German EWE posts 47% drop in net profit on lower gas sales volumes
German gas supplier EWE has posted a 47% drop in net profit for the first half of 2007, on the back of a sharp fall in gas sales volumes, due to the mild 2005/6 winter, the company said on Wednesday.
“The extremely mild temperatures throughout the winter and spring seasons resulted in a squeeze on sales and profit during the first half of 2007 for EWE. Another factor to take into account is that the winter of 2006 was significantly colder,” said the energy group’s c.e.o., Werner Brinker.
Gas sales volumes dropped 21.9% year-on-year to 19.74 terawatt hours (1.8 billion cubic metres (Gm3)). The volume of trade, sales and gas transported on its network — which includes those of VNG, the Leipzig-based gas transmission company in which EWE is the main shareholder — also fell by a similar amount (21.8%) to 73 TWh (6.8 Gm³).
As a result, sales revenues fell 15.4% to EUR 4.3 billion and operating profit fell 36% to EUR 319 million. The group said lingering price pressures in the telecommunications market and the formation of a reserve for long-term financial commitments to expand energy research had also weighed on results. The group said stronger power sales — which grew 1.5% to 7.1 TWh — had helped to offset the downturn in its gas business. Nonetheless, EWE forecast lower profits for the full 2007 year.
EWE is one of Germany’s biggest gas suppliers. The company gained a foothold in the Turkish energy market this year, when it acquired 39.9% of the equity in gas provider Bursagaz in April. The group is also looking to considerably expand its storage capacity over the coming years. ADS
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