Unexpected losses in its trading business pushed down first-half profit for German power producer and utility RWE, (RWEOY) though it confirmed its forecasts for the full year.

The company said first-half Ebitda fell by 5% to €3.0 billion ($3.3 billion), while operating profit declined 7% to €1.9 billion, a result Jefferies said fell 6% short of consensus forecasts. RWE said costs cuts and real estate sales had generated a "significant rise" in profit at its conventional power generation business, while a turnaround program at its troubled Npower division in the U.K. was bearing fruit. It cut 497 jobs during the period, leaving it with a work force of 59,283.

The unspecified second-quarter losses at the trading unit are a setback for the restructuring Essen, Germany-based group, which in May said it would double the trading unit's business with third-party customers and expand the division internationally. RWE said it now expects full-year profit from the division to be much lower in 2016 year-on-year, instead of significantly rising. The unit is one of three divisions in the restructured company, with the others being RWE's conventional electricity generation business and its RWE International unit, which houses its renewables, grid and infrastructure, and retail operations and is to change its name next month to Innogy.

RWE is preparing to sell 10% of Innogy later this year in an IPO as it responds to a squeeze on prices that has made it tough for conventional energy producers to compete against subsidized alternative power providers. In January RWE said it expected Innogy to have proform Ebitda in 2016 of up to €4.4 billion.

RWE shares were recently down 3.2% at €14.55. That's almost 50% more than the share price's mid-September lows last year, before RWE announced its plan to spin off Innogy.

Jefferies analysts have a buy rating on the stock and a price target of €17.00. Despite the operating profit shortfall in the first half as compared with the consensus forecast "the underlying operational performance in H1 was strong and implies upside for FY 2016 consensus estimates even if H2 turns out to be weak," they noted.

In the first half net profit was flattered by reorganization-related tax benefits and rose 10% to €598 million. But net debt rose to €28.3 billion from €25.5 billion as of December because of negative free cash flow and pension provisions.

RWE, which is led by CEO Peter Terium, said it is still expecting Ebitda of of €5.2 billion to €5.5 billion this year, compared with €7.0 billion last year, an operating profit of €2.8 billion to €3.1 billion, down from €3.8 billion last year. It forecasts adjusted net profit of €500 million to €700 million, down from €1.1 billion.

Its supply division will perform better than expected this year, with profit about level on last year, RWE said.

The company has a market value of €9 billion.