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4-Traders Homepage  >  Equities  >  Xetra  >  RWE    RWE   DE0007037129

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RWE, E.ON Scrap UK Nuclear In Big Blow To Government Plans

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03/29/2012 | 12:09pm CET

--E.ON, RWE withdraw from new nuclear in the U.K., seek buyer for project

--RWE cites economic crisis, accelerated nuclear phase out in Germany as reason for pullback

--UK government says RWE, E.ON withdrawal is "disappointing"

(Adds detail.)

 
   By Selina Williams and Jan Hromadko 
   Of  
 

In a huge blow to U.K. government plans to develop new nuclear power, German utilities E.ON AG (>> E.ON AG) and RWE AG (>> RWE AG) said Thursday they were scrapping their plans in the U.K. and are seeking a buyer for their Horizon nuclear joint venture.

RWE cited the global economic crisis, which has made capital for such large and costly projects scarce, and the accelerated phase out of nuclear power in Germany, which has hit revenues there, as reasons for the pull back in the U.K.

This is the second wave of companies to pull out of U.K. new nuclear in recent months. U.K. utility SSE PLC (>> SSE PLC) exited the NuGen nuclear group and sold its stake to partners Iberdrola SA (>> Iberdrola SA) and GDF Suez SA (>> GDF SUEZ) in September 2011.

The U.K. government, which has backed nuclear power in efforts to keep the lights on as old power plants close, while also meeting targets to reduce greenhouse gas emissions, said RWE and E.ON's withdrawal was "disappointing."

"Following a strategic review, separately carried out by both parent companies, RWE npower and E.ON U.K. said today that they would not proceed to develop new nuclear power projects in the U.K. through the Horizon joint venture," RWE said in a statement.

"RWE and E.ON will now focus on finding a new owner for Horizon Nuclear Power," the statement said.

An industry source said some meetings with other companies had already been held, but gave no further details.

Through the Horizon joint venture, RWE and E.ON were planning investments of about GBP15 billion in around 6 gigawatts of new nuclear by 2025 starting with a new plant at Wylfa in Wales.

Horizon was the second group developing nuclear power in the U.K.

French nuclear giant Electricite de France SA (>> EDF) is spearheading the U.K.'s nuclear revival, using Areva SA's (ARVCY) EPR reactors with its plans to build a new plant at Hinkley Point in Somerset, southwest England.

However, French state-controlled EDF hasn't made its final investment decision yet, it intends on doing so at the end of this year.

There are fears that EDF's plans for the U.K. could be threatened if there is a change of government in France following presidential elections that kick off in April.

-By Selina Williams and Jan Hromadko, Dow Jones Newswires; +44 207 842 9262; [email protected]

Stocks mentioned in the article : EDF, E.ON AG, GDF SUEZ, Iberdrola SA, RWE AG, SSE PLC
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Financials (€)
Sales 2017 45 672 M
EBIT 2017 3 516 M
Net income 2017 2 666 M
Debt 2017 9 487 M
Yield 2017 8,93%
P/E ratio 2017 3,93
P/E ratio 2018 10,81
EV / Sales 2017 0,43x
EV / Sales 2018 0,44x
Capitalization 10 213 M
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 22,1 €
Spread / Average Target 31%
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Managers
NameTitle
Rolf Martin Schmitz Chief Executive Officer
Werner Brandt Chairman-Supervisory Board
Markus Krebber Chief Financial Officer
Frank-Detlef Drake VP, Head-Corporate Research & Development
Frank Bsirske Deputy Chairman-Supervisory Board
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