German utility RWE has booked an 18% increase in its group operating result for the first half of 2007 compared to the same period of 2006, to E4.4 billion. In addition, RWE improved EBITDA by 15% to E5.2 billion. The main drivers of this growth were a good trading performance and the positive trend in the company's power generation business.
Partly as a result of one-off effects, net income was up 58% year on year, amounting to E2.6 billion. In addition to the operating performance, this increase was also due to improvements in the non-operating and the financial results.
In the first half of the year, RWE generated external revenue of E22.6 billion. This corresponds to a 2% decrease compared to the same period of 2006 but, adjusted for consolidation and currency effects, group revenue remained stable.
In total, RWE invested E1.5 billion in the first half of 2007 alone and the group expects that capital expenditure on property, plant and equipment will be in the order of E4 billion in 2007. This would equate to an increase of around 40% year on year.
The company said that its strong performance has given it a solid financial basis for driving forward its major capital expenditure program. New power plants will be built at Ensdorf, Hamm and Lingen in Germany, and Eemshaven in the Netherlands. In the UK, RWE will invest in two new gas-fired power plants and five new wind farms.
The company has raised its earnings forecast for the year and said that, based on the assumption that it is able to sell the majority of American Water by the end of the year, it expects an increase of 10% to 15% (previously around 10%) in its operating result.
RWE also said that it has launched an efficiency enhancement program that will last from 2007 until the end of 2010. Planned measures to reduce costs and improve revenue are designed to progressively increase the annual operating result by a total of E600 million. In 2007 alone, RWE intends to add E100 million to the operating result.