By Christoph Steitz
FRANKFURT (Reuters) - German utility RWE (DE:RWEG) expects to reach the top end of its full-year profit targets after cost cuts and proceeds from the sale of land in Britain boosted profit at its struggling power generation division.
Low wholesale electricity prices and competition from solar and wind energy have put intense pressure on conventional power plants, including those of RWE, triggering substantial job cuts and plant closures across Europe.
In a more drastic response to the crisis, RWE last month listed a minority of Innogy (DE:IGY), comprising its healthy networks, renewables and retail activities, leaving it with volatile trading and fossil-fuel and nuclear generation.
Nine-month operating profit at RWE's power generation division rose 7 percent to 435 million euros ($469 million), RWE said, also pointing to stabilising margins at hard coal and gas-fired power plants as a result of lower fuel prices.
"Given the positive development in generation we expect to come in at year end ... at the upper end of our ranges," Chief Financial Officer Markus Krebber said in a video interview on the group's website.
Shares in the group traded 2.4 percent higher shortly after the market opened.
RWE expects earnings before interest, tax, depreciation and amortisation (EBITDA) of 5.2 to 5.5 billion euros, operating profit of 2.8 to 3.1 billion and adjusted net income of 500 to 700 million in 2016.
Krebber also said that RWE wanted to quickly transfer cash to a state fund in charge of handling the storage of waste from the shutdown of the country's nuclear plants, saying it had a very solid liquidity position following Innogy's listing last month.
The German government last month agreed a deal under which the country's largest utilities have until 2022 to pay a total of 23.6 billion euros into the fund, shedding all liabilities related to any additional future costs of nuclear waste storage.
At about 6.8 billion euros, RWE will shoulder the second-largest share and is currently looking at the best way to transfer the amount, including the option to pay "quite early", Krebber said, not being more specific.
The listing of Innogy left RWE with 2.6 billion euros in proceeds as well as a 76.8 percent stake in the unit, which is valued at 13.5 billion euros. RWE is currently valued at about 7.5 billion euros.
($1 = 0.9266 euros)