District heating earnings burdened by higher generation costs
District heating sales rose year-on-year by Euro 31 million to Euro 303 million (+11%). This was driven in particular by weather-related volume increases, external growth at the Czech subgroup and clause-related price adjustments, thus more than offsetting reduced sales in the Polish district heating business.
Of total sales in the district heating segment, 61% (Euro 185 million) related to the German market and 39%
(Euro 118 million) to the international business. Sales at the Czech subgroup increased year-on-year by Euro
30 million to Euro 92 million, while sales at the Polish subgroup fell by Euro 14 million to Euro 26 million.
District heating earnings before interest, taxes, depreciation and goodwill amortisation (EBITDA) fell year-on-year by Euro 5 million to Euro 67 million, while earnings before interest and taxes (EBIT) dropped by Euro 3 million to Euro 39 million. The positive impact on earnings of weather-related volume growth was more than offset by a series of negative factors. The rapid rise in coal prices led to higher generation costs at upstream suppliers. Our companies could only pass on the resultant rise in procurement costs to customers following a certain delay. Moreover, earnings were affected by a one-off special charge at the Offenbach subgroup due to a damaged turbine at its cogeneration plant and by higher procurement costs at MVV Energie AG due to the fair cause-based splitting of cogeneration costs with the electricity segment (please see Electricity Segment). District heating earnings at the Kiel subgroup were burdened in the year under report by the offsetting for the first time of the gas input used in district heating production.
Despite this reduction, the district heating segment remains a key earnings driver at the MVV Energie Group. Of segment EBIT prior to consolidation, 42% related to MVV Energie AG, 10% to shareholdings in Germany and 48% to international shareholdings.
Of total district heating volumes generated, 63% are attributable to the large power plant in Mannheim (GKM) and the jointly owned power plant in Kiel, in which MVV Energie AG and Stadtwerke Kiel AG hold stakes of 28% and 50% respectively. The heat generated at proprietary waste incineration, heating and cogeneration plants contributed 30% to the district heating output of the MVV Energie Group, while other generation or procurement volumes contributed 7%.
In view of the discussions currently surrounding climate protection, the MVV Energie Group is planning a massive expansion in the district heating supply for the coming years (please see Environmental Protection and Outlook).
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