E.ON stands by strategy and forecast

  • Operating earnings again strong in 2010
  • More than EUR9 billion of planned EUR15 billion divestment target already delivered
  • Management recommends dividend of EUR1.50 per share
  • Attractive 6.5 percent dividend yield

“E.ON faces substantial business and energy-policy challenges. But our solid balance sheet and clear corporate strategy will enable us to be successful even in difficult times. We’ve successfully internationalized our company and are making it even more so. We’ve foresightedly updated our generation portfolio and made it more climate friendly. And we have unique expertise in natural gas. Together, this will enable us to successfully meet the business challenges ahead and deploy our capabilities to help shape the energy future,” said E.ON CEO Johannes Teyssen at the company’s Annual Shareholders Meeting, emphasizing that E.ON stands by its strategy and medium-term forecast.

Stable 2010 earnings, attractive dividend yield

2010 was another financially successful year for E.ON. As forecast, the company increased its adjusted EBIT by 2 percent year on year to EUR9.5 billion, right within its target range. It also grew its sales, which rose by 16 percent to EUR92.9 billion. E.ON achieved these increases even though in 2010 it sold businesses and shareholdings with earnings totaling EUR800 million. In view of E.ON’s stable earnings, its Board of Management and Supervisory Board will recommend to the Annual Shareholdings Meeting in Essen today that the company pay out a dividend of EUR1.50 per share, on par with the prior-year dividend. E.ON’s payout ratio is 58.5 percent; its dividend yield, 6.5 percent. E.ON aims to pay out a dividend of at least EUR1.30 per share for the transition years 2011 and 2012.

Rapid progress in transforming company

Just half a year after announcing its new corporate strategy, E.ON has already achieved noteworthy milestones in its implementation. Since November 2010, E.ON has sold its Gazprom stake, its gas network in Italy, its power network in the United Kingdom, and concluded other transactions that together have already enabled it to deliver more than EUR9 billion of the planned EUR15 billion in asset sales. These funds are available for debt reduction or investments. The company is also successful in making itself even more international. In Russia, E.ON recently commissioned a new gas-fired generating unit and has three other units under construction. In the United States, it began building its fourteenth wind farm in just three years. E.ON operates a total of 84 wind farms worldwide. At 8,400 megawatts of capacity, renewables are already an E.ON mainstay.

Efficiency program and debt reduction enhance investment strength

As planned, E.ON’s current efficiency-enhancement program, which is called PerformtoWin, will deliver EUR1.5 billion in lasting savings and performance improvements by the end of 2011. Going forward, E.ON will put an even greater focus on the profitability of its existing and new businesses. This will enable it to achieve an additional EUR600 million in annual efficiency improvements by the end of 2013. E.ON’s net financial position at year-end 2010 was just over -EUR20 billion, a roughly EUR10 billion improvement from its debt peak in mid-2009.

E.ON stands by forecast

E.ON’s forecast is based on the assumption that the company will be able to return its nuclear power stations to service after the current moratorium expires. Assuming this, E.ON expects its 2011 adjusted EBITDA to be between EUR11.2 and EUR11.9 billion, without factoring in portfolio measures. It expects its adjusted net income to be between EUR3.3 and EUR4 billion.

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.