not be achievable." Dr. Müller therefore explicitly welcomed the fact that, in the climate protection programmes adopted last week, the Federal Government too had underlined the particular significance of CHP in reducing carbon dioxide emissions. CHP ideally complemented renewable energies. "Heating energy is generally most needed when the sun and wind are in short supply, i.e. in winter. For our company, a conventional power plant without CHP capability makes no sense in either economic or environmental policy terms," added Dr. Müller.

Fall in wholesale market electricity prices and mild winter leave their mark

In conjunction with the strong expansion in renewable energies, the persistently difficult energy market framework led wholesale market electricity prices to drop sharply. As expected, together with the unusually mild weather conditions during the past heating period, this factor left its mark on MVV Energie's sales and earnings in the past financial 2013/14 financial year (1 October 2013 - 30 September 2014). Sales reduced to Euro 3.8 billion, down six percent on the previous year’s figure. Adjusted operating earnings (adjusted EBIT) fell by 17 percent to Euro 173 million. Dr. Müller confirmed that earnings were thus "within the forecast range". Annual earnings also form the basis for the company upholding its continuity-based dividend policy. Consistent with the proposal submitted by the Executive Board, the Supervisory Board is thus recommending an unchanged dividend of 90 cents per share for approval by the Annual General Meeting to be held in Mannheim on 13 March 2015.

Following this dip in earnings, assuming normal weather conditions the Mannheim energy company expects its earnings to increase once again in the coming years. For the current 2014/15 financial year, MVV Energie thus expects to see moderate sales growth and adjusted EBIT of between Euro 180 million and Euro 195 million from an operating perspective.

This positive outlook is the result of successful growth investments. The Group's sales and earnings are set to benefit from the acquisition already executed by the Energieversorgung Offenbach shareholding of the Hungerberg wind farm close to Kirchheimbolanden (Rhineland-Palatinate) and the launch of operations scheduled for May at the new block at the GKM plant in Mannheim. Not only that, two new plants in the UK - the waste-powered CHP plant in Plymouth and the biomass power plant at Ridham Dock - both of which are scheduled to be linked up to the grid in the coming months, and a new biomethane plant in Stassfurt (Saxony-Anhalt) will also contribute to sales and earnings growth, as will the success of the Group's cost-cutting efforts.

Weather-related downturn in heating energy and gas turnover

The decline in sales in the past financial year was due on the one hand to a sharp fall in electricity and gas trading volumes on account of the current market situation. As a result, sales in the "Trading and Portfolio Management" reporting segment fell by 14 percent. On the other hand, sales were also affected by weather-related downturns in the district heating and gas business with end customers. In "Sales and Services", our strongest reporting segment in terms of sales, heating energy and gas turnover fell by 14 and 15 percent respectively.

The reduction in operating earnings was also attributable to the difficult energy policy frame-work and above-averagely mild weather. Adjusted EBIT in the "Generation and Infrastructure" reporting segment alone thus decreased from Euro 149 million to Euro 124 million. Positive earnings contributions from the new wind power and biomethane plants were insufficient to offset the charges on earnings due to lower electricity and waste prices. Earnings at "Trading and Portfolio Management" were further adversely affected by costs of CO2 emission rights.

High investments in sustainable growth

At the same time, the Mannheim energy company maintained a high pace of investment in the past financial year. In that period alone, MVV Energie invested Euro 321 million. "By making targeted investments in sustainable projects, MVV Energie is seizing the opportunities associated with the energy system conversion", commented Dr. Müller. By 2020, MVV Energie intends to invest three billion euros in renewable energies, energy efficiency, combined heat and power generation and generating energy from waste, expanding environmentally-friendly district heating and modernising and maintaining its grids and plants. To date, 2.2 billion euros of this total have already been implemented or definitively committed.

Decentralised energy management with BEEGY

The BEEGY joint venture founded in mid-October together with the cross-sector partners BayWa r.e., Glen Dimplex and GreenCom Networks will be focusing above all on developing innovative decentralised energy management products and services for industrial, retail, housing, commercial and private customers. The company's services range from planning via the provision of sustainable plants, such as photovoltaics collectors, thermal storage facilities, heat pumps and storage heating or battery storage facilities through to controlling their energy-optimised deployment. MVV Energie is contributing its energy industry experience and all its expertise along the value chain to the cooperation. BEEGY pools competencies from different sectors in order to develop joint solutions offering a decentralised, flexible and smart energy supply on all levels.

The complete financial report ist available at

www.mvv-investor.de


 

 

Key figures of the MVV Energie Group
    
Euro million2013/142012/13% change
    
Sales and earnings   
Sales excluding energy taxes3 7934 044- 6
Adjusted EBITDA1,2338376- 10
Adjusted EBIT1,2173208- 17
Adjusted EBT1,2130143- 9
Adjusted annual net income 1,292101- 9
Adjusted annual net income after minority interests1,285850
Adjusted earnings per share 1,2 (Euro)1.291.290
Cash Flow   
Cash flow from operating activities2418372+ 12
Cash flow from operating activities per share2 (Euro)6.355.64+ 13
Capital structure   
Adjusted total assets (at 30 September)33 9864 037- 1
Adjusted equity (at 30 September)2,31 3971 3910
Adjusted equity ratio (at 30 September)2,335.1%34.5%+ 2
Net financial debt1 0881 111- 2
Value indicators   
ROCE26.8%8.3%- 18
WACC7.4%7.4%0
Value Spread2- 0.6%0.9%-
Capital employed22 5562 507+ 2
Investments   
Total Investments321392- 18
of which growth investments212301- 30
of which investments in existing business10991+ 20
Employees   
Number of employees (at 30 September)45 4445 4590

 

 

1 excluding non-operating measurement items for financial derivatives, excluding structural adjustment for part-time early retirement, excluding restructuring expenses and including interest income from finance leases
2 previous year's figures adjusted
3 excluding non-operating measurement items for financial derivatives
4 proportionate inclusion of Ingolstadt subgroup