Earnings call transcript: RWE’s Q4 2024 sees robust renewable growth

RWE’s fourth-quarter 2024 earnings call revealed a strong performance in renewable energy production and significant investments in infrastructure, despite a drop in stock prices. The company’s adjusted EBITDA reached €5.7 billion, with adjusted net income at €2.3 billion. The stock saw a 4.45% decline, closing at €33.05, influenced by market reactions to the company’s strategic shifts and reduced investment plans. According to InvestingPro data, RWE maintains a healthy financial position with a current ratio of 1.55, indicating strong liquidity. The company’s market capitalization stands at $25.3 billion, with an attractive P/E ratio of 8.38.

Key Takeaways

• RWE reported a significant increase in renewable electricity production, up 8% year-over-year.
• The company invested €10 billion in expanding its generation portfolio.
• Stock prices fell 4.45% following the earnings announcement.
• RWE plans to reduce its investments by €10 billion through 2030.
• The company aims to implement a €1.5 billion share buyback program by Q2 2026.

Company Performance

RWE demonstrated a robust performance in renewable energy, with electricity production from renewables increasing by 8% to nearly 50 million megawatt-hours. The company also made substantial investments in its generation portfolio, totaling €10 billion. These efforts align with global trends toward cleaner energy and position RWE strongly within the industry. InvestingPro analysis shows the company operates with a moderate debt level, with a debt-to-equity ratio of 0.61, supporting its ambitious growth plans. Get access to 10+ additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Financial Highlights

• Adjusted EBITDA: €5.7 billion for 2024
• Adjusted Net Income: €2.3 billion for 2024
• CO2 emissions reduced by 13% year-on-year
• Investment in generation portfolio: €10 billion

Market Reaction

RWE’s stock fell by 4.45% to €33.05 following the earnings release. The decline reflects investor concerns over the company’s strategic decision to reduce planned investments by €10 billion through 2030 and the potential impact on future growth. Despite recent volatility, InvestingPro data shows the stock has delivered a strong 16.09% return year-to-date. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value. The stock’s movement contrasts with its 52-week high of €36.64, indicating a cautious market sentiment.

Outlook & Guidance

Looking ahead, RWE has set a 2025 adjusted EBITDA guidance of €4.55-5.15 billion and an adjusted net income guidance of €1.3-1.9 billion. The company targets an adjusted EPS of €3 by 2027, increasing to €4 by 2030. The strategic reduction in investments and the €1.5 billion share buyback program are key components of its future plans. InvestingPro data reveals the company’s strong financial health with an overall score of 3.1 out of 5, labeled as "GREAT." For detailed insights and expert analysis on RWE’s future prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro.

Executive Commentary

Markus Kreber, a board member, highlighted the company’s focus on value-creating growth, stating, "Value creating growth is the compass for all our investment decisions." He also emphasized the importance of stable government policies in Europe, saying, "We need a stable and resolute government that’s also prepared to take the lead in Europe."

Risks and Challenges

• Potential policy changes in the US energy market could impact operations.
• The reduction in planned investments may affect long-term growth prospects.
• Political uncertainties around nuclear power reactivation pose strategic challenges.
• Market volatility and macroeconomic pressures could influence financial performance.

Q&A

During the earnings call, analysts questioned RWE’s reduced investment strategy and its implications for future earnings. The company clarified its approach to maintaining earnings targets while managing investment risks. Discussions also covered the potential reactivation of nuclear power, though this remains politically uncertain.

Full transcript - RWE (RWE) Q4 2024:

Steffi, Moderator/Conference Host, RWE: Good morning, ladies and gentlemen, and welcome to our Compass Day to our annual press conference. Well, we’re very late in the reporting season this year with a benefit that there’s a lot of sunshine outside, and we conduct our press conference at the beginning of spring. And I would also like to welcome those who have logged in via this stream. Also, a warm welcome to you. Before I pass the floor to our board members, some technical indications and remarks.

The questions here in the room will be answered directly and you can raise your hand to those colleagues who wish to ask via the stream, then it would be nice to enter your name on the chat, and then I will call upon you. It it doesn’t make sense to enter the whole question, but just enter your name and that you wish to, wish to ask a question. And and we will answer the questions in the language that you pose your question. So feel free to use either English or German. And then the final remark, it would be nice, if there was a question via the virtual room, if you could switch on your cameras so we can all see you in this room and here.

And then I pass the floor to Markus Kreber.

Markus Kreber, Board Member/Executive, RWE: Thank you, Steffi. Good morning, ladies and gentlemen. A warm welcome to our annual press conference. We’re living in a troubled times. And in 2025, the situation has not really improved.

The global political tensions are palpable. The situation is very challenging. The development of individual companies seems to almost fade into the background. Therefore, I am all the more pleased to welcome you here on campus and on your screens. Thank you for your attention.

RWE can look back on a successful fiscal year, both operationally and financially. Our financial figures are good. We have expanded our portfolio by a further two gigawatts. Our newbuild projects are progressing according to plan, and they are the basis for positive future earnings developments. In a nutshell, we are in a robust position and well on track.

And this is primarily the result of the successful work of our employees, the result of the people who work for RWE and who make RWE what it is. I would therefore like to express my sincere thanks to all colleagues. In 2024, we achieved an adjusted EBITDA of EUR 5,700,000,000.0 and an adjusted net income of EUR 2,300,000,000.0. That was more than we had expected at the beginning of 2024. Our electricity production from renewables reached a new record of almost 50,000,000 megawatt hours.

This is an increase of around 8%. Our CO2 emissions have continued to fall significantly by a further 13% year on year. This means that our emissions from electricity generation have more than halved since 2018. In 2024, we invested EUR 10,000,000,000 net in the expansion of our generation portfolio. A large portion was invested in offshore wind projects in the North Sea, primarily in the construction of Sofia off the British coast and Tor in Danish waters.

