E.On Q1 Earnings Up on Gazprom Deal
German utility E.ON recorded strong performance in the first quarter of 2016, spurred by compensation from a prior settlement with Russia's Gazprom .
According to E.ON's statement on May 11, its net profit rose to €1.17bn, up from €1.06bn a year earlier, while pre-tax operating earnings (Ebitda) rose to €3.1bn, up from €2.9bn in the first quarter of last year. The improvement came from released provisions of €600m and operating performance improvement in its gas trading business.
Stripped of the effects of the deal on gas terms with Gazprom, first-quarter earnings were slightly lower from a year earlier, E.ON said.
In the first quarter, adjusted after-tax profit was €1.3bn, up 30% from €1bn in the year-earlier quarter.
Gains from gas and newly commissioned power plants were partially offset by low market prices, the decommissioning of some generating capacity, divestments and a power plant outage in Russia, the company said in the statement.
E.ON Chief Financial Officer Michael Sen said that the government-appointed commission's financing proposal for nuclear energy offers a basis for discussion, but proposed risk payments are too high. It's premature to say E.ON would require a capital increase until talks completed, but it can no longer be ruled out, he said in a conference call with journalists.
The company also confirmed its forecasts for 2016. In March, the company said the Gazprom deal would improve its outlook for the year and raised guidance for adjusted Ebitda to €6.4bn-€6.9bn, from an earlier forecast of €6bn-€6.5bn.
The company reported Ebitda of €7.56bn in 2015. Net income would be around €1.2bn-€1.6bn this year, it said in the statement.
The company will try to get approval in June 8 shareholder meeting for spin off its energy trading operations to a new upstream and fossil-fuel generation company, Uniper, listing 53% of its shares by end-2016. After the spinoff, E.ON will focus on renewable energy, networks and service.
Following the split, the company earlier said it projects earnings before interest and taxes of €2.7bn to €3.1bn for this year.
Murat Basboga