In the same period, RWE posted external revenue of E13.4 billion, up 1% over Q1 2006. This was impacted by the sale of RWE Solutions in August 2006, and RWE Energy’s decreased revenue due to reductions in grid fees and mild winter weather conditions.
RWE’s power division saw the strongest increase in Q1 2007, and the group generated higher income from its trading business in particular. The group’s UK subsidiary RWE npower also experienced above-average growth, the utility said.
Nevertheless, the energy arm’s contribution to the group result declined. RWE said that this effect was felt particularly strongly in Germany, where the result decreased by 19% due to network regulation.
RWE added that, on March 30, 2007, the group transferred around E8 billion in pension obligations to its pension fund as part of a contractual trust arrangement. Despite this, earnings per share increased from E1.86 to E2.79 in the quarter.
The group’s capital expenditure on property, plant and equipment in the energy business was up 28% in the quarter to E679 million. The utility said that the most significant single project is the construction of a 2,100MW twin-unit lignite plant with optimized plant technology in Neurath, Germany.
RWE has launched an efficiency-enhancement program which the utility hopes will strengthen its competitiveness. RWE plans to use cost reductions and revenue gains to boost the annual result in 2007 by around E100 million. The eventual goal is to increase the annual operating result by a total of E600 million from the end of 2010 when the program ends.
RWE concluded that, despite major political constraints in the form of German network regulation and more restrictive anti-trust legislation, the utility should still achieve its positive forecast for fiscal 2007.
