European Utilities Key Player Profiles: RWE

Table of Contents

• CATALYST
• SUMMARY
• METHODOLOGY
• ANALYSIS
  • Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
  • Key Players dominate power generation capacity market share in the Wmed competitive arena
  • Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
  • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
  • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
    • The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure
      • The Performance pillar combines 5 financial metrics to measure business performance
      • The Scale pillar combines financial and operational metrics to measure the size of a utility
      • The Growth pillar measures the rate of growth of a utility' s financial and energy resources
      • The Exposure pillar combines both operational and financial measurements of risk
  • RWE scores 30.5/100 on Datamonitor' s European Utility Scorecard and ranks 18 out of the 31 Key Players covered
  • RWE' s ranking varies widely across the four pillars
    • RWE achieves an overall ranking of 18, with a utility score of 30.5
    • RWE scores well below average on the Performance and Exposure pillars
    • RWE significantly underperforms the Key Player average, yet carries a higher than average level of risk
    • RWE outperforms the average on Scale, and scores slightly higher than many top ten utilities on Growth
  • RWE scores well below average on most Performance metrics, for an overall ranking of 28 on this pillar
    • Only on operating profit margin does RWE rank above the Key Player average
    • Only on operating profit margin does RWE rank above the Key Player average
    • RWE' s return on fixed assets and return on sales significantly underperform the Key Player average
    • RWE significantly underperforms on return on investment and return on energy volume
  • RWE scores in the top ten in each Scale metric, for an overall ranking of 6 on this pillar
    • RWE' s best Scale metrics are power supply volume and generation capacity, where it ranks 4
    • In terms of generation capacity RWE ranks 4, with 42 GW
    • RWE is an integrated utility, though gas supply volume is still twice the company' s power supply volume
    • RWE has 10.5% of Key Player power customers
    • At 228 TWh, RWE ranks 4 in terms of power supply volume
    • RWE has a 9.5% share of Key Player gas customers
    • RWE ranks 5 in terms of gas supply volume
    • RWE ranks 5 and 8 in terms of revenue and net income, respectively
  • RWE' s Growth ranking is 9, despite a decrease in power supply volume
    • RWE outperforms the Key Player average on profit and gas supply volume growth
    • RWE' s price earnings ratio is slightly above average (15), while its operating profit margin is slightly below (21%)
    • From 2001 to 2005, RWE' s average annual revenue growth (5.6%) lagged profit growth (29.1%)
    • From 2004 to 2005, declining power supply volume (-39.1%) has not balanced an increase in gas supply volume of 14%
  • RWE is among the most highly leveraged utilities, contributing to a low Exposure ranking of 28
    • RWE significantly lags the Key Player average in financial and operational Exposure
    • RWE' s gas NTR of -94.4% is higher than the Key Player average of -88.4%
    • RWE' s power NTR deficit is -4.8%, resulting in a ranking of 14 on that metric
    • RWE is among the most highly leveraged Key Players, with a debt to equity ratio of 490.2%
    • RWE ranks 28 in terms of debt leverage
    • RWE' s operating cash flow has increased despite a drop in energy supply volume growth
  • RWE' s operations are focused on Germany and the UK
    • Coal and gas dominate RWE' s power generation capacity
    • RWE' s power sales are concentrated in Germany and the UK
    • Half of RWE' s gas supply volume is provided outside of Germany
    • RWE' s generation capacity is focused on Germany and the UK
    • RWE has a Key Player power customer market share of 11%
    • RWE has a 9.5% share of Key Player gas customers
• APPENDIX
  • Definitions
  • Datamonitor Consulting
  • List of Tables
    • Table 1: The Key Players are drawn from across a diverse range of markets
    • Table 2: The Performance pillar combines 5 financial metrics to measure business performance
    • Table 3: The Scale pillar combines financial and operational metrics to measure the size of a utility
    • Table 4: The Growth pillar measures the rate of growth of a utility' s financial and energy resources
    • Table 5: The Exposure pillar combines both operational and financial measurements of risk
    • Table 6: RWE scores 30.5/100 on Datamonitor' s European Utility Scorecard and ranks 18 out of the 31 Key Players covered
    • Table 7: RWE scores 7.2/25 on the Performance pillar, and ranks 28 out of 31 on this measurement
