04/23/2013STEAG significantly increases earnings in 2012 business year

Targets achieved in spite of difficult market conditions


Essen. STEAG GmbH today presented its financial statement for the 2012 business year. The energy company based in Essen reached, and in some cases even surpassed, its targets. “We can look back on a successful year,” says Joachim Rumstadt, Chairman of the Management Board. “In spite of difficult market conditions, we significantly increased our Group earnings in 2012.”

STEAG’s income after taxes rose to € 184.8 million (+ € 179.9 m). All the company’s business units contributed to that positive development. Sales declined slightly, amounting to € 2.778 billion (- € 289 m). The fundamental reasons for this were the fall in hard coal prices and slightly lower volume sales in coal trading.

On the basis of this successful business activity, STEAG is in a position to fulfill the shareholders’ expectations of profits from normal business operations. “As promised, we will keep the dividends to our shareholders on a stable level,” Rumstadt confirms. The sum of 110 million euros (+ € 0.7 m) is to be paid out to the group of shareholders for the past business year.

“The STEAG management’s sound structural and financial planning and the national and international demand for the company’s know-how prove that the shareholders have made a profitable investment with us,” Guntram Pehlke, Chairman of STEAG’s Supervisory Board, explains. “Especially for the Rhine-Ruhr consortium of municipal utilities, STEAG is and will prove in future to be sustainably valuable in both strategic and financial terms, and a future-oriented component in our relationship.”

The major part of investments amounting to € 262 million in 2012 was directed at power generation. Around 93 million euros of that sum was invested in renewable energy. In total, investments were therefore € 55.3 million higher than in 2011.

“Thermal power plants will still be indispensable for security of supply until at least 2050 – and particularly so in the context of the move to renewables, ”Dr. Ralf Gilgen, Technology Director of STEAG explains. “We are therefore concentrating on boosting the efficiency of our existing power plants.” In 2012, as a result, investments of around 43 million euros were made in STEAG’s current power plant portfolio.

For that reason, too, the STEAG management has not made any decisions on closures. “In spite of the difficult background conditions, we have succeeded in keeping our power plants in the market. They will remain on line for as long as they can be operated profitably,” Gilgen adds.

Anticipating the expiry of long-term capacity provision and electricity supply contracts at the end of 2012, STEAG started to establish its own marketing expertise at an early stage. With success: “We have already sold nearly 100 percent of our power plant output for 2013,” says Dr. Wolfgang Cieslik, the member of STEAG’s Management Board whose responsibilities include energy trading.

Continuity in the strategic process

STEAG is one of the companies facing the challenge of diversifying its energy mix more strongly. It therefore pressed ahead with the expansion of generation from renewable energy sources in 2012, albeit more cautiously than originally planned. This is because STEAG, like other power generation companies, sees itself confronted not only in Germany, but also and increasingly on the international scene, by an energy policy background which presents more and more difficulties.

“It is one of our fundamental strategic objectives to establish STEAG in Germany as a generation, trading and service platform for local authorities,” Joachim Rumstadt states. In consequence, a partnership model with municipal utilities specifically for renewables projects was developed in 2012. That model is to lead this year to the foundation of a company through which selected municipal utilities can invest in renewable energy. Together with the joint implementation of new projects – onshore wind, bioenergy and geothermal energy – STEAG will contribute biogas facilities and onshore projects from its own generation portfolio to this venture.

STEAG’s experience of long-term involvement in partnerships with local authorities has been extremely good. The County Town of Rochlitz, for example, which founded the utility Energieversorgung Rochlitz jointly with STEAG New Energies 20 years ago, received the European Energy Award in 2012. The district heating system there is to be extended in 2013 with a combined heat and power plant fueled by biomethane gas. Similar projects with further local authority partners are at the planning stage.

STEAG’s overseas power plants made a substantial contribution to earnings in 2012. In addition, international service business was intensified. The solar thermal power plant in Spain will go on line this year. Wind projects in Turkey and Romania are under review. “Foreign business is and will remain an integral part of STEAG's business model, and is to be further expanded as a pillar of our earnings structure,” Joachim Rumstadt says. “In that context, STEAG is focusing above all on markets in which successful projects have already been implemented.” The focus is therefore on growth markets in Europe (including Poland, Romania, France and Turkey) and in South America and Asia.

Prospects

In no other country have such far-reaching energy policy decisions been made as in Germany. These developments mean fundamental changes for STEAG too. The company has already geared itself up to face these with efficiency programs, and is systematically continuing its restructuring process. The tense situation at the hard coal fired power plants and the intensification of international activities will lead to shifts in employment figures in the medium term. According to Alfred Geissler, Human Resources Director, “While the number in Germany will drop, we will in future need more employees with the required know-how abroad – especially for the operation and maintenance of power plants.”

With the establishment of the subsidiary STEAG Technischer Service, STEAG intends to increase the availability to external customers of its maintenance expertise, gained in 75 years of operating energy facilities.

Walsum 10, one of Europe’s most modern power plants, is due to start commercial operation in autumn 2013. Marketing of the greater part of its generating capacity has already been secured by long-term contracts.

Growth potential is indicated by the continuing strong demand for thermal power plants abroad, and STEAG will also continue to grow in the renewables sector. Projects with a total capacity of around 730 MW are currently in development.

“We are facing up to the criticism that might be leveled at us here,” as Joachim Rumstadt puts it. “We would have liked to do more in that field. However, like other companies too, we see a lack of conditions we can rely on in energy policy, both nationally and internationally. When those conditions have been established, we will be pleased to be judged against our aim of investing significantly more in energy from renewable sources.”

The long winter of 2012/2013 with little wind and sun, and therefore only a small proportion of electricity from renewable energy sources in the grid, has however once again made it clear how much thermal power plants are needed for the security of supply of electricity – and heat from cogeneration – especially if the shift to renewable sources is to succeed.


Related files

STEAG AR 2012 WEB FINAL 06.05(6.4 M)
PI Bilanz 2012 FINAL en(61 K)
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Frauke Riva
STEAG GmbH
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