E.ON internal operating profit up 36 percent in first nine months of 2002
EUR2.4 billion impairment charge to Powergen goodwill
In the first nine months of 2002, the E.ON Group’s internal operating profit climbed 36 percent to EUR3,178 million compared with EUR2,341 million in the prior-year period. The increase resulted in particular from the improvement in E.ON Energie’s internal operating profit, which was up 52 percent to EUR2,286 million from EUR1,506 million in the year-earlier span.
This high rate of increase, due in part to the effects of first-time consolidations, will decline considerably for full year 2002. However, E.ON expects internal operating profit for the 2002 financial year to again markedly exceed the previous year’s high figure.
In view of the significant changes in the market environment of E.ON’s Powergen subsidiary, E.ON must, under U.S. GAAP, record an impairment charge of EUR2.4 billion on the goodwill stemming from the Powergen acquisition. This one-off effect is recognized in other non-operating earnings, but does not affect E.ON’s cash flow.
Despite the impairment charge, E.ON’s nine-month net income after taxes and minority interest in the amount of EUR2,910 million was 100 percent higher than the prior-year figure of EUR1,454 million. The increase reflects the positive effects of asset sales. These were partially offset by the impairment charge on the Powergen goodwill and the write-off already recognized on June 30, 2002, on E.ON’s shares in HypoVereinsbank. If the capital markets remain at their current depressed level, U.S. accounting standards would, from today’s perspective, require further valuation adjustments in the fourth quarter to securities held by E.ON, which would push the E.ON Group’s net income for 2002 below the figure for the previous year.