MVV Energie posts good start to difficult year

The Mannheim-based energy company MVV Energie (WKN: A0H52F, ISIN: DE000A0H52F5), whose firstquarter earnings in the previous year had been adversely affected by mild weather conditions and turbine damage at the joint power plant in Kiel (GKK), managed to generate positive sales and earnings growth in the 1st quarter (1 October ¿ 31 December 2012) of the current 2012/13 financial year. As announced by the company upon the presentation of its financial report for the first three months of the current 2012/13 financial year in Mannheim on Thursday, sales grew year-on-year by 6 percent to Euro 1.1 billion, while operating earnings (adjusted EBIT) rose over the same period from Euro 74 million to Euro 88 million.

According to company CEO Dr. Georg Müller, MVV Energie has therefore posted "a good start to a difficult year". Alongside the weather-related upturn in heating energy and gas turnover, the company's performance also benefited from further success in its nationwide energy sales to industrial and commercial customers, higher trading volumes and the non-recurrence of the charge on earnings due to turbine damage at the GKK power plant. A further positive factor was the rising volume of electricity fed-in from renewable energies. Renewable electricity generation volumes thus grew year-on-year by 12 percent to 179 million kilowatt hours. Not only that, the launch of operations at the biomethane plant in Klein Wanzleben in autumn 2012 enabled the company for the first time to feed 13 million kilowatts of biomethane into the public gas grid.

"We too have nonetheless been unable to escape the persistently difficult sector trend, which has intensified further in recent weeks and months", stressed Dr. Müller with regard to the full-year outlook. The MVV boss added that, given the uncertain framework, market expectations for energy suppliers had deteriorated significantly, especially in electricity generation business. Even though the Group had taken precautions by selling most of its proprietary electricity generation volumes on the forward market several years in advance, the current negative developments in the electricity price would impact on earnings contributions. This was especially true for the MVV Umwelt subgroup, as part of the electricity volumes generated at energy from waste plants were sold at short notice.

As unforeseeable damages have also arisen in heating energy generation facilities at the cogeneration plants in Mannheim and Leuna, the company does not expect its adjusted EBIT for the year as a whole to match the previous year¿s figure of Euro 223 million. From a current perspective, MVV Energie expects its operating earnings for the current 2012/13 financial year to fall round 5 percent short of the previous year¿s figure.

This earnings forecast already accounts for the additional challenges the company faces due to the expiry of emission rights allocation, lower waste prices, developments in its competitive environment and in the regulatory climate for its grid business. Furthermore, earnings will also be affected year-on-year by the discontinuation of the earnings contributions previously received from Stadtwerke Solingen. Comments Dr. Müller: "We will continue to exploit opportunities arising due to the energy system conversion to generate profitable growth. Our investment programme has gained great momentum and we are now reaping initial benefits from the investments made in renewable energies and energy efficiency."