In addition, we acquired Vattenfall’s Norfolk projects off the East Coast Of England. They have a planned total capacity of 4.2 gigawatts and development is already well advanced. With the investment decisions for the North Sea cluster in Germany and Oranje Wind in The Netherlands, we have also set the course for the further expansion of wind power in the North Sea. And most importantly, we have brought partners on board, Masdar for our three gigawatt projects on Dagr Bank in The United Kingdom and TotalEnergies for Oranyvind and for the German sites located Northwest of the island of Borkham, joint projects that benefit both sides. While we are spreading further billions of euros investments across several shoulders, our partners are also getting a stake in attractive projects.

In addition to offshore wind, we have also continued to invest heavily in new onshore wind projects, solar farms and battery storage facilities. In total, we have almost 150 projects with a combined capacity of 12.5 gigawatts under construction. We will commission the majority of these this year and next a total of nine gigawatts. Ladies and gentlemen, our operational and financial performance is strong. The prospects for our business are fundamentally positive.

Global demand for electricity is expected to increase significantly, not least to electrification, artificial intelligence. With our integrated portfolio of renewables, battery storage and flexible generation as well as a broad project pipeline of possible newbuilds, we are well positioned to respond to this positive market development. However, we also have to recognize that the investment environment has become more uncertain. Continued high inflation and rising interest rates, constraints in supply chains, geopolitical tensions, possible additional tariffs and possible adjustments in the direction of energy policy in our core markets. These are risk factors that need to be taken into account when deciding on new investments.

Our multi billion euros investment in new wind and solar farms, energy storage systems, electrolyzers and power plants are made over decades and therefore require stable, reliable framework conditions. Given greater uncertainties, it is all the more important that we are even more cautious. This is reflected in stricter risk management for new investments. And we have also raised our return expectations for all of our future projects from an average of 8% to more than 8.5%. As a result, we project a lower investment volume in the years ahead than we had anticipated in the past.

We are currently planning net investments totaling billion for the years of 2025 to 02/1930. This is EUR 10,000,000,000 less than we had previously planned for this period. You all know the figure of EUR 55,000,000,000 for investments that we announced two years ago. Now how does this translate into that? We already invested billion, 45 are left and this has been reduced by billion and therefore, they will total from today to 2,030.

In November, we already announced investment delays in view of increased risks of offshore wind projects in The U. S. And slower than expected ramp up of the European hydrogen economy. The funds saved will be used for our share buyback program worth EUR 1,500,000,000.0. This will be completed by the second quarter of twenty twenty six.

Share buybacks will remain part of our possible capital allocation decisions in the future. Ladies and gentlemen, value creating growth is the compass for all our investment decisions. Thanks to our large project pipeline, which is broadly diversified in terms of region and technology, we can very precisely select where we allocate our capital. We are therefore reaffirming our earnings targets despite the reduced investment program. In 2027, we want to achieve adjusted earnings per share of around EUR 3 and increase it to EUR 4 per share by 2,030.

What do we expect for this current year? Well, for 2025, we expect adjusted EBITDA in the range of EUR 4,550,000,000.00 to EUR 5,150,000,000.00. We forecasted adjusted net income of between billion to billion. This means that our group earnings will not reach the level of the past fiscal year as expected. This is because we expect income from the short term optimization of our power plant dispatch and earnings in the trading business to normalize in 2025.

In addition, margins from electricity sales should be lower due to lower electricity prices. However, we expect the commissioning of new wind and solar farms as well as battery storage facilities to have a positive impact. As announced, we intend to pay a dividend of per share for fiscal year twenty twenty four. This is more than in the previous year. For the current financial year, we plan to increase the dividend by a further This means a total of per share.

And with this, I would like to hand over to you, Michael. Ladies and gentlemen, a warm welcome from my side as well. RWE’s business performance in 2024 was strong. Our adjusted EBITDA was higher than what we forecast at the beginning of the year. Adjusted net income also exceeded our expectations.

This was partly due to a strong performance in the Supply and Trading and Flexible Generation segments. Both segments performed better than expected. Our continued expansion of renewables also had a positive impact. Overall, however, as expected and announced, we were unable to match the unusually strong earnings registered in the previous year. Let’s take a look at the segments in detail.

In the Offshore Wind segment, we achieved adjusted EBITDA of EUR 1,600,000,000.0 in 2024. This is 6% less than in the previous year. This expected decrease is due to lower prices than in 2023 for the part of our offshore wind capacity for which we do not have long term offtake contracts. In addition, expenses for the repair and maintenance of the plants increased. In the Onshore Wind and Solar segment, we achieved an adjusted EBITDA of billion in 2024, and that’s an increase of around 20%.

And this was mainly due to the commissioning of new facilities. In addition, The U. S. Business from Con Edison acquired on 01/2023 contributed to earnings for the first time for the full year. In the Flexible Generation segment, we achieved adjusted EBITDA of billion.

As expected, this was significantly below the previous year. However, we exceeded the forecast from the beginning of the year, and this was mainly due to higher than expected income from the short term optimization of our power plant dispatch. Supply and trading once again posted strong earnings in 2024 with adjusted EBITDA at million. The performance was better than expected. But as anticipated, there was a significant decrease compared to the exceptional high earnings level of the previous year.

Since 2024, we have been managing our lignite based electricity generation business and our nuclear decommissioning activity on the basis of adjusted cash flow. This business is no longer included in our key earnings figures. Details on this and the outlook for each segment can be found in our annual report. Last year, RWE invested EUR 10,000,000,000 net. We forged ahead with expanding our portfolio of renewables and flexible generation.

We currently have four offshore wind projects under construction. We are making good progress. At Sofia, our 1.4 gigawatt project in The UK, work to install the foundations began last spring. More than half of a total of 100 foundations are now firmly anchored in the seabed. Construction work is also in full swing at our Danish offshore wind farm tour.

The installation of foundations will begin this spring. A few days ago, the first foundations for our German Noordsee cluster project arrived at the base port in Einshaven. We will also use Einshaven as a base for the Dutch wind farm, Iranian wind. Offshore construction work will start next year. We are also significantly increasing our capacity in onshore wind battery storage and solar, especially in photovoltaics.