    • Table 8: RWE scores 8.1/25 on the Scale pillar, and ranks 6 out of 31 on this measurement
    • Table 9: RWE scores 9.2/25 on the Growth pillar, and ranks 9 out of 31 on this measurement
    • Table 10: RWE scores 6/25 on the Exposure pillar, and ranks 28 out of 31 on this measurement
    • Table 11: RWE scores well below average on most Performance metrics, for an overall ranking of 28 on this pillar
    • Table 12: RWE scores in the top ten in each Scale metric, for an overall ranking of 6 on this pillar
    • Table 13: RWE' s Growth ranking is 9, despite a decrease in power supply volume
    • Table 14: RWE is among the most highly leveraged utilities, contributing to a low Exposure ranking of 28
    • Table 15: Return on fixed assets
    • Table 16: Return on sales
    • Table 17: Operating profit margin
    • Table 18: Return on energy volume
    • Table 19: Return on investment
    • Table 20: Generation Capacity / EU25 market total
    • Table 21: Power Supply Volume / EU25 market total
    • Table 22: Gas Supply Volume / EU25 market total
    • Table 23: Net income / Net income of 94 leading utilities
    • Table 24: Revenue / Revenue of 94 leading utilities
    • Table 25: Revenue growth, 2001-2005 CAGR
    • Table 26: Profit growth, 2001-2005 CAGR
    • Table 27: Growth in operating cash flow, 2004 to 2005
    • Table 28: Gas supply volume growth, 2004-2005
    • Table 29: Growth in power supply volume, 2004 to 2005
    • Table 30: Power NTR / Power supply volume
    • Table 31: Gas NTR / Gas supply volume
    • Table 32: Debt leverage
    • Table 33: Growth in operational cash flow - Growth in energy volume
  • List of Figures
    • Figure 1: Datamonitor' s Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
    • Figure 2: Key Players dominate power generation capacity market share in the Wmed competitive arena
    • Figure 3: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
    • Figure 4: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
    • Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
    • Figure 6: RWE achieves an overall ranking of 18, with a utility score of 30.5
    • Figure 7: RWE scores well below average on the Performance and Exposure pillars
    • Figure 8: RWE significantly underperforms the Key Player average, yet carries a higher than average level of risk
    • Figure 9: RWE outperforms the average on Scale, and scores slightly higher than many top ten utilities on Growth
    • Figure 10: Only on operating profit margin does RWE rank above the Key Player average
    • Figure 11: RWE' s return on fixed assets and return on sales significantly underperform the Key Player average
    • Figure 12: RWE significantly underperforms on return on investment and return on energy volume
    • Figure 13: RWE' s best Scale metrics are power supply volume and generation capacity, where it ranks 4
    • Figure 14: In terms of generation capacity RWE ranks 4, with 42 GW
    • Figure 15: RWE is an integrated utility, though gas supply volume is still twice the company' s power supply volume
    • Figure 16: RWE has 10.5% of Key Player power customers
    • Figure 17: At 228 TWh, RWE ranks 4 in terms of power supply volume
    • Figure 18: RWE has a 9.5% share of Key Player gas customers
    • Figure 19: RWE ranks 5 in terms of gas supply volume
    • Figure 20: RWE ranks 5 and 8 in terms of revenue and net income, respectively
    • Figure 21: RWE outperforms the Key Player average on profit and gas supply volume growth
    • Figure 22: RWE' s price earnings ratio is slightly above average (15), while its operating profit margin is slightly below (21%)
    • Figure 23: From 2001 to 2005, RWE' s average annual revenue growth (5.6%) lagged profit growth (29.1%)
    • Figure 24: From 2004 to 2005, declining power supply volume (-39.1%) has not balanced an increase in gas supply volume of 14%
    • Figure 25: RWE significantly lags the Key Player average in financial and operational Exposure
    • Figure 26: RWE' s gas NTR of -94.4% is higher than the Key Player average of -88.4%
    • Figure 27: RWE' s power NTR deficit is -4.8%, resulting in a ranking of 14 on that metric
    • Figure 28: RWE is among the most highly leveraged Key Players, with a debt to equity ratio of 490.2%
    • Figure 29: RWE ranks 28 in terms of debt leverage
    • Figure 30: RWE' s operating cash flow has increased despite a drop in energy supply volume growth
    • Figure 31: Coal and gas dominate RWE' s power generation capacity
    • Figure 32: RWE' s power sales are concentrated in Germany and the UK
    • Figure 33: Half of RWE' s gas supply volume is provided outside of Germany
    • Figure 34: RWE' s generation capacity is focused on Germany and the UK
    • Figure 35: RWE has a Key Player power customer market share of 11%
    • Figure 36: RWE has a 9.5% share of Key Player gas customers