Power company RWE sticks tentatively to 2011 forecasts

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The second biggest Germany power company, RWE, said Thursday that it would maintain 2011 forecasts for now after a weak first quarter that was nonetheless somewhat better than expected.

"RWE is maintaining its outlook for 2011 for the time being," a statement said.

In February, the company had forecast a drop of around 20 percent in its 2011 operating profit and a 30-percent decline in "recurrent net income," which it uses as the base for determining dividends.

That is the result of weaker profits and a nuclear fuel tax that has been levied starting this year.

Decisions on nuclear energy expected by the German government "will reveal whether RWE will have to face additional burdens on earnings in 2011, and if so, to what extent," the statement added.

German power companies have slammed an about-face by German Chancellor Angela Merkel on extending the life of German nuclear reactors following the catastrophe in Japan.

RWE has filed a complaint against a decision to shut down one of the reactors it owns.

"The transformation of the energy market mandated by the German government is a Herculean task which will place huge demands on the investment capability of the industry," the statement quoted RWE chief executive Juergen Grossmann as saying.

In the first quarter, RWE posted a net profit of 1.82 billion euros ($2.6 billion), a gain of 16.8 percent that was in part the result of asset sales worth some 300 million euros.

Recurrent net income fell by 7.5 percent to 1.6 billion euros, but that was a little better than the 1.44-billion-euro figure expected by analysts polled by Dow Jones Newswires.

Operating profit declined by 5.4 percent to 2.8 billion euros on the back of slumping sales of natural gas, while analysts had pencilled in an even lower figure of 2.6 billion.

First quarter sales gained 3.2 percent to 15.75 billion euros however, owing to an increase in oil prices.

© 2011 AFP

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