Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RWE AG (RWEOY, Financial) has invested EUR6.9 billion net in 2024, with 95% of investments being taxonomy aligned, demonstrating a strong commitment to sustainable growth.
- The company has 11.2 gigawatts of capacity under construction across all technologies, indicating robust expansion efforts.
- RWE AG (RWEOY) delivered a good financial performance despite declining commodity prices, with an adjusted EBITDA of EUR4 billion.
- The company has initiated a significant share buyback program, planning to return an additional EUR1.5 billion to shareholders over 18 months.
- RWE AG (RWEOY) increased its guidance for adjusted EBITDA, EBIT, and net income to the middle of the guidance ranges, reflecting confidence in its financial outlook.
Negative Points
- RWE AG (RWEOY) faces higher uncertainties and risks in the development of US offshore wind and the hydrogen economy in Europe, leading to a reduction in its CapEx program for the next two years.
- The company has experienced lower prices for unhedged positions and weaker weather conditions in the US, impacting its financial performance.
- Net debt increased to EUR12.2 billion due to investments and timing effects, which could pose financial challenges.
- There are concerns about potential changes in US energy tax credits, which could affect RWE AG (RWEOY)'s onshore growth plans.
- The company acknowledges the need for more pragmatic build-out of new capacity, especially gas, in Germany, which could require strategic adjustments.
Q & A Highlights
Q: Can you elaborate on the impact of CapEx delays on the 2027 net income and the rationale behind the share buyback program?
A: Michael Mueller, CFO, explained that the offshore investments would have been unproductive CapEx since the projects would only go online by the end of the decade, thus having no earnings impact. The share buyback is seen as an attractive investment at the current share price, with an implied IRR higher than the 8% average return on existing assets.
Q: What are the implications of a potential Republican clean sweep on your US onshore investment plans?
A: Markus Krebber, CEO, noted that while changes to energy tax credits could affect economics, the strong demand for green power remains. The company is closely monitoring the situation and will adjust capital allocation if necessary, considering share buybacks as part of the strategy.
Q: How does the current political environment in Germany affect your energy strategy, particularly regarding nuclear and coal phase-out?
A: Markus Krebber stated that a CDU-led government would focus on cost efficiency and pragmatic build-out of new capacity, especially gas. While nuclear discussions may arise, he sees it as unlikely to bring back nuclear plants due to economic and procedural challenges.
Q: Can you clarify the changes to the CapEx plan and the protection of US projects against tariff changes?
A: Michael Mueller confirmed that the EUR2 billion reduction in CapEx is solely from offshore wind and hydrogen. The company feels confident that projects with FID are protected against tariff risks through various measures, including local procurement and supplier agreements.
Q: What is the outlook for PPA prices in the US and Europe, and how does this affect your offshore projects?
A: Markus Krebber indicated that PPA prices in the US are higher year-on-year, with expectations to remain stable. For European offshore projects, the company plans to fully contract them until COD, with current power prices providing a stable environment for marketing these assets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
