EWE operations under pressure in first half

Oldenburg, Germany, 29 September 2022. The current energy crisis had a significant impact on the energy and telecommunications provider EWE in the first half of 2022. Operating EBIT – the key figure for the performance of the operating business, which has been adjusted for one-off effects – fell to EUR 136.7 million, less than half of last year’s figure, during this reporting period (H1 2021: EUR 286.8 million). The joint venture Alterric accounted for roughly two thirds of this much lower figure for operating EBIT. EWE holds a 50% stake in Alterric but the company is fully recognised on the EWE balance sheet. In the Market segment, where traditional energy sales and trading is recognised, EWE registered an operational loss of EUR –176.2 million.    

Group sales increased by 31 per cent to EUR 3,980.5 million as of 30 June 2022 (H1 2021: EUR 3,037.7 million). The Group’s result for the period increased year-on-year to EUR 712.4 million, primarily as a result of non-cash accounting and measurement effects in the Energy division (H1 2021: EUR 284.5 million). 

EWE’s CFO, Wolfgang Mücher, explains: “The Russian invasion of Ukraine is having major repercussions and putting our business under great strain, too. Our operating result, adjusted for one-off effects, clearly shows the pressure our day-to-day business is under. We cannot pass the high energy procurement costs on directly to our customers – as a result, our core area of business is currently suffering losses at this time. However, now more than ever, we require investments so that we can continue to work towards becoming independent from Russian energy and to develop a sustainable energy supply. The derivative measurement at the end of the period once again had a significant impact on our balance sheet. While these derivatives have a high value on paper as of the reporting date, we use these energy volumes procured early on to establish security of supply and to stabilise prices for our customers. As a result, both the EBIT and the result for the period are heavily distorted.”

Gas storage facilities full
In the second half, EWE is focussing all of its efforts on security of supply. This includes investments in renewable energies, the construction of the LNG pipeline in order to connect storage facilities, a fast-growing hydrogen economy and full gas storage facilities. The storage facilities used by EWE are over 99 per cent full and will thus make a significant contribution towards security of supply this winter. “These full storage facilities mean we can make a contribution towards safeguarding the gas supply this winter even if Russia continues to halt supply. However, efforts to reduce consumption will still have to be significantly stepped up,” says EWE CEO Stefan Dohler. 

Expansion of renewable energies
Alterric, the joint venture of EWE and the Aloys Wobben Foundation, is one of Europe’s leading green electricity suppliers. Established last year, the company is aiming to achieve a total installed capacity of around 5 GW by 2030 and has already established its first wind farm projects and obtained approval throughout Europe for new wind farms. 
“The current crisis clearly shows how important it is to boost the expansion of renewable energies,” Stefan Dohler reports. “With Alterric, we have a growth-oriented company that is making a significant contribution towards making our energy supply more sustainable and more diversified. However, red tape continues to hinder the expansion process. We are also experiencing enormous increases in the cost of materials this year. As a result, it is important that investment volumes do not drop and that they continue to be available in order to boost the sustainability of our energy supply.”     

Construction of LNG pipeline and development of hydrogen economy
The LNG terminal currently under construction in Wilhelmshaven will make a significant contribution towards quickly cutting our dependency on Russian gas. The liquefied natural gas that will arrive there will be directed to storage facilities and networks for further transport by the transmission system operator OGE and EWE. As such, EWE is planning its own pipeline in the Sande region to the new OGE pipeline in order to connect the facilities at Jemgum and Huntorf. The EWE pipeline will run underground for around 70 kilometres through agricultural land owned by about 1,000 people. 
Stefan Dohler: “Our pipeline will help ensure that around four million households in the northwest and beyond can be securely supplied with energy. This project is our top priority and we are aiming to get the pipeline into operation next year. In the future, it is also conceivable that our pipeline could be used for green hydrogen. As a result, we are not just constructing a temporary solution but a central component of an energy supply system that is more sustainable and climate-friendly over the long term.”
EWE is also continuing to work with its partners to develop the hydrogen economy. “Green hydrogen will be a major component of our energy supply in the future. We are already using it today. Together with our partners, we are putting hydrogen-powered buses and disposal vehicles on the roads. We also recently achieved our next major milestone with the construction of our hydrogen storage facility in Rüdersdorf, Brandenburg, and are supporting the steelworks in Bremen in switching to a green energy supply,” explains Stefan Dohler.  

Joining forces in tough times
Stefan Dohler emphasised once again that the company is aware of the pressure that exorbitant energy prices are putting on people and companies. EWE will therefore continue to champion the acceleration of the energy revolution and is involved in the State of Lower Saxony’s planned hardship fund. 
“We are facing two very tough years. We’re pretty well set up for this winter. But next winter is already posing huge challenges for us. The people in our region have been able to rely on energy from us for decades and the certainty that we also provide financial support for the region. We will continue to do that. We are consistently continuing on our course towards a sustainable energy supply. To do this, however, we also need political support, a solid financial basis and collective action rooted in solidarity,” says Stefan Dohler. 
 
Individual business areas 
The Renewable Energies business area achieved sales of EUR 229.4 million during the reporting period. Operating EBIT came to EUR 101.5 million (H1 2021: EUR 21.1 million). 
In the Infrastructure business area, sales increased to EUR 430.8 million (H1 2021: EUR 375.1 million). Operating EBIT was EUR 188.7 million (H1 2021: EUR 195.0 million). 
In the Market business area, EWE’s sales increased to EUR 2,579.1 million (H1 2021: EUR 1,839.7 million). Operating EBIT in the Market business area was EUR –176.2 million (H1 2021: EUR 58.3 million). This shows that traditional energy sales and energy trading are subject to great strain. 
External sales in the swb business area came to EUR 592.3 million in the reporting period (H1 2021: EUR 610.2 million). Operating EBIT was EUR 56.4 million (H1 2021: EUR 33.4 million). 
In the Other business area, EWE recorded an increase in external sales of EUR 148.0 million (H1 2021: EUR 104.2 million). Operating EBIT was EUR –11.1 million (H1 2021: EUR 2.3 million). 
The Group corporate centre only generates minor sales. Operating EBIT was EUR –22.6 million (H1 2021: EUR –23.6 million). This was due to the holding function of EWE AG and the other shareholdings allocated to it. 

The half-year financial report for 2022 is available at www.ewe.com: https://www.ewe.com/de/investor-relations