Major acquisitions put RWE on course for growth

17 March 2003 – German multi-utility RWE is forecast today a 15 per cent rise is profits to €4.5bn for 2002 following the acquisitions of British utility Innogy and Czech gas activities. The groups core businesses have performed well but weak economic conditions saw a 76 per cent drop in returns from non-care businesses.

RWE’s 2002 fiscal year resulted in a return on capital employed of 10.4 per cent which exceeded capital costs of 9.5 per cent. The group’s electricity activities performed well boosted by cost reductions. Without Innogy, the electricity business area’s operating result rose 32 per cent.

Gas activities generated considerable growth with operating result up 27 per cent to € 858m. The water division also performed well with profits of €963m up 11 per cent on the previous year.

Difficult trading conditions in the German waste management market led to a 33 per cent fall n returns from the Environmental Services Division.

In a statement, RWE said that 2003 would be a year of consolidation and integration with debt reduction a priority. RWE plans to reduce net debt to below €24bn by the end of 2003 and by an additional €2bn by the end of 2005. RWE expects group profits to rise by over ten per cent again this year which will include a full year’s results from its American Water acquisition as well as Innogy and the Czech gas activities. Non-core business are again expected to under-perform.

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