Uniper starts 2023 with a strong first quarter
- Adjusted EBIT of €749 million and adjusted net income of €451 million significantly above prior-year period
- IFRS net income of €6.7 billion affected by markedly lower commodity prices and the substantial release of provisions for anticipated losses for gas replacement procurement
- Significantly lower economic net debt primarily because of the positive development of operating cash flow
- 2023 financial year still expected to be better than 2022
- New Management Board team assembled within ten weeks
- Final inspection of Wilhelmshaven LNG terminal successful
- Uniper recognized for innovative social partner model
- More than 1.2 million kWh of electricity conserved at Uniper offices
Uniper recorded adjusted EBIT of €749 million in the first quarter of 2023. Adjusted EBIT in the prior-year period of the crisis year 2022 was -€917 million. Neither figure nor IFRS net income includes Russian company Unipro, which was reclassified as a discontinued operation in the 2022 financial year and deconsolidated effective year-end 2022.
Adjusted EBIT at the Global Commodities segment improved significantly relative to the prior-year period, but at -€291 million remained negative (prior-year period: -€618 million). The increase is mainly attributable to the gas business, which, following significantly more negative earnings in the prior-year period, continues to be affected by the exceptional price developments of prior years and their consequences.
In the current market environment, Uniper has no additional adverse impacts in conjunction with the costs for gas replacement procurement. From June 14, 2022, to year-end 2022, the cumulative additional costs for the procurement of replacement gas amounted to about €13.2 billion. In total, Uniper recorded no additional losses related to the procurement of replacement gas in the first quarter of 2023. Uniper therefore currently does not need any additional equity from the German federal government.
Trading activities enabled the electricity trading business unit to generate positive earnings in a volatile market environment. The international portfolio also delivered a positive contribution. LNG deliveries from Freeport LNG terminal in the United States began again in the first quarter of 2023 after several months of repairs.
In the European Generation segment, the exceptionally strong adjusted EBIT of just over €1 billion in the first quarter of 2023 was significantly above the prior-year figure of -€152 million. This is particularly attributable to earnings streams resulting from successful hedging transactions in the fossil-fueled power generation business. The European Generation segment generated less electricity than in the prior-year period across nearly all technologies and markets, even though power plants returned to commercial operation to support supply security and output restrictions were lifted. This negative volume effect was more than offset on the earnings side by higher average prices.
A higher earnings contribution relative to the prior year resulted from lower expenses related to the fair value measurement of provisions for carbon allowances, which are offset by hedges that will not be settled until the fourth quarter of 2023. The resulting mark-to-market gains on hedging transactions are recognized in non-operating earnings until settlement. Price effects in the nuclear energy and hydropower businesses in Sweden also had a positive impact. The hydropower business benefited additionally from lower price discrepancies than in the prior year between the system price and the price zones in Sweden. Higher ongoing depreciation charges, especially in the fossil-fueled generation fleet, had an adverse impact on earnings. Positive effects from the elimination of fixed generation restrictions for the Maasvlakte power plant were offset by charges to earnings resulting from the regulations on the absorption of profits in Europe.
Adjusted net income, which largely tracks adjusted EBIT, stood at €451 million after the first quarter of 2023, significantly above prior-year adjusted net income of -€674 million.
IFRS net income of €6.7 billion was significantly above the net loss of -€3.1 billion in the prior-year period. Net income was strongly affected by markedly lower commodity prices and the substantial release of provisions for anticipated future losses in the gas portfolio. The net loss in the first quarter of 2022 was adversely affected mainly by impairment charges on the Nord Stream 2 loan and Unipro.
Economic net debt declined from €3 billion to €2.3 billion. The main reason was positive operating cash flow of €727 million.
Uniper expects a strong earnings recovery for 2023 relative to the previous year, which may lead to a positive Group adjusted EBIT and adjusted net income. This is due to higher average anticipated realized prices in 2023 compared with 2022 and, in particular, lower anticipated additional costs for gas replacement procurement in the 2023 financial year. This forecast business development is subject to market price trends in the further course of the 2023 financial year in a business environment that remains volatile and uncertain overall.