This is mainly due to expansion in The United States where we are building large solar farms, often in combination with battery storage systems. Our large scale batteries in Germany and other European markets are usually operated independently. We have just commissioned one of the largest battery storage systems in Germany at our sites in Hamm and Neurath. The two battery systems have a combined capacity of two twenty megawatts and can deliver within seconds. The construction of our large electrolyzer in Lingen is also progressing well.

The pilot plant is already in operation. In total, we plan to build 300 megawatts of capacity at the site. From 02/1930, our partner TotalEnergies will purchase around 30,000 metric tonnes of green hydrogen a year from Linge and use it to decarbonize its refinery in Leuna. This is the largest green hydrogen purchase agreement in Germany to date, and it shows that the hydrogen economy is making progress. We have set ambitious growth targets, and that means that we need a solid financial position.

This is the case at RWE. We have the required financial headroom to fund our multibillion euro investment program, dividend payments to our shareholders and for our share buyback program. We cover most of our financial needs with our operating cash flows. In 2024, this amounted to billion. Thanks to our strong operating cash flows, our net debt was moderate.

It amounted to billion as of thirty one December twenty twenty four. Our leverage factor, which reflects the ratio of net debt to adjusted EBITDA, was two point zero in the year under review. It remained well below the upper limit of three point zero that we have set for this key figure. We also expect to remain below the three point zero threshold in the current fiscal year. Our good credit rating remains strong.

The rating agencies, Moody’s and Fitch, confirmed our solid investment grade rating. We want to increase value for our shareholders and let them participate in the company’s success. Thanks to our strong earnings, we are able to pay an attractive dividend, and we want to keep increasing it. We are aiming for an annual increase of our dividend of 5% to 10% through to 2020. And with this, I’ll hand back to you, Markus.

Steffi, Moderator/Conference Host, RWE: Thank you, Michael. Ladies and gentlemen, the market fundamentals for power demand are promising. In October, the International Energy Agency published its latest outlook. It expects global electricity demand to almost double by 02/1950. The main drivers are the further electrification of transport, of buildings for heating and cooling and of industrial processes and of course, the growing demand from data centers and AI.

To supply the increasing demand for electricity, a combination of renewables, storage and flexible gas fired power plants is the right mix. And there needs to be a massive amount of additional generation capacity. An attractive and stable environment is crucial as a prerequisite for long term investments. It’s equally crucial to retain industrial competitiveness. A secure and affordable energy supply is essential to this.

It is therefore right that the European Commission and the coalition partners of the future German government are putting competitiveness at the top of their agenda. The European Commission’s Clean Industrial Deal and the Action Plan for Affordable Energy now provide guidelines for achieving this goal. And the problem of excessive bureaucracy, which undermines our competitiveness, has also been recognized. However, what’s still missing is really a mental change. It’s not enough to describe the general direction.

We need concrete measures and that quickly. These will be the new German government’s more pragmatic power plant strategy will be approved within three months and the central capacity market within eighteen months. The over regulated definition of green hydrogen will be abolished. Decarbonization is already taking place via the CO2 trading system. The current requirement for green hydrogen has no impact on climate policy.

Instead, it systematically slows down the ramp ups instead of boosting it and makes this unnecessarily expensive. The review of whether further EU financial market regulation should be applied to energy markets will be discontinued. Why consider tightening up and when that would only cause companies to consider relocating to The U. S. Or U.

K? Excessive bureaucracy will be specifically reduced. Sustainability reporting will be scaled back to a reasonable level. And the EU supply chain law will be limited for all companies and not just for small and medium sized enterprises. And a true capital markets union with harmonized insolvency laws and true digital union with harmonized data protection rules will be created today’s fragmentation prevents investment in the EU.

This list of specific examples that provide real relief could be continued. Germany urgently needs a stable and resolute government that’s also prepared to take the lead in Europe. It’s good that CDU and CSU and SPDF quickly concluded the exploratory trucks for their coalition. Now it’s important to maintain the pace. The new agenda for our country must be geared towards economic dynamism.

A successful and productive economy is a basis for providing the funds for our defense and the modernization of our infrastructure in the long run. And a successful economy will take the wind out of the sales of the political radicals. Affordable energy is a basic requirement for a competitive industry. This is why in Germany too greater retention must be paid to security of supply and economic efficiency. In other words, German energy policy needs a fresh start for the coming years.

It requires first a clear focus on what’s necessary in the next few years. What does it mean in concrete terms? A major driver of energy costs is the cost of cost grid extension. Grid expansion planning is currently based on maximum demand planning. What we need is a reality check-in this respect.

Expansion must be dynamically aligned with verifiable factors such as the actual electricity demand. When it comes to hydrogen and CCS infrastructure, we should initially focus the build out on industrial centers. When it comes to renewables, it is not a matter of achieving previously said gigawatt targets. It’s a matter of building where it makes sense. This also applies to offshore wind where the expansion target of 70 gigawatts should be adjusted downwards.

More important than the pure increase in capacity is efficient use of sites so that wind farms do not block each other and can achieve sufficient wind yield. This also saves costs. And most importantly, what we need is security of supply. I’ve said it many times and it’s still true. We need competitive tenders for new gas fired power plants and we need them as soon as possible.

Whole They need to be planned and remunerated more from the perspective of the system as a whole. The best locations are where they cause the least additional costs for the grid and where they provide the highest yields for the system as a whole. This could be managed by means of more transparency. If there was a traffic light system that shows everyone where it makes sense to build based on grid expansion plans and where it does not, we could become considerably more efficient. It would also be helpful if those who built in areas without sufficient grid capacity were to contribute to the grid connection costs.

It is not a good solution at all costs, whether or not they make sense, are imposed on the general public. And this is also true for private PV system with feed in tariffs. They receive guaranteed remuneration and pay a small contribution to the grid fees. However, they always use the grid precisely when it is already at maximum capacity. Here too, urgent action is needed.

Third, there needs to be more trust in market instruments. Some very specific examples. We should let emissions rate effect and take effect. Any double regulation makes the energy transition more expensive. Why do we need fixed conversion days from gas fired power plants to hydrogen?

