E.ON moves forward with transformation in difficult times
- EBITDA1 of roughly €10.8 billion, underlying net income of €4.2 billion
- Dividend proposal: €1.10 per share
- 2013 forecast: EBITDA expected to be €9.2 – €9.8 billion, underlying net income €2.2 – €2.6 billion
- Net financial debt halved in just four years
Düsseldorf-based E.ON SE posted EBITDA of about €10.8 billion and underlying net income of about €4.2 billion in the 2012 financial year.
“Our solid results, which also reflected a number of positive one-off effects, are gratifying and a tribute to our employees’ outstanding dedication and performance, particularly in difficult times,” said E.ON CEO Dr. Johannes Teyssen at the company’s annual-results press conference in Düsseldorf. “But we have no reason to sit back and relax, since our sales volume and earnings remain under pressure, especially in conventional power generation. In particular, our technologically advanced, climate-friendly gas-fired power plants are currently barely profitable, although they’re urgently needed for the stability of the power system. Policymakers need to act swiftly on this issue. Otherwise we’re going to have to shut down power plants.”
Teyssen spoke in detail about E.ON’s reorientation: “We’re tapping growth markets like Turkey, Russia, and Brazil. In addition, we’re making above-average investments in renewables and rapidly expanding our business in distributed generation. Our gas production business is also making good progress: two new North Sea gas and oil fields are entering production in the first quarter. At the same time, we’re moving forward with our company’s transformation. In 2012 we implemented a significantly leaner holding-company structure, and our efficiency-enhancement program is already delivering significant earnings improvements. The contours of the new E.ON are already becoming clear: we’re becoming leaner, faster, more international, and more decentralized. By doing so, we’re creating the business platform for future sustainable growth.”
E.ON’s 2012 EBITDA of €10.8 billion was about €1.5 billion above the prior-year figure. The main reasons for the increase were a significant improvement in the gas wholesale business following the renegotiation of gas-procurement contracts with producers and the retroactive recovery of losses recorded in earlier years. In addition, 2011 earnings were adversely affected by one-off items relating to Germany’s accelerated phaseout of nuclear energy. Additional generating capacity in Russia and the first lasting cost reductions from E.ON’s ongoing efficiency-enhancement program were also positive factors. The negative factors included lower prices and sale volume in the power business.
E.ON’s underlying net income rose to about €4.2 billion, owing mostly to the increase in EBITDA. Other positive factors included lower amortization charges and a lower economic interest expense. The E.ON Group’s investments were up slightly, increasing by 7 percent to just under €7 billion. More than 25 percent of this figure went toward expanding E.ON’s renewables business.
E.ON’s operating cash flow of €8.8 billion was significantly above the prior-year figure of €6.6 billion. The E.ON Group’s economic net debt at year-end 2012 was €35.9 billion, a slight improvement of €500 million. By contrast, its net financial debt improved significantly, declining by €3.3 billion to €14.7 billion. This is indicative of E.ON’s progress in achieving lasting reductions in its debt. From a highpoint of nearly €30 billion at year-end 2008, E.ON’s net financial debt has declined by half.
E.ON expects its 2013 EBITDA to be between €9.2 and €9.8 billion. This forecast factors in the loss of earnings streams through asset sales under the company’s ongoing divestment program. E.ON expects its 2013 underlying net income to be between €2.2 and €2.6 billion.
On the basis of its 2012 results, the Board of Management and Supervisory Board will propose to the Annual Shareholders Meeting that the company pay out a dividend of €1.10 per share.