It was a historic day for the German power sector: on 4 March, RWE, Germany's second largest utility, announced its first loss in 60 years, amounting to €2.8 billion in 2013. An impairment of €4.8 billion on its power plants rattled RWE's balance sheet, owing to greatly diminished power prices. Remarkably, the write-downs took place mostly in EU member states outside Germany.
All over Europe, utilities are ailing and posting losses (see box). Companies react with a three-pronged strategy. Firstly,…
Accounts dip into red
All over Europe, utilities are in the red. At the end of February, French GDF Suez posted a gigantic net loss of 9.3 billion euro for 2013, writing down 14.9 billion euro in assets. "We consider that the deterioration of gas storage and thermal energy production in Europe is deep and long-lasting," said Chief Executive Gérard Mestrallet. RWE's German arch-rival E.ON, Europe's biggest private power company, will publish its 2013 report on 12 March. Sustainable profitability halved in the first nine months in 2013. Italy's Enel, burdened by a debt exceeding 40 billion euro, reported that net profits sank by a third during the same period. Spain's Iberdrola has recently announced a 33% drop in profits. Even though they recovered slightly over the last six months, European utilities have lost nearly half their market capitalisation since 2007.