German's second-largest utility, RWE (RWEOY) , on Thursday reported better-than-expected quarterly profit figures as it confirmed full-year forecasts though warned that debt would rise.
RWE said first-quarter Ebitda rose 5% to €2.3 billion ($2.6 billion), with operating profit up 7% to €1.7 billion, which Jefferies International analysts said was 14% better than consensus expectations. RWE put the increase in part down to a bigger-than-usual contribution from its energy trading division, though it said that unit is "subject to major fluctuations during the year." RWE said net profit slipped 2% to €857 million, after the year-before figure was inflated by securities sales.
RWE shares were up more than 5% in Frankfurt trading.
RWE reiterated forecasts involving steep declines in full-year earnings, mainly because of declining conventional power generation margins, but it said the predictions were deliberately cautious.
"At first glance, these figures appear quite conservative in light of the result for the first quarter. In the energy sector, however, the first quarter is traditionally strong, and its figures cannot be extrapolated to provide a reliable estimate for the year as a whole," said CFO Bernhard Guenther in a statement.
RWE is still expecting full-year Ebitda at between €5.2 billion and €5.5 billion, down from €7 billion last year, with operating profit of between €2.8 billion and €3.1 billion, compared with €3.8 billion in 2015.
Full-year adjusted net profit will be between €500 million and €700 million, it said. Net profit was €1.1 billion last year.
But it said net debt will be moderately higher than last year's €25.1 billion level because of higher pension provisions. Net debt stood at €27.9 billion at the end of the quarter.
The company is preparing to spin off its renewables business and sell 10% of the entity in an IPO later this year. On Thursday it said its quarterly performance in renewables was "pleasing." The unit posted a 4% rise in Ebitda to €233 million.
Ebitda at the conventional power generation business fell more than 19% to €554 million.
RWE in February opted to suspend its 2015 ordinary-share dividend to conserve cash amid a downturn in conventional power.