(Bloomberg) — Germany’s largest power generator RWE AG saw its profits fall by almost a third in the first half of the year after falling electricity prices weighed on results.
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The energy group said adjusted earnings before interest, taxes, depreciation and amortization were 2.9 billion euros ($3.2 billion) in the six months to June, down from 4.1 billion euros a year earlier.
While the utility benefited from relatively high electricity prices in Europe over the past two years, they have fallen significantly since last November due to lower gas costs, an increase in renewable energy generation and a recovery in French nuclear power.
Analysts are closely following news related to a report that RWE is exploring acquiring a stake in US power giant Calpine Corp. as energy demand in the US is expected to rise sharply thanks to artificial intelligence, data centers and factories.
CEO Markus Krebber declined to comment further on possible M&A deals in a conference call with journalists on Wednesday. However, he said the US electricity market was “attractive” due to its strong growth in demand.
The company said its renewable energy revenues reached a record high during the period, thanks to better weather conditions and the commissioning of new capacity. Wind and solar power accounted for 45 percent of the company’s electricity production, and carbon dioxide emissions fell 27 percent.
Analysts at Bernstein said RWE’s announced progress in reducing emissions could be a “subtle hint” that the company does not intend to deviate from that strategy by buying Calpine’s gas reserves. RWE did not comment directly on the issue.
The company continues to expect annual profit at the lower end of a range between 5.2 and 5.8 billion euros.
RWE added that the company sees “high” political risks related to the US presidential election in November. These “could lead to a change in US energy policy, which in turn could hinder investments in wind and solar energy.”
Similar developments are conceivable in Europe, but RWE explained that the recent electricity market reform in the European Union and the elections in the UK have increased the likelihood that green investments will become more attractive.
In Frankfurt, shares lost 1%, making the decline this year 22%.
(Updated with CEO comment on the US market in the fifth paragraph.)
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