This costs money, increases uncertainty and has no impact on climate policy. The expansion of renewables might also be market based. Fixed feed and tariffs must be abolished. Compensation is no longer justified during hours when electricity prices are negative. Further expansion should be based on more commercialization or long term supply contracts.

If state organized long term purchase contracts, CFDs are used, they should be integrated into the market competitively. There are proposals for this such as production independent financial CSDs. First cost reductions can be achieved by using the grid connection points more efficiently. Why is it not possible in Germany to connect several plants to one grid connection point? It is significantly cheaper overall to do this, this way than to create a separate grid connection point for each plant.

And this could continue. Together with E. ON, we’ve published a paper in which we have combined very, very specific proposals for how a fresh start to the energy transition can be made possible at significantly lower cost. Dear ladies and gentlemen, to conclude, let me summarize our company’s situation once again. Our operational and financial performance is strong.

With our portfolio, we’re in a robust position to meet the growing demand for electricity. Given major uncertainties, we’re increasing our requirements for future investments and therefore expect to invest less than before up to 2,030. We will continue to realize attractive projects internationally and of course also here in Germany. Despite the slight reduction in our investment expectations, we confirm our previous long term earnings and dividend targets. The times are and will remain challenging, and we are very well prepared for this.

And now we are looking forward to your questions.

Markus Kreber, Board Member/Executive, RWE: Thank you very much, Markus. And before we start with the Q and A session, I’d like to remind you that if you’ve joined at a later time, if you are connected through the virtual room, you can ask your question in the virtual room. Simply state your name, enter your name in the chat and I will call you. And now let us continue with the questions in the room. I can’t see everybody, but I’ll start with the right side.

Daniel Wetzel, Mr. Fincke, Ms. Busse and Ms. Honing, that would be the order. And then I’ll move over to the left side of this room.

Mr. Kreber, the new risk assessment and the reduced reduction in terms of the reduced investment in Germany, how much will you invest in Germany? Are you going to change investments for Germany? No, nothing has changed for Germany as far as the plan is concerned. But of course, this will depend on the auction for new gas fired power plants.

Future investments in Germany that have not been confirmed are hinging on the gas fired power plants. In Germany, Three gigawatts more than three gigawatts are being built and additional offshore wind areas have been secured. But the variable that we’re faced with is the additional are the additional gas fired power plants that are to be built. Thank you, Marcus. Mr.

Fincke, please. Good morning. I would like to know what the as far as the forecasts are concerned, you mentioned in your speech that there’s a normalized contribution to earnings in the area of power plant generation and supply and trading. What does that mean specifically? Was 2024 a year where these two segments were normally profitable or were prices normally high?

Are they normalizing now? That’s my first question. And if you look at The United States and the fact that Donald Trump is not a big fan of offshore wind power, but that was already a topic in November. Apparently, he’s not a big fan of solar systems. He called them hell on earth because they look ugly.

You’re a major solar player in The United States now. Do you are you concerned that you may have to reduce your expansion plans in solar in The United States? Now, considering your first question, from 2022 to 2023, we generated high earnings in flexible generation and energy trading supply and trading. And that was mainly due to the fact that prices were very high at this time and flexible generation stepped in and made the necessary capacity available. However, volatility, you may remember price volatility.

Volatility was extremely high, and that was a situation that supply and trading used to its benefit and generated high results. What we saw in 2024 and 2020 what we’re expecting for 2025 is that the situation will normalize. So with regard to supply and trading, we guided a range of 100,000,000 to 500,000,000 of earnings, billion of earnings, and that’s the figure that we already mentioned in the previous year. And this depends, of course, on prices and how markets will develop at the end of the day. And in flexible generation, we are expecting volatility to go down.

And with regard to gas and electricity prices, they have also gone down. And that’s why our expectations are below the level of 2024, but will remain at a normalized level. Your question concerning The United States, Mr. Finca, if you look at the market, the electricity demand is developing dynamically. Electricity demand growth is higher in The United States than anywhere else in developing in developed countries.

And it is expected that this will continue. Now if you look at what can be built in addition, what new builds are possible, it will take decades until nuclear can be added. Gas isn’t that quick either, but renewables is quick. So anything that can be added in terms of capacity is required in order to meet the demand. Now under Trump won, Administration won, the expansion of wind energy solar power was good.

We added a lot of capacity at the time. But what can we do in order to take further investment decisions? We need clarity with regard to customs tariffs, and we also need clarity with regard to permits. I can’t give you an answer yet, but we can only make additional investments through the three four gigawatts that we’re currently in construction if we have clarity. Once we have clarity, we will continue to invest.

If we do not have clarity, we will not be able to accept this risk. And I will only be able to give you an answer at the end of the year. The next question is from Ms. Bose from FAZ. I have a question concerning gas fired power plants.

If your requests are realized by the new government, it doesn’t make sense to stick with your time schedule. If you win an auction and the first power plants will be able to run-in 02/1930, But if this won’t be successful, what does that mean with regard to what does that imply for your coal exit? Well, if clarity comes quickly and if the auction will take place at the end of this year, early next year, and if the planning and authorization and permit process is accelerated, which would be necessary, construction by the end of the decade will still be possible. And that’s because we continued planning our projects. We didn’t stop because we know that this capacity is needed when we prepared the permits and etcetera.

And in our discussions with suppliers, we continued working and moving forward. Now you will probably have to ask this question to the government. We have a clear regulation and agreement that we will exit coal by 02/1930, and the federal government will still have the possibility to use remaining power plants as reserve capacity. The government will have to decide, but it’s in the interest of all of us to have clarity. We need renewables also to keep electricity prices down.

The next question is from Ms. Hoening, Rein Serpost. I have three questions, if I may. Electricity prices depressed your business. What do you expect in this regard?

And in the paper of the government, the negotiators want the first fusion reactor to be based in Germany. Do you think that’s realistic? And would you like to join this business? There’s also debate on Nord Stream if the war ends at some stage. Do you think it’s realistic that Nord Stream will start operating again?

