RWE sees higher profits in 2017 after Innogy M&A report

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German utility RWE on Tuesday forecast rising profits for 2017, boosted by its volatile trading division as well as Innogy, its networks, retail and renewables unit that has become the subject of takeover speculation.

RWE expects core earnings (adjusted EBITDA) to reach 5.4 to 5.7 billion euros ($5.8-6.1 billion) this year, compared with 5.4 billion in 2016 and more than the 5.2 billion average forecast in a Reuters poll.

The company on Tuesday reiterated it would not comment on a report by Bloomberg saying that French energy group Engie was weighing a bid for Innogy, in which RWE holds a 76.8 percent stake.

RWE said it could in principle sell Innogy shares and thereby reduce its stake to 51 percent, in line with its goal of keeping a majority in the unit in the long-term to benefit from its stable dividend payments.

"There are no further corporate decisions in place in this context," RWE said.

Innogy, listed by RWE last year in Germany's biggest IPO since 2000, is a key source of income for struggling parent RWE. It proposed a payout of 1.60 euros per share on Monday, at the upper end of its range.

RWE meanwhile last month cancelled its dividend for ordinary shares for the second year in a row, and Chief Executive Rolf Martin Schmitz said on Tuesday it would not be a good idea to pay out dividends by going into debt or selling Innogy shares.