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E.ON say profits hit by tricky conditions

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Photo: DPA
15:46 CET+01:00
Germany's biggest power supplier E.ON said Wednesday it was projecting a sharp drop in bottom-line profits this year as a result of the difficult industry environment and divestments.

E.ON said in a statement it forecast "underlying" net income of between €2.2 billion and €2.6 billion for 2013, down from €4.3 billion it managed in 2012.

The decline would be due to "the significant deterioration of the business environment of Europe's energy industry" and also took into account the "substantial earnings streams that E.ON will lose through its ongoing divestment programme," the statement said.

For 2011 E.ON had actually booked a net loss of €2.2 billion, but after this was adjusted for one-off effects such as divestments, the group made an "underlying" net profit of €2.5 billion.

Operating profit was projected to fall to between €9.2 billion and €9.8 billion in 2013 after rising by 16 percent to €10.8 billion in 2012, the company calculated.

E.ON also said it planned to pay shareholders a dividend of €1.10 for 2012, up from €1.0 per share the previous year. But it declined to give any dividend forecast for 2013.

E.ON said it had to re-think its strategy given the "radical changes in Europe's energy industry."

"The unmanaged growth of renewables and the resulting collapse of the EU emissions trading scheme are making in particular gas-fired power plants in Europe -- which had already been hit by the recession-driven decline in power demand -- largely uneconomic to operate," the group explained.

E.ON therefore called for "adequate compensation for maintaining this capacity, which ensures the reliability of the power supply."

But it said it would restructure its conventional generation business in such a way as to "swiftly improve the competitiveness of its generation fleet.

"Along with further cost reductions and efficiency improvements, E.ON is studying whether to close power plants in Europe," it said.

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E.ON said it would focus its investments even more strictly on growth areas, such as renewables, and markets outside Europe like Russia and Turkey.

AFP/hc

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