E.ON increases earnings in difficult environment
- 2008 adjusted EBIT up by 7,3 percent to €9.9 billion
- Dividend again higher: €1.50 per registered share
- 2009 outlook: stable adjusted EBIT,
adjusted net income to decline
- Investments of up to €30 billion through 2011
E.ON posts significantly higher earnings, demonstrating strength in the current economic crisis. In a very difficult environment, E.ON increased its 2008 adjusted EBIT by 7,3 percent to €9.9 billion. This result is in line with the forecast E.ON issued in the spring of 2007 before the economic crisis began. Sales were up 26 percent to €86.8 billion. Adjusted net income, the earnings figure E.ON uses to determine its dividend, rose by 9 percent to €5.6 billion. Management will propose raising the dividend to €1.50 per registered share, resulting in a payout ratio of just over 50 percent.
E.ON again significantly increased its investments in 2008. It invested €26.2 billion, more than twice as much as in 2007. About €16 billion of this figure went towards the acquisition of operations under E.ON’s agreement with Enel and Acciona and its agreement with Statkraft. E.ON hired 13,000 new employees groupwide in 2008, just under 5,000 of them in Germany. E.ON has 2,700 apprentices in Germany, making it one of the country’s biggest providers of vocational training.
The outlook for 2009 is subject to significantly more uncertainty than outlooks of previous years. One of the main sources of uncertainty is the future course of the global economic crisis and its effects, which at this time are difficult to foresee. In view of this, E.ON currently expects its 2009 adjusted EBIT to match the high prior-year figure. It expects 2009 adjusted net income to decline by around 10 percent relative to the prior year due to higher interest expenses resulting from the increase in its debt. E.ON intends to stand by its current dividend payout ratio of 50 to 60 percent.
Based on ongoing performance improvements, E.ON anticipates that its operating earnings will develop positively. From today’s perspective and based on its current portfolio, E.ON expects to increase adjusted EBIT to about €11 billion.
E.ON had earlier announced €63 billion in investments for the period 2007-2010. By 2010, E.ON will have invested €60 billion of this figure. For the current planning period (2009-2011), the company’s earnings stability will enable it to largely continue its investment program, which is the biggest in the energy industry. However, in view of the significantly more difficult economic environment, E.ON has again reviewed all projects in the current planning period and reduced the original figure by about €6 billion. After this reduction, E.ON will invest an average of €10 billion in each of the next three years (2009-2011). About one third of investments will go towards updating and replacing networks and power plants in Germany and the United Kingdom. Two thirds are earmarked for growth. Here, the focus will be on expanding the company’s generating capacity in the Netherlands, Belgium, Slovakia, and Russia. With double-digit growth rates, renewables remain a growth business and one that E.ON intends to expand and make one of its core businesses. E.ON is one of the world’s leading players in onshore wind power and offshore wind power in the North Sea and Baltic Sea. E.ON sees future potential for large-scale solar power plants located in sun-rich regions and is preparing several such projects.
Along with its ongoing performance enhancements and the prioritization of its investment projects, E.ON will systematically review its business portfolio. Depending on the capital-market situation, E.ON intends to divest at least €10 billion of assets by the end of 2010. This press release may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management and other information currently available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. E.ON AG does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.