E.ON LOSES €7 BLN
European utility company E.ON made a net loss of €7bn during 2015, it announced March 9, with underlying net income of €1.6bn. This was similar to 2014 but it also took an €8.8bn impairment charge mainly related to its struggling generation assets.
E.ON CEO Johannes Teyssen said: "We posted solid operating results in a very difficult market environment.... But the course ahead will be tougher and longer than anticipated."
Power and gas prices have slumped in recent years as part of a general commodity market turndown. European power generators meanwhile have seen conventional thermal power plants facing growing competition from renewables.
"Our numbers reflect the far-reaching structural transformation that our industry is experiencing and that continues unabated in the current year," said Teyssen.
Fellow German-headquartered utility RWE also reported a loss for 2015 this week, and the companies are both embarking on major restructuring programmes. E.ON is splitting up its conventional power generation assets, which will be established as new spinoff Uniper, from its renewables and network assets, which will continue as E.ON. Shareholders will vote on the spinoff at their anual meeting on June 8.
"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 said.
The company has cut its net debt by €5.7bn to €27.7bn. It expects underlying net income for 2016 between €1.2bn to €1.6bn. "The first months of 2016 have seen new lows in energy prices, further declines in gas prices, and a persistently weak ruble," E.ON warned. The company has 9.9 GW of generating capacity in Russia.
E.ON's gas sales in 2015 amounted to 1,722bn kWh. This was actually up 47% from the previous year, with some impact from colder weather, but largely driven by a large increase in wholesale market volumes. Electricity sales for 2015 of 781bn kWh were steady from 2014.
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