P&L Check

Innogy Keeps the Lights on at RWE

  • Why it matters

    Why it matters

    • RWE is Germany’s biggest electricity producer and, like its German peers including E.ON, has suffered from slumping profits and huge writedowns as a result of Chancellor Merkel’s green energy revolution.
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  • Facts

    Facts

    • RWE made the biggest net loss in its history last year, €5.7 billion, due to writedowns on its gas, coal and nuclear business.
    • The company has far lower market cap than its subsidiary Innogy, which contains its spun-off renewable power, distribution and networks business.
    • Earnings are unlikely to improve in the foreseeable future but RWE’s stake in Innogy provides a cushion.
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    Audio

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Kraftwerk
Rock-bottom electricity prices dim RWE's earnings prospects. RWESource: Julian Stratenschulte/DPA

For RWE, Germany’s biggest power company, 2016 was a year of upheaval, in two respects. On the plus side, it completed the spin-off of its renewables, distribution and networks business into Innogy, its new subsidiary. On the downside, it booked the biggest net loss in its history, €5.7 billion, or $6.18 billion, due to huge writedowns in its core business of producing electricity from nuclear, coal and gas-fired plants.

Chief Executive Rolf Martin Schmitz, RWE’s previous second-in-command who got the top job when his predecessor, Peter Terium, decided to take the helm at Innogy, will have some explaining to do at Thursday’s annual general meeting after omitting the dividend on ordinary shares for the second year in a row.

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