Germany utility Uniper SE said it will overcome the problems generated by Russian gas cuts by 2024 at the latest.
(Bloomberg) — Germany utility Uniper SE said it will overcome the problems generated by Russian gas cuts by 2024 at the latest.
The company — which was rescued by the German government last year after the energy crisis put it on the brink of collapse — said it may continue to face high gas replacement costs in the next years. The firm also took a €4.4 billion ($4.7 billion) hit from deconsolidating its Russian business, according to its earnings report.
“We must be aware that in future quarters, too, Uniper’s earnings will depend to a significant extent on the amount of gas replacement procurement costs. These costs, in turn, depend largely on the price of gas,” said Chief Financial Officer Tiina Tuomela, without offering details on the company’s strategy to handle contracts with Russia’s Gazprom.
Read more: European Gas Falls Below €50 as Historic Energy Crisis Recedes
Once Germany’s largest importer of Russian gas, Uniper was among the companies hardest-hit by the war in Ukraine, requiring a mammoth rescue package from the government that led to its nationalization late last year.
Yet a mostly mild winter and strong inflows from other countries lowered gas prices by more than 80% from their peaks last summer. That has helped Uniper reduce the cost of replacing curtailed Russian supplies, and more than halved its expected losses.
Europe still faces the prospect of gas shortages this year unless it further curbs demand, the International Energy Agency warned earlier this week, while other energy giants are preparing for higher gas prices to linger.
Assets Sale
The utility is in the midst of a management shakeup, and the new executives will have to carry out a series of asset sales to comply with the conditions imposed by the European Union for the government’s aid deal. Divestments are expected to end by the end of 2026, Uniper said in a presentation.
Uniper has closed a deal with a Russian buyer for its unit Unipro, but the likelihood of winning Russian government consent is uncertain, Tuomela said in call with analysts, without disclosing the sale valuation.
The company provided only a vague outlook for 2023 given the market uncertainties. Continuing high volatility in gas prices makes it “very uncertain” to define if there will be a need for additional equity injection, Tuomela said in a call with analysts.
Uniper said it expects an increase in adjusted earnings before interests and taxes this year compared to 2022. The company’s power generation should benefit from “fundamentally higher prices,” said Tuomela. It recorded an adjusted loss before interests and taxes of €10.9 billion for 2022.
One of the key challenges Uniper faces is to develop a more diversified business strategy. Environmental groups have criticized the company’s fossil-fuel based model that is still reliant on natural gas.
(Updates with comments on Russian business in eighth paragraph.)
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