By Linda Pasquini and Christoph Steitz
(Reuters) -Germany's biggest power producer RWE (LON:0HA0) said on Friday that profits this year would come in at the lower end of its guidance range due to a major drop in wholesale energy prices, knocking its shares to their lowest level in more than three months.
RWE, at its capital markets day in November, said adjusted core earnings (EBITDA) would come in at 5.2-5.8 billion euros ($5.7-$6.3 billion) in 2024.
"In light of the significant drop in energy prices on the European wholesale markets over the last weeks", RWE expects to hit the lower end of that range, it said on Friday.
Power prices fell last year due to milder weather, more renewables and nuclear power generation in comparison to 2022, as well as lower prices for gas - often used to generate power.
Up to Thursday's close, the continuous German front-year contract had fallen by nearly 20 euros to 79.75 euros per megawatt hour (MWh) since its 30-day peak on Dec. 27, and has halved from the 161 euros/MWh on Jan. 27 last year.
RWE shares fell as much down 7.5% and were still 7% lower at the bottom of Frankfurt's blue-chip index at 1517 GMT, on track for their worst day since March 2022.
Analysts at Bernstein said this was an over-reaction, adding investors were "unduly spooked" by the news as the stock had underperformed in recent weeks already.
RWE also published preliminary results for 2023 that it said would exceed its guidance, boosted by a strong performance in its hydro, biomass and gas business as well as supply and trading segments in the fourth quarter.
RWE expects adjusted EBITDA to come in at 8.38 billion euros for 2023, compared with its earlier forecast range of 7.10-7.70 billion euros. Adjusted net income for the year reached 4.54 billion euros, above RWE's target of 3.3-3.8 billion, it said.
RWE, which is set to publish its final full-year figures on March 14, is still targeting a dividend of 1.00 euro per share for the 2023 fiscal year.
($1 = 0.9200 euros)