In January RWE ruled out an Eon-style split of upstream and supply-side business arms in the near-term, but the company then surprised the market on Tuesday by saying it will create a new “innovative decentralised energy group” within a year.
The new company will take control of RWE’s renewables, grids and retail operations in Germany and abroad to create a “platform for growth” which will “strengthen the viability of the group overall”.
RWE will remain a majority shareholder of the company but will focus on the firm’s beleaguered conventional power generation and energy trading operations.
The move should enable RWE more flexibility to manage the costly state-mandated nuclear phase out which – combined with weak market signals for thermal generators – has eroded energy company profits over recent years.
“The group’s restructuring is our response to the transformation of the European energy landscape,” said RWE chief executive Peter Terium.
“We are creating two viable companies under one roof. The new subsidiary will have its own access to the capital market and improve our growth prospects. At the same time, we are convinced that conventional power generation will remain an irreplaceable partner for renewable energy for decades to come,” he said.
RWE reported double-digit operating profit losses in its first half financial results, blaming the 11 per cent operating losses to €2 billion for H1 on continued decline in profit margins from its conventional generation fleet.
By contrast the company claims that based on the pro-forma figures for 2015, the new company would achieve external revenue of more than €40 billion and EBITDA of over €4 billion.
The new company will be listed on the stock market “probably” in late 2016, the company said, with some 10 percent of the new company’s share capital to be offered to the public.
The proceeds will be used to finance further growth in markets with good future prospects, RWE said.