RWE confirms earnings forecast, hails ‘good start’ to the year despite the coronavirus

Germany’s RWE said Thursday it had got off to a “good start” in 2020 despite the coronavirus pandemic.

Adjusted earnings before interest, taxes, depreciation and amortization came in at 1.3 billion euros ($1.41 billion) in the first quarter, a 19% increase from the same period last year, with the firm also confirming its earnings forecast for 2020.

“On our side the power generation business has very limited impact from the corona situation,” Markus Krebber, RWE’s chief financial officer, told CNBC on Thursday.

“Of course, we see muted power demand but usually our positions are hedged very well in advance and that is why we have seen, so far, very limited impact.”

Krebber went on to explain that the situation around the coronavirus was “more challenging on the operational side.”

“We have to ensure security of supply, so the health and safety of our workforce is of top priority and we have taken very early pre-emptive measures to ensure that our people stay safe and that we are able, in all conditions, to provide power,” he said.  

RWE carried out a significant asset swap with E.ON last year in a deal valued at more than 40 billion euros. At the time, RWE explained that, going forward, its focus would primarily be on electricity generation “based on renewables.”

On Thursday, the company noted it was planning to make net investments of around 5 billion euros to expand its renewables portfolio to more than 13 gigawatts by 2022. Krebber told CNBC that the “shift in business model” had made RWE’s overall business mix “much more robust.”

“On the conventional side, as I said, we are hedged long in advance but on the renewables side most of our income is actually locked into government contracts or long term PPAs (power purchase agreement) with industrial customers.”