Germany's RWE sees no swift return to profit growth
By Christoph Steitz and Tom Käckenhoff
ESSEN, Germany (Reuters) - Germany's second-biggest utility RWE (RWEG.DE: Quote) warned profits and investments would fall further this year, offering little hope that group would emerge from a crisis in the industry and return to growth in the near future.
"The vale of tears has not yet been passed," Chief Executive Peter Terium told journalists at the company's annual press conference on Tuesday.
He was referring to a structural crisis for German utilities hit by weak demand for energy in Europe and a boom in renewable sources that are given priority access to power grids over conventional gas and coal-fired plants.
As a result, shares in RWE have lost more than 70 percent since 2007, destroying nearly 40 billion euros ($43 billion) in market value.
Terium said that up to 45 percent of the group's conventional power plants were currently not earning any money, adding operating profit was expected to fall for a third consecutive year in 2015 as a result.
"It is now becoming more difficult every day to keep a gas or hard coal-fired power station commercially feasible," Terium said.
Investments will decline to 2.5 billion-3.0 billion euros this year and to about 2 billion next year, down from 3.4 billion in 2014.
Shares in RWE, which were 1.6 percent lower at 8.40 a.m. EDT, trade at 12.8 times estimated forward earnings, lower than the 15.2 times average of major European rivals. Continued...