Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on RWE AG. We currently have 13 research reports from 1 professional analysts.
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Reassuring 2017 expectations ahead of M&A rumours
14 Mar 17
The group has published its financial results with no major surprises as it provided its preliminary results in late February 2017 with revenues being short of expectations and reaching €45.83bn, while adjusted EBITDA decreased by 23% to €5.4bn. Net income finished on the red once again at -€5.7bn as the group booked €4.3bn of impairments in its power portfolio, the 35% risk premium of €1.8bn for the nuclear energy fund, and €0.8bn from mark-to-market of derivatives. Adjusted net income reached €777m, which represents a 30% decrease, but is slightly ahead of expectations. In line with 2015, the group will pay no dividend payment for its common shares and a €0.13/share on its preferred ones. Net debt decreased by 10.8% to €22.71bn helped by the positive cash generated from the placement of Innogy shares. The important news came from the guidance as it is far better than expectations with EBITDA reaching €5.4-5.7bn, representing a flat to 5% increase. However, the good news also comes from the strong net income improvement, as it is expected to reach €1-1.3bn, which implies a 25% to 62% increase in net profit. The group will reinstate a dividend of €0.5/share in 2017, which will represent a 40-50% payout ratio and which should serve as a floor for the coming years.
One-offs hurt profits; no dividend payment for common shares in 2016
22 Feb 17
Prior to the FY16 results, RWE has decided to publish an unexpected trading update in which it says that the company had a net loss of €5.7bn for FY16, being impacted by multiple one-offs such as the €4.3bn impairment charges mainly attributable to the generation power portfolio. In addition to this, the group has booked the €1.8bn risk payment for nuclear waste provisions and -€0.8bn on hedging derivatives. No dividend will be paid once again for common shareholders, but a dividend of €0.50/share will be attributed from 2017 onwards, corresponding to a 3.7% yield at current stock price levels. Preferred shares will be given a €0.13/share dividend for 2016 and €0.50/share for 2017.
Trading continues to hurt results; guidance maintained
14 Nov 16
The group has posted weak 9-month results slightly below expectations with revenues falling €5.2% yoy to €33.21bn, with EBITDA reaching €3.8bn and operating income at €2.1bn, which represents -13% yoy and -20% yoy respectively. The major impact came from the financial result, driven by an underperformance in financial securities disposals pushing this above expectations to -€1.4bn, negatively impacting the bottom-line results and pushing adjusted net income to a contraction of 58% yoy to €227m. On a reported basis, net income decreased by 99.4% yoy and reached €11m, translating into an EPS of only €0.02/share, being affected in addition by non-operating results and tax effects. Operating cash flows contracted by 72% yoy to €608m, and despite a 31% yoy decrease in investments, free cash flows finished in negative territory at -€506m. Moreover, net debt has increased 7.8% yoy to €27.45bn, negatively impacted by weak cash flows and a +€2.9bn increase in provisions. Despite this, the company maintains its full-year guidance of EBITDA at €5.2-5.8bn and net income at €500-700m.
Trading backfires, but generation and UK improve; cash flow continues to suffer
11 Aug 16
Given the positive first quarter results, the group had a difficult second one as it missed all the market forecasts with revenues decreasing 3.8% yoy to €23.9bn, with EBITDA contracting 5.5% yoy to €3.11bn and the operating result falling 7.2% yoy to €1.88bn, both below market consensus. The major reason for this was the poor performance of the trading division that had a relatively strong first quarter and significant losses in the second, which is now expected to be below the 2015 level for the year. However, given a relatively low effective tax rate (8%) the group had a 10.1% increase in adjusted net income to €598m, but still fell short of expectations by 8.2%. On a reported basis, net income decreased by 73.8% yoy to €457m. Net debt increased by 11.1% ytd to €28.28bn driven by a negative operating cash flow (-€1bn) due to margin calls on hedge positions and negative working capital, where the 30% drop in capex and no dividend payments was not enough to compensate a €1.7bn fall in free cash flow. This and the increase in pension provisions (+€1.9bn) due to low interest rates have pushed net debt upwards. The group maintains its full-year guidance with EBITDA at €5.2-5.5bn, operating profit at €2.8-3.1bn and adjusted net income of €0.5-0.7bn. The IPO of the new company “Innogy” (renewables, networks and retail) continues on schedule, with separate operations expected to start from 1 September 2016 and a listing expected before the end of the year.
