Uniper Profit Up, as it Shrugs Off UK Worry

Uniper, the mainly fossil-fuel generation spun off last year from Germany’s E.ON, on May 9 reported 1Q net income of €751mn, 16% above its €646mn in 1Q2016, and said it did not expect to be impacted by new controls on retail pricing announced as an electoral pledge by the UK's governing party.

CFO Christopher Delbruck said the 1Q2017 result “laid a good foundation for the rest of the year,” given that the 1Q2016 figure had included a number of very high one-off effects including a roughly €400mn benefit from its agreement with Gazprom to adjust long-term gas contracts.

He also said that Uniper assumes it will not be impacted by UK prime minister Theresa May's May 9 announcement, if she is returned to power in national elections on June 8, to tighten retail price regulation. Her party called the initiative a 'price cap', but UK industry and energy secretary Greg Clark on BBC radio said it would give regulator Ofgem greater powers over retail price setting, but did not promise that prices would be flat or decline. 

Delbruck noted that the approval of Russian authorities on Uniper’s €1.479bn sale of its 24.99% Yuzhno Russkoye stake to OMV is still pending, but said that everything was going to plan. Uniper would contribute €958mn as its contribution towards the Gazprom-led Nord Stream 2 project, he said, to add another 55bn m³/yr Russia-to-German subsea gas transmission capacity -- the same capacity as the existing operational Nord Stream 1 system.

European generation’s 1Q result was stable although Uniper noted “narrower margins at fossil-fueled assets in the UK.”

Its global commodities 1Q Ebit was two-thirds lower at €230mn (Q1 2016: €746mn) chiefly because of the one-off Gazprom effect a year earlier, but the company said a cold 1Q2017 had improved gas sales and reduced European storage inventories year on year – both positive for Uniper.

For its Russian generation division, the impairment charge on Berezovskaya 3, Uniper’s fire-damaged power plant in Russia, did not recur in 1Q2017 and the company expects to receive a rouble 20bn ($344mn) fire insurance payment in 2Q2017.

“We affirm our forecast for our full-year adjusted pre-tax earnings (Ebit) of €0.9bn-€1.2bn,” said Delbruck.

Meanwhile E.ON reported 1Q net income attributable to shareholders down by 46% year on year to €628mn.

Mark Smedley