E.ON posts significant increases in first-half (Germany)

Adjusted EBIT up 11 percent year on year. 2,800MW of new, climate-friendly generating capacity enters service. 2010 forecast unchanged – adjusted EBIT expected up 0 to 3 percent and adjusted net income at prior-year level.

Following a strong first quarter, Düsseldorf-based energy company, E.ON recorded significant increases in its key financial figures for the first half of 2010. First-half sales were up about 7 percent year on year to roughly EUR44 billion. Adjusted EBIT, the company’s main earnings metric, rose by 11 percent to EUR6.1 billion. E.ON improved its operating performance across all its business areas—from gas E&P and power generation to retail sales—in nearly all its markets. Nevertheless, in view of the continued uncertainty of its energy-policy environment and, particularly, in view of the future earnings development in its gas business, E.ON continues to expect full-year 2010 adjusted EBIT to increase by between 0 and 3 percent and adjusted net income to be at the prior-year level.

“E.ON remains, despite increasing competitive pressure, one of the strongest international energy companies today. E.ON remains on course by continually improving our performance, further streamlining our business portfolio, and investing in our operating business,” said E.ON CEO Johannes Teyssen as he presented the company’s half-year results.

Teyssen, however, views with concern the current energy-policy debate, particularly in Berlin: “There has long been a lack of clarity about the direction of Germany’s energy-policy. This needs to change. As the federal government stated, Germany needs a non-ideological, technology-neutral, and market-based energy strategy that includes an environmentally and economically sensible decision on the future of nuclear energy in this country. Only then will Germany make a real start towards its energy future.”

Adjusted EBIT at the Central Europe market unit was down 11 percent from the prior-year level. The sale of the ultrahigh-voltage transmission system in the first quarter, the absence of earnings streams due to the disposal of power capacity, and lower earnings in the gas business were the main negative factors.

Pan-European Gas’s adjusted EBIT was significantly higher, climbing by 17 percent to about EUR1.3 billion. The positive factors included higher gas sales volume and positive effects in the upstream business, mainly the inclusion of Yuzhno Russkoye gas field.

U.K. grew adjusted EBIT by EUR425 million to EUR663 million, more than twice the prior-year figure. This substantial increase is attributably in part to the uncommonly low prior-year figure but also to significantly improved margins in the retail business, operating improvements, and exceptionally low temperatures at the start of the year.

Nordic’s adjusted EBIT rose by 25 percent in local currency and by 39 percent, or EUR133 million, in reporting currency. The regulated business benefited primarily from a weather-driven increase in sales volume and higher tariffs. Adjusted EBIT in the non-regulated business rose on higher generation, higher market-based transfer prices, and higher hydropower sales volume.

Energy Trading recorded adjusted EBIT of EUR826 million. Optimization, whose main purpose is to limit risks and to optimize the deployment of the E.ON Group’s generation and production assets, contributed EUR891 million due to wider power and gas margins. Proprietary trading recorded a loss of EUR65 million.

New Markets’ adjusted EBIT of just under EUR430 million was below the prior-year figure, mainly due to the absence of a one-off effect recorded in the prior year at the Italy market unit. Climate & Renewables posted significantly higher earnings on a substantial increase in generating capacity. Earnings were also higher in the Russia and Spain market units due to improved margins.

Net income attributable to shareholders of E.ON AG of EUR3.9 billion was down by 9 percent from the prior-year figure. E.ON’s adjusted net income declined by just 1 percent to EUR3.3 billion; the 11-percent increase in E.ON’s adjusted EBIT was offset primarily by higher tax and interest expenses, resulting on balance in a slight decline. E.ON’s cash provided by operating activities of EUR5.6 billion was 30 percent above the prior-year figure.


Source: eon, August 11, 2010