German energy group Innogy SE, a subsidiary of utility RWE AG that is focused on renewable energy, network and retail businesses, aims for its electric mobility business to become profitable "at the start of the next decade" after investment in the segment again weighed on the company's earnings for the first half of the year.
"We had to do some spending and the returns will only occur over the next couple of years," Innogy CEO Uwe Tigges said during the company's Aug. 10 earnings call. Innogy operates approximately 7,000 electric charging points in Europe as of February and announced the acquisition of electric vehicle charging equipment provider Broadband TelCom Power Inc. in the U.S. in July.
Losses from its eMobility business, as well as those from Innogy's Innovation Hub, were in line with the company's expectations outlined in its business plan, added CFO Bernhard Günther. The e-mobility segment reported adjusted EBIT of minus €16 million in the first half of 2018, compared with a loss of €7 million in the first half of the previous year.
The whole group reported a 10% decline of adjusted EBIT to €1.55 billion in the first half and adjusted net income at €662 million, down by 22.8% from the previous year's period. The company this year started reporting results for eMobility separately on its earnings sheet.
"As with any new business segment in our industry, you have to expect startup losses — otherwise you don't even have to begin," Günther said. "When it comes to eMobility we expect that, at the start of the next decade, we will show positive figures."
Innogy also confirmed its outlook for 2018 of adjusted EBIT for the whole business at approximately €2.7 billion, compared with €2.82 billion in 2017. Expectations for the renewable energy segment are also unchanged at approximately €350 million, compared with €355 million last year. For the so-called new business segments like eMobility, an outlook was not separately reported.
Innogy reported adjusted EBIT for its renewable energy segment of €167 million in the first half of 2018, down 6.7% from the same period in the previous year. The company said the segment suffered from lower earnings from solar PV engineering, procurement and construction contracts, as well as lower wind levels in the first six months of the year, especially in the U.K., which reduced power generation.
German multi-utility E.ON SE and Danish power producer Ørsted A/S also reported lower earnings due to wind speeds in Europe for their second quarters.
Innogy's renewables business is expected to be transferred to RWE while rival E.ON would get the company's grid and retail businesses under an extensive asset swap deal that is expected to close by the end of 2019 and is set to remake the German utility sector. During the earnings call, Tigges emphasized that Innogy was still operating independently for the time being.
In the U.S., innogy in July closed its acquisition of wind energy developer EverPower Wind Holdings Inc. "[W]e have identified the U.S. market not only being attractive for wind assets," Günther said. "Hence, we will expand also our solar business to the U.S., where we have secured exclusive project rights for a pipeline of around 440 megawatts." In June, the company struck a deal to acquire the development portfolio of a U.S. developer.