E.ON confirms full-year outlook and timetable for transformation
Just a few weeks before Uniper begins operations in January, E.ON reaffirmed its forecast for full-year 2015. It continues to expect its EBITDA to be between €7 and €7.6 billion and its underlying net income to be between €1.4 and €1.8 billion. At the nine-month mark, both figures were in line with expectations and therefore well below the respective prior-year figures. E.ON recorded nine-month EBITDA of €5.4 billion (prior year: €6.5 billion, -18 percent) and underlying net income of €962 million (prior year: €1.4 billion, -30 percent). Since the start of the year E.ON has reduced its economic net debt by €5.3 billion to €28.1 billion. Operating cash flow of €5.7 billion was high but below the prior-year figure (-23 percent), which benefited from non-recurring effects. E.ON reaffirmed its plan to pay a dividend of €0.50 per share for the 2015 financial year. In third quarter E.ON recorded the impairment charges of €8.3 billion it had already announced, leading to a significant net loss. Because the charges are extraordinary effects, they did not affect underlying net income.
CFO Michael Sen said: “The third quarter was very eventful. In Germany there were discussions about corporate liability and then the developments around the report on the stress tests for nuclear-energy provisions. This kept us busy as well. But above all it left its mark on the share price, which at times was highly volatile. Many market participants do not appreciate uncertainty. As we know, capital is skittish. The figures we’re releasing today include the significant impairment charges we announced in September. We recorded these charges, which totaled €8.3 billion, primarily on goodwill and other assets. The impairment charges were triggered by the significant decline in commodity and energy prices, which is mainly a result of structural changes on global energy markets and on the regulatory framework. Our operating environment remains very difficult. We confirm our outlook for full-year 2015, in part because our operating business is making good progress. Amrumbank West and Humber Gateway wind farms in the North Sea, which together total just over 500 megawatts, are now fully operational, as is unit Berezovskaya 3, a new 800 megawatt power generating unit in Russia. This means that both E.ON and Uniper have received new and profitable assets that support their respective strategies operationally as well as financially.”
E.ON’s nine-month EBITDA was about €1.1 billion below the prior-year figure. Earnings were higher at its regional businesses in Germany and in other European markets. The decommissioning of power plants and the sale of operations in Spain and Italy had a significant adverse impact on the Generation segment’s earnings (-32 percent). The decline in EBITDA at Renewables (-17 percent) is attributable to lower wholesale power prices and positive non-recurring effects in the prior-year period. The Global Commodities segment (-42 percent) recorded an intraperiod effect in carbon trading that will, as anticipated, be offset in the fourth quarter. Low oil prices and the decline of the ruble led to lower earnings at Exploration & Production (-24 percent) and Non-EU countries (-46 percent).
“Since the end of last year we’ve reduced our economic net debt by €5.3 billion, due to our high operating cash flow and the proceeds from divestments,” Sen said. “The reduction in our provisions for pension obligations also had a positive impact. We expect that the sale of our oil and gas production business in Norway to DEA Deutsche Erdoel AG will close in the fourth quarter, which will have a further positive impact on our economic net debt. We’re steadily reducing our debt, thereby increasing our room for maneuver.”
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