FRANKFURT (Reuters) - The chief executive of Innogy (IGY.DE), Peter Terium, has left the German energy group following a profit warning last week, having failed to convince investors and the supervisory board of his future plans for the group.
Terium joined utility RWE (RWEG.DE) in 2003 and became its CEO in 2012, presiding over the carve out and listing of its networks, renewables and retail units as a separate entity, Innogy. He became head of Innogy last year.
His sudden departure comes less than a week after Innogy cut its operating profit forecast for 2017 and laid out a strategy that would lower profits the following year.
Innogy cited bleak prospects for npower, its British power and gas supply business, which is to be merged with rival SSE’s (SSE.L) bigger retail arm.
It said group profits would decline next year, citing increased spending on energy supply networks, broadband telecoms and renewable power generation that it argued made a temporary decline in profits worthwhile.
Shares in Innogy and RWE are down 17 percent and 18 percent respectively since that announcement.
“In the end, we suspect this has led to the abrupt resignation of the CEO last night – the big capex/‘jam tomorrow’ promise failed to be acceptable given German utility excesses in the past,” Investec analyst Harold Hutchinson said.
Shares in Innogy were down 0.8 percent at 1153 GMT on Wednesday, while RWE lost 1 percent.
According to last week’s announcement, Innogy’s capital expenditure was expected to rise by more than a quarter to more than 3 billion euros ($3.6 billion) next year.
“The Supervisory Board generally welcomes the corporate and finance strategy pursued by the Board, but sees the necessity for greater emphasis on cost discipline and a more focused growth and investment strategy,” Innogy said late on Tuesday.
RWE, which retains a 76.8 percent stake in Innogy, said it agreed with the supervisory board’s assessment.
With a payout ratio of 70 to 80 percent of adjusted net income, Innogy supplies parent RWE with a healthy dividend it needs to build and expand its own business, which is based on conventional power generation and energy trading.
Innogy said that Terium’s departure was the result of a “friendly agreement” with the supervisory board. His employment contract was due to have run until the end of March 2021.
Terium will be replaced in the interim by Uwe Tigges, chief human resources officer, until the supervisory board decides on a successor, Innogy said.
Additional reporting by Victoria Bryan in Berlin; Editing by Keith Weir and Elaine Hardcastle