RWE is confident of hitting targets for 2018 even as its profits slumped

Frankfurt am Main (AFP) - German energy group RWE on Tuesday reported slumping revenues and profits as 2018 got under way, but said it was confident of hitting targets for the full year as a mega-deal with rival EON inches forward.

Net profits at the group dropped 34.5 percent year-on-year between January and March, to 620 million euros ($739 million).

Adjusted for some financial effects, net profit fell slightly less sharply, losing 25 percent for a reading of 517 million euros – beating a 513-million-euro forecast from analysts surveyed by data company Factset.

Revenue shed more than six percent to 12.4 billion euros, while adjusted operating, or underlying profit fell to 1.9 billion, dragged down by “lower margins and wholesale prices” in conventional power generation, RWE said in a statement.

Nevertheless, “we are on track with our operating business,” financial director Markus Krebber insisted, saying the group would meet its full-year goals.

RWE said it would provide investors and analysts with updated forecasts later in the year, as a complex deal with German rival EON is set to completely reshape the business.

The two firms agreed in the first quarter on a series of asset swaps that will see RWE focus on energy generation with both renewables and traditional fossil fuel and nuclear plants, while EON specialises in retail customer relationships and managing energy networks.

Executives hope for approval from regulators and competition authorities by mid-2019.

Investors were not enthused by RWE’s results, with stock in the firm shedding 1.4 percent to trade at 19.72 euros around 10:30 am (0930 GMT) in Frankfurt, making it one of the worst performers in the DAX index of blue-chip German shares.