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The company, heavily dependent on Russian gas, is now in talks with the federal government for stabilization measures. Uniper announced Wednesday night in Dsseldorf that it was looking into ways to further secure the company’s liquidity. The management around CEO Klaus-Dieter Maubach collected the forecasts for the year. Already in the first quarter, the Dsseldorfer had accumulated billions of losses due to Russia’s commitment.
According to Uniper, since mid-June it has received from GAZPROM only 40 per cent of the contractually guaranteed volumes of gas and has had to procure replacement volumes at significantly higher prices.
Uniper has concluded more than 50 percent of its long-term supply contracts with Russia, a source that is now running out, explained the situation to Bankhaus Metzler analyst Guido Hoymann. Alberto Gandolfi of US investment bank Goldman Sachs estimates that additional replacement purchases on the Uniper market could cost around 500 million euros for a full month.
“We already had significantly increased liquidity needs at the end of last year due to the huge increase in gas prices,” CEO Klaus-Dieter Maubach said the night before, explaining the step to seek help from the federal government. To counter this, we had already extended our credit lines and, among other things, we received a two billion euro facility from the state-owned company KfW, which we have not used to date.
Developments have now “worsened considerably” due to the war in Ukraine and the resulting sharp reduction in gas supplies from Russia, Maubach explained. “Therefore, we are talking again with the Confederation about stabilization measures, for which certain instruments are possible, such as guarantees and guarantee payments, an increase in the current credit line through participation in the form of equity”. A spokesman for Economy Minister Robert Habeck (Greens) confirmed the talks on Thursday.
Uniper also suspended its previous earnings forecast the night before. In the first half of the year, based on preliminary data, operating earnings are also expected to be significantly lower than those of the same period last year, he said. A year ago Uniper had earned 580 million euros in the first six months before interest, taxes and special effects. Adjusted net profit at the time was € 485 million.
In the first quarter Uniper had already recorded a loss of over three billion euros due to its strong commitment to Russia. This is mainly due to value adjustments following international sanctions against Russia. The write-downs mainly involved the Russian subsidiary of Uniper Unipro and the group’s loan to Nord Stream 2 AG. Uniper had completely canceled the loan for the Baltic Sea oil pipeline, co-financed by the Russian energy group GAZPROM.
Fortum sees Germany as an obligation in Uniper
Finland’s majority shareholder Fortum also sees Germany as obliged to bail out its power plant subsidiary Uniper. “A national and industry-wide effort is needed,” the company said in a written statement Thursday. Fortum declined to comment on how high and how any support should be. Uniper has “partially” used an eight billion euro credit line granted by Fortum, he said. Uniper should be able to meet its commitments even if Russia’s gas cuts in Germany continue or even expand.
Uniper’s request for help from the state shocks investors in the energy sector
Shares in the company, which are listed on MDAX and are majority-owned by Finnish utility Fortum, plummeted Thursday. In early trading, the card temporarily lost up to nearly 23 percent to € 12.76. In the meantime, however, the share has reduced losses and is now down by 15.11 percent to 14.05 euros.
Since the beginning of the year, the losses are now nearly 70 percent. Market capitalization fell by € 10 billion to around € 5 billion over the period.
A trader commented that Uniper must now ask the German taxpayer to bail it out. The warning makes it clear how critical, if not downright dangerous, the current situation is if the Federal Network Agency does not determine and announce the shortage of gas soon.
In this case Uniper assumes that some of the current charges can then be passed on to customers. This is currently not possible. Shares of utility companies EON and RWE were also affected by the generally weakened market environment and at times fell by 2.61% to € 8.15 and by 3.00% to € 35.92.
“The situation in Uniper and also in German utilities shows how dangerous the general situation is for the entire European energy sector. Very few energy companies can escape the risks due to links between them and partly overlapping business areas”, commented the market expert Andreas Lipkow from Comdirect. The financial and banking crisis of 2007/2008 almost comes to mind. “At the time, the situation was also difficult to manage at first and the consequences were sometimes devastating.” In the energy sector, for the moment, everything depends on additional supplies from Russia and the rapid deployment of alternatives.
And RBC analyst John Musk explained: As part of the gas contingency plan, the Federal Network Agency is expected to allow the people of Düsseldorf to pass higher costs on to customers. He calculated that the reduced gas supply from Russia currently costs the group about 30 million euros per day.
JPMorgan analyst Vincent Ayral estimates the costs incurred by Uniper due to the gas bottleneck at 20 million euros per day. Only a few months will pass before the group can draw on the two billion euro KfW loan that has already been granted.
Ayral warned that many “utilities” have less solid balance sheets and may not have as much time as Uniper. He then assumes that the federal government is currently “working hard on the details” of how energy companies could pass on the high costs and that this is why the “gas shortage” has not yet been declared. This is also complicated because it is likely to have a significant impact on the economy. But Ayral expects a decision to be a matter of days or weeks rather than months.
ESPOO / DSELDORF / FRANKFURT (dpa-AFX)
The leverage must be between 2 and 20
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