E.ON reaffirms earnings forecast for 2012, will review medium-term guidance

  • Nine-month EBITDA1 at roughly €8.8 billion, underlying net income at €4 billion
  • Full-year 2012 EBITDA expected to be between €10.4 and €11 billion, underlying net income between €4.1 and €4.5 billion
  • E.ON confirms plan to pay out a dividend of €1.10 per share for 2012

Düsseldorf-based E.ON AG posted EBITDA of roughly €8.8 billion and underlying net income of roughly €4 billion for the first nine months of the 2012 financial year. The results remain in line with the company’s upgraded forecast from August.

Nine-month sales of €93.6 billion were 21 percent above the prior-year figure. E.ON’s Optimization & Trading segment and its network and sales businesses in Germany recorded particularly significant sales increases. By contrast, sales declined significantly at E.ON’s nuclear and fossil generation business. The main reasons were the shutdown of nuclear power stations in Germany pursuant to the amendment of the Nuclear Energy Act along with lower capacity utilization at E.ON’s European generation fleet.

E.ON’s nine-month EBITDA of €8.8 billion surpassed the prior-year figure by €2.3 billion. The main reasons for the increase were significant improvements in E.ON’s wholesale gas business owing to the renegotiation of procurement contracts with gas producers, the non-recurrence of the adverse impact of the amended Nuclear Energy Act in Germany, and the operation of three new gas-fired generating units in Russia. In addition, E.ON 2.0, a group-wide efficiency program, began to have an earnings impact. The biggest contributions to EBITDA came from Optimization & Trading and the Germany regional unit, which improved its earnings by €258 million, owing in part to cost savings.

“Our nine-month results reflect the first successes of the transformation of our company and our ongoing efficiency-enhancement programs. But they also clearly indicate that we face huge challenges, particularly in our generation business,” E.ON CEO Dr. Johannes Teyssen said. “That’s why we’re further optimizing our conventional generation portfolio and also exploring whether to close some assets. Where assets are important for ensuring the stability of the power supply, we’re working with system operators and government agencies to find interim solutions.”

Underlying net income rose to roughly €4 billion, mainly because of the EBITDA increase. Non-operating earnings were 23 percent higher, particularly because of amortization charges. At €4.3 billion, nine-month investments in property, plant, and equipment, intangible assets, and equity interests were slightly above the prior-year figure. Operating cash flow increased significantly year on year, rising to about €6.8 billion. Cash-effective items in the EBITDA increase constituted one of the positive factors. E.ON’s economic net debt stood at -€35.6 billion at the end of the third quarter, roughly €800 million less than at year-end 2011. Key reasons for the improvement were positive cash and divestment proceeds.

On the basis of its current business portfolio, E.ON continues to expect its full-year 2012 EBITDA to be between €10.4 and €11 billion and its underlying net income to be between €4.1 and €4.5 billion. It also stands by its plan to pay out a dividend of €1.10 per share for the 2012 financial year.

Considering the substantial economic uncertainties and the structural changes in the energy industry, E.ON’s previous 2013 forecast no longer seems achievable. E.ON is therefore reviewing its 2013 forecast and statements regarding 2015 as part of its current planning process.

1Adjusted for extraordinary effects.