A recovery in German utility RWE's (>> RWE) power and commodity trading during the first nine months failed to overcome concerns about its exposure to politically sensitive coal generation on Tuesday, with its shares falling almost 4 percent.
Talks over forming the next German government involving the anti-coal Greens have raised concerns about RWE's assets as about 60 percent of its installed capacity in Germany is from coal-fired power plants.
"Exiting coal in the short term would make it impossible to continue ensuring security of supply. Replacing it in the short term with gas is unrealistic, if only for reasons related to planning, approval and construction periods," RWE Chief Financial Officer Markus Krebber said after the results.
Coal-fired power plants are a key issue in current negotiations, with the Greens holding out for carbon dioxide emissions cuts that would require the closing of 20 coal plants by 2020, double of what is proposed by the Christian Democrats and the pro-business Free Democrats.
Tuesday's results showed Supply & Trading, which acts as the central marketer of RWE's power station output and manages its global commodities deals, swung to core earnings of 201 million euros (£180 million), from a 97 million euro loss last year when it was hit by volatile markets caused by unexpected and prolonged maintenance at French nuclear plants.
Krebber, a former head of the unit, said this was the level of earnings to be expected in a normal full year with no major price swings as had been the case so far in 2017.
"Last year, there were developments that were unforeseen under our fundamental market models," Krebber said.
At a group level, RWE's adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 9.3 percent to 4.18 billion euros, slightly higher than the 4.13 billion average analysts' forecast in a Reuters poll.
Since carving out its renewables, networks and retail unit Innogy (>> Innogy SE) last year, RWE's own business is focused purely on operating power plants and the trading of commodities and energy, including liquefied natural gas (LNG).
(Additional reporting by Patricia Uhlig; Editing by Vyas Mohan and Alexander Smith)
By Christoph Steitz and Vera Eckert