RWE AG: SWOT Analysis & Company Profile by BusinessReview

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									RWE AG


RWE AG: SWOT Analysis & Company

Reference code: BRPW002CP10-Q4

Published: Mar 2010

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RWE AG - SWOT Profile                                                               Page 1


RWE AG - Company Overview

RWE AG (RWE) is a management holding company of the RWE Group. The company is engaged in the generation,
trading, transmission and supply of electricity and gas. It is one of the largest utility holding groups in Europe and operates
through its wholly and partially owned subsidiaries. RWE’s operating subsidiaries are RWE Power AG (RWE Power),
RWE Innogy, RWE Dea, RWE Supply and Trading and RWE npower. It serves over 16 million customers by supplying
electricity and around eight million clients by supplying gas. The company operates principally across Germany, the UK,
Czech Republic, and other countries.

On September 30, 2009, Essent N.V. and RWE AG completed the transaction and subsequently, 100% shares of Essent
were acquired by RWE.

Financial Performance

The company reported revenues of (Euro) EUR 47,644.00 million during the fiscal year ended December 2009, a
decrease of 1.08% from 2008. The operating profit of the company was EUR 7,326.00 million during the fiscal year 2009,
an increase of 24.44% over 2008. The net profit of the company was EUR 3,571.00 million during the fiscal year 2009, an
increase of 39.60% over 2008.

RWE AG - Key Facts

RWE AG, Key Facts

                                  Opernplatz 1, Essen, , 45128,
                                                                    Ticker Symbol, Stock
Corporate Address:                Germany
                                                                                                   RWE (XETRA)

Telephone                         + 49 201 1215025                  No. of Employees               70,990

Fax                               + 49 201 1215265                  Financial Year End             December

URL                                            Revenue (in EUR Million)       47,644.00

Industry                          Power                             Revenue (in USD Million)       66,172.22

Locations                         Czech Republic, France, Germany, Poland, Spain, United Kingdom

Source: Annual Report, Company Website, Primary and Secondary Research


RWE AG - SWOT Profile                                                                                                 Page 2


RWE AG - Business Description

RWE AG (RWE) is an energy utility company. The company is in the business of the power generation, transmission, and
sale and trading of electricity and natural gas. RWE generates power using varied fuel sources including lignite, hard coal,
nuclear, gas, renewable energies, pumped storage and oil. RWE serves over 16 million customers by supplying electricity
and around eight million clients by supplying gas. In fiscal 2009, the company also supplied 282.8 billion kWh of electricity
to outside customers.

The combined power plant capacity of the company as of December 31, 2009 was 49,582 MW. Of this, hard coal
accounted for 31 % of the total installed capacity of the company, followed by lignite (22%), gas (18%), nuclear power (13
%) and renewable energy (5%). Pumped storage, oil, and other plants accounts for the balance 10%.

The company carries out its operations through its wholly and partially owned subsidiaries namely, RWE Power, RWE
npower, RWE Supply & Trading, RWE Dea, Essent and RWE Innogy. Further, in 2009, the company’s most important
accomplishment was the merger of two regional companies RWE Rhein-Ruhr AG and RWE Westfalen-Weser-Ems AG to
form a sales company (RWE Vertrieb AG) and a distribution network company (RWE Rheinland Westfalen Netz AG).

RWE Power is responsible for the generation of power in Continental Europe. It is engaged in the production of lignite and
generation of electricity from gas, coal, and nuclear fuel. As of December 31, 2009, the company had total installed
capacity of about 50 gigawatts (GW) and generated around 187.2 billion kWh of electricity or 80% of the total in-house
electricity production of RWE. During the same period the company’s in-house generation and power purchases
combined were 300.0 billion kWh.

