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    MNM Service What is it? Latest Edition Search Archive
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World Energy News From the Communications Centre Contributed by Aristide Mbiock IJmuiden, NL, 9th July 2001 - Ref.:0107art09 Electricity profits up at RWE RWE, the German utility group, said on Tuesday its long-suffering electricity division had recorded its first rise in profits after seven consecutive quarters of lower earnings. The results indicate that prices in Germany's fiercely competitive, liberalised electricity market are at last starting to rise. "This shows there is a U-turn under way in Germany's energy market," said Lüder Schumacher, utilities analyst at Deutsche Bank.Electricity accounts for a third of RWE's sales, according to Tuesday's preliminary results for the fiscal year ending June 30, which showed strong growth in sales and operating profits in line with analysts' expectations. Operating profit was up 35 per cent on the previous year while turnover rose 29 per cent to E62bn ($52.6bn) from E47.9bn the year before. The group said it expected net profits slightly up year-on-year. However, RWE did not detail the rise in profits in its electricity division or any other of its operations. Full data will be published on September 26. RWE said growth had been due primarily to the first-time consolidation of VEW, another German utility, and Thames Water, the UK water supplier, as well as record profits in the petroleum business. Adjusted to take into account consolidations, profits were up 5 per cent on sales up 11 per cent. Analysts were particularly impressed by the turnround in RWE's electricity operations. "This really is good news," said Matthias Heck, utilities analyst at the investment bank Sal. Oppenheim. RWE's shares were up 23 cents at E46.99. Following liberalisation of the German electricity market in 1998, wholesale electricity prices had fallen by up to 50 per cent but started recovering late last year. "Electricity prices in general are picking up. Moreover, contracts, which provided the utilities' big customers with energy at heavily discounted prices, are gradually running out. The new contracts will be far more sensible," Mr Schumacher said. Other analysts said the turnround in RWE's electricity division owed more to a cost-cutting scheme launched in the middle of the last fiscal year. "RWE's rise in profits in the fourth quarter stems from cost-cutting, not from higher prices", said Mr Heck. RWE said the scheme had brought about savings of E1bn, with more than 80 per cent of savings achieved in the energy division. The group aims to slash costs by another E1.55bn by 2004. BP to invest 120mln euros in solar cell plant in Spain MADRID - BP Plc , the world's number three oil company, said yesterday it would invest 120 million euros ($101.7 million) to set up Europe's largest solar power cell factory in Spain. Production was due to begin at the end of 2002 and the plant will be capable of manufacturing solar power cells equivalent to 60 megawatts of solar energy annually with the possibility of increasing output up to 100 megawatts. BP said it had signed a preliminary agreement to acquire a semiconductor plant from Agere Systems Inc. in Spain which BP would convert to produce the cells. BP said the new plant would increase five-fold its production of solar cells in Spain. Agere, the optical components maker spun off from Lucent Technologies Inc. in late March, recently said it was cutting its global workforce by 25 percent and restructuring to cope with a downturn in semiconductor industry. The solar power cell plant will be located just north of Madrid and employ 600 people, BP said in a statement.
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