Interesting spin-off proposition and possibility for value creation: Innogy
01 Jul 16
RWE’s management presented on 30 June 2016 the new profile of the company that will be created from the spin-off: Innogy. This will be a company focused on distribution networks (€13.3bn RAB), renewable energy (3.1GW installed) and retail (23m customers). The listing will start with 10% of Innogy via a primary offering expected in late 2016, while a further placement of Innogy may be possible via a secondary offer at the same or different time. Innogy will have a more stable earnings contribution and a lower exposure to commodity price movements as 60% of its EBITDA will be generated from regulated or semi-regulated business such as network infrastructure and renewables. The remaining part will be linked to hydro generation (classified within the renewable business, but with exposure to price movements as they are not covered by feed-in-tariffs or PPA contracts) and retail. In terms of the financial profile of the new company, based on 2015 values, Innogy would have €4.5bn in EBITDA (61% networks, 21% retail and 18% renewables). The payout ratio has been set at 70-80% of adjusted net income, and net income for 2015 is currently estimated to be around €1.6bn. A €6-7bn planned capex programme will be attributed to Innogy, whereby both dividend payments and capex are expected to be fully covered by operating cash flows (with an expected 70% CFOA/EBITDA conversion ratio). In terms of debt expectations, all senior debt will be transferred to Innogy, although for the moment the hybrids will remain within RWE AG as it may put Innogy’s equity levels at risk. The balance sheet and capital structure expected would be based on a 4.x net debt/EBITDA ratio, which has been raised from the previous expectations of a 3-3.5x ratio. For the moment, given the low float initially proposed, rating agencies have decided that Innogy would not be able to hold a separate rating notation. No information has yet been provided in terms of growth expectations or any forward looking variables as this has been considered for the moment sensitive information prior to the IPO, additional information is expected at a later stage. Moreover, RWE’s management has reiterated once again Innogy’s listing as a priority, even under the current environment of volatile markets and increasing political uncertainty.
Trading and one-offs boost results; cash flow suffers; guidance maintained
12 May 16
A positive start of the year for the company even if revenues fell 6% yoy to €13.65bn, which is in line with expectations, but EBITDA rose 5% to €2.31bn beating forecasts mainly driven by an unusually high trading performance. Operating income followed the same path helped by lower depreciation expenses to a 7.1% yoy increase. However, higher financial expenses and lower contribution from minorities pushed adjusted net income to €857m, which is a 2.3% yoy decrease but is 29% better than expected. On the other hand, net debt increased 11.1% ytd to €27.9bn, due mainly to negative free cash flow despite the decrease in capex and a substantial increase in pension provisions. The group has adjusted upwards its expectations on net debt because of this. Moreover, despite the good results, the group still maintains its guidance, which seems conservative (net income between €500m and €700m), as it does not expect the good performance to continue.
N+1 Singer - Morning Song 21-03-2017
21 Mar 17
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N+1 Singer - Augean - Double digit growth in ’16, good start to ‘17
21 Mar 17
Augean reported another year of double digit growth for 2016, with profits in line with our forecasts. Sales grew by 21% excluding landfill tax, while adjusted PBT grew by 18% to £7.1m before amortisation of acquired intangibles. DPS was increased by 54% to 1.0p, 25% ahead of our estimate. The business units made further strategic progress, with revenues from their top 20 customers increasing from 42% to 43% of the total, of which 88% was under contract or a framework agreement, increasing forward visibility. There has been an encouraging start to 2017 and management is confident of delivering another year of profits growth. The shares trade on undemanding single digit multiples, offering good value.