- Adjusted EBITDA increased despite difficult environment
- Integrated business portfolio contributes to financial stability
- Renewables business largest contributor to earnings for the first time
- Accelerated implementation of energy transition projects with increased investments
- Coal phase-out targeted for 2028 already
According to the company’s website press release on March 27, 2023, EnBW continued its transformation in 2022 and generated an operating result (adjusted EBITDA) of €3.29 billion (an increase of 11%). “We owe this result to prudent planning and our integrated lineup across the entire value chain,” EnBW CEO Andreas Schell said at the results presentation in Stuttgart. “This financial stability enables a further significant acceleration in our investment in expanding renewables and the associated grid infrastructure. Just a few days ago, for example, we took the final investment decision to build our 960 MW He Dreiht offshore wind farm.”
In a highly volatile market and political environment marked by the Russian war in Ukraine, the company made itself independent of Russian gas and coal in a very short time and ensured a secure supply of energy by rapidly diversifying its sources of supply. Schell continued: “But the energy transition needs to be accelerated if we are to meet our energy demand and climate targets. As EnBW, we are promoting the transition to greater sustainability and plan to completely phase out coal as early as 2028, provided that the German government’s policy framework allows.”
“The financial year 2022 was exceptional in many ways,” added CFO Thomas Kusterer. “This also had an impact on the figures. Our solid operating result once again underscores that our integrated product portfolio delivers stable cash flows even in challenging times.” Kusterer emphasized that the recently completed SBTi validation provides an important basis for the financing of EnBW’s future growth. “Many capital market players base their investment decisions on a company’s carbon reduction commitments. With their funding, they support sustainable companies like EnBW on their clearly defined decarbonization path.”
With a view to the future, Schell noted: “A successful transition to carbon-free energy supplies requires an appropriate economic and political framework. We believe that a market-based energy system is the only way to create investment incentives and support the accelerated expansion of renewables. The German government also needs to do its part towards achieving its expansion plans for 2030.”
The financial year 2022 at Group level: growth despite difficult environment
At €3.29 billion, adjusted EBITDA was above the original guidance range as well as the reduced guidance issued in November. This outcome was made possible by the fact that some of the risks factored into the guidance due to market and political uncertainties did not materialize as expected. Warmer-than-average weather towards year-end kept gas storage well filled, which led to an easing of wholesale prices for both gas and electricity.
Due to higher prices for energy and commodities, external revenues rose significantly to around €56 billion. The number of employees grew to 26,980, a year-on-year increase of 3.5%.
Group net profit increased significantly year on year to €1.7 billion. As a result of the lower financial result due to the mark-to-market valuation of securities, adjusted Group net profit attributable to the shareholders of EnBW AG was approximately €973 million. A dividend of €1.10 euros per share will be proposed at the Annual General Meeting. This is the same level as in the previous year.
EnBW Group’s investment, at around €3.2 billion, was 12% higher than in the previous year. This mainly relates to success in the seabed auction for the construction of offshore wind farms off the Scottish coast and to the expansion of electricity transmission grids. Some 75% of total investment was for growth projects such as the expansion of renewables and grids as well as the rollout of charging infrastructure for electric vehicles.
Varying performance in the individual segments
Adjusted EBITDA in the segment Smart Infrastructure for Customers rose to €510 million, a significant increase on the previous year. This was mainly due to higher B2B earnings at subsidiaries and increased earnings at Senec, EnBW’s home storage subsidiary.
The segment System Critical Infrastructure (electricity and gas transmission and distribution grids) generated EBITDA of €1.05 billion, which is around 17% down on the previous year. This was mainly due to significantly higher costs of grid reserve and redispatch to maintain security of supply.
Adjusted EBITDA in the segment Sustainable Generation Infrastructure significantly increased year on year by 26% to €1.93 billion.
The increase mainly relates to Renewable Energies, where adjusted EBITDA rose by over 39% year on year to €1.11 billion. This significant earnings increase was mainly due to newly commissioned large solar farms, higher market prices and better wind conditions. Adjusted EBITDA in Thermal Generation and Trading rose by around 11% year on year. Higher market prices and positive earnings contributions from trading activities offset the negative impact from the curtailment and cessation of Russian gas supplies at subsidiaries and the resulting high cost to replace the shortfall in gas volumes.
2023 guidance: significant increase in earnings
EnBW forecasts a further increase in earnings this year. Kusterer: “We expect that our adjusted EBITDA will be in a range between €4.7 billion and €5.2 billion.”
Specifically for each segment: a stable or slightly lower result of between €400 million and €500 million is expected in Smart Infrastructure for Customers (sales). For System Critical Infrastructure, results are expected to be between €1.6 billion and €1.9 billion. A significant increase in earnings is predicted for Sustainable Generation Infrastructure in 2023. Thermal Generation Trading and Renewable Energies together are expected to contribute around €2.9 billion to €3.2 billion to earnings.
Outlook: new growth through to 2030
“We have a clear plan for our segments that is centered on sustainability and security of supply,” emphasized EnBW CEO Andreas Schell. Until 2025, EnBW plans to make gross investments of €14 billion, around 75% of which allocated to the expansion of grids and renewables in the next three years to accelerate the energy transition.
“The financial year 2022 was a watershed for the energy industry, requiring a recalibration of our strategy. The next few years will be crucial in setting the course for the future. We expect further major changes in the energy market, for example in areas such as hydrogen, all of which we will aim to prepare ourselves for,” Schell said. Currently, he added, we are working on further developing our strategy with a target horizon of 2030.
Martina Evers
Group Spokesperson
Phone: +49 721 63-14358 m.evers@enbw.com
