Germany's Fourth Biggest Utility aims to cull number of subsidiaries
FRANKFURT - July 30, 2003 - German utility EnBW AG ((EBKG.DE)) said on Wednesday it aimed to cut the number of subsidiaries by well over a quarter to 252 to simplify the company's structure and improve its operational performance.
"This...will be reached through mergers, closures and sales as well as through integration in partnerships," Germany's fourth-biggest utility said in a statement, adding a significant part of this would take place this year.
New Chief Executive Utz Claassen, who took over from Gerhard Goll in May, said earlier this month he would step up a savings programme already under way and sharpen the company's focus on energy by selling businesses in other areas.
EnBW, which many investors criticise for having diversified into businesses as diverse as shoes and car parking management while rivals like E.ON ((EONG.DE)) and RWE ((RWEG.DE)) honed in on energy, has said it can't rule out an operating loss in 2003.
"It is right and important that we now follow up this announcement with the appropriate action," Claassen said.
He added that the remaining parts of shoe and services business Salamander -- including profit-making parking lot operator Apocoa Parking -- would be quickly sold, but did not give further details.
Loss-making units that cannot be restructured will be sold or dissolved.
"Investors and employees must know that strengths available in the core business will not in future be diluted by almost 100 loss makers," said Claassen, who aims to save a billion euros by 2006.
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The seven-year contract, which expires next year, aims to reduce Ontario's greenhouse gas (GHG) emissions by buying 2.3 Terawatt-hours of electricity from Quebec annually — that corresponds to about seven per cent of Hydro-Quebec's average annual exports.
The announcement comes as the provincially owned Quebec utility continues its legal battle over a plan to export power to Massachusetts.
The Ontario agreement has guaranteed a seasonal exchange of energy, since Quebec has a power surplus in summer, and the province's electricity needs increase in the winter.…
