March 13 (Renewables Now) - The renewables division of Germany’s Innogy SE (ETR:IGY) experienced a 15.8% year-on-year drop in adjusted EBIT in 2018 to EUR 299 million (USD 337.6m), hit by exceptionally low wind levels in Europe.
The company, which is the Essen-based renewables, grid and retail subsidiary of Germany’s RWE AG (ETR:RWE), explained on Wednesday that the unusually low wind resource in large areas across Europe, especially in the second quarter of 2018, significantly impacted the results, which were also negatively affected by increased development and up-front costs for new projects and a drop in earnings from the solar engineering, procurement and construction (EPC) business.
External revenues at the renewables segment climbed by 0.2% on the year to EUR 969 million as electricity sales from the unit rose by 1% to EUR 623 million. Although weather-related factors led to the lower utilisation of wind farms, external electricity revenue was helped by favourable price effects and the commissioning of new assets, Innogy said. Its total renewables capacity at the end of 2018 amounted to 3,572 MW, up from 3,487 MW in 2017. The bulk of that capacity is located in Germany and the UK.
Innogy’s renewable power plants generated 8.8 billion kWh of electricity in 2018, down from 9.2 billion kWh a year before.
The German firm noted it successfully implemented its growth strategy for renewables in 2018, took part in renewable energy auctions in Germany and Poland and expanded into new markets, while adding about 200 MW of projects to its portfolio. It also built up a development pipeline of wind and solar projects with a combined capacity of about 7.1 GW.
On a group level, Innogy booked adjusted EBIT of EUR 2.63 billion, down 6.6% in annual terms but in line with its forecast. Adjusted net profit came at EUR 1.03 billion, marking a drop from EUR 1.2 billion a year back.
“2018 was a very turbulent year for Innogy,” said CEO Uwe Tigges, as he referred to the agreed sale of RWE's 76.8% stake in Innogy to E.on SE (ETR:EOAN) in a transaction involving a wide-ranging exchange of business activities and participations. Separately, E.on is looking to sell its major renewable energy operations, including Innogy’s own renewables business, to RWE. “But, our key focus is of course on further developing our operational business: we are rigorously driving our strategy forward, and are bolstering our position in an increasingly competitive market environment,” the CEO said.
The table below gives more details about the company’s 2018 results.
|Figures in EUR million||2018||2017|
|- of which from Renewables||299||355|
|- of which from Grid & Infrastructure||1,962||1,944|
|- of which from Retail||654||827|
|- of which from Corporate/New Businesses||(285)||(310)|
|Attributable net profit||(653)||778|
|Adjusted net profit||1,026||1,224|
The company’s capital expenditure in the past year increased by EUR 550 million from 2017, reaching EUR 2.69 billion. The funds were allocated mostly for the expansion and modernisation of grid infrastructure, maintenance of existing assets and eMobility. Renewables accounted for EUR 700 million of the total, up from 438 million, mainly due to the construction of the 860-MW Triton Knoll offshore wind farm in the UK and onshore wind projects in the UK and the US.
For 2019, Innogy guided for adjusted EBIT of EUR 2.3 billion, expecting a year-on-year drop following the sale of its Czech gas grid business to RWE in February. While lower earnings are seen in the retail and grid and infrastructure businesses, earnings are forecast to mark a “noticeable” rise in renewables, the company said. Adjusted net profit for 2019 is seen at EUR 850 million.
(EUR 1.0 = USD 1.129)