Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RWE AG (RWEOY, Financial) reported a strong financial performance in the first half of 2024, with an adjusted EBITDA of EUR2.9 billion.
- The company has made significant progress in its renewable energy projects, adding 4 gigawatts to its offshore wind pipeline and FID-ing almost 3 gigawatts of renewable projects.
- RWE AG (RWEOY) has more than 10 gigawatts of capacity under construction, with projects on time and on budget despite a challenging supply chain environment.
- The company has secured significant PPAs, including a new 374-megawatt PPA with Maasbracht in the US, indicating strong demand for green power.
- RWE AG (RWEOY) has reduced its CO2 emissions by 27% year-on-year and aims for a further reduction of 60% by 2030, aligning with the 1.5-degree emission reduction pathway.
Negative Points
- The company confirmed its outlook for the rest of the year at the lower end of its guidance, indicating potential challenges in meeting higher expectations.
- RWE AG (RWEOY) faces a challenging supply chain environment, which could impact future project timelines and budgets.
- The company's net debt increased to EUR11.4 billion due to investments and high timing effects, raising concerns about its leverage.
- There is uncertainty around the policy framework for decarbonizing gas assets, which could impact the company's long-term strategy.
- The trading business performance in Q2 was below expectations, with the lowest result since 2019, raising questions about future profitability in this segment.
Q & A Highlights
Q: Do you have any comments on the recent Calpine speculation? And can you remind us of the criteria for considering flexible power generation investments in the US?
A: No comment on the rumors. Regarding US Flex, the criteria include the quality and location of assets, earnings profile, and alignment with our decarbonization strategy. Current PPAs with Meta are unit-continuous, not 24/7, but still highly attractive due to strong demand.
Q: Is there room for large-scale M&A in your plan given your growing green strategy and significant organic CapEx?
A: M&A is about finding the right target at the right price and time. We remain focused on delivering our strategy and managing our portfolio. Any potential M&A will be evaluated based on its fit with our decarbonization goals.
Q: Could you clarify the EUR55 billion CapEx plan and its flexibility for M&A?
A: The EUR55 billion is primarily for organic investments. We constantly optimize our portfolio, including partial sell-downs. The plan does not include acquiring existing assets, but we remain open to opportunities that align with our strategy.
Q: Can you provide an updated view on financial figures like minority interests and other consolidations for the full year?
A: We have not adjusted the guidance for other consolidations and minorities. The trading business had a normalized performance in Q2, which was expected after high volatility in recent years.
Q: Could you elaborate on the E.ON stake and its strategic importance?
A: The E.ON stake is a financial investment, not strategic. We are happy with its performance but will consider opportunities to generate attractive returns. Our decarbonization targets remain unchanged.
Q: Is there a limit to how much gas generation you can add before it impacts investor appetite due to ESG concerns?
A: This is a question for our investors. Our strategy includes adding H2-ready CCGTs in Germany, which will run on natural gas initially but will be decarbonized over time.
Q: How do you plan to finance additional offshore projects given your current CapEx plan?
A: We have flexibility in our CapEx plan and will optimize our portfolio through partial farm-downs. We are confident in our ability to finance additional projects while maintaining our strategic goals.
Q: What are your expectations for the German capacity market and its impact on existing assets?
A: The capacity market will likely focus on incentivizing new builds. Existing assets will be included but may not receive significant payments initially. We await further details from the German government.
Q: How do you view the current performance of your onshore and PV segments?
A: We expect strong performance in Q3, especially in the US due to our PV footprint. The overall outlook for onshore and PV remains positive.
Q: How committed are you to maintaining your current credit rating?
A: We are fully committed to maintaining our current credit rating and the associated financial metrics. Our green investment program aligns well with our green bond framework.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
