By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) - Volatile commodity markets are boosting RWE's trading business, helping Germany's biggest power producer to deliver a 72% jump in core profit in the first nine months of this year.
Apart from generating and selling electricity, RWE also operates a large desk that trades in electricity, gas and CO2 certificates as well as other commodities, which can lead to bumper profits in times of significant price swings.
"We have a very fundamental understanding of how markets work," Chief Financial Officer Michael Mueller told reporters on Thursday. "Whenever there is volatility it is possible to take relevant positions."
Commodity markets have been shaped by major swings in gas and electricity prices so far in 2022 as a steep reduction in Russian supplies and warmer temperatures have both left a mark.
Stifel Research, keeping a "buy" rating on RWE shares, said trading results were driven by so-called contango, where the futures price of a commodity is higher than spot levels.
RWE is generally tight-lipped about its trading strategies, usually deferring to the line that volatility is good for the business, but not disclosing any specifics, arguing it would hurt its competitive position.
The company's shares were up 2.9% in morning trade, leading Frankfurt's blue-chip DAX index.
Nine-month adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 4.1 billion euros ($4.1 billion), up from 2.4 billion a year earlier.
Apart from the strong performance in trading, where profits were up 59%, results also benefited from higher electricity wholesale prices for gas and biomass, Mueller said.
RWE, which last month unveiled the $6.8 billion acquisition of the renewables arm of U.S.-based Con Edison, confirmed its 2022 guidance for adjusted EBITDA of 5-5.5 billion euros and adjusted net profit of 2.1-2.6 billion euros.
($1 = 0.9968 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Miranda Murray and Mark Potter)