E.ON Remains on Course After Nine Months (Germany)

* Adjusted EBIT up 9 percent year-on-year
* Adjusted net income up slightly
* 2010 forecast unchanged with adjusted EBIT expected up 0 to 3 percent and adjusted net income at prior-year level

E.ON remains on course after nine months. Its sales were up about 11 percent year on year to roughly €64 billion. Adjusted EBIT rose by 9 percent to just over €8 billion, and adjusted EBITDA rose to €10.8 billion.

E.ON increased its adjusted EBIT by nearly €700 million year on year despite the disposal of power capacity and the sale of its ultrahigh-voltage transmission system and Thüga shareholdings.

The strong performance of E.ON’s end-customer business, particularly in the first half of the year, was among the factors contributing to the earnings increase. In addition, E.ON UK delivered further efficiency enhancements, which also had a positive impact on earnings. In the Nordic region, E.ON benefited from higher sales volumes and higher tariffs. Wider margins enabled E.ON Energy Trading to post another marked earnings improvement. E.ON’s generation fleet in Russia also delivered significantly higher earnings on wider margins in power generation. The sharp rise in earnings at E.ON’s Climate & Renewables business resulted from a further increase in generating capacity. Pan European Gas’s international business also improved. E.ON sold significantly more gas, particularly to industrial customers and customers outside Germany, and benefited from successful price negotiations with gas producers. E.ON’s gas production business also posted higher earnings, in particular through the inclusion of Yuzhno Russkoye, a large gas field in Siberia.

At €3.5 billion, net income attributable to shareholders of E.ON AG was 42 percent below the high prior-year figure. The significant year-on-year difference is attributable to the fact that exceptionally high book gains on the disposal of power capacity were recorded in the prior-year period and to the impairment charges of €2.6 billion recorded on goodwill ad other assets in Italy, Spain, and France, which more than offset the increased mark-to-market valuation of derivatives. By contrast, adjusted net income, which does not include these extraordinary, non-recurring, and non-cash-effective items, was up by 2 percent to €4.4 billion. Cash provided by operating activities rose by 37 percent to €9.2 billion.

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.


Source: eon, November 10, 2010;