Mild weather takes a toll on RWE earnings

German energy giant RWE reported a 31 per cent year-on-year decline in operating profit for the first nine months of the year, saying the milder weather “left its mark” on the supply side of its business.

The company said its €2.9 billion (£2.29 billion) operating profit was “in line with expectations” following a decrease in sales volumes across Europe due to milder than average weather conditions at the beginning of the year.

“The much milder weather compared with last year clearly left its mark, especially on the residential and commercial customer business. We suffered a substantial drop in sales volume in this supply segment,” the company said.

“Customer losses and the aforementioned trend towards saving energy played a minor role,” the report added.

In RWE’s gas business, revenue fell 23 per cent to €7,907 million “due to the weather-induced decrease in sales volume” while electricity revenue dropped 3 per cent €25,191 million for the same reason.

Within the UK market gas sales revenue slumped 8.3 per cent to €1,453 million, while electricity sales revenue increased 3.7 per cent to €4,620 million.

The weather-related losses cited in RWE’s financial report come after similar reports from SSE and Eon which both posted heavy earnings losses in financial statements released on Wednesday.

However, RWE added that there was “good news” for the company in its UK capacity market success. RWE said all 8GW of the eligible capacity sumbitted for pre-qualification for the upcoming auction was accepted, making the company the second-largest participant.

“A capacity market of the type introduced by the UK creates the economic basis for the construction of new stations and the continued operation of existing power plants, which are needed in order to guarantee security of supply over the long term,” RWE said.

The auctions are due to take place next month to secure output for delivery in four years’ time.