RWE to further expand its austerity programme

• 9 years ago (2014-09-13)
• Junior Isles

Europe 1061 Renewables 752

---

German utility giant RWE AG is looking to make even deeper cuts in its conventional power generation business to fight increasingly difficult market conditions, according to German newspaper reports.

The target for its austerity programme is to save €800 million ($1.03 billion), but this will be raised by a further several hundred million euros, according to reputed sources on the firm’s supervisory board.

"We confirm that the cost-cutting efforts at RWE Generation to be adapted to the difficult market situation," an RWE Generation spokesperson revealed to the media. The supervisory board is due to meet next on September 19th to discuss the strategy

Labour union Verdi has revealed it is concerned about the potential for job cuts. "Faced with a possible extension of the austerity programme, it is more important to reach a collective agreement quickly to secure employment," Hans Peter Lafos, who represents Verdi on RWE's supervisory board, told German newspaper Rheinische Post.

RWE was Germany's largest power producer by capacity last year but new plans to reduce costs by a €1 billion over the following four years to boost operating profit by around €500 million from 2017, caught some off-guard.

The savings would be achieved partly through cutting around 10 per cent of RWE’s workforce, 6750 jobs in total. RWE expects to have a workforce of only 60 700 by the end of 2016, down from 72 000 in 2011.

RWE, like other German and European utilities, has been struggling with excess generation capacity as government subsidised wind farms and solar plants have come on stream and poor energy demand in a sluggish European economy has pushed power prices and earnings down considerably.