E.ON Determined to Lead the New Energy World

E.ON reiterated its aim to establish itself as a leading company in the new energy world while confirming its 2016 outlook today.

“Our objective is to make E.ON into a leading company of the distributed, renewable, and digital energy world,” said E.ON’s CEO Johannes Teyssen, confirming the company’s determination to carry out the spin-off of its conventional power generation and trading businesses.

“Even in view of the further deterioration of our market environment, we remain convinced that the spinoff is the right thing to do at the right time,” Teyssen said. “This sharper focus will enable E.ON and Uniper to better meet their respective challenges and systematically seize development opportunities.”

E.ON’s transformation will have three phases. This year will be transitional, as E.ON plans to complete the spin-off of Uniper pending the approval of the Annual Shareholders Meeting on 8 June. The company also intends to list about 53 percent of Uniper shares on the stock market later in 2016.

The company said that, going forward, it will focus on highly profitable, stable, and largely regulated businesses: energy networks, customer solutions, and renewables, with a new objective to use this platform to tap new growth opportunities in its core businesses.

The planned spin-off makes it necessary for E.ON to adjust its outlook for 2016 owing to the accounting treatment of Uniper, the company said. E.ON expects its EBITDA to be between EUR 4.6 and EUR 5 billion and its EBIT – which will be the company’s new key earnings figure – to be between EUR 2.7 and EUR 3.1 billion. Underlying net income is expected to be between EUR 0.6 and EUR 1 billion.

E.ON’s medium-term finance plan is designed to earn the trust of capital markets. Its objective is to create lasting value through disciplined capital allocation, capital efficiency, a clear cash-flow orientation, and earnings growth. E.ON aims for a capital structure that supports a BBB+/Baa1 rating.

The objective for the next few years is for E.ON’s EBIT to be at least stable and to achieve a high cash conversion rate. E.ON wants to achieve a return on capital employed of 8 to 10 percent and to continually improve its earnings per share by 5 to 10 percent per year.

In its 2015 financial results published in March, E.ON set out a 2016 investment plan worth EUR 4.5 billion, of which EUR 1.5 billion (34%) will be dedicated to renewables, with the main focus on offshore wind in Europe and onshore wind in the US.

Yesterday, E.ON announced its plans to move forward with the Arkona offshore wind farm development, together with Statoil, which will invest into German offshore wind market for the first time. The project will make E.ON the first company to operate wind farms in both the German North Sea and the Baltic Sea.