Uniper still hopes for start of Nord Stream 2

The German energy group Uniper, which is involved in the Nord Stream 2 pipeline as a financial investor, is "deeply unsettled" by the current political situation on the Russian-Ukrainian border. Group CEO Klaus-Dieter Maubach stated this to journalists at a video conference on the presentation of the 2021 financial statements. He said this as CEO of a company "where thousands of colleagues worked hard for the Group every day, either in Russia itself or in long-standing relationships with Russian partners." Maubach, meanwhile, hopes that the pipeline will be able to start after all: "We are counting on a diplomatic solution, the certification process being resumed and Nord Stream 2 going into operation," he said. After the German government decided to put the pipeline on hold for the time being, Uniper is examining the effects, including possible impairments, he said. However, it is not up to the financial investors to file an appeal against the suspension. That would have to be done by Nord Stream 2 itself.

Maubach did not want to rule out possible interruptions in Russian gas supplies. Depending on the situation, Uniper could in any case be forced to procure gas at higher market prices to ensure security of supply for customers. For a possible repetition of the extreme price developments for electricity and gas, the company had provided itself with the necessary financial flexibility to be able to secure supplies. At the end of last year, the liquidity framework was expanded to 12 billion euros. Overall, however, Maubach was confident about possible supply disruptions. Recent public statements gave him "a certain amount of courage. It had apparently been understood that maintaining supplies to Europe was in the interest of all sides.

Maubach believes that Uniper, as one of Europe's largest gas traders and gas storage operators, has a key role to play in this complex situation. This role has been fulfilled well. Last year, for example, 356 cargos of LNG tanker cargoes were traded, he said, moving 330 terawatt hours, one-third of Germany's gas consumption. Maubach described it as his personal view that Germany "can ensure a secure gas supply with market-based instruments. And these instruments already exist, he said, but they have to be used.

Maubach considers the business development of the past year to have been successful. Important steps had been taken to implement the strategy, he said. "All business units are working consistently on our decarbonization," the Group CEO said. The accelerated phase-out of coal-fired power generation and the Green Wilhelmshaven hydrogen project are examples of "how we are transforming our company for the future," he said. Chief Financial Officer Tiina Tuomela added that Uniper was on a firm footing operationally and financially and enthused about a "great result."

After declining earnings in the first half of 2021, Uniper had posted strong gains in the second half and significantly outperformed the previous year for the full fiscal year. It reported adjusted earnings before interest and taxes (EBIT) of €1.187 billion, compared with €998 million a year earlier. The increase of almost 19 percent was mainly due to the strong performance of the Global Commodities segment.

Adjusted net income essentially followed adjusted EBIT and at €906 million was significantly higher than the prior-year result of €774 million. Nevertheless, Uniper reported a consolidated net loss of €4.106 billion. The Group cites the fair value measurement of hedges and hedged items as the main reason for this. While the derivatives are subject to fair value accounting, the increases in value of the assets underlying the hedge are initially limited to their acquisition or production costs. Any additional gains in value may only be recognized at the time of realization.

At the Annual General Meeting on May 18, 2022, the Executive Board and Supervisory Board will propose a dividend payment of 26 million euros, or 7 cents per share, compared with 1.37 euros in the previous year. According to the information provided, this reflects the fact that Uniper is placing a stronger focus on liquidity and investment capability in view of the high volatility on the energy markets, the geopolitical situation and the increasing momentum of the European energy transition. This attitude is supported by the majority shareholder, Finnish Fortum Oyj, it said.

In the Global Commodities segment, which was particularly successful, Uniper benefited from unusual weather conditions in North America and the Asian business. As in 2020, the good gas business also had a positive effect again thanks to unusually volatile and sharply rising prices. By contrast, the European Generation division fell slightly short of the prior-year result. Earnings were negatively impacted by higher provisions for nuclear waste management and decommissioning obligations in Sweden and by the fact that the Dutch hard coal-fired power plant Maasvlakte 3 was temporarily not producing.

In power generation in Russia, Uniper benefited from the fact that the Beryozovskaya 3 power plant unit was recommissioned in May 2021. However, higher prices and volumes on the electricity market were almost offset by the expiry of long-term capacity payments for a total of four power plant units and negative foreign currency effects. Maubach currently spoke of business as usual. At the present time, he said, it was unlikely that Uniper's business or that of its Russian subsidiary Unipro would be significantly impacted by sanctions. However, he said it was "impossible to forecast" what impact the current situation would have on the Russian business.