And do we need Russian gas? Ms. Honning, electricity prices have developed as expected. We’re not surprised facing the most recent developments. The earning situation has normalized.

And as Michael Mueller said, we had very high results in the previous years because of the good situation in energy trading, which, of course, cannot be continued in the future. We’re not surprised the earnings level that we’re faced with now is normal. And over time, it will rise because of the investments that we’re making. Second question concerning fusion, nuclear fusion. Research and development is a good thing fundamentally.

Now if we have technologies that can reach a breakthrough, if we’re able to solve the energy problem of future generations, well then, of course, you have to make an effort and you should make this effort. But we are not active doing actively research. We are those who invest at the end when the technology is mature enough for the market. We are observing the situation, but we’re not getting involved in research and development. However, we may get involved if our existing sites can be used for pilot plants and such a situation we would be willing to participate.

Nord Stream is a political decision at the end of the day, and it’s not about the economic topics. It’s really about ending the war that always has to be the first step and anything else is secondary. Regardless of what the political decision will be, I would like to state that we should never be dependent no matter of whom. We always need alternative import routes. We need an LNG import structure infrastructure in order to be independent regardless of where the gas comes from.

Well, what site would be suitable for a fusion reactor? You may be familiar with the debates in Hesa, but that’s still at a very early stage. We are currently dismantling and decommissioning the existing nuclear power plants according to the Nuclear Energy Act.

Steffi, Moderator/Conference Host, RWE: Okay. Now let me turn to the virtual room. Mister missus Becker, missus Patel, and missus Eckerts have called for the floor. And after that, we will hear mister Stites and mister Witkopf. Missus Becker, you have the floor.

Good morning, everybody. I have a full bunch of questions. The U. S. Business first, you got into on that.

What does that mean for Con Edison and the value creation of this investment? Then you mentioned a more strict investment management. I wouldn’t expected you to be strict anyway when it comes to investment management and risk management. And you confirm the earnings situation, but then you say in specific term earnings per share. And can you that is CHF 9,000,000,000 of EBITDA by 02/1930.

Can this be confirmed? First of all, on Con Edison, at the moment, we don’t see any impairment need. When we bought Con Edison, when we bought it, there were three gigawatt installed capacity. Now we’re disposing of more than 11 gigawatt and more than four gigawatt around the construction. So you see the dynamic development since we’ve established the business.

This is not so much to do with the purchase proper, but with a dynamic development in The U. S. And of course, we put some capacities in, of course. Well, in practical terms, when you’re aware of the fact that approval application go their normal way and it’s a formal thing to receive the approval, then you can start investing, then you can start planning without having the approval. When trade policy is quiet and smooth and there are no customs and tariffs, then you can be sure that things can be delivered in a year’s time.

But if the situation changes, then the trade policy is volatile and that within the delivery times, customs are raised, which have to be borne by the importer or the exporter, then, of course, risk management is still in place. Of course, it was in place, but a lot stricter stating that investment decisions are only taken once the customs risk is mitigated, completed. So if the environment is getting more uncertain, then the criteria gets stricter. Yes, for example, 02/1937 to 02/1930, you said that we see a situation that there’s a lot of uncertainty on the investment environment. And in the field of offshore, for example, or in case of flexible generation, we have already decided on the investments for 2027.

And thus, the expectations for 2027 can be confirmed. In the field of onshore wind, of course, since the investment cycles are shorter and they also include The U. S, everything depends on the development of investment conditions. Rearrange investments. So for 2027, we have communicated the net earnings objectives and the net EBITDA.

And after that, we will have, of course, to include the uncertainty. And as soon as there is more clarity, we will provide more information. But at the moment, of course, the situation is completely unclear. Then Laura Pitell from the Financial Times. You have the floor.

Markus Kreber, Board Member/Executive, RWE: Opportunity. I wanted to ask a follow-up question about Russian gas. Mr. Kleber, you said that Germany should never again be so dependent on one market. But what does that mean in terms of your view about Germany and Russian gas in future?

Do you think it’s conceivable that that could happen one day down the line?

Michael Mueller, Board Member/Executive, RWE: Laura, since, let’s say, questions around security of supply are always political question. I mean, the market will not saw that as we have seen also in the past. This is a political question, what proportion would be acceptable, what price level, what are the conditions. But as I said, this economic discussion can only happen after a solution to the active war is in place. So it’s in the end a political question.

And it’s I mean, we have no opinion how fast that might happen or not. That’s probably for your political correspondence.

Steffi, Moderator/Conference Host, RWE: Good. Okay. Thank you. The next question will be asked by Mrs. Van Reuter.

Hello. Three things. We were talking about dependency. Will there not be a new dependency on American LNG? And also in terms of the gas market, what is the option of concluding long term LNG contracts reducing the dependency on the spot markets raising its own problems.

And the British colleagues expect the status quo on the British projects, in particular with a view to onshore wind. Well, I think we need to differentiate between where the gas comes from, and that is a question of the market, which price is raised where and what are the alternatives. And if I depend on two zero one pipelines, then I’m really restricted. But if I’m not restricted to these two pipelines, then I can, of course, source gas well at worldwide level. So we need to invest in infrastructures.

And some people say, well, it’s not fully utilized and we don’t need it. No, no, this is wrong. We need it as a fallback position and we discussed that also before the breakout of the war. Then long term contracts, second question. Long term contracts are a kind of risk management.

They don’t provide us with a supply guarantee. For example, during the energy crisis, it was not a problem of long term contracts, but we bought into long term contracts and redirected cargos. Asia, for example, if they pay higher prices, then this long term country goes to Asia. So what we need is the infrastructure, and this creates the highest degree of independence. And this also changes our perspective of how we source gas worldwide.

And the last question was The U. K. Projects. In The U. K, of course, there’s a lot of projects under construction apart from severe that is the offshore wind farm, 1.4 gigawatt then.

