Bloomberg News

RWE Almost Over Worst as New CEO Prepares to Cut Costs Further

February 26, 2012

Feb 24 (Bloomberg) -- RWE AG’s Chief Executive Officer designate Peter Terium said Germany’s second-biggest utility is almost over the worst after a “very difficult year” following the government’s decision to exit nuclear power.

RWE plans to save an additional 1 billion euros ($1.3 billion) a year in 2013 and 2014. The utility is considering measures such as increasing cross-border cooperation on power plants to streamline operations, Terium told reporters yesterday in Essen, where the company is based.

“We believe strongly that we will soon bottom out after a very difficult year” that also included the financial crisis, said Terium, 48, who takes over from Juergen Grossmann in July. “However, it’s not going to work without additional efficiency measures.”

Germany’s biggest utilities are revamping their operations after being ordered by Chancellor Angela Merkel to close their nuclear plants by 2022 in response to Japan’s Fukushima accident. RWE, which reports full-year earnings on March 6, is raising as much as 11 billion euros to reduce debt and help finance new projects. Rival EON AG is cutting as many as 11,000 posts and seeking to expand outside Europe.

RWE is selling assets such as gas fields in Egypt, as well as its Czech NET4GAS gas-grid unit. The utility is making “good progress” on its divestment program, including the sale of its stake in local utility VSE, Terium said.

‘On Track’

“We’re well on track to renew our power plant portfolio, the biggest investment program in the company’s history,” Terium said.

There’s “no immediate need” for consolidation in the European utility industry, he added, suggesting that a merger with EON as proposed by European Energy Commissioner Guenther Oettinger is not an option at the moment.

“We as RWE seek to find our financial strength again to make our own investments and grow,” said Terium, who oversaw RWE’s acquisition of the Dutch utility Essent NV in 2009.

RWE remains open to cooperation such as joint power plant projects even after talks with OAO Gazprom over a venture failed, he said.

“If someone says, ‘I want to have a coal-fired power plant, or a part of it,’ then we’re open for that as we have enough new capacity,” he said.

RWE saw third-quarter earnings slump 73 percent as it worked to phase out nuclear production after earlier slashing full-year profit targets.

--Editors: Stephen Cunningham, Tony Barrett.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus