E.ON Profit Rises After Renegotiations; Warns Still Tough Times Ahead

German utility E.ON has announced a rise in profits of 27 per cent for the first quarter of this year, following the renegotiation of gas contracts and increased sales to Russia.

Earlier this year, E.ON renegotiated a gas contract with Norwegian major Statoil, which supplies around 25 per cent of E.ON's yearly needs, reducing gas prices from Statoil to current market levels.

Increased earnings in Russia, where sales resulting from power generation rose by 30 per cent, have also bolstered the company's profit for the quarter.

The performance totals the company's net profit for this quarter at €1.72 billion, almost a quarter less than in the year previous which saw net profits €2.27 billion. However, after tax, profits for E.ON total €1.67 billion, an increase from the same quarter in 2011, which saw an after-tax profit of €1.32 billion.

E.ON has said that it expects profits to continue to rise, in spite of a difficult market, for the next two years. However, despite this encouraging forecast, the company says it fully expects the market to remain difficult for the foreseeable future.

"Our positive first-quarter performance can't hide the fact that the energy and macroeconomic environment remains difficult," the Dow Jones news agency reports chief executive of E.ON Johannes Teyssen as saying today.

"For the foreseeable future, our business will continue to be characterized by weak energy demand, keen competitive pressure--above all in our wholesale gas business--and occasionally erratic government intervention in the energy marketplace."