March 12, 2020 / 8:05 AM / 19 days ago

UPDATE 2-Power utility RWE's growth outlook leaves investors cold

* Core profit jumps 40%

* Plans to invest 5 bln euros in renewables

* Analysts unimpressed by 2020 outlook

* Shares down 15% (Adds detail, shares, analyst)

By Vera Eckert and Tom Käckenhoff

FRANKFURT, March 12 (Reuters) - Germany’s biggest electricity producer RWE’s renewables expansion strategy and annual profit at the top end of expectations drew a cool response from investors, with its shares falling steeply on Thursday.

RWE said it was targeting further profit growth in 2020 after core profit and net income rose sharply last year but its shares were down 15% by 1450 GMT, with traders citing the utility’s 2020 earnings and dividend guidance.

The midpoints of RWE’s 2020 and 2022 guidance for net income were 3% and 8% respectively below expectations, Jefferies analyst Ahmed Farman said in a note.

Europe’s third-biggest renewables player, with a wind and solar power portfolio of 9 gigawatts (GW), also said it would invest 5 billion euros ($5.6 billion) in the continued expansion of green energy over the next three years.

That investment is aimed at raising wind and solar capacity to 13 GW by 2022, supported by 20 GW in the pipeline in markets across Europe, North America, Asia and Australia.

“Asia will be the new Europe in the next 5-7 years when it comes to offshore wind power,” said Anja-Isabel Dotzenrath, CEO of the RWE Renewables, singling out Japan, South Korea and Taiwan as target markets.

Traders, however, said that many investors quit long positions because the outlook looked weak, given that the company expects to feel little impact from the global coronavirus outbreak.

RWE reported adjusted core profit of 2.1 billion euros, up 40%, while adjusted net income doubled to 1.2 billion euros.

Profit tripled at its volatile supply and trading operation to 702 million euros, but traders viewed that as one-off and RWE managers acknowledged that the division’s profit would be nearer 250 million euros this year.

The company is targeting adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of between 2.7 billion and 3 billion euros for 2020 and adjusted net income of 850 million and 1.15 billion euros.

RWE proposed a 2019 dividend of 80 cents, up from 70 cents a year earlier, and is targeting 85 cents for 2020. ($1 = 0.8971 euros)

Reporting by Vera Eckert; additional reporting by Christina Amann and Hakan Ersen, editing by Jan Harvey and David Goodman

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