Uniper has warned a “significant earnings decline” for the first quarter as it shifts its strategy to releasing gas later in the year.
The company expects a preliminary unadjusted net loss for the first three months of 3 billion euros ($3.19bn). It warned of an impairment of around 2bn euros ($2.12bn), mostly on its Nord Stream 2 loan and Russian subsidiary, Unipro.
The company warned that the first quarter would be “significantly” below market expectations and previous years.
It expects adjusted EBIT for the first quarter to be a loss of around 830 million euros ($881mn), from a gain of 731mn euros ($776mn) last year.
The company said changes in its gas midstream business drove the earnings reduction. Because of the current market, Uniper has cut gas storage withdrawals in the first quarter, opting to shift this to future quarters.
The company has a 370 TWh of long-term gas supply contracts, of which 200 TWh is from Russia. It has said it would not enter into new long-term supply contracts with Russia.
Uniper cut storage withdrawals by around 13 TWh in March “effectively enabling us to buy back volumes in spot and resell in forward”. As a result, this has moved around 750mn euros ($796.5mn) out of the first quarter and into the subsequent quarters.
For the year as a whole, Uniper sees it as being “exceptionally strong”.
Supply scramble
S&P Global Ratings (S&P) expressed concerns around Uniper’s credit outlook in March. The ratings agency raised concerns about the risk of curtailed gas supplies from Russia. The company has said it believes that should such an event occur, the German regulator would step in and release Uniper from securing substitute gas supplies.
Uniper said the gas storage move would be commercially positive, in addition to helping security of supply.
The company announced an update to its Russian activities in March. At that time, the company said it would take an impairment of 987mn euros ($1.05bn) on loans to Nord Stream 2.
Uniper has an 83.73% stake in Unipro, which operates five power plants in Russia. Uniper began a process to sell off its stake in the company last year, but this was put on hold in March.
In the short term, Uniper is shifting into LNG. The company has resumed work on an LNG import terminal in Wilhelmshaven.
Uniper has talked about expanding this facility into ammonia imports and hydrogen production. However, discussions with Russia’s Novatek on the supply of ammonia are on hold.
Amid the crisis stemming from the invasion of Ukraine, some concerns have surfaced around Uniper’s financial outlook. Germany’s KfW agreed to provide a 2bn euro credit facility at the end of March. This will run until April 2023.