E.ON results in line with expectations
- Dividend proposal of €0.50 per share confirmed
- EBITDA of €7.6 billion at upper end of forecast range, underlying net income at €1.6 billion
- Substantial net loss due to significant impairment charges
- Economic net debt reduced by €5.7 billion
- Full-year 2016 EBITDA expected to be between €6 and €6.5 billion
E.ON’s 2015 operating results were in line with expectations. At today’s annual results press conference CEO Johannes Teyssen said: “We posted solid operating results in a very difficult market environment. Our numbers reflect the far-reaching structural transformation that our industry is experiencing and that continues unabated in the current year. Our strategy of having E.ON and Uniper focus on their respective energy world is the right response to this transformation. But the course ahead will be tougher and longer than anticipated.”
E.ON’s EBITDA declined by 10 percent year on year to €7.6 billion. Underlying net income of €1.6 billion was at the prior-year level. Both figures are in line with the company’s earnings guidance of €7 to €7.6 billion and €1.4 to €1.8 billion, respectively. Impairment charges of €8.8 billion recorded in the autumn of 2015 primarily on generation assets resulted in a substantial net loss of €7 billion. Despite the earnings decline, operating cash flow of €6.1 billion was only slightly below the prior-year level. Relative to year-end 2014, E.ON reduced its economic net debt significantly to €27.7 billion. At the E.ON SE Annual Shareholders Meeting, the Management Board and Supervisory Board will propose a dividend of €0.50 for the 2015 financial year, which would correspond to a payout ratio of about 60 percent of underlying net income.
Teyssen pointed out that the economic and industry environment had deteriorated substantially since E.ON announced its new strategy at the end of 2014. The company will therefore subject its assumptions on the future development of E.ON and Uniper to a critical review. The difficult market environment will cause, in particular, free cash flow to be below earlier assumptions; future investments and dividends will have to reflect this. The E.ON and Uniper Management Boards will present the results of their review of their corporate objectives in light of these new challenges at the end of April.
The separation and refocus of E.ON and Uniper are on schedule. E.ON is currently preparing a spinoff report, which it will release along with the invitation to its Annual Shareholders Meeting. At this meeting, which will be held on June 8, 2016, the shareholders will vote on the spinoff of Uniper. This would be followed by Uniper’s stock-market listing. “It’s right for us to divide our operations into two companies, which will enable them to develop their respective businesses in line with their own strategy,” Teyssen emphasized. “Precisely because we’re facing huge challenges, we need to take decisive action. Our new setup will give our shareholders more options and E.ON and Uniper’s management more leeway.”
CFO Michael Sen said: “Compared to year-end 2014, we reduced our economic net debt significantly by €5.7 billion to €27.7 billion. Our high operating cash flow as well as the proceeds from disposals were the main drivers. But reduced provisions for pensions also had a positive impact. Going forward, we’ll continue to focus on the solidity of our balance sheet.”
The first months of 2016 have seen new lows in energy prices, further declines in gas prices, and a persistently weak ruble. E.ON therefore expects its 2016 EBITDA to decline to between €6 and €6.5 billion. It expects its underlying net income to be between €1.2 and €1.6 billion. Considering the vote at the E.ON SE Annual Shareholders Meeting on June 8, 2016, on the spinoff of a majority stake in Uniper and assuming that the spinoff will become effective in 2016, E.ON’s outlook for 2016 will have to be adjusted due to accounting effects resulting from the spinoff. E.ON then expects its outlook to be significantly lower. Further details will be communicated along with the publication of the spinoff documents for the Annual Shareholders Meeting. Due to accounting effects, this does not allow any conclusions on the expected EBITDA and underlying net income for Uniper in 2016.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 SE 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.