RWE Aktiengesellschaft Q3 Earnings Call Highlights

Key Points

• RWE’s first-nine-month earnings rose sharply: adjusted EBITDA increased by nearly €1.2 billion to €4.6 billion, while adjusted EPS climbed to €2.52. The company expects 2026 results toward the upper end of its unchanged guidance, with stronger-than-expected trading contributing to the outlook.
• New energy projects are advancing: RWE secured 15-year capacity contracts for three German gas plants totaling 2.5 GW and has around 3 GW of batteries under construction. Its 2.8-GW Vanguard offshore wind projects also reached financial close, backed by £13 billion in project financing.
• RWE expects net debt to fall from €17 billion at September’s end to around €12 billion by year-end, largely due to the Vanguard joint venture’s change in consolidation. The company is also nearing agreements for two data-center sites, potentially before year-end.

RWE Aktiengesellschaft ETR: RWE expects its 2026 earnings to land toward the upper end of its guidance ranges after higher wind generation, organic growth and stronger trading helped lift results in the first nine months of the year.

Adjusted earnings per share rose to €2.52 from €1.77 a year earlier, while adjusted net income reached €1.8 billion. CFO Michael Müller said the company had already achieved around 85% of its full-year adjusted earnings-per-share target.

RWE maintained its full-year guidance for adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of €5.75 billion to €6.35 billion. It also retained forecasts for adjusted net income of €1.95 billion to €2.45 billion and adjusted earnings per share of €2.60 to €3.30. Its dividend target remains €1.32 per share.

On the earnings call, Müller said the outlook assumes average wind conditions in the fourth quarter. He added that the guidance did not include the strong trading performance recorded so far in the quarter, while noting that two months remained in the year.

Wind and Trading Drive Earnings Growth

Adjusted EBITDA increased by almost €1.2 billion to €4.6 billion in the first nine months. Müller attributed the increase to organic growth, better wind conditions in Europe and stronger supply and trading earnings.

Offshore wind adjusted EBITDA rose to €1.1 billion, helped by normalized wind conditions and the phase-in of the Sofia, Thor and Nordseecluster A projects. Onshore wind and solar generated €1.5 billion, supported by growth and improved European wind conditions.

Flexible Generation contributed €1.3 billion, including a €332 million compensation payment related to production restrictions at the Eemshaven power plant in 2022. Supply and trading contributed €543 million, with strong performance in the second and third quarters continuing into the fourth, Müller said.

RWE expects full-year supply and trading earnings to be well above its initial segment guidance range. Müller said the current environment of volatile prices and shifting spreads had created opportunities across trading books.

German Gas and Battery Projects Advance

RWE won 15-year capacity contracts for three new combined-cycle gas turbine plants at Werne, Voerde and Weisweiler in Germany. The projects have 2.5 gigawatts of capacity, equivalent to 2.1 gigawatts on a derated basis under the auction rules.

Müller said construction could begin in the coming weeks, with first power expected in early 2030. The contracts begin in November 2031, and expected returns are above RWE’s average internal rate of return target of 8.5%.

The company has more than 1.5 gigawatts of additional new-build projects ready for a second auction in December. Müller said RWE was analyzing the auction conditions, including proposed restrictions affecting lignite assets. He said the company’s 1.5-gigawatt pipeline does not include lignite projects.

RWE also has around 3 gigawatts of battery projects under construction in Germany and an advanced pipeline of around 1 gigawatt. Müller said the battery projects exceed 10% project returns, with earnings expected to be front-loaded compared with typical flexible generation or renewable projects.

Vanguard Financing and Offshore Construction

RWE completed the equity closing of its Vanguard West and East offshore wind joint venture with KKR and reached financial close on the projects. The 2.8-gigawatt development secured £13 billion in non-recourse project financing from a consortium of 35 international banks, Müller said.

The projects also secured a 20-year, inflation-indexed contract for difference at a strike price of £91.2 per megawatt hour in 2024 prices. Foundation installation at Vanguard West is scheduled to begin in the first half of 2027.

Elsewhere, Sofia was offline from the beginning of November while a damaged onshore cable was repaired. Müller said generation was expected to resume at the end of the month, with all 100 turbines generating by year-end. He said another party caused the damage and RWE would seek compensation, although none had been included in its figures.

At Denmark’s Thor project, 62 of 72 turbines had been installed and 59 were generating power; full operation is expected in early 2027. RWE’s goal is to fully contract the output of its merchant offshore assets, Müller said.

Debt Outlook and Data Center Negotiations

Net debt stood at €17 billion at the end of September, reflecting €10.7 billion in gross investment, including €3.6 billion for an additional Amprion stake. RWE expects net debt to fall to around €12 billion by year-end, mainly because of a change in consolidation of the Vanguard projects following the KKR equity closing.

RWE has increased its stake in Amprion to 58% and expects to add another small stake in the coming months without financing measures. Müller said a full consolidation was not expected in the near term and would depend on an accounting trigger tied to supervisory board appointments.

On data centers, Müller said RWE was nearing agreements on two sites and could announce deals before year-end, depending on progress. Negotiations have taken longer than initially expected, but he said the company continued to see strong interest. RWE is progressing work on about 10 sites and is considering different ways to monetize them, including one-off sales and other models.

About RWE Aktiengesellschaft (ETR:RWE)

RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities.

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