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RWE maintains guidance, invests in growth despite debt rise By Investing.com

Abercrombie & Fitch surges on third-quarter beat, 'cautiously optimistic' outlook


In the recent Q1 2024 earnings call, RWE AG (OTC:) (RWE.DE) discussed their financial performance and strategic moves that underscore the company’s commitment to growth and sustainability. CFO Michael Muller highlighted the company’s adjusted EBITDA of €1.7 billion, primarily driven by favorable wind conditions and strong trading performance.

Despite an increase in net debt to €11.2 billion, due to significant investments in growth initiatives, RWE confirmed its full-year guidance at the lower end of the range. The company’s issuance of U.S. green bonds marked a successful reentry into the U.S. debt market, indicating investor confidence in RWE’s sustainable business model.

Key Takeaways

  • Adjusted EBITDA for Q1 stood at €1.7 billion, with a strong contribution from the offshore and onshore wind businesses.
  • RWE issued its first U.S. green bonds with a 3.8x oversubscription, reflecting robust market confidence.
  • The company confirmed its full-year guidance for 2024, with adjusted EBITDA expected to be between €5.2 billion and €5.8 billion.
  • Adjusted net income for Q1 was €801 million, and RWE aims for a dividend target of €1.1 per share for the year.
  • Investments of €2.3 billion net into growth were made, including acquisitions and divestments in the offshore wind sector.

Company Outlook

  • RWE maintains its long-term outlook for 2027 and 2030, expecting a quicker normalization in the early years.
  • The company anticipates year-end net debt to be similar to the current level, around €11 billion.

Bearish Highlights

  • Net debt increased to €11.2 billion, influenced by investments in growth such as the Norfolk offshore projects.
  • Optimizing between hours has deteriorated, although it has now stabilized.
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Bullish Highlights

  • RWE sees strong data center demand for PPAs in the U.S. and increasing requests in Europe.
  • The company is capturing upside through regular hedging activities due to rising prices in ERCOT.

Misses

  • No specific misses were discussed in the earnings call.

Q&A Highlights

  • PPA pricing varies by location, with higher prices on the U.S. East Coast and demand for green molecules influencing returns.
  • Net debt is expected to remain around €11 billion at year-end, with a CapEx run rate similar to Q1 at about €10 billion.

RWE’s strategic decisions in the first quarter, such as the sell-down of DogaBank South and the acquisition of the Norfork project portfolio,…

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