The company has five lignite power plants namely, Kraftwerk Frimmersdorf, Energy service center Kraftwerk Goldenberg,
Kraftwerk Neurath, Kraftwerk Niederaussem and Kraftwerk Weisweiler accounts for majority of RWE Power’s generation
with output capacity of over 11,000 MW. In addition, it also owns and operates hard coal fired plants which mainly include
Ensdorf and Westfalen. Its affiliated hard coal fired power plants include Gemeinschaftskraftwerk Bergkamen, Kraftwerk
Ensdorf, Kraftwerk Gersteinwerk, Block K, Kraftwerk Ibbenbüren and Kraftwerk Westfalen with total capacity of more than
3,500 MW. The company’s gas plants include Emsland power plant, Kraftwerk Gersteinwerk, CHP Dortmund and
Heizkraftwerk Bochum with a net capacity of around 3,000 MW. The company’s customer power plants include CCGT
Bayer Dormagen, CCGT Ludwigshafen, Kraftwerk Duisburg-Huckingen, CHP Duisburg-Hamborn and Thermal waste
treatment Salzbergen (TAS) with production capacity of over 1,800 MW. The company owns and operates nuclear energy
power stations namely, Biblis plant, Emsland plant and Gundremmingen with an installed capacity of 6,700 MW. Further,
the company operates over 44 hydropower plants with a capacity of about 280 MW for its sister company, RWE Innogy.

The company operates through seven geographic segments namely, Germany, Netherlands/Belgium, the UK, Central
and Eastern Europe, Renewable, Upstream gas & oil and Trading/gas midstream.

The company’s Germany division consists of the generation and sales and distribution networks, business areas. The first
business areas consist of RWE Power’s activities apart from Hungary based Matra. The generation division does not
include RWE Innogy’s or Essent’s German electricity production. Its sales and distribution networks area include RWE
Gasspeicher GmbH and RWE Vertrieb AG including eprimo and RWE Aqua. This segment also includes the new RWE
Rheinland Westfalen Netz AG, besides the regional utilities, which operate electricity generation facilities to a small
extent, along with managing the network and end-customer business. In addition, the newly formed RWE Effizienz GmbH
also belongs to this business area. Furthermore, the segment also holds minority interest in Austrian-based KELAG and
Luxembourg-based Enovos as well as its water business in Zagreb, Croatia, which is carried out by RWE Aqua. In 2009,
the Germany division produced 146.0 billion kWh of electricity and sold 108.0 billion kWh of electricity, 7% increase as
compared to 2008. Further, the company also sold 94.9 billion kWh of gas. The segment accounts for 78% of the
company’s revenue.

The company’s Netherlands and Belgium division was formed on 30th September 2009, after RWE AG acquired Essent.
The company’s former Dutch energy business of RWE Energy Nederland was transferred to Essent, effective October 1,
2009. The fourth-quarter production for 2009 was 4.5 billion kWh. Further, from December 2009, the division supplied
2,316,000 customers electricity, out of which 2,144,000 were in the Netherlands and 172,000 were in Belgium. Further, at
the end of 2009, Essent supplied 1,979,000 customers gas, out of which 1,920,000 were in the Netherlands and 59,000
were in Belgium.

The company’s UK business is run by RWE npower, which encompasses the entire UK generation and supply business
with the exception of electricity production from renewables, which is overseen
by RWE Innogy. In 2009, the segment through RWE npower generated 26.7 billion kWh of electricity and sold 49.9 billion
kWh of electricity. In 2009, the number of customers to whom the company supplied both electricity and gas rose by
121,000 to 2,348,000.

The company’s Central and Eastern Europe segment covers companies in Poland, Hungary, Czech Republic and
Slovakia. In Poland, the company focuses on electricity supply and electricity distribution network. In total, the company
recorded 901,000 electricity customers in Poland at year end 2009.

In Hungary, it concentrates on lignite-based electricity generation, which is managed by its subsidiary Matra. In total, the
company recorded 2,231,000 electricity customers in Hungary at year end 2009. In the Czech Republic, the company’s
main activity is gas. Further, its local operations consist of regional supply, distribution, supra-regional transmission,


RWE AG - SWOT Profile                                                                                               Page 3


transit and storage. In Slovakia, the company is involved in electricity network and electricity end-customer businesses
through its minority interest in VSE and in the gas supply sector through the new RWE Gas Slovensko. In 2009, the
company’s generation in this region totaled 5.7 billion kWh and sold 24.8 billion kWh of electricity. This generation was
largely from the Hungarian lignite-based pow
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