Germany’s Uniper suffers €12 billion loss from energy shock


Uniper reported a loss of more than 12 billion euros, making it one of the largest in German corporate history and revealing the unprecedented crisis gripping European energy markets.

The earnings of the utility, which received a government bailout last month, show the seriousness of the situation as the European Union prepares for the winter.

Russia has cut gas supplies to the EU amid heightened tensions over its invasion of Ukraine, which has spread across the continent, fueling inflation and threatening to plunge some of the continent’s largest economies into recession.

“Uniper has been playing a crucial role in stabilizing the German gas supply for months – at the cost of billions in losses due to the sharp drop in gas supplies from Russia,” said CEO Klaus-Dieter Maubach in the company’s balance sheet.

The loss on an IFRS basis includes a loss of 6.5 billion

Supply shortages forced Uniper to buy gas on the spot market to fulfill contracts, bringing the company to the brink of insolvency.

This led to a €17 billion federal government bailout to prevent the company from collapsing, which could have had a domino effect on the country’s energy system.

‘The Eye of the Storm’

“Uniper remains in the eye of the storm of Europe’s energy crisis,” said John Musk, analyst at RBC Europe Ltd., in a statement. “Uniper is only for the very brave.”

The utility reported an adjusted loss before interest and taxes of 564 million euros in the first half of the year, after profits of 580 million euros in the same period last year.

The company’s net debt increased from €324 million to €2 billion on negative cash flow, along with measures to improve liquidity in the gas and CO2 emission allowance business.

The forecast for this year “due to the volatile environment” cannot yet be given within an appropriate range, the company said and expects a “significantly negative result”.

The previous forecast for this year was in the range of €1 billion to €1.3 billion.

“The war in Ukraine had a significantly negative impact on the risk and opportunity profile of the Uniper Group,” the company said in the interim report.

The conflict exposes the company to “several new material risks and increases the potential worst-case impact and probability of several existing risks.”

Germany, which is still heavily dependent on Russian supplies despite efforts to diversify, is scrambling to stockpile enough to avoid strict rationing when the weather turns colder.

The government is pushing for lower consumption, wants to revive coal-fired power plants and is considering phasing out the remaining nuclear power plants.

A levy on gas consumption was also imposed this week, helping households brace for higher energy bills and deepening the pan-European cost of living crisis.

Russian deliveries

Moscow and Berlin are at odds over the return of a key turbine for the Nord Stream gas pipeline, with the machine stuck in Germany after being repaired in Canada.

Gazprom has reduced inflows via Nord Stream to just 20 percent capacity, prompting the federal government to repeatedly raise concerns that supplies could be completely disrupted.

Uniper has to deal with the full economic loss from replacing Russian gas by September 30, when the government introduces a mechanism that allows utilities to pass on 90 percent of the cost to customers.

The government stands ready to further support the company if replacement cost losses that cannot be offset by other companies’ operating profits exceed 7 billion euros, according to the financial report.

Uniper expects earnings to improve in 2023 and aims to break even by 2024, Chief Financial Officer Tiina Tuomela said in the company’s release. Germany’s Uniper suffers €12 billion loss from energy shock

Fry Electronics Team

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