RWE shares hit 10-week high as group may exceed 2023 outlook

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) -RWE may exceed its 2023 outlook if wind speeds and market volatility, which benefits its trading business, remain high in the remainder of the year, Germany’s top utility said on Tuesday, helping to send its shares to a 10-week high.

“From today’s perspective the financial guidance looks rather conservative,” RWE Chief Financial Officer Michael Mueller told analysts after presenting what Deutsche Bank and Jefferies described as strong nine-month results.

“So if volatility in the market remains attractive and wind conditions are good, we should be possible to even exceed the guidance for the full year.”

RWE reported an 82% increase in core profit in the first nine months, thanks to its commodity trading business and improved margins for its gas-fired power plants.

It continues to expect adjusted EBITDA of 7.1 billion to 7.7 billion euros ($7.6 billion to $8.23 billion) and adjusted net income of 3.3 billion to 3.8 billion euros in 2023.

Mueller also ruled out impairments on the company’s U.S. offshore projects, comments which, along with data showing U.S. inflation may be slowing, caused RWE’s shares to rise by more than 4% to their highest levels since Sept. 4.

Delayed permitting processes and inflation caused companies active in the U.S. offshore sector, including BP, Equinor and Orsted, to recently disclose major writedowns on their local projects.

“The big difference to our competitors is … that we have not secured any (contracts for difference) in the early days for those projects,” Mueller said.

Investors are now focusing on RWE’s capital markets day later this month, which analysts see as a potential catalyst for the stock, for an update on the group’s cleantech push.

Goldman Sachs said any portfolio moves could trigger a “major re-rating in multiples”, singling out RWE’s lignite division, which some investors have said should be carved out and transferred into a foundation.

($1 = 0.9353 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Miranda Murray, Bernadette Baum and Susan Fenton)