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RWE’s quarterly profits are expected to be around 7 per cent lower than those seen at the end of last year, investors have warned, as power generation earnings continue to plummet.
Investment analysts at RBC Capital said the continued weakness in this area is likely to result in Q1 operating profits of around 7 per cent lower than those of Q4 2014 at €1.6 billion.
The company’s biggest area of weakness remains its beleaguered power generation fleet which is expected to post an earnings decline of over 30 per cent from the last year after floundering in recent years amid hostile market conditions, the analysts said.
RBC said this would put the company on course to achieve results at the lower end of its full-year guidance at €3.6-3.9 billion.
The disappointing results come following news that the Npower parent company will implement new measures to cut admin costs by 30 per cent, with a second wave of cost cutting expected in June.
The German press reported that a memo on its ‘Lean Steering’ programme was distributed internally, with RWE’s chief executive Peter Terium saying previous attempts to drive cost efficiency are “not enough” to bring the group back on track as market conditions across Europe become increasingly difficult for large generators.
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