RWE confirms forecasts after 'respectable' first quarter

RWE, Germany's second-largest power supplier, on Thursday confirmed its full-year targets after a satisfactory first quarter. 

"Overall, we have achieved a thoroughly respectable result for the first quarter," said chief financial officer, Bernhard Guenther. 

"RWE confirms its earnings outlook for the  group's business performance this year," he said.

Full-year underlying or operating profit was projected to  total between 2.8 billion euros and 3.1 billion euros ($3.2-3.5 billion) and adjusted net income was "likely to be in the range of 0.5-0.7 billion euros," RWE said.

That compares with operating profit of 3.8 billion euros and net profit of 1.1 billion euros in 2015.

"At first glance, these figures appear quite conservative in light of the result for the first quarter. In the energy sector, however, the first quarter is traditionally strong, and its figures cannot be extrapolated to provide a reliable estimate for the year as a whole," RWE said.

In the period from January to March, RWE's net profit slumped by 59.4 percent to 879 million euros. But the year-earlier figures had been boosted by gains from the divestment of shares. 

Operating profit, on the other hand, grew by 7.1 percent to 1.7 billion euros, while revenues declined by 5.9 percent to 13.7 billion euros. 

Like its rivals, E.ON and Vattenfall, RWE is being hit by intense pressure on its margins from weak electricity wholesale prices and intense competition from heavily-subsidized renewable energy sources. 

RWE is the biggest operator of conventional coal, gas and nuclear power plants in Germany. 

Operating profit in the conventional power generation business slumped by 20 percent in the January-March period. 

"Development in the renewables division was pleasing," said finance chief Guenther. 

At the same time, the energy trading division "made an unusually high earnings contribution."

But "revenues from energy trading are, however, subject to major fluctuations during the year," he said.