Uniper started the first quarter of 2023 with strong earnings in a generally positive market environment. Based on current conditions, we now expect positive adjusted EBIT and positive adjusted net income for the 2023 financial year. Due to the significant drop in gas prices, for the time being Uniper will not need any new equity from the German federal government. The provisions created at the end of 2022 for anticipated losses in our gas portfolio of about €5.9 billion have declined significantly. However, we can’t allow this success to make us forget that there are still risks in connection with gas replacement procurement. Uniper’s earnings in future quarters will continue to depend to a large extent on the level of costs for gas replacement procurement and thus on gas prices.
Uniper Management Board team is complete
Uniper’s new Management Board team was assembled within ten weeks in the first quarter and has been confirmed as of March 24. Chief Financial Officer (CFO) Jutta Dönges and Chief Operating Officer (COO) Holger Kreetz began their work on the Management Board on March 1. Management Board Chairman and Chief Executive Officer (CEO) Michael Lewis will begin by July 1 at the latest. The new Management Board team will be completed by Chief Commercial Officer (CCO) Carsten Poppinga, who will assume his role by October 1 at the latest. Uniper’s current CCO Niek den Hollander will remain in his position until July 31.
The new Management Board team and the timeline for the transition are clear, and we’re making very good progress in both stabilizing and shaping the future of Uniper. My colleagues and I are very confident about the future. We plan to present a strategy update shortly to explain how Uniper can do its job as a reliable energy company in a rapidly evolving environment. Supply security and decarbonization will be our guiding principles, because they’re two sides of the same coin.
Final inspection of Wilhelmshaven LNG terminal successful
The final inspection of the Wilhelmshaven LNG terminal was conducted in late February by the responsible authorities under the leadership of the Oldenburg State Trade Supervisory Office. No issues were raised. The facility was built by Uniper in a short space of time and, on December 21, 2022, became Germany’s first LNG import terminal to start operations. Since then, it has unloaded an average of one LNG tanker per week. The liquefied natural gas (LNG) is regasified aboard the FSRU Höegh Esperanza and then injected into the gas network. About 6 percent of Germany’s gas needs can be met by means of the terminal. The LNG import terminal in Wilhelmshaven is currently the only one in Germany in regular operation and contributing reliably to the country’s supply security with large amounts of LNG.
Uniper recognized for innovative social partner model
On April 25 in Berlin, Uniper was awarded the German bAV Prize in the large companies category. Uniper has supplemented its existing company pension scheme (German abbreviation: bAV) with a model consisting of a pure defined contribution plan, thereby enabling pension contributions to achieve even better value growth on the capital market. An innovative hedging strategy is designed to mitigate or offset any fluctuations. The model – which was jointly developed by Uniper, employer associations AVEW and AGV Bayern, and trade unions ver.di and IG BCE – is the first social partner model of its kind to be adopted in Germany.
More than 1.2 million kWh of electricity conserved at Uniper offices
Last fall Uniper launched an initiative to save energy at all its office buildings in Germany in order to contribute to the country’s national energy conservation targets for the winter months. As part of the initiative, half of the company’s office space in Düsseldorf was put into hibernation: certain areas of the building were no longer used, and the room temperature in the other areas was reduced to 19 degrees Centigrade. The aim was to conserve about 500,000 kWh during the winter. The actual savings surpassed expectations: around 1.2 million kWh were conserved in Düsseldorf alone, which is equal to the annual energy consumption of nearly 500 average two-person households.
About Uniper
Düsseldorf-based Uniper is an international energy company with activities in more than 40 countries. With around 7,000 employees, it makes an important contribution to security of supply in Europe. Uniper’s core businesses are power generation in Europe, global energy trading, and a broad gas portfolio. Uniper procures gas – including liquefied natural gas (LNG) – and other energy sources on global markets. The company owns and operates gas storage facilities with a capacity of more than 7 billion cubic meters. Uniper plans for its 22.5 GW of installed power-generating capacity in Europe to be carbon-neutral by 2035. The company already ranks among Europe’s largest operators of hydroelectric plants and intends to further expand solar and wind energy, which are essential for a more sustainable and autonomous future.
Uniper is a reliable partner for communities, municipal utilities, and industrial enterprises for planning and implementing innovative, lower-carbon solutions on their decarbonization journey. Uniper is a hydrogen pioneer, is active worldwide along the entire hydrogen value chain, and is conducting projects to make hydrogen a mainstay of the energy supply.
This press release may contain forward-looking statements based on current assumptions and forecasts made by Uniper SE management and other information currently available to Uniper. Various known and unknown risks, uncertainties, and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Uniper SE does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.