Then onshore wind solar, I think more than one gigawatts under construction and the major pipeline for more than 4.2 gigawatts. So if the conditions for the investments are right, then we can confirm the investment plans. However, when it comes to these major investments, we intend to take partners aboard. Okay. Let me return to the room here, Mr.

Stijs and then Mr. Witkopf and then Mr. Mainke. And after that, Mrs. Brandl, Mr.

Stijs?

Markus Kreber, Board Member/Executive, RWE: Thank you very much. I have a few questions, Mr. Kreber. Could you please explain how or talking about tariffs, to what extent would you be affected by tariffs associated with The United States? Could you please elaborate on that?

In your speech, I did not see an assessment of the budget policy in Berlin. How do you assess the budget bazooka? What impact will that have on the energy infrastructure? Is that going to change the game or not? Another question concerning your strategy in detail.

What does the global developments imply for your global green strategy? Doesn’t it have to be adjusted? You’ve done that, but shouldn’t would it go even a bit further? Would you have to challenge the entire strategy considering what is happening globally? Are you working on that?

And can we expect an update on that? Thank you very much. I’ll start with the first question concerning tariffs. Our current program that is being built in The United States, we have four gigawatts under construction, is very much immune against tariffs. Even the extreme tariffs reduce would increase costs by a factor of only about 1%.

That’s why we feel secure as far as these investments are concerned. But in future, if we want to invest, we either have the imported goods in the country or the supplier has to pay the tariffs. It’s going to become more difficult, and that’s why we expect fewer investment decisions during this phase of uncertainty. Its next topic, well, it’s nice that you missed that, but I didn’t want to comment on this topic. Well, concerning there are three aspects.

Number one, the challenges that we have as a country are tremendous. Modernizing infrastructure in Germany is a topic that we’ve been dealing with for many, many years that doesn’t only relate to energy. Then we have the security situation, geopolitical certainties that existed are no longer valid. That’s the second challenge. And I believe that Germany has one big advantage compared to other Western countries.

We have a very little national debt. And in this situation, we are using the opportunities that we have, and that’s a good thing. But we have to make sure that the money is spent precisely on the problems that were just mentioned, not just because we have money. Any structural reforms and any other topics, of course, will be put on the back burner. We want to use the advantage, not just we should use the money that we have to solve the problems and not just have two or three easy years.

And the third part of the question, energy infrastructure, I don’t think too much money is needed from the government because private money is available. The investment framework has to be good. We shouldn’t money for traffic or transport infrastructure, etcetera. We don’t want to replace private investments in the energy infrastructure. And now finally, just to give you a magnitude, the topic to solve the problem of security supply, and we’re talking about the 2025 gigawatts of gas fired power plants.

If you break this down and it will we expect that we get a price for providing capacity, a price that is competitive, we expect that these costs will account for less than 3% of total electricity generation costs. We do not need government support for that. This can be done privately. Second topic, strategy. Our general orientation of growing green, which has always been a combination of renewables, battery storage, flexible generation, that’s gas new builds were required.

We believe that this is still right. That’s the technology mix that will meet the rising demand of electricity for electricity. Of course, the waiting may change. We may move more towards one technology than to another technology. And there may shift from it may shift from one region to another, but the general orientation is the same.

Maybe the piece of the pie will not be that big because we are more risk adverse. There may be shifts, but we can tell you more about that at the end of the year when we know two unknowns, the general thrust of The U. S. Policy and the German energy policy. These are two important factors.

And with this, we will be able to revise our industry mix and specify our technology mix in the future. But in general, we need more capacity, and it’s definitely indispensable and also in the mix required. Mr. Witkop is the next person on my list. Mr.

Witkop, thank you very much. A question to Mr. Kreber. Well, my colleague just asked the question that I wanted to raise, but let me get more specific. Now considering the plans for government expenditure of CDU, CSU and SPD, do you see that there may be a risk of expenses shifting from energy consumers to public households without addressing the structural problems.

Well, if you have a lot of money, there’s always a risk of taking easy solutions. So I would think this money should be used where the government is needed. Now concerning the energy topic, we submitted a joint paper. You may have read it and it includes a lot of examples of BCBPD study that was published today has the same general gist and what needs to be done in order to implement the energy transition in a cost efficient manner. Now I believe that the energy intensive industry that is competes with other international companies and that will not benefit from all relief measures will still be able to compete when we have when carbon border adjustments won’t work, they will have a problem.

And then we will have to think of potential relief, but the amounts are not excessive. No infrastructure fund, for instance, will have to be utilized. But if this money is yielded used for the German industry, it will probably used for German industry that competes with international companies and that is not competitive. But I would not just generally subsidize the German industry. Mr.

Meinke from V. A. Zet and Ms. Van der from Bloomberg. Thank you.

I have several smaller questions concerning the balance sheet. Your net income rose from $1,500,000,000 to $5,100,000,000 Could you explain what the reasons for this were? And earnings taxes declined from 2,300,000,000.0 to 1,000,000,000. Why do you not have to pay as much tax as in the past? In November, there was some discussion.

There was a debate concerning Elliott. Are they still active? Still active? Or is that no longer of interest because of the share buyback program? And then there’s still it was reported that the sales process was initiated concerning the sale of your stake in Amprion.

Has this process been started? Do you want to sell your stake in Amprion? And what is the value of Amprion in your books? Mr. Maenka, thank you.

Let me start with the net income. We always report an adjusted net income and in the balance sheet, you will see according to IFRS. The difference between these two figures is our adjustments. And I would like to mention derivatives. These are temporary differences resulting from accounting principles, which, however, are dissolved when they’re realized.

These are being adjusted, and that’s a driver for the positive result. And then last year, we also had several impairments on our lignite assets, which were not did not occur this year. We also had provisions for impending losses on loss making electricity contracts, which were resolved this year. So these were temporary effects. With regard to taxes, these are deferred taxes.

We had made provisions or depreciation, sorry, for capital gains taxes. And we also had some appreciation in The United States. But these are all accounting matters. So the guidance that we give to the capital market is an adjusted tax rate of 20% because we believe that this tax rate effective tax rate effectively reflects the taxes that we will pay in the years to come. Now your question concerning Elliott.

