Uniper Narrows Loss in 2017, Updates on Fortum
Germany’s Uniper said March 8 it narrowed losses last year and preserved some autonomy in relation to its new largest shareholder. Finnish state-run utility Fortum a month ago failed in its five-month struggle to wrest majority control of Uniper, but secured 47.12% of its shares making it Uniper's largest shareholder, requiring both managements to seek an uneasy truce.
Uniper CEO Klaus Schafer said: “I promised we would fight for our independence and kept Fortum’s influence as small as possible; today we have successfully prevented a complete takeover…. I’m keen to see how the game plays out.” Most shareholders followed Uniper’s guidance not to accept Fortum’s initial low and then revised higher €22($27)/share offer, he noted. Schafer however said that he and Fortum's CEO Pekka Lundmark have regular meetings but have agreed not to provide a running commentary on them.
Schafer opened Uniper’s press briefing by saying that European natural gas production is in decline, while demand is expected to increase gradually, and thus Europe needs to import more. Uniper imports LNG and will buy gas through the Southern Gas Corridor, he said, but would continue to rely on Russia as “an important and reliable supplier.” He also called for regulatory fairness in how gas-fired power plants and gas storage operators are remunerated, especially in Germany as the new coalition government takes power.
Uniper’s net loss in 2017 was narrowed to €538mn, from €3.24bn in 2016 a year when it recorded both significant impairments on its fossil fuel generation business in Europe and a one-off benefit from its Gazprom gas import contract.
It said the €538mn net loss was entirely attributable to non-cash-effective one-off items, primarily €890mn of “technical” unrealised net currency losses relating to Uniper’s early 2017 sale of its 24.99% stake in gas field Yuzhno-Russkoye in Siberia.
Uniper said the sale of its stake in Yuzhno-Russkoye gas field to OMV early in 2017 enabled it to reduce net debt to €2.4bn at end-2017, down 40% from its end-2016 level of €4.2bn. Debt rating agencies had uprated its debt to ‘BBB’ with a positive outlook, it said.
The German energy supplier and trader’s 2017 adjusted earnings before interest and tax (Ebit) were €1.1bn, down 18.2% and in the middle of its forecast range of €1bn to €1.2bn.
CFO Christopher Delbruck said adjusted Ebit in 2018 should be between €0.8bn and €1.1bn – lower than in recent years because of no earnings from Yuzhno-Russkoye, but positively impacted by higher allowed returns by the Swedish regulator on hydro and nuclear plants (Uniper owns both in that country, but elsewhere nuclear was retained by E.ON).
Delbruck described Uniper’s generation business as “generally robust” but its Datteln-4 coal-fired plant in Germany will not be commissioned until end-2018 or even 1H2019 following investigation of faulty welding at a boiler there. There is still ongoing remediation of 2016 fire damage at its Berezovskaya power plant in Russia.