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Innogy cuts renewables, retail outlooks ahead of breakup

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Innogy cuts renewables, retail outlooks ahead of breakup
Innogy logo before the company's annual news conference in Essen, Germany March 12, 2018. REUTERS/Wolfgang Rattay   -   Copyright  WOLFGANG RATTAY(Reuters)
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By Christoph Steitz

FRANKFURT (Reuters) – Germany’s Innogy <IGY.DE> lowered profit forecasts for its renewables and retail operations on Tuesday, businesses which will be owned by RWE <RWEG.DE> and E.ON <EONGn.DE> following a planned breakup of the energy provider.

“Since May the average utilisation at our wind power assets was significantly below the annual mean,” Chief Financial Officer Bernhard Guenther told journalists during a call.

In retail energy he said intensifying competition in Germany, the Netherlands and Belgium was burdening operating profit.

The company lowered its adjusted operating profit forecast in renewables to about 300 million euros (260.27 million pounds) from 350 million and cut its retail profit forecast to over 700 million from about 750 million.

Innogy, Germany’s largest energy group by market valuation, is set to be broken up and its assets divided between E.ON and RWE under a landmark deal reached earlier this year.

“In the context of the E.ON-RWE asset swap, we see negative read-across for E.ON (which will own Innogy’s retail businesses) and RWE (which will own Innogy’s renewables),” Jefferies analysts said in a note.

Shares in E.ON, RWE and Innogy were all flat.

A day earlier smaller rival EnBW <EBKG.DE> lowered its renewables outlook, also citing unusually low wind levels that hit wind farm profits.

On a group level Innogy confirmed it still expected adjusted earnings before interest and tax (EBIT) of about 2.7 billion euros and adjusted net income of more than 1.1 billion.

On Tuesday it reported an 11 percent fall in nine-month adjusted EBIT of 1.9 billion euros.

In Britain, Innogy is in the process of forming a retail joint venture with SSE <SSE.L> but the process is being delayed due to renegotiations prompted by toughened market conditions.

Guenther said the two sides remain focussed on forming the venture but he could not rule out that the talks with SSE could fall apart.

Year to date, Innogy has lost nearly half a million customers in Britain.

(Editing by Maria Sheahan and Jason Neely)

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