RWE AG won't drastically alter its strategy despite its home market's
decision to accelerate the exit from nuclear energy, significantly
affecting its share price as investors lost trust in the company, said
RWE Chief Commercial Officer Leonhard Birnbaum Wednesday.
"Generally, our strategy won't change fundamentally," Birnbaum told
reporters on the sidelines of an energy conference in Berlin.
He conceded, however, that investors have lost trust in RWE as Germany
decided to phase out all nuclear energy through 2022 after the Fukushima
nuclear reactor accidents in Japan.
RWE's shares have lost more than 20% since the beginning of the year,
due mostly to Germany's nuclear policy shift, which further soured a
challenging market environment as power and gas prices remain depressed.
At 1341 GMT, RWE shares were up 1.3% at EUR37.64.
"The development of our share price demonstrates that we have
considerably lost investors' trust due to the political development (in
Germany)," Birnbaum said.
"Our task now is to regain that lost trust. We have to demonstrate that
our strategy can deliver returns that exceed our capital costs,"
Birnbaum said.
RWE is heavily dependent on domestic power generation for its earnings,
particularly from nuclear plants and those running on fossil fuels.
German electricity generation contributed around 44% of RWE's earnings
before interest, tax, depreciation and amortization in 2010.
The government's nuclear exit decision is expected to hit RWE's
profitability in the short-term as the company has been forced to shut
down two of its reactors immediately. To meet power delivery commitments
to customers the company either has to buy electricity on the market or
opt for producing in more expensive fossil-fueled power plants.
In response to the deteriorated market environment Standard & Poor's
earlier this month downgraded RWE's creditworthiness to A- and
Citigroup analysts recently said RWE may have to raise as much as EUR5
billion in fresh capital to protect its credit ratings.
Birnbaum declined to comment on whether the company will have to raise
fresh capital, adding that RWE will comment on the consequences of the
nuclear exit in Germany when it reports second quarter results in
August.
Birnbaum also said that RWE will proceed with the construction of new
power plants, wind farms and gas storages with a total investment volume
of around EUR12 billion. In addition, RWE seeks to identify new
investment projects to expand its position in the European power
generation market.
A third priority for RWE is to reach "critical mass" in its renewable
energies business as the company needs to improve its carbon dioxide
emissions footprint.
RWE is Germany's second-largest utility by market value behind E.ON AG
(EOAN.XE) and Europe's largest emitter of CO2.