RWE Q1 2025 slides: earnings dip on weak wind conditions, full-year outlook unchanged

German energy giant RWE (LON:0HA0) (ETR:RWE) reported lower first-quarter earnings for 2025 due to weak wind conditions in Europe, but maintained its full-year guidance as it continues to expand its renewable energy portfolio. The company presented its Q1 results on May 15, 2025, highlighting both challenges and strategic progress.

Quarterly Performance Highlights

RWE delivered adjusted EBITDA of €1.3 billion in Q1 2025, down from €1.71 billion in the same period last year. Adjusted net income fell to €498 million from €801 million in Q1 2024, resulting in adjusted earnings per share of €0.68 compared to €1.08 previously.

The company attributed the decline primarily to weak wind conditions in Europe, which particularly affected the Offshore Wind segment, along with lower hedged prices and normalized margins in the Flexible Generation segment.

As shown in the following breakdown of Q1 2025 adjusted EBITDA by segment:

The Offshore Wind segment saw earnings decline to €380 million from €548 million in Q1 2024, while the Flexible Generation segment dropped to €376 million from €552 million. However, the Onshore Wind/Solar segment showed improvement, with earnings increasing to €496 million from €341 million, driven by organic growth and higher hedged prices in the US market.

The Supply & Trading segment experienced the most significant percentage decline, with earnings falling to €40 million from €251 million due to lower trading performance.

Construction Program & Strategic Initiatives

Despite the earnings challenges, RWE continues to make progress on its construction program and strategic initiatives. The company provided the following update on its key projects:

In the Offshore Wind segment, RWE’s Sofia project (1.4 GW) in the UK has installed 79 of 100 foundations and 12 turbines, with first power expected in the second half of 2025. The Thor project (1.1 GW) in Denmark has begun installation with 5 of 72 monopiles in place.

For Onshore Wind/Solar, RWE commissioned 500 MW in Q1 and secured offtake agreements for more than 95% of its projects. The company has also largely mitigated supply chain risks for its 3.9 GW US project portfolio.

In the Flexible Generation segment, RWE fully commissioned a 220 MW battery system in Germany during Q1 and has an additional 1.4 GW of battery projects under construction across Germany, the UK, and the Netherlands.

The company is also optimizing its offshore portfolio through strategic sell-downs, having signed agreements to sell 49% equity stakes in both the 1.6 GW Nordseecluster and 1.1 GW Thor offshore wind projects.

Financial Analysis

RWE’s adjusted net income for Q1 2025 was impacted by the lower EBITDA, though partially offset by improvements in the financial result:

The company’s net debt increased significantly during the quarter, rising from €11.2 billion at the end of December 2024 to €15.9 billion by March 31, 2025. This increase was primarily driven by continued investments in renewable energy projects and timing effects from hedging and trading activities.

The following chart illustrates the development of RWE’s net debt during Q1 2025:

Net cash investments of €2.7 billion were mainly directed toward Offshore Wind and Onshore Wind/Solar projects, reflecting RWE’s continued commitment to expanding its renewable energy portfolio despite the challenging quarter.

The company’s adjusted operating cash flow was negative at €1.15 billion for the quarter, impacted by seasonal effects including the purchase of CO2 certificates and changes in provisions:

RWE’s economic net debt as of March 31, 2025, included financial assets of €10.64 billion and financial liabilities of €19.78 billion, along with provisions for pensions, nuclear waste management, and dismantling of wind and solar farms:

Outlook & Forward-Looking Statements

Despite the weaker Q1 performance, RWE confirmed its full-year 2025 guidance, maintaining confidence in its ability to deliver on its financial targets:

The company expects adjusted EBITDA for the full year 2025 to be between €4,550 million and €5,150 million, with adjusted net income ranging from €1,300 million to €1,800 million. This translates to adjusted earnings per share of €1.8 to €2.5.

By segment, RWE forecasts Offshore Wind to contribute €1,300-1,700 million to adjusted EBITDA, Onshore Wind/Solar €1,650-2,150 million, Flexible Generation €1,000-1,400 million, and Supply & Trading €100-500 million.

The company’s €1.5 billion share buyback program is progressing as planned, with the first €500 million tranche expected to be completed by the end of May 2025, followed immediately by the start of the second €500 million tranche.

RWE’s stock closed at €32.28 on May 14, 2025, well above its 52-week low of €27.89 but below its 52-week high of €36.64, reflecting the market’s mixed sentiment about the company’s performance and outlook.

The company’s continued investment in renewable energy capacity, as shown in the following chart, underscores its long-term strategic focus despite short-term challenges:

With 10.6 GW of capacity under construction across various technologies and geographies, RWE remains committed to its growth strategy in the renewable energy sector, positioning itself to benefit from the ongoing global energy transition despite the temporary setback in Q1 2025.

Full presentation:

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