Elliott, you have to ask Elliott about their own opinion. We would not like to comment on that. And with regard to Amprion, I can only repeat what we previously said. Grid expansion requires high investments that concern Amprion, and that’s why Amprion will need capital. We talked about capital allocation.

And of course, we always look at where capital can be allocated properly. And then it may also make sense to sell our stakes or part of our stake in Amprion in order to release financial means. The current book value of Amprion is 1,300,000,000.0. Thank you very much.

Steffi, Moderator/Conference Host, RWE: Next is Brendel on time. Mrs. Brendel next. And Mr. Akuto, Mrs.

Muller Arnold and Mr. Burschoff, Brendel, three questions. You addressed your willingness to sell your off shore wind assets and some other companies are planning in the same direction, which might have a negative impact on the sale price. And second question, and that is you communicate your press release on wind turbines and purchase of wind turbines. And you mentioned domestic purchase very often.

Will this be your priority? And will this be your focus? And what kind of impact will this have on The U. S. Activities?

Then the CDU’s SPD paper stated that power plants could remain in the market in order to reduce power plants power prices. Of course, we did not want to sell everything completely, but wanted to take partners on board and because approaches are evolving very positively. If you look at our portfolio, we are planning apart from the things which are already in the pipeline and that is master for English projects and TotalEnergies for German and Dutch projects. So we’re planning on Danish project and another German project where we are in a very far progressed state of taking new partners on board, which we will communicate briefly. And there are other projects which are in the pipeline, but we are planning those more flexibly.

For the Norfolk projects, we haven’t taken an investment decision, but it’s clear which partner we’ll be taking on board. So really, there is not a lot that needs to be done still. Then an EG Nova domestic, of course, points to the fact that there are no tariff risks. Of course, if you produce in the country, then there’s no risk that tariffs have to be paid. And thus, you mitigate the risks of trade policy.

But the other aspect is and that was also the basis for the Inflation Reduction Act, which actively incentivized domestic activities, which was partly successful. And it’s only fair to point that out. The last question, the reserve capacity, well, of course, at first glance, it seems to be a very good idea to keep power plants alive. But with a view to the age and the state of the power plants, it’s not a good idea. And of course, the effect this will have on the political environment.

And first of all, there’s a great, great incentive to add batteries in the market. And batteries are not just needed to compensate for price peaks, but also to transport electricity in transitional phases. If we took the peaks away on the basis of such ideas, then the idea to add batteries without any subsidies in the market would fade. And not utilized fully. If you add reserve power plants, then there is an incentive to decommission even more power plants because you get some sort of remuneration for not investing in new capacity.

And because if you wish and if you wish to enter into a long term supply contracts, then of course, you need to reserve capacity, but there is no incentive to invest in you. And I haven’t addressed the political side or whether this is possible from the regulatory side, but it will have major negative impacts on the market developments and renewable developments. And then next on the list is Mr. Akutu and then Mr. Muller Arnold and Mr.

Bushen and Mrs. Weichner. I would like to ask two questions. First of all, you said that the offshore target for Germany should be lowered. I haven’t found a figure in your paper.

So what would be a realistic target figure? It was a view to the billion. Yes, I did understand that you cannot specify where you lower investments. Would be good to hear in which segments that is be it in storage or hydrogen or power plants you intend to reduce investments? Or have you really deleted some of the investment plans?

Or have you delayed some investments? And so these are my questions. Mr. Ecoto, thank you very much. In terms of Ecoto, our proposal is to think about two things.

First of all, the expansion goals, the 70 gigawatts also include the North Of England where the grid connection costs are very high. And if you not only look at the generation costs, but also the expansion costs, then this is something from our point of view, which will be delayed and wait for the power development in the future. And then really wait for the demand, which makes sense to build such an infrastructure. Of course, we should go away from the areas for which, for example, there are tenders. But we should try to look at the gigawatts needed because then the electricity generation becomes cheaper because we do not have overlaps of different wind farms, for example.

Perhaps it’s about 50 gigawatts that we need at the end of the day. And second question, 10,000,000,000 offshore wind, we U. S. Offshore wind, I don’t think that there will be any major relevant investment this year. We are shifting that to hydrogen.

And due to the uncertainties, all the investments will be delayed or will be reduced at the end of day. That remains to be seen. The new mix in which you would like to see is something we can’t give you. And this is find in the Capital Markets information. Of course, we know the path which we will tread upon in the field of the investments.

So we have already in the firm pipeline, but we know that less will be invested. But the two major points are The U. S. Energy policy. If the province resolve, then we will further invest.

And on the other hand, what is the development in terms of the German gas fired power plants? And after that decision is taken, we can come in on the investments in the future in Germany. Two questions. Of course, questions which are raised time and again. One question, Then a possible reactivation of nuclear power plants, which obviously didn’t find entry into the coalition negotiations, even though CDUCSO wanted to get there, is it dead?

Or will we have to wait and see what the coalition paper will show? And secondly, for years, there’s been talk about giving away its lignite business. For example, a foundation could be established. Is this idea still alive? Or what is the idea behind this?

Well, thank you very, very much, Mr. Mueller Annot. Well, first of all, there is a good laugh about your questions in the room. Of course, these are both political decisions. Well, let me start with a letter.

At the moment, there are no good talks about establishing a foundation. And the lignite coal will be phased out in the way that has been set out in the regulations. These are the concrete plans and this is our mandate and our task to finalize this job. Should there be any other political decision, we are open for discussions, but I don’t see any problems raised in this respect. Nuclear energy is a political decision.

We always said technologically, a lot of things are possible. Is there a consensus in society? What about the commercial situation? Because each investment needs to be secured in one way or the other. And this is why it is the job of the coalition negotiations to really take a decision on that.

Markus Kreber, Board Member/Executive, RWE: Thank you. Mr. Bursch, please. Thank you. Three questions.

Mr. Kreber, could you just say in simple words what you are planning to do with the EUR 10,000,000,000 that you do not intend to invest? Number two, if you are investing billion less by 02/1930, but still are expecting to generate the same earnings per share figure, how are you going to go about this? And three, Mr. Mueller, you said that offshore wind projects are decided until 2027.

Does that also apply to The United States? And what penalties may have to be paid because you ordered material for wind turbines, etcetera, which you’re not calling off? I think Mr. Mueller is better the right person to answer these three questions. I’ll start with the $10,000,000,000 Will.

Our investment program is limited by two things. Number one, do you have attractive projects that can be realized? That’s our decision. And number two, keeping our stable investment grade rating as a company. That’s why leverage ratios are important to rating agencies and we have to stick within the boundaries.

If you invest less, then we will have fewer cash flow from new assets and that means that our room for maneuvering will be smaller. So eventually, we will have less cash flow and we’ll be able to invest less. But number two, we also stated that we want to be more cautious with regard to our rating headroom. Currently, considering the volatile and uncertain times, we want to put our balance sheet on a stable footing and want to have lower leverage. And a large part of this amount will probably used for taking up less debt.

If the situation changes, we will have the possibility to adjust this again. And number three, the share buyback program that we mentioned, we said that DKK1.5 billion would also lead to DKK2 billion less in terms of investments. So these are the three drivers. The second question concerning earnings per share. If you invest less, you will have corresponding effects.

If you invest less, you have less depreciation, you have a smaller financial result because you take up fewer loans and fewer adjustments have to be made in general. We’re talking about 2027 and 02/1930 being the times when we have more clarity. So then, that means that we will make adjustments as soon as we know more. But we think that we will have enough maneuver room for maneuvering in order to achieve these objectives. But that, of course, very much depends on the framework conditions and how they develop in Germany and The United States.

Now question number three, penalty payments. Currently, we only stopped offshore wind projects in The United States. This project was reduced to a minimum. We are still able we’ll still be able to realize the project in the future, but we are not investing very much into this project. And as far as this project is concerned, we did not have any contracts with suppliers on future deliveries, and that’s why no penalty fees will have to be paid.

Your maximum leverage rate ratio of three times EBITDA, you’re now at two. Are you going to adjust this target? What is your final objective? 3.5 to three point zero is the target. And until 02/1930, we’re expecting a target of three point zero.

That’s the conservative end of this range. And we assume that at the end of this year, we will be close to three point zero due to additional investments. 12.5 gigawatts of projects are in the pipeline and in construction, which these are especially the offshore wind farms mentioned, but also 4.1 gigawatts of onshore projects in The United States, but also battery projects and other projects in Europe. And this will, of course, lead to an increase in the leverage factor for by the end of this year. And the next person, Ms.

Weichner from DPAFX and Mr. Mainke. Thank you very much. This is a question that is probably directed to Mr. Miller.

Two questions. Number one, I’d like to talk about the requirements for returns more than 8.5%. What criteria are becoming more important than they have been in the past that they were in the past? Or are they also regionally do they vary regionally? Another question concerning the share buyback program.

Did I understand you correctly that you are not that you may be interested in going beyond the 1,500,000,000.0? Well, the return of 5.8%, a return needs to be aligned with the risk. Now what we do with projects currently is that we have different expectations with regard to returns depending on the project. If you have a project, a solar project in Germany with a very stable regulatory environment, with a offtake agreement with the government and a low risk free interest rate in Germany, the return expectations are lower than in The United States where you have more political uncertainty and the interest rate may be higher. So these are the things that you have to take into account.

Sometimes projects can be realized with less than 8.5% if the risk profile is low. But for projects with a higher risk profile, I would charge more. Now if we raise our expectations with regard to returns, that does not mean that we’re not going to do any project that does not exceed 8.5%. So we are evaluating each project according to its risks. If you look at the projects in detail, you will see that The U.

S. Projects are currently being challenged, scrutinized. It’s not that we raised our expectations for returns across the board. We are also more restrictive in United States when it comes to when investment decisions are taken. We want to have more clarity about the approval process, about the offtake process, about tariffs.

We now have higher hurdles when it comes to taking investment decisions. Second question concerning the share buyback program. We are satisfied with it. We think it’s the right decision. The share buyback program will end in 2026, and we will see how the market develops until then.

On the one hand, of course, we have to keep an eye on our share price, but we also have to focus on the regulatory frameworks and the expectations for returns concerning our own projects in Europe and The United States. Last question from Mr. Mainke. Otherwise, I do not have anybody on my list, Mr. Mainke.

Employment was a topic that we haven’t covered yet. You mentioned that it is your job to phase out lignite generation. Could you give us an update on the employment situation in the Rhenish lignite mining areas? How many jobs have been cut? How many jobs still need to be reduced?

Steffi, Moderator/Conference Host, RWE: We

Markus Kreber, Board Member/Executive, RWE: hear of companies that are cutting jobs. Do you also have efficiency programs? Or are you even recruiting new staff? Or do you have retirement programs, early retirement programs, etcetera? Thank you very much for that question.

As you know, we have a clear job reduction plan for Lignite, but our core business is a growth business. And this is also reflected in our labor figures. And we grew in 2023. We also had a net increase in staff of eight fifty employees at RWE. At the end of the year, we were at just over 21,000 employees throughout the group.

Now as far as Lignite is concerned, about 5,800 employees are still employed in the Lignite segment. Our plan is to close the individual power plant sites by 2,030 gradually and eventually we will have 2,000 employees in this segment. I mentioned that the other segments are growth businesses, but nevertheless, due to adjustments in investments and projects, there may also be adjustments in staff levels, for instance, in offshore wind in The United States. But these are adjustments that are normal and do not require any further, schemes. How many are based at the campus at the headquarters?

We have about 3,500 employees based at the campus site. Thank you very much. Now I don’t see any further questions from the chat, and I do not see any questions questions in the room. Has anybody been forgotten? This is not the case.

Thank you very much for your attention. And as always, we’re always available for any questions that you may have after this press conference. Please enjoy the rest of the day and have a safe trip home. Thank you very much.

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