(new: Further details, statements from press and analyst conference)

ESSEN (dpa-AFX) - The energy group RWE continues to expect pressure on earnings in 2024 due to the recent fall in electricity prices. The management confirmed its forecasts on Thursday in Essen at the presentation of the balance sheet. However, the risk should be manageable, at least in the renewable energy business, as RWE has already sold a large part of the electricity generated by wind and solar at fixed prices. Analysts and investors were initially relieved, but the share price slipped into negative territory around midday. At the end of the day, the share lost over 2 percent.

In response to a question from an analyst in the investor conference call, the management left open whether a share buy-back program was being considered. "We are looking at all options," said Group CEO Markus Krebber when asked how the earnings target of EUR 3 per share is to be achieved in 2027.

The share price maintenance associated with a buyback program could do the RWE share some good. Since the rise in energy prices at the end of 2021, the share price had risen sharply until the fall of 2022. Since then, however, the trend has been downwards again. The price gains of the past three years have now disappeared again. The losses accelerated in the current year: the DAX share price has fallen by over 22 percent.

A month and a half ago, RWE had already announced that only the lower end of the target range of 5.2 to 5.8 billion euros published in November was likely to be achieved as adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in 2024. This corridor remains valid despite the sharp fall in electricity prices since then, the company said. RWE also confirmed its preliminary figures and medium-term targets.

JPMorgan analyst Javier Garrido referred to more transparency with regard to the medium-term forecasts. Presentations showed how insensitive earnings from wind and solar energy are to electricity prices. According to RWE's data, the majority of renewable electricity generation has already been sold at fixed prices, both in 2024 and in the coming years. Electricity production from wind and solar parks is therefore only exposed to price fluctuations to a limited extent.

JPMorgan expert Garrido is also reassured by the prospects for earnings from the Essen-based energy company's flexible generation capacities. The analyst also noted that the management there is showing the target figure for adjusted earnings per share for 2027 and 2030 and not for adjusted consolidated earnings overall. This is reassuring with regard to the impact of future financing options.

However, the earnings situation in 2024 will largely depend on how the business activities of the subsidiaries develop, as RWE explained in the annual report. Accordingly, income from energy trading is likely to be "significantly" below the 2023 level. This also applies to the commercial improvement of power plant dispatch.

In contrast, the Essen-based company expects positive impetus from the commissioning of new wind and solar parks. However, the management only expects an improvement in operating profit for onshore plants. By contrast, the earnings contribution from offshore wind power is also likely to decline, as RWE has sold the electricity generated at lower prices on the forward market.

In general, RWE expects demand for electricity in the Group's key markets of Germany, the UK, the Netherlands and the USA to recover somewhat following last year's declines. However, even if energy prices were to rise again, RWE would not be able to match last year's results with the current forecast range.

In day-to-day business, profit rose by a third to just under 8.4 billion euros in 2023. The preliminary figures for 2023, which were also announced at the end of January, were confirmed. At the bottom line, profit rose even more strongly, from just under 1.5 billion euros to just over 2.7 billion euros. As already announced, shareholders are to receive a dividend of €1.00 per share. In the current year, RWE is planning an increase of 10 cents.

RWE significantly expanded its electricity generation capacities in 2023. More than 160 plants with a total of 6.3 gigawatts were added, three gigawatts alone through the acquisition of US green power producer Con Edison. At the end of the year, RWE operated plants with a total capacity of 46.5 gigawatts. Of this, 10.6 gigawatts were attributable to lignite and hard coal-fired power plants and 15.7 gigawatts to gas-fired power plants. Plants for renewable electricity generation from wind and solar power had a capacity of 17.5 gigawatts. Pumped storage and batteries accounted for the remainder./lew/tob